Press Note 18 Loses Sting

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The government has taken the sting out of Press Note 18. The Foreign Investment Promotion Board (FIPB), has rejected the demands of RKKR Infotech and Silgate Technologies to block the new investment proposals of their overseas partners, US-based Honeywell Inc and Yokogawa Electric Corp of Japan.

According to sources, though the FIPB ruled that Press Note 18 cannot be invoked in the two cases, it marked a deviation from earlier FIPB rejections, where the existing joint ventures were defunct. However, in these two cases, the existing JVs, Usha Amorphous Metals (a 50:50 Honeywell Inc and RKKR Infotech company) and Silgate Technologies are going-concerns and fully operational.

RKKR Infotech accused Honeywell of setting up a 100% export-oriented unit with the permission of the STPI to manufacture cores and lamination of amorphous metal alloys, which are being manufactured by itself. It said that Honeywell’s move, prompted by the rising demand of amorphous metal, would paralyse the Indian JV.

The FIPB has noted that any dispute between RKKR and Honeywell would need to go through a legal channel. It has said that Honeywell obtained the approval from STPI on 12, 1998. This was prior to the issue of Press Note 18, 1998 (dated December 14, 1998), which requires a no-objection from the existing JV.

Silgate Technologies, engaged in the development, installation, testing of computer software and related hardware, said that Yokogawa Electric Corp, Japan, violated Press Note 18 by furnishing a wrong declaration to the government.

The Japanese company had in 2001 entered into a memorandum of understanding with Silgate to make use of its capabilities in energy management systems (EMS).

A collaboration agreement was entered between the two companies to work onEMS products, which continued till December 2003, when Yokogawa terminated the agreement. Silgate represented to the FIPB that Yokogawa’s subsidiary was now undertaking EMS without FIPB’s approval.