21 October, 2020

What's That Stink?

Business houses protest the proposed scrapping of a clause that has protected Indian firms with foreign tie-ups

Jitender Gupta
What's That Stink?
Press Note 18. It's a one-page note issued by the Union industry ministry on December 14, 1998. For foreign firms, the three clauses are meant to act as guidelines "pertaining to the approval of foreign/technical collaborations under the automatic (FDI) route with previous ventures/tie-ups in India." While it looks like any other clarification, the seemingly harmless paragraphs have created a furore in both political and business circles. Foreigners see it as the most obnoxious entry barrier and the biggest impediment to FDI inflows; Indian industry views it as a protector of its interests in the ugly—and often unfair—tussles with foreign partners; and politicians take a stand depending on whether they want to be viewed as pro-reforms or anti-reforms, pro-MNCs or against them.

Almost everyone has a view on Press Note 18. Now that the government plans to scrap it, the debate on it has acquired a nationalist tone and the battle is being billed as swadeshi vs videshi. The critics of the note include the two reformers—PM Manmohan Singh and FM P. Chidambaram—and foreign...


To read this piece, and more such stories in India's most exciting and exacting magazine, plus get access to our 25-year archives goldmine, please subscribe.

Latest Magazine

October 26, 2020

other articles from the issue

articles from the previous issue

Other magazine section