Revive Press Note 18, CPI tells govt

The Left parties and the government seem to be heading for yet another confrontation, this time on the scrapping of Press Note 18.

To show how the United Progressive Alliance (UPA) government's decision to scrap Press Note 18 would affect the lives of more than 5,000 families across India, the CPI issued a statement about the South Korean multinational LG serving a termination notice to its sole Indian joint venture licencee, hours after the Cabinet passed the decision.

"We urge the government to reconsider the decision of scrapping Press Note 18 and many other regulations to protect Indian trade and consumers from unethical and unfair trade practices of multinationals like LG," the CPI said.

Press Note 18 stipulated that multinationals doing business in India with joint venture partners should obtain a "no objection certificate" from the JV partner before cancelling the existing agreement or before entering the Indian market directly or before changing the JV partner.

According to the CPI, after the government had scrapped the Press Note 18 on January 12, 2005, the South Korean multinational had served a termination notice to its sole Indian joint venture licencee, India Household & Healthcare Ltd (IHHL)for its Computer Network Systems Business within hours.

In the next two weeks, the LG sent termination notices for its consumer durables and cosmetics business.The CPI said LG then served notices to IHLL and all its direct and indirect business partners, demanding that they destroy all LG logo products and warning them of prosecution if they failed to do so.

IHHL, the CPI statement said, had invested over Rs 120 crore to promote LG business in India. The State Trading Corporation of India had also provided a Rs 100 crore import assistance to IHHL, the statement said.

According to the CPI, IHHL has appointed 500 distributors, who in turn appointed 5,000 employees. Some them have individually invested in LG products ranging from Rs 10 lakh to Rs 1.8 crore, totalling Rs 50 crore.

"The Left parties raised the issue with the government at the UPA-Left coordination meeting. We told the government that the scrapping of Press Note 18 will be against the interests of the domestic industry," CPI leader D Raja said.

Keeping the LG example in mind the CPI has now demanded that the government take steps to "safeguard Indian business houses, trade and consumers from the MNC exploitation". The party has also asked the government to "do away with FDI in the retail sector" and take up immediately with the Korean government about LG's "unfair and unethical trade practice".