Govt wants to give FDI a push.

NEW DELHI: In a move aimed at speeding up FDI flow, the government on Friday proposed to allow foreign firms to bring in new technology and set up new independent business without clearance from their existing local joint venture partners.

A foreign player with a joint venture, set up before January 12, 2005, now faces several barriers if it wants to set up a new business without approval of the domestic partner.

The relaxations will not be applicable to the joint ventures entered after January 12, 2005.

The barriers include fresh approvals from the government and a no-objection certificate from the Indian partner in the joint venture. "There is a need to examine whether such a conditionality continues to be relevant in the present day context," the Department of Industrial Policy and Promotion said in a discussion paper released on Friday. Alternatively, it has suggested that the stipulation of the no-objection certificate from the domestic partner should not be applicable to joint ventures that have been in existence for 10 years. The department has invited comments from stakeholders till October 15.

The move follows representations from foreign investors who pointed out that their domestic partners were using a string of Press Notes since 1998 "as a means of extracting unreasonable prices/commercial advantage.
These press notes had become a stumbling block for further FDI coming into the country." The paper said India has entered into a number of free trade agreements and several others are under negotiations.

"In such a scenario if an industry (FDI) is discouraged from being set up in India, it could be set up in a neighbouring country with whom a trade agreement exists or is being negotiated," the discussion paper said.

India received $25.8 billion FDI in 2009-10. After a pickup in the first two months of the ongoing fiscal, the inflows have slowed down for June and July.

Source : economictimes.indiatimes.com