For the second time in four months, the government has rejected French dairy-to-beverages major Groupe Danone's proposal to set up its solo venture in India.
The Department of Economic Affairs (DoEA) in the finance ministry has reiterated the view of the Department of Industrial Policy and Promotion(DIPP) that Groupe Danone needs to get a no objection certificate (NOC) from the Wadias before going ahead with its proposal to enter the Indian market on its own.
"Danone's claim that it does not need an NOC is incorrect," a senior finance ministry official told Business Standard today.
Earlier, Danone had approached the DIPP for its dairy project arguing that the proposal was made in 1996 and hence it would not need an NOC from its Indian partner, the Mumbai-based Wadia Group, under the Press Note 1 guidelines.
However, the DIPP had upheld the decision that Danone needed an NOC from the Wadias as the earlier proposal lapsed in 2003.
The relations between the Wadia Group and Danone have soured in the last one year with the Wadias taking Danone to the court and complaining to the commerce ministry citing the violation of Press Note 1 of 2005 the government notification saying a foreign joint venture partner must take an NOC from its Indian partner if it wants to enter the same business where the partnership operates.
The Wadias and Danone are equal partners in the UK-headquartered Associated Biscuits International Holdings, which holds a majority stake in Indian biscuit maker Britannia Industries.
The two groups also have another joint venture, Wadia BSN, set up in 1996 to launch Groupe Danone's products from its global portfolio. However, nothing has been launched through the JV till date and Danone is in negotiations with the Wadias to dissolve the JV as it will pave the way for the French major to enter India on its own.
The rift came into the open as Britannia accused Danone of violating intellectual property rights on its Tiger biscuit brand. The rift widened as Britannia declined to share its financial results since September 2006 with Danone citing corporate governance issues in support of its decision.
Currently, Britannia has initiated legal action against Danone at a Singapore court for allegedly usurping the intellectual property rights of its Tiger brand.
