CPI(M) against scrapping Press Note 18

NEW DELHI: Government on Monday received flak from its key outside supporter CPI(M) for its proposal to scrap Press Note 18 under investment norms, which bars foreign partners from setting up wholly-owned subsidiaries in the country without prior permission.

"The scrapping of Press Note 18 would harm the interests of domestic industries and provide MNCs with additional leverage," a CPI(M) statement said here.

Press Note 18 bars the foreign partner in an Indian joint venture from setting up a wholly-owned subsidiary in the country on the same line of business without the domestic partner''s permission.

The statement comes close on the heels of reports that Finance Minister P Chidambaram was considering withdrawal of Press Note 18 to increase the inflow of FDI.

The CPI(M) Polit Bureau has urged the Manmohan Singh government to take into account the opinion of domestic industry and not to proceed with this step, it said.

Corporates fear that the scrapping of the provision would harm the domestic industry and benefit the foreign investor.