Financial Daily from THE HINDU group of publications
Saturday, Feb 23, 2002
Financial Daily from THE HINDU group of publications Saturday, Feb 23, 2002 |
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New Projects Corporate - New Projects 2/3-wheeler venture -- Suzuki accuses Govt of lacking inter-Ministerial co-ordination Ambarish Mukherjee
NEW DELHI, Feb. 22 THE Indian counsels for Suzuki Motor Corporation, who were co-ordinating with the Foreign Investment Promotion Board (FIPB) regarding the company's latest plan to set up a two/three-wheeler facility in India, have fired off a letter to the Government charging it with lacking co-ordination among its various departments, particularly the Ministry of Commerce and Industry and the Ministry of Heavy Industries and Public Enterprises, and thereby causing delay in approving the proposal. The developments come at a time when talks between the two parties regarding disinvestment of the Government stake in Maruti Udyog Ltd (MUL) and subscription to Maruti's rights issue have been reportedly making some headway. This letter was in response to a set of clarifications sought by the Government regarding the company's investment plans for its proposed two/three-wheeler venture. Suzuki had applied to the FIPB on January 28 for permission to set up a two and three-wheeler manufacturing facility with an initial investment of $10 million to be spread over three years following which the Government had sought some more information regarding the proposed production capacity and the likely turnover, further investment plans and other related matters. In response to the queries, the local counsel has informed that initially around 50,000 units will be produced annually with an estimated turnover of Rs 175 crore to Rs 200 crore and stated that "We may add that this law firm has applied for and obtained (on behalf of our various foreign clients) several foreign investment approvals from the FIPB without having to provide details regarding production units or annual turnover nor has the FIPB required this information at any time prior to granting us foreign investment approvals". Interestingly, it may be mentioned that as per existing FDI policies for various sectors, most of the FDI applicants do provide information about the proposed production capacity and related details to the FIPB while seeking permission. Suzuki's proposal first came up for consideration at the FIPB meeting on January 31 when a decision was deferred till February 21. But before it was taken up again the company's Indian counsels have dashed off a letter which also declines to provide the necessary no-objection certificates from its various joint ventures as required under Press Note 18 of FDI guidelines citing reasons why they are not required in this particular case. Industry Ministry sources told Business Line that it is the normal practice that clarifications, wherever necessary, are usually sought only from the administrative Ministry, which in this case is the Ministry of Heavy Industries. The proposal was taken up by the FIPB on Thursday but following the letter from the Indian counsels, the decision has been deferred again and the proposal will again be taken up at the next FIPB meeting scheduled for February 28.
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