Guidelines pertaining to approval of foreign/technical Collaborations under the automatic route with previous Ventures/tie-up in India. - FEMA - 01/2005

Government of India Ministry of Commerce Industry Department of Industrial Policy Promotion Secretariat for Industrial Assistance Press Note No.1 (2005 Series) Subject: Guidelines pertaining to approval of foreign/technical Collaborations under the automatic route with previous Ventures/tie-up in India. The Government has reviewed the guidelines notified vide press Note 18 (1998 Series ) which stipulated approval of the government for New proposals for forgin investment/technical collaboration where the Foreign investor has or had any previous joint venture or technology transfer/ Trademark agreement in the same or allied fleld in India. 2. New proposals for foreign investment /technical collaboration would henceforth be allowed under the automatic route, subject to sectoral policies, as per the following guidelines: (i) 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 requiste justification as also proof to the satisfaction of the Government that the new proposals would or would not in any way technology/trademark partner or other stakeholders would lie equally on the foreign investor/ technology supplier and the Indian parner. (ii) Even in the cases where the foreign invester 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: a. Investment to be made by venture capital founds registered with the Security and Exchange Board of India (SEBI) b. where in the exsting joint-venture Investment by either of the parties is less than 3%' or c. the existing venture/collaboration is defunct or sick. (iii) 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 intrest 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. 3. These guidelines would come into force with immediate effect. (Umesh kumar ) joint Secretary to the Government of India No 8/1/2003-Fc (Pt ) Dated 12 th January 2005 Copy forwarded to the press Information Officer, press Information Bureau for giving wide publicity to the above press note.