New Delhi: Japanese two-wheeler major Yamaha’s plans to transfer its Indian sales business to a new entity — India Yamaha Motor Pvt Ltd — have hit a speedbreaker with the Industry Ministry against allowing the company to import products.
Yamaha Motor India Sales Pvt Ltd (YMISPL) had sought Foreign Investment Promotion Board (FIPB) approval to transfer its business to India Yamaha Motor Pvt Ltd (IYMPL), a wholly-owned subsidiary of Yamaha Motor Co, Japan.
Highly-placed sources say the FIPB has deferred a decision on the proposal in its recent meeting after representatives of the Department of Industrial Policy and Promotion said IYMPL should not be allowed to import as it would lead to retail trading, something that does not conform to FDI policy.
When contacted a senior official of IYMPL said: “FIPB had asked for some clarifications and we have given them the clarifications. The proposal will be approved in the next meeting of FIPB.”
The FIPB is understood to have directed the DIPP to examine the company’s proposal in detail as the board had given its nod in a similar case in September last year for transfer of foreign collaboration approval of Yamaha Motor India Pvt Ltd to India Yamaha Motor Pvt Ltd.
In its application, YMISPL had sought to transfer its business, which included sales of two-wheelers, not only manufactured in India but also imported from Yamaha group companies outside, along with other products such as all terrain vehicles, generators, golf carts and unmanned helipcopters,
The sources said the FIPB has asked the DIPP to make a general recommendation on the matter.
YMISPL and IYMPL had executed a business transfer agreement in December last year, under which the entire business of the former, along with its assets, liabilities and employees, was supposed to be transferred to the latter without any change in the shareholding pattern.