SEZ documents cannot be kept confidential

The Bombay High Court has recently ruled that development of SEZs are of Public interest and the documents related to it cannot be kept confidential and it has to be public domain.

A division bench of Justice B H Marlapalle and Justice N D Deshpande was hearing a petition filed by SKIL Infra that had challenged the RTI commissioner's order asking Cidco to provide a Navi Mumbai resident with documents of the Navi Mumbai SEZ Pvt Ltd. The petition stated that the company had tied up with Cidco, the development authority, to set up the Navi Mumbai SEZ and the two had agreed on a deal that documents pertaining to this joint venture would be kept confidential.

The Bombay High court said that in a case where public interest was involved, a confidentiality clause between the Private Parties would not be applicable and documents would have to be made public.

FDI Rules governing JVs may be relaxed.

The Government of India has issued a discussion paper on FDI policy regarding foreign / technical collaboration in case of existing Joint ventures in India.

The purpose of this discussion paper is to solicit the comments and suggestion from public at large that any relaxation in FDI policy regarding JV & technical Collaboration / trademark agreement is required or not. This discussion paper also seeks the people’s views on the scope of relaxation.

The current move of Government of India is in furtherance of its continued effort to make FDI sector more attractive and investor friendly. Earlier, Government of India has also proposed relaxation of FDI policy in Multi-brand retail and in Defence sector.

Under the existing FDI regime, foreign investor, who entered into India before January 12, 2005 are not eligible for Automatic route for bringing in FDI, technology transfer or Trademark Agreement. It is necessary to take Government approval. Further, the foreign investor has to prove to the satisfaction of the government that the new proposal would not in any manner jeopardize the interest of existing joint-venture or technology / trademark partner or other stake holders.

However, the proposed relaxation of FDI policy shall not be applicable to Joint Ventures entered into after January 12, 2005. The reason behind it that as per PRESS NOTE 1 (2005 SERIES) all the Joint Ventures entered after January 12, 2005 are eligible for Automatic approval except in certain cases and also the onus to prove that the new joint venture shall not jeopardize the earlier one, is equally on Foreign & domestic companies. Further, the “Conflict of Interest” clause in JV could be embodied to safeguard the interest of Joint venture Partners.

The proposed relaxation aims at minimizing discrimination between foreign investors who had invested prior to 2005 and those who invested later. Further, the proposed relaxation shall promote healthy competition in this field and sustained long-term growth. Today the Indian industry is at par with its foreign counter-parts and hence there is absolutely no need of the clauses that brings onus only upon foreign investor that new proposal would not in any manner jeopardize the interest of existing joint-venture.

Most favoured FDI Sector: Telecom

The telecommunication sector, including radio paging, cellular mobile, basic telephone services, is the most favoured Foreign Direct Investment (FDI) sector. The telecom sector has attracted $891 million FDI in April-May 2010-11, the first two months of current fiscal.

The Second most favoured is the service sector that attracted $578 million investment during the same period. Further, metallurgical industries and power sector clinched third and fourth place with an investment of $461 million and $313 million respectively.

This is the result of the continued effort of Government to make the FDI policy more attractive and investors friendly. Recently, Department of Industrial Policy & Promotion (DIPP) has invited comments/ suggestions on the consolidated FDI Policy - Circular 1 of 2010 by 31st August, 2010. It is also expected that DIPP shall release Revised Consolidated FDI Policy i.e., Circular 2 of 2010 on 30th September, 2010. The Revised Consolidated FDI Policy may introduce the more relaxed policy regarding FDI in Multi-Brand Retail trading and Defense Sector.

Further, according to the latest official data by the Government, Mauritius is again the top investing Country in India with an investment of $1.29 billion during April-May 2010-11. The other top investing Countries are Singapore ($854 million), Japan ($369 million) and the Netherlands ($298 million) for the same period.