March, 2005

Press note 18, a controversial policy announcement of the Government made in 2000 prevented foreign companies already in an Indian joint venture from getting into other ventures without the existing partner's permission. The Government has recently issued revised guidelines superseding this restrictive policy. The revised guidelines under new Press Note called Press Note 1 allows new proposals for foreign investment and technical collaboration under automatic route subject to sectoral policies on foreign investment. However, Press Note 1 applies only to future joint ventures i.e. joint ventures formed on or after December 12, 2004. In other words, prior government approval would continue to be required in cases where the foreign investor has an existing joint venture or technology transfer or trademark agreement in the same field. The onus to provide requisite justification as also proof that the new proposal would or would not jeopardize the existing joint venture or other stakeholders would lie equally on foreign investor or technology supplier and the Indian partner.