Rejecting an FDI proposal of the US-based Federal Mogul Corp, the foreign investment promotion board (FIPB) has said that its job is confined to examine the impact of the proposed investment on the existing Indian partner. It has said that the board is not appropriate forum to adjudicate whether the Indian partner has rights to invoke PN-1 according to any agreement signed between the two parties in the past. Talbros Automotive Components (TACL), which has a technical assistance agreement with Federal Mogul, had invoked the PN-1, stating that the proposed move of the partner would jeopardise its existing business. Federal Mogul, however, argued that the agreement (signed in 2003) was non-exclusive and TACL had no right to object.
According to the agreement between the two firms, TACL had committed that it would have no objection to the licenser or any other company in the Federal Mogul group investing directly or indirectly in other Indian companies or entering into joint ventures.
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By Mr Chitranjan, Section Finance & Investing
Posted on Sat Jun 07, 2008 at 01:04:52 AM EST
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Rejecting the $15-million investment proposal for setting up a wholly-owned subsidiary by Federal Mogul, the FIPB has decided to preserve the spirit of the PN-1 and refuse to consider nitty-gritty of individual agreements which may or may not be aligned with the provisions of the FDI policy note. The FIPB also noted that Federal Mogul did not make an effort to argue that its new venture would not affect the existing business of TACL
Source: Gunjan Pradhan Sinha & Rajeev Jayaswal From Economic Times 07/June/08
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