Amendments to Press Note 18 get delayed

The proposed amendments to Press Note 18 has been delayed on account of differences between the finance ministry and the Department of Industrial Policy and Promotion (DIPP) regarding the introduction of a sunset clause for existing joint ventures.

"While there is no difference of opinion that the clause should not be applicable for JVs which have become defunct or insolvent, the issue is how long should Press Note 18 continue to be valid for the existing ventures. The finance ministry is of the view that there should be a sunset clause for existing ventures," a ministry official told Business Standard.

Officials pointed out that the recommendations of the core group of secretaries on amendments to Press Note 18 had already been fowarded to the DIPP.

Since the DIPP still handles the FDI policy, it has to prepare a Cabinet note on the proposed amendments to Press Note 18 before the same can be effected.

While the finance ministry has been pressing for amendments to Press Note 18, there was a domestic lobby which was keen to ensure that the present guidelines continue.

The note, issued in 1998, deals with guidelines pertaining to the approval of foreign or technical collaborations under the automatic route for cases with previous ventures or tie-ups in India.

The committee of secretaries proposes to exempt new joint ventures from the purview of the guidelines since there are now sufficient safeguards in their contracts.

The clause requiring the approval of the Foreign Investment Promotion Board (FIPB) in case of "previous joint venture or technology transfer or trademark agreement in the same or allied field in India" would now be limited to the "same field" only.

A background paper prepared by the Planning Commission for the meeting of the core group of secretaries had three options.

One was to do away with Press Note 18, another was to indicate a list of negative sectors which would not be under the jurisdiction of the government directive, while the third option was to incoporate dilutions into some of the clauses of the note.