In January 2005, Indian Prime Minister announced scrapping of the contentious Press Note 18 pertaining to foreign financial or technical collaboration under the automatic approval route with effect from January 2005. The scrapping of restrictive Press Note 18 was hailed as, and has proved to be, a positive step towards further liberalising foreign direct investments regulations in India.

A. Press Note 18:

In terms of Press Note 18, the automatic route (which requires no prior regulatory approval) for foreign investment was not available to foreign investors having an existing or previous venture or technology transfer/trade mark agreement in the same or allied field in India. Investors having a previous or existing venture or technology transfer/trade mark agreement in the same or allied field in India required prior Foreign Investment Promotion Board (FIPB) approval for such investment.

To obtain FIPB approval, the foreign investor had to give detailed circumstances in which they found it necessary to setup a new joint venture/enter into new technology transfer (including trade-mark) and the onus was on such investors/technology suppliers to provide the requisite justification as also proof to the satisfaction of the FIPB that the new proposal would not in any way jeopardize the interests of the existing joint venture or technology/trade-mark partner or other stakeholders.

In implementing Press Note 18, the Indian Government, in practice, required a letter/certificate from the existing Indian joint venture partner that it had no objection to the foreign partner