The Hindu Business Line : Rieter gets FIPB nod for going it alone in India

New Delhi April 11 Rieter, the Swiss textile machinery major, has got its investment plans for India back on track. The company, which was faced with a stumbling block in the form of its Indian joint venture partner Lakshmi Machine Works (LMW) invoking Press Note 1 to check Rieter's Indian ambitions, has bagged the Foreign Investment Promotion Board approval for going it alone in the country.

The FIPB clearance, which came through in February, was granted to Rieter despite LMW not issuing a no-objection certificate, mainly with the Government weighing the case in Rieter's favour in light of the machinery shortage being faced by the textile industry, sources said. Domestic textile players are now faced with a two- to three-year waiting period for machinery deliveries.

Kick start investments

With the clearance in place, the company now plans to kick start investments through its wholly owned subsidiary Rieter India Pvt Ltd. "We have got the Government permission for investing in our own facility. At the same time, we are also keen on expanding the joint venture with LMW. There is abundant scope for growth for all players in view of the demand in the Indian market," the Chief Executive Officer of Rieter, Mr Hartmut Reuter, told Business Line.

The Coimbatore-based LMW, in which Rieter has about 13 per cent stake, had objected to Rieter's proposals seeking Government's nod to expand its activities through a wholly owned subsidiary here. LMW — the country's largest textile machinery manufacturer — had invoked provisions under Press Note 18 (and replaced by Press Note 1 from January 2005) — arguing that Rieter's proposal would clash with its areas of business.

Press Note 1 allows foreign investors to set up new ventures through the automatic route, despite having previous joint ventures in the same or allied fields. However, prior approval of the Government is required in cases where the foreign investor has an existing joint venture or technology transfer/trademark agreement in the same field.

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