CMP promised more FDI, CPM swears by NDA’s unfriendly note

The rule, introduced by the BJP-led government, forces foreign investors to seek the permission of their Indian joint venture partners if they wish to set up their own subsidiary in the same line of business. There have been reports of Indian companies holding their foreign partners to ransom by not giving this consent. The result is that foreign companies find themselves unable to expand the scope of their operations or their investment.

While Finance Minister P Chidambaram recently told The Indian Express that he found Press Note 18 ‘‘outdated’’, the CPI(M) today defended the rule.

The party’s highest decision-making body, the Politburo, warned the UPA government against doing away with Press Note 18. It felt that the rule defended the interests of the domestic industry.

The NDA government had used the same logic to introduce Press Note 18 in the first place. It did not want the foreign collaborator to enter India and subsequently dump the Indian partner.

Since then, the balance has swung the other way with investors like Walt Disney initially facing strong objections from the Modis, their Indian partners, when they wanted to start a wholly-owned subsidiary.

The CPM made its distrust of MNCs clear when it said: ‘‘The scrapping of Press Note 18 would harm the interests of domestic industries and provide MNCs with additional leverage.’’

This was a thinly-veiled warning to Chidambaram, barely a week after the Left had attacked his colleague, the Planning Commission deputy chairman Montek Singh Ahluwalia.

Ahluwalia had tried to include experts from foreign agencies on panels reviewing the performance of the Tenth Plan.

In its statement on Press Note 18 today, the Politburo urged the government to take into account the opinion of domestic industry and not to proceed with this step.