From: reddym@Barra.COM (Reddy Mallidi)
Subject: Shell Pulls Out Of A Joint Venture With India
Organization: BARRA, CA
Date: Tue, 22 Dec 92 22:51:32 GMT


     Source : Financial Times
     Date   : Dec 18-20, 1992
     Country: India

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    * Shell pulls out of planned venture in India

    Royal Dutch/Shell is abandoning its Indian partner of 25years' standing
    and is pulling out of a planned $2bn petrochemicals venture in India
    following disputes about management of the project. Even though, Shell
    insisted that the decision had nothing to do with the group's view of 
    Indian economy or economic program, the move will be a blow to the Indian
    government. Ministers have frequently cited the Shell project as an
    example of extensive foreign investment India hopes to attract as it 
    opens its doors to outside world.
    Shell has had a long association with Arvind Mafatlal, a textile and
    chemical group, which includes the joint ownership of National Organic
    Chemical Industries (Nocil), a chemical manufacturer. The two partners
    discussed plans for Nocil to build a petrochemical complex on the west
    coast. The scheme was delayed by bureucratic wrangles and protests by
    environmentalists. During the past year, a serious argument has blown up
    over Shell's proposals to increase its stake in Nocil from 33.3% to 51%.
    Shell's coordinator for Asia announced the decision and said "the 
    withdrawl should not be constued as a reflection of doubt or disappoinment
    in the progress of reforms in India. Shell strongly supports them".
    (Dec 19/20)

    * Supreme Court reinstates Bofors case

    India's Supreme Court yesterday reinstated an investigation into 
    allegations of corruption over a $1.3bn artillary deal withe the Swedish
    company Bofors. It delivered final judgement on a vgovernment appeal
    against a lower court order in September which ended the investigation
    into the 1986 deal on the grounds that no charges had been brought 
    despite lengthy probe. (Dec 18)

    * Uncertainity prevails over economic program

    Despite the public show of loyalty, many Congress MPs harbor serious
    doubts about supporting Mr Rao as prime minister. They feel some of the
    criticisms of the government's role before and after Ayodhya incident 
    have hit home. Some believe that the party may have to call a general
    election next year to try to restore its damaged credibility.
    With the BJP defiant, India could face a prolonged political fight over
    Ayodhya.
    The uncertainity clouds the outlook for Mr Rao's widely praised economic
    reform program, which has drawn much of its force from the single-minded-
    ness of his cabinet and its senior advisers.
    Any hope that the crisis might be settled soon has evaporated with the
    dismissal of the BJP state governments. This move has been condemned by
    commentators as unconstitutional. 
    If Rao sits and tries to ride out the crisis by doing as little as 
    possible, he will alienate the party hardliners, who want him to go all
    out in attacking the BJP. Muslims who traditionally support Congress
    also want firm action. However, the strong use of government power runs
    the risk of provoking sympathy for the BJP. (Dec 18)


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