Bajaj Auto?s ambitious small car plans in partnership with Renault may hit a roadblock. The French car company?s existing Indian partner, Mahindra & Mahindra, appeared set to extract its pound of flesh before granting the no-objection certificate required for the new partnership to take shape.
Mahindra & Mahindra president Pawan Goenka said his company would ensure that its ?interests were protected? before an NoC was given for the new venture. ?We have to ensure that the interests of the Mahindras is protected in case a new partnership comes up between Renault and any other Indian partner,? Goenka told FE. However, he said no application for an NoC had been received by the company as yet.
Under guidelines issued by the department of industrial policy & promotion under Press Note 1 of 2005, prior approval of the government is required in cases where a foreign investor has an existing JV or technology transfer/ trademark agreement in the same field. Meant to protect interests of the first Indian partner, it requires the foreign company to obtain an NoC from its current Indian partner before it enters into any new joint venture in the same field.
Bajaj and Renault have already confirmed that they are looking for joint opportunities in India, widely expected to be for the development of a $3,000-car in which Renault chief Carlos Ghosn has expressed interest. ?Bajaj Auto and Renault are in preliminary deliberations to jointly understand customer requirements and business potential for very competitive vehicles in India,? the two companies had said in a joint statement.
Bajaj Auto vice-chairman Madhur Bajaj said it was too early to discuss issues related to the NoC.
?Things first need to be firmed up between us and Renault before any such call has to be made. All I can say is that talks are at a very preliminary stage,? Bajaj said.
Any glitches in obtaining clearance for a partnership?if and when one takes place?could mean a serious delay for Renault?s global plans for its budget car. Ghosn, who heads both Renault and Japan?s Nissan, has already said India would be one of the best locations for developing such a cheap car because of its low-cost manufacturing and suppliers.
While the Mahindras have not expressed interest in joining Renault in its quest for a budget car, the company has said it is interested in expanding its current engagement with the French company. The 51:49 Mahindra-Renault JV was formed in 2005 for the Logan, while the company also entered into a tripartite agreement with Renault and Nissan for a separate plant in Chennai.