The finance ministry today cleared the recommendations of a group of secretaries for giving the go-ahead to the company’s plan to set up a subsidiary.
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.
The issue revolves 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 will have to get a no-objection certificate from their existing Indian joint venture partner.
There has been considerable pressure on the Foreign Investment Promotion Board (FIPB) and government functionaries in this tangle. In two separate letters, senior US officials tried to link the approval to India’s commitment to liberalisation.
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