New Delhi, Jan. 12: India Inc was guarded in its reaction to the proposal to scrap the infamous Press Note 18 ? an anachronistic set of rules that many believe has been the main reason why foreign direct investments in India have totalled just a little over $25 billion in the 13 years since liberalisation began in 1991.

FDI inflows have steadily declined since they touched a high of $9.89 billion in 2001-01. In contrast, China attracted $52.7 billion in just 2002.

Industry shoguns welcomed Prime Minister Manmohan Singh?s statement that the government would provide some form of protection to existing joint ventures without actually spelling out what this might be.

The Federation of Indian Chambers of Commerce and Industry (Ficci) ? the apex chamber which had lobbied hard for Press Note 18 that came into force on December 14, 1998 ? said it would ?await the final wording of the new Press Note 18 dispensation from the commerce minister and make further suggestions if required.?

Ficci president Onkar S. Kanwar expressed ?satisfaction? over the Prime Minister?s suggestion that the existing joint ventures between Indian and foreign partners be protected under a new dispensation.

Industry speculated that the protection could come in the form of a cooling-off period of three to five years that would give joint ventures the time to prepare for competition from a wholly-owned subsidiary of its foreign partner.

Many felt that this wasn?t asking for too much: after all, Honda was forced to make only scooters for five years in exchange for a no-objection certificate from the Munjals of mobike maker Hero Honda. It was only after the cooling off period that the local arm of Honda could start making motorcycles.

Kanwar cautioned Indian industry ?to carefully draw up future joint venture contracts using the global templates in practice where a ?cooling-off? period is included in commercial joint ventures."

This will ensure that government intervention in such private sector contracts will not be necessary.

CII president S. K. Munjal said, ?We welcome the Prime Minister's announcement of eliminating Press Note 18.?

Rahul Bajaj, CMD of Bajaj Auto, said: ?I support what the Prime Minister has said today. There is no need for the Indian partners to ask for any kind of safety provision which he deems necessary under a new joint venture. There should be no sunset clause.?