The Foreign Investment Promotion Board, in the wake of Commerce Ministry'sstand, has deferred the company's proposal by four weeks.

The Board has also deferred all proposal of foreign direct investment indomestic trading companies. Sources said the deferment of Honda applicationas well as other FDI proposal for domestic trading in the country indicatesthat the industry ministry is in the process of revising policy guidelineson permitting foreign companies to venture into domestic and retail tradingin India. Honda Siel Cars had sought FIPB's nod to act as indenting agentsfor sales and servicing for various passenger car models from the globalrange of its parent company, Honda of Japan.

Honda Siel, which manufactures only the Honda City in India wants to importHonda's other models from Japan against orders by domestic customers. Thecompany had stated in its application to the FIPB that it intends to importcars from Japan for Indian customers as there are no authorised agents withadequate and qualified infrastructure to meet the needs of the customers,which include embassies, foreign journalists, NRIs and export tradinghouses.

The company had contended that by allowing it to act as indenting agents forsales and servicing of other Honda models of passenger cars, it would alsobe able to make more productive utilisation of distribution, sales,marketing, service infrastructure which has already been set up. The companysaid it has already invested a large amount to set up manufacturingfacilities but are not able to productively utilise this investment becauseof low volumes in the market segments in which it is operating. Honda Sielsaid it would receive an indenting agency commission from Honda or itslicensees in the range of 10 to 15 per cent of the CIF value of thecars/vehicles and spare parts/accessories sold in India.