FIPB defers decision on Guardian's solo plans

The Foreign Investment Promotion Board (FIPB) today deferred a decision on allowing US glass-maker Guardian Industries' proposal for setting up a separate wholly owned glass venture in the country.

FIPB has further asked the Department of Industrial Policy and Promotion (DIPP) to review its earlier recommendation to clear the proposal.

Informed sources said the decision came after Guardian's Indian partner Modi Rubber pointed out to the finance ministry and DIPP that since a joint venture, Gujarat Guardian, already existed, the proposal for a 100 per cent subsidiary attracted the provisions of Press Note 1.

As a consequence, FIPB has taken the view that Guardian needs a valid no-objection certificate from its Indian joint venture partners "" Modi Rubber and two Gujarat state-owned entities "" in float glass and mirror-maker Gujarat Guardian.

Modi Rubber has already told the government that it will not grant a no-objection certificate to Guardian for setting up venture.

The company, which holds 21.24 per cent in the JV, said this on August 17, a day before the expiry of the two-week deadline set by the FIPB for the company to give its view on Guardian's plans to set up a wholly owned subsidiary in the country.

The Gujarat state entities hold 9.46 per cent in the JV, while Guardian holds a 50 per cent, NRIs and OCBs 18.52 per cent, with the balance being held by other associates.

Guardian intends to invest $66 million in equity in an expansion plan that will involve an overall investment of $200 million in two phases.

Modi Rubber has contended the conditions mentioned by Guardian in its application are not fair and appropriate.

"The company has already filed for release from the BIFR for revival, and has cash reserves of Rs 270 crore. There is no cause for it to be said that Gujarat Guardian is defunct," company sources had added.