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GOVERNMENT ISSUES PRESS NOTE 1 (2005 SERIES) REVISED GUIDELINES SUPERSEDE PRESS NOTE 18

Date : 12 Jan 2005
Location : New Delhi
 
 

Following the withdrawal of Press Note 18 for future joint ventures and other modifications announced today, government have issued Press Note 1 (2005 series) containing guidelines for approval of foreign/technical collaborations under the automatic route with previous ventures/tie-ups in India.

It says that the Government has reviewed the guidelines notified vide Press Note 18 (1998 series) which stipulated approval of the Government for new proposals for foreign investment/ technical collaboration where the foreign investor has or had any previous joint venture or technology transfer/ trademark agreement in the same or allied field in India.

1. Prior approval of the Government would be required only in cases where the foreign investor has an existing joint venture or technology transfer/trademark agreement in the ‘same’ field. The onus to provide requisite justification as also proof to the satisfaction of the Government that the new proposal would or would not in any way jeopardize the interests of the existing joint venture or technology/ trademark partner or other stakeholders would lie equally on the foreign investor/ technology supplier and the Indian partner.
2. Even in cases where the foreign investor has a joint venture or technology transfer/ trademark agreement in the ‘same’ field prior approval of the Government will not be required in the following cases:
   1. Investments to be made by Venture Capital Funds registered with the Security and Exchange Board of India (SEBI); or
   2. where in the existing joint-venture investment by either of the parties is less than 3%; or
   3. where the existing venture/ collaboration is defunct or sick.
3. In so far as joint ventures to be entered into after the date of this Press Note are concerned, the joint venture agreement may embody a ‘conflict of interest’ clause to safeguard the interests of joint venture partners in the event of one of the partners desiring to set up another joint venture or a wholly owned subsidiary in the ‘same ‘ field of economic activity.

These guidelines would come into force with immediate effect.

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