New Delhi, Sep 11 (IANS) India’s commerce and industry ministry has favoured the easing of norms for foreign companies that already have tie-ups with a domestic firm but want to expand their operations independently.
In a bid to protect Indian industry, the government had required all foreign companies to get a go-ahead from their domestic joint venture or technology partners if they wished to expand their business independenly.
While this policy was reviewed and the norm done away with in 2005, it still applied to those ventures that were in operation before the cut-off date of Jan 12 that year.
‘An element of government oversight was necessary so that future collaborations were subjected to the test of ‘jeopardy’ and existing domestic joint-venture partners and technology collaborators were not placed in a position wherein their survival was threatened,’ the industry ministry said.
‘With more than five years having elapsed, it can be argued that the issue of jeopardy is no longer relevant, as the Indian partners could have recovered their investments substantially during this period of time,’ the ministry added.
‘The Indian industry today is in a much stronger position than it was in the 1990s, when the condition was first introduced. It, therefore, needs to be seen whether there is a need to continue with the elements of such a regime even today.’
The ministry, accordingly, has released a discussion paper, inviting suggestions and recommendations from all stakeholders before making any change in the existing policy. Comments on the issue is invited before Oct 15.
The ministry also argued in favour of doing away with the persmission clause in the wake of a number of free trade agreements and economic pacts signed with other countries and regions.
‘In such a scenario, if an industry 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 ministry said.
‘Competition today, is not only between domestic players inter se but also between international and domestic players. Dumping of goods from some of countries has posed serious threats to the survival of domestic industries.’
The ministry has asked whether the policy should be totally abolished, if it should continue for some more time, or should it be relaxed in a calibrated manner?
For example, it could be exempt for existing ventures that are beyond 10 years old, or on occasions when the activity of the new venture is demonstrably different from the activity of the existing venture.
