Move to scrap Press Note18 irks CPI(M)

After foreign direct investment and foreign consultant in the Planning Commission, the proposal to do away with Press Note 18 came under critical review from the government's most important outside supporter, the CPI(M).

The Press Note 18 bars foreign partners from setting up wholly-owned subsidiaries in the country without permission.

"The scrapping of Press Note 18 will harm the interests of domestic industries and provide multinational companies with additional leverage," a CPI (M) statement said here.

Press Note 18 bars the foreign partner in an Indian joint venture from setting up a wholly-owned subsidiary in the country on the same line of business without the domestic partner's permission.

The statement comes close on the heels of reports that Union Finance Minister P Chidambaram was considering withdrawal of Press Note 18 to increase the inflow of foreign direct investment.

The CPI(M) politburo has urged the government to take into account the opinion of domestic industry and not to proceed with this step. Corporates fear the scrapping of the provision will harm the domestic industry and benefit the foreign investor.