Lakshmi Machine Works (LMW) has invoked the provisions of Press Note 1 to prevent the direct entry of Switzerland-based Rieter."Rieter plans to invest $20 million in India over the next three years to set up textile machinery manufacturing facility in india," a senior company official said.The move has, however, been blocked by LMW, which had got technology from Rieter in 1963. In return for technology, Rieter had then picked up 13% equity in LMW. The technology agreement ended in 1999, but Rieter continues to hold stake in LMW.Press Note 1, an amended version of Press Note 18, restricts foreign companies with more than 3% equity in a venture in India to get a no-objection certificate (NoC) from its partner for setting up another venture in the same line of business.The application of Rieter is now before the Foreign Investment Promotion Board (FIPB), which has asked it to get an NoC from LMW.LMW, however, appears in no mood to oblige Rieter. Sanjay Jayavarthanavelu, wholetime director of LMW, said the issue of providing NoC was not that simple."A lot of investment happening in the textile industry has been due to the Technology Upgradation Fund (TUF) scheme. TUF expires in 2007, and we are looking at the post-2007 scenario. Then, there is a question of the livelihood of so many people," Jayavarthanavelu said.He said the company was taking 18-20 months to supply machines due to increasing demand. "We have embarked on increasing the capacity of our plant by 35%, which will bring down the waiting time to eight months," Jayavarthanavelu added.Many Indian companies have started looking at China for machines in view of the long time being taken by LMW to supply orders. Many of them have said on record that if one player is unable to provide for the needs of the textile industry, more suppliers should be allowed to operate in the country.
