The US-based glass-maker’s existing Indian joint-venture partner Modi Rubber, which owns 21.24 per cent in float glass and mirror-maker Gujarat Guardian Ltd (Guardian holds 50 per cent), had earlier refused to grant a no-objection certificate to its joint venture partner for setting up the subsidiary.
Gujarat state entities hold 9.46 per cent in the JV, while Guardian holds 50 per cent and NRIs and OCBs, 18.52 per cent, with the balance being held by other associates.
The issue revolved around separate interpretations of Press Note 1, 2005. Press Note 1, which replaced Press Note 18, requires international companies to get government approval for setting up a fully owned subsidiary if they have a joint venture with an Indian firm.
In effect, foreign firms that come under this category have to get a no-objection certificate from their existing Indian partner. There has been considerable pressure on the Foreign Investment Promotion Board (FIPB) and government functionaries in this tangle.
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