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No colour investment: Nath

As India plugs into the global economic order, the colour and nationality of investments is no longer an issue.

india Updated: Feb 18, 2006 01:46 IST

As India plugs into the global economic order and finds its rightful place under the sun, the colour and nationality of investments is no longer an issue. Or areb they? Commerce and Industry Minister Kamal Nath told the Hindustan Times, "If Swiss cement major Holcim can acquire two of India's biggest and oldest cement companies — Gujarat Ambuja and ACC respectively — and French giant Lafarge can pick up assets in India without a murmur, then isn't it obvious that investments have no colour attached to them?"

He went onto say that Holcim had poured in the largest amount of FDI in India in the last 12 months through these acquisitions. "Remember that these aren't greenfield investments but the acquisition of existing assets and India as a country hasn't impeded this, but on the contrary we have welcomed such investments and will continue to welcome them in the future," he said.

"I am not going into the modalities of whether it is a good bid or bad bid, I don't think governments can comment on anyone's Indianness. The national treatment of crossborder investments should not be vitiated by such statements. Such issues should be left to the shareholders and industry experts," he contended.

It is learnt that the Luxembourg Minister of Economy and Foreign Trade Jeannot Krecke has told his Indian counterparts that the government of Luxembourg has appointed JP Morgan as the investment bank to advise it on the Mittal Steel public offer. He has said, "The government henceforth requests an independent and professional opinion on Luxembourg state's interests as the main shareholder of Arecelor and a stakeholder in the proposal."

As the host regulatory jurisdiction for the bid, he further expressed his confidence in the orderly course of the public offer procedure in the interests of all shareholders and stakeholders from Arcelor and Mittal. Significantly, on proposed bill transposing the EU takeover directive into national law, Krecke said, "This transposition would also have taken place in the same terms in the absence of the public bid of Mittal Steel for Arcelor."

"The assertion that this bill is protectionist devised with the aim to prevent the proposed transaction is clearly erroneous as the contents of the bill demonstrate. This bill reflects the Luxembourg government's intention to create a clear and coherent framework for such transactions and to confirm the Grand Duchy's position as an open economy and an international financial centre," he added.

However, Luxembourg Ambassador to India Paul Steinmetz stressed that the issue concerned "two European companies". On Indian government's intervention, he said that Luxembourg government had the right to intervene as it had the majority shares of 5.6 per cent in Arcelor. "As a shareholder, we (Luxembourg government) should raise our voice... We cannot sit back," he said, adding, "The situation is different for the Indian government which is not a shareholder.... I don't see where India fits into it, except that Mr Mittal was born in India." He further said, "From a legal point of view, we are the only government who really has a locus standi," he said.

"We are getting involved because we have 5.6 per cent shares. It is plain and simple. It is not only about jobs. We have the right to intervene," envoy said.

Steinmetz also brushed aside reports that India could back out of signing the double taxation avoidance agreement (DTAA), saying the Finance Ministry, which was involved in the talks on the pact, had conveyed nothing of that sort to his government.

Nath summarised the situation when he stated, "I think this episode impinges on the delicate WTO negotiations, it is not about Arcelor or any individual. These countries should ask themselves whether they are finding globalisation painful."

First Published: Feb 18, 2006 01:46 IST