INDIA - restrictive barrier for foreign JV partner finally eliminated!
As from 1 April 2011, the government eased regulations for investment by foreign companies that are present in India through joint ventures or technical collaboration (formerly known as Press Note 1 rule) .
Now, overseas companies will not have to seek a no-objection certificate from the Indian associate for investing in the sector where the joint ventures operate.
The restructured policy permits overseas firms in existing joint ventures to function independently in the same business segment. Previously, they needed prior approval from their Indian partners.
Major factors to still consider on the existing JV part are the provisions of the JV/Collaboration agreement that were entered into. Action would now need to be taken based on the provisions of the agreement that were entered into, rather than the erstwhile protection granted under the FDI policy to the Indian JV partner.
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