آ‘No Objection Certificateآ’ still needed

Vol 3, PW 18 (29 Sep 99) People & Policy
     

They say finding a good local partner in India is the key to success.

But if the countrys Ministry of Commerce gets its way, your local partner could become more a hindrance than a help. In a little reported development, Petrowatch learns the Ministry of Commerce - backed by the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) - is lobbying hard to retain a mandatory requirement for foreign companies to obtain a No Objection Certificate (NOC) from their Indian partner before making fresh investments or setting up wholly-owned Indian subsidiaries.

Foreign companies in India are generally required to give their local Indian partner detailed assurances that any new venture will not jeopardise an existing venture. Officials in the Ministry of Trade want to abolish this piece of nonsense, but are facing resistance from the Ministry of Commerce, which is backed by Bajaj, Hero, Indian Tobacco Company (ITC), and the Modi Group - all well-known protectionist Indian corporate houses.

The row began last year when on 14th December the Ministry of Industry issued a circular announcing guidelines for the abolition of the NOC requirement for foreign companies. On 9th March this year a meeting of the Core Group of Secretaries diluted the guidelines, following pressure from the Ministry of Commerce.

The Core group met again on 29th June but no final decision was taken. So sensitive is this issue that neither the BJP nor the Congress parties have shown the courage to propose a solution in their election manifestos.