The government today referred to CCEA a proposal of German commercial vehicle maker Daimler to buy out its erstwhile partner Hero Group's entire 40 per cent stake in a joint venture to produce trucks in India.
According to an official release, Daimler's proposal to increase its stake to 100 per cent has been recommended to Cabinet Committee on Economic Affairs (CCEA) for consideration as the initial approval was granted by the CCEA.
Earlier this year, diversified business house Hero Group had pulled out of its joint venture with Daimler to produce trucks in India due to the economic slowdown.
Meanwhile sources said Daimler has already increased its stake to 100 per cent by acquiring the 40 per cent holding of Hero Group in April and it has now sought post-facto approval for raising the foreign equity participation.
The stake raising exercise would result in a foreign direct investment inflow of Rs 78.48 crore, they added.
"After Daimler acquired Hero's stake, the JV has been rechristened as Daimler India Commercial Vehicles from the earlier Daimler Hero Commercial Vehicles," a source said.
Last year the two companies agreed to form a JV in which the German firm was to have a 60 per cent stake and the Hero Group the rest. The partners had announced an investment of Rs 4,400 crore for the purpose, including setting up a manufacturing plant in Chennai.
