Somany Disowns Thapars View On Mnc Stake

In a sudden volte face, Assocham president H L Somany yesterday distanced himself from the controversial suggestion by fellow member L M Thapar that stake of multinational corporations in the consumer goods sector should be restricted to 40 per cent.

"The issues of a 40 per cent foreign investment cap on MNCs in the consumer goods sector and that of MNCs diluting their stake in the 100 per cent subsidiaries, are not mentioned in the report," said Somany, referring to the Thapar committee report on foreign direct investments and MNCs.

The about-turn comes in the wake of a chorus of protest from the pro-MNC lobby within the chamber to the controversial suggestions in the report.

When Thapar released the report last week, Somany had not reacted to the formers clarifications on the chamber's stand on foreign investments in the consumer goods sector.

"Forty per cent," Thapar had said when asked specifically about the chamber's views on a ceiling on foreign investments in the sector. He had added that wholly- owned MNCs should lower their stakes in phases.

Although the report upset the multinational members of Assocham, Somany until Wednesday had stood by Thapars views on putting a cap on MNC holdings in the sector. In fact, on Monday, Somany had said: "In our wisdom, we thought that a 40 per cent ownership was sufficient for the MNCs in a growing market."

Somany has done a double take since the controversy snowballed. I did not say it, he said when he was reminded of his statement.

He said he did not wish to comment on Thapar's statement. What Thapar said was a lie and a fact," Somany said yesterday, pointing out that the relevant paragraphs on foreign investment cap do not mention the consumer goods sector.

"We have asked for transparency in the government's policy on allowing foreign investments to the country. We have asked the government to expand the list of industries under the automatic list. This may include the consumer goods industries."

"But the government must also make another list of industries that has to pass through the FIPB route, but the criteria for the selection of these industries must be spelt out clearly. This is all that we are asking for," Somany said. This list may also include the consumer goods industries but that is for the government to decide, he added.

Thapar, the man at centre of the controversy, has gone abroad and could not be contacted for his comments.