The Commerce Ministry which has been stoutly opposing changes in the current regulations is likely to send another letter protesting against the Industry Ministry's move and is seeking another meeting of the Core Group of Secretaries to discuss the matter. Pressure to dilute the norms has been mounting on the government with several multinationals wanting to set up majority-owned or wholly-owned subsidiaries in India in the same products that their existing joint ventures are currently manufacturing. FICCI president Sudhir Jalan had already written to Industry MinisterSikander Bakht stoutly resisting the proposal.

Highly reliable industry sources said a powerful official in the Prime Minister's Office is pushing the case for multinationals. The same official was the brain behind the earlier decision of the Industry Ministry to placate Suzuki Motor Corporation by curtailing the term of Maruti Suzuki managing director RSLN Bhaskarudu and handing over control over two key decision-making committees in Maruti to the Japanese partner.

Japanese multinationals are spearheading the move to amend the current rules and dilute the strict entry norms. The proposal is currently stuck following the dissolution of the Lok Sabha. As per the current rules, there is no obligation for a multinational to exit from the current joint venture if it sets up a new company in India. By freezing investment and standing in the way of expansion and modernisation, the foreign partner can squeeze the older joint venture and force the Indian partner to sell out at a throwaway price. For example, if aJapanese joint venture in India wants to set up a fully owned subsidiary in India, it need not exit from its existing joint venture. On the other hand, the Indian partner of the existing joint venture cannot approach a German or Korean company for technology or new products.

``If India allows multinationals to have their own way, every Indian joint venture partner will have to sell out to their multinational partner despite having a majority stake in the joint venture,'' said the chief of a company who is involved in a bitter struggle with a Japanese company for control, adding, ``a number of existing joint ventures are listed on the stock markets and the stocks are high-priced because of the multinational tag. By channelising new technologies and products to the fully owned or majority owned new companies, the multinationals can lower the price of their shares in the older joint ventures to such an extent that he could eventually buy out the Indian partner dirt cheap''.

Under the existing law severalmultinationals were denied permission to set up wholly owned subsidiaries in the absence of no-objection certificates from their Indian partners. BAT Industries of the UK, for example, was not allowed to set up a new 100 per cent subsidiary as it did not get a consent from ITC, its existing Indian joint venture. Similarly the Modis of Modi Xerox Ltd is against Xerox of the US setting up a separate venture.

Besides, most multinationals in India have no research and development capabilities as these are centralised by the parent companies in their home countries. Manufacturing capacities set up by the earlier joint ventures were in most cases uneconomical. Instead of expanding and modernising the existing joint ventures, multinationals are now keen to set up new companies.