The government has decided to abolish the restrictive provision of Press Note 18 for all future joint ventures with foreign partners, Prime Minister Manmohan Singh said on Wednesday.
Announcing this in Kolkata while inaugurating the Confederation of Indian Industry Partnership Summit, he said it was a regulatory provision that had been a source of some discomfort for investors.
The prime minister said measures like Press Note 18 were anachronism having outlived their purpose.
"In the new dispensation, while the existing joint ventures will continue to be protected by a few provisions of Press Note 18, new joint ventures and collaborations will have to be shaped by commercial contractual agreement based on the free will of the partners without government interference," he said.
Singh also said the Left parties are in agreement with the United Progressive Alliance government on the policy of engaging India with the world economy.
Emphasising the government is committed to lowering tariffs to at least the ASEAN (Association of South East Asian Nations) level, Singh said that the Left is in consensus with the government.
"I am aware that at times some of the views expressed by our alliance partners on the left may have raised some doubts in your minds but I am sure you will leave this summit reassured and convinced that there is today a wide-ranging consensus on the necessity for India to be actively engaged with the world economy," he said.
The prime minister said the protection will be restricted to existing joint ventures and not to allied field or defunct or sick JVs.
Underlining the need for integration of Indian economy with the global economy, he said, "This is a course which we have set and we shall stay this course," he said. "I commit our government to an open, caring economy, an economy where the marginalised are empowered so that they become partners in development and share the benefits of growth."
The country was taking firm steps in this direction, systematically and steadily, Singh said. "We have begun the process of rationalising our indirect tax structures with a movement towards a VAT system and a common goods and services tax."
He sought to downplay the views expressed by the Left, which might have raised some doubts in the minds of trade and industry. "I am sure you will leave this summit reassured and convinced that there is today a wide-ranging consensus on the necessity for India to be actively engaged with the world economy."
Speaking in the presence of West Bengal Chief Minister Buddhadeb Bhattacharjee, Singh said the UPA government has already taken several steps towards engaging India with the world economy.
He said he had repeatedly reaffirmed the country's commitment to the successful functioning of the multilateral trading system and to broadening the agenda of the WTO with an increasingly liberal flow of goods, services and labour.
Doing away with Press Note 18 for all future joint ventures would help increase the flow of FDI into the country, Union Commerce Minister Kamal Nath said on Wednesday.
Addressing the Partnership Summit of Confederation of Indian Industry, Kamal Nath said the decision to scrap the controversial provision was taken as it was appearing as a restrictive trade practice.
Any joint venture entered into will not come under the purview of Press Note 18 and the joint venture partners should discuss among themselves whatever is required in a mutually agreeable manner, he said.
It will also help increase FDI flow into the country, he said.
However, the Press Note 18 will continue to apply to all joint venture agreements entered into in the past.
"We are committed to transparent investment policies," he said.
The Note says that the foreign partners of existing joint ventures in India should obtain no objection from their Indian partner to increase their investment.
