Guardian first wanted to acquire local partner Modi Rubber's 22% stake in Gujarat Guardian, where state government too holds 9.5%.
It later wanted to set up a new venture to manufacture glass but the proposal was deferred by FIPB last month after the finance ministry said that a no objection from Modi Rubber had not been received. Modi Rubber had petitioned the government against the US company's move.
The government was split with the department of industrial policy and promotion — entrusted with FDI policy preparation — suggesting that the FIPB could go ahead with the move since it did not see any threat to Gujarat Guardian. DIPP had, however, suggested that Guardian should give an undertaking that Gujarat Guardian's business would not be affected due to the new venture.
The core group, which met on Thursday, heard both the parties — Guardian International and Modi Rubber — and, sources said, concluded that the new venture will not affect the existing company and did not violate press note 1. "The contract between Modi Rubber and Guardian was outside the purview of FIPB and therefore the core group had no mandate on the issue," an official said.
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