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Moumita Bakshi Chatterjee

New Delhi, Nov. 14 The Foreign Investment Promotion Board (FIPB) has deferred decision on the proposal by ZF Friedrichshafen Group to set up a new joint venture company in India for manufacture of rubber and rubber-to-metal parts for the automotive industry, after Department of Heavy Industry (DHI) insisted on submission of a specific no-objection certificate (NOC) from its existing Indian partners under the current FDI norms.

The matter was deferred on the latest meeting of FIPB on October 24, 2008. The matter had come up earlier in an FIPB meeting on September 30, where DHI had brought it to FIPB’s notice that the NOC towards Press Note 1 (2005) was not for products for which the company had sought the latest approval and therefore, the information furnished by the company was incomplete.

The Press Note 1 (2005) requires a foreign company with an existing joint venture to get the approval from its existing local partner before making a fresh investment in the same field.

Sources said that in its letter to DHI, the company clarified that its proposed activity does not cover any business of the existing joint ventures or technical collaborations or licence agreements with Indian partners.

“Even though none of its existing joint ventures or technical or technical collaboration or licence is currently engaged in the business of manufacture and marketing of rubber and rubber to metal parts, the company is being given to understand that in pursuance to the PN 1 (2005), it may perhaps be wrongly construed by the existing Indian joint venture partners or licensees that some manufacturing activities proposed to be carried out by the joint venture company may be covered by the scope of ZF Friedrichshafen’s existing joint ventures with Indian companies,” it said, adding that the proposal is being submitted as a measure of caution in order to avoid unnecessary conflict.

The company’s existing joint venture, licence agreement and technical collaboration in India entail Sona Somic Lemforder Components, ZF India, Ashok Leyland, Force Motors, and ZF Steering Gear (India). NOC has been furnished by Sona Somic Lemforder Components, ZF Steering Gear India, ZF Lenksysteme India and Bharat Gears.

ZF Friedrichshafen Group is a global supplier of driveline and chassis technology. ZF Boge Elastmettall GmBH (ZFBE), its wholly owned subsidiary, is engaged in the business of rubber metal technology which broadly covers development and production of components and modules for vibration damping and mountings for cars, commercial vehicles and rail vehicle chassis and drivelines including rubber metal parts for various applicants.

The FIPB approval has been sought for ZFBE to set up a new joint venture with Delhi-based Anand NHV Products. The new company would focus on manufacturing and marketing of rubber and rubber-to-metal parts for the automotive industry, agriculture and construction machinery, railway and construction application.

The company could not be reached for comments.

More Stories on : Alliances & Joint Ventures | Foreign Direct Investment | Automobile Components

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