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FM supports tough stand on Maruti
S Kalyana Ramanathan & Priti Patnaik in New Delhi |
September 22, 2004 09:52 IST
As if the onslaught from Heavy Industries Minister Santosh Mohan Deb wasn't enough, there was more bad news in store for Suzuki Motor Corporation. Finance Minister P Chidambaram on Tuesday told Deb that he fully agreed with his questioning of the 'unilateral' investments proposed by the Japanese company in India.
The Maruti Saga: Complete Coverage
Chidambaram spoke to Deb in the morning and assured him of his ministry's total support, the heavy industries minister told Business Standard.
North Block can be a key player in any Suzuki move that affects Maruti Udyog. According to the terms of the agreement between the government and Suzuki, before it makes the proposed investments, Suzuki Motor needs to get approval from the Foreign Investment Promotion Board, which comes under the finance ministry.
The Japanese company had last week announced that it would put up a Rs 427 crore (Rs 4.27 billion) diesel engine plant and a car assembly unit in India.
FIPB officials said there were valid grounds for the government to stall the investments by invoking Press Note 18. Under the rules, a foreign company needs to take the permission of its local partner before making any fresh investments. The government of India and Suzuki Motor are 18:54 partners in Maruti Udyog.
"The government will not give up its sovereign right in deciding who will invest in this country," said a heavy industries ministry official. He added that the fall in Maruti Udyog's share price, resulting from Suzuki Motor's announcement last week, could delay the government's plan to offload its residual stake in the company.
The latest development comes a day before S Nakanishi, the Suzuki-nominated chairman of Maruti Udyog, is slated to meet top officials in the heavy industries ministry.
Nakanishi will chair a meeting of the Maruti board on Thursday to decide on the proposed investment in a car assembly plant at Manesar in Haryana.
Deb also indicated that the controversy could soon get a political twist as the Congress had earlier opposed the previous NDA government's decision to give a controlling stake in Maruti Udyog to Suzuki.
"Maruti Udyog is not just a business for us. Since the Congress was involved in the formative stages of this company, we also have an emotional attachment to it," he said.