NEW DELHI, April 1, 2011 (AFP) – India has eased regulations governing foreign companies and their Indian joint venture partners as it seeks to halt a decline in direct foreign investment. Foreign companies with an existing joint venture in India will no longer need the local partner’s permission if they want to set up a wholly-owned subsidiary in the same field of business, a government statement said late Thursday.
The move will “promote the competitiveness of India as an investment destination and be instrumental in attracting higher levels of FDI (foreign direct investment) and technology inflows,” the statement said.
Foreign firms have long complained that some local partners have tried to exploit them financially when they seek a non-objection certificate to setting up a separate business in a similar line of activity.
The government is keen to reverse a sharp decline in foreign direct investment, which fell 25 percent to $18.3 billion in the first 11 months of the fiscal year 2010-11 from the same period a year ago, according to the latest data.
The step “will go a long way in inspiring investor confidence”, said Commerce Minister Anand Sharma.