| Prime Minister Manmohan Singh with CII president S. K. Munjal in Calcutta on Wednesday. Picture by Amit Datta
Calcutta, Jan. 12: Press Note 18, a controversial set of rules loaded against foreign investors, has been dumped.
The announcement was made by Prime Minister Manmohan Singh at the inaugural session of CII's Partnership Summit 2005 here today. Coinciding with his calls to open up the economy further, the decision warmed the cockles of overseas firms that have long been hobbled by the executive fiat in their Indian joint ventures.
'As I listened to the tales of success of Indian firms in the global market and the words of optimism at a recent meeting of the Manufacturing Competitiveness Council, I was convinced that measures like Press Note 18 are an anachronism today. They have outlived their purpose,' the architect of reforms told industry captains.
Under Press Note 18, which the National Democratic Alliance (NDA) government introduced in 1998 to protect Indian companies, foreign partners need a no-objection certificate from their Indian allies if they want to start a new venture in the same field or in allied areas.
The edict was forced into the spotlight after a tug-of-war between free-market proponents rooting for higher foreign direct investment and a lobby that wanted it retained as a shield for Indian joint-venture partners.
Commerce and industry minister Kamal Nath followed up on Singh's announcement, clarifying that joint ventures forged after today will be out of Press Note 18. For existing companies, foreign firms will have to secure the Indian partner's nod only if they wish to set up ventures in the same ' not allied ' line of business.
The curbs stay for venture capital funds registered with Sebi, firms in which the foreign partner owns less than 3 per cent and sick or defunct companies, Nath said. 'In future, the partners will settle the issue on mutually agreeable terms,' the commerce minister said.
The revised guidelines overwriting the restrictive provisions of Press Note 18 were issued in Delhi tonight. The new regulations have been called Press Note 1.
Apart from razing a six-year-old entry barrier, the Prime Minister made it clear that engaging the Indian economy with the rest of the world was high on the government's agenda. 'I am convinced that India has to be a more open economy and we must derive the benefits of globalisation,' Singh said to a round of hearty applause.
Beyond the economic roadmap lay Singh's promise of equity and justice. Not oblivious of the presence of Bengal's Marxist chief minister, Buddhadeb Bhattacharjee, on the dais, the Prime Minister quoted Marx to make sure his dialectics struck the right ideological chord in a state daring to embrace his brand of reforms.
Singh said stepping up the rate of investment was the government's highest priority. He referred to the National Investment Commission, headed by Rata Tata.
'I have great expectations from the initiatives this commission will take because we can not step up the rate of growth and employment without increasing the rate of investment.'