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This E-Newsletter has been published by India Juris, full service Indian law firm with special expertise in Business, Corporate & IP laws, on requests from clients and associates worldwide with an object to keep them abreast of latest legal & business developments in India.

 Contents 

• Approval of Limited Liability Partnerships (LLP) bill

• Minimum investment criteria  for Special Economic Zones (SEZs)

• Rigorous implementation of  IPR laws in IT industry

• Favorable decision for Ranbaxy

Approval of Limited Liability Partnerships (LLP) bill

The ministry of company affairs is hopeful that the Re-codified Companies Bill and law on Limited Liability Partnerships (LLP) will get the approval of Parliament in the next budget session. The ministry plans to introduce both Bills in the winter session. The new companies’ law will provide a boost to the country’s investment climate. This new law will boost investor’s confidence, increase investments, grow employment opportunities and improve issues of corporate governance.

Minimum investment criteria  for Special Economic Zones (SEZs)

The Government has recently removed the cap on SEZs which was earlier fixed at 150. The Board of Approval (BoA) has given approval to 14 more proposals, taking the total number of zones approved to 164. The eGOM has decided to review the situation after 75 SEZs become operational. At present, there are 28 operational SEZs. The removal of the cap will now give the companies an opportunity to get back into the fray.

The finance ministry had expressed reservation against raising the ceiling on SEZs beyond 150 as it feels that SEZs are a drain on revenue. It is argued that the tax sops given to SEZs would lead to loss of potential revenue. Apprehensions are also expressed that relocation of existing units into SEZs would lead to revenue leakage.

But a counter-argument says that revenue loss was notional as without the SEZs, there would not be any investment in the zones. It also contended that the amended SEZ rules would ensure that there is no relocation which could lead to revenue leakage.

In a bid to rule out SEZ applications from financially unsound entities, the board of approval (BoA) for SEZs has fixed minimum investment and net worth criteria for promoter companies. To qualify for the development of a multi-product SEZ, the net worth of the applicant has to be at least Rs 250 crore and the minimum investment in the project Rs 1,000 crore. For sector-specific SEZs, the applicant's net worth has to be a minimum of Rs 50 crore while the minimum investment criteria is Rs 250 crore. For applying for IT SEZs, net worth of the applicant has to be Rs 100 crore.

The list of authorised operations for IT, bio-tech and gems and jewellery SEZ includes roads, housing apartments , convention centre, cafeterias and restaurant, air conditioning, telecom and other communication facilities, electrical, gas and PNG distribution network and recreational facilities. Sector-specific SEZs will be allowed to have additional operations including hotels, schools and educational and technical institutes. Multi-product SEZs will also be allowed to have ports, airports and golf-courses. Sector-specific SEZs will be allowed to have 7,500 houses, hotels with a total of 100 rooms, a 25-bed hospital and schools and other educational institutions over 25,000 square metre. Multi-product SEZs will be allowed 25,000 houses, a 250-room hotel and a hospital with 100 beds. Developers will not get tax concessions for any construction beyond the specifications. They will also not be allowed to defy the master plan that clearly lays down what percentage of the zone should be demarcated for various facilities.

INTELLECTUAL PROPERTY  Laws 

Rigorous implementation of  IPR laws in IT industry

In line with the demands of the IT industry, the Government has agreed to rigorously implement IPR laws in the sector to enable India to emerge as a knowledge superpower. India's current track record to implement IPR regime is very poor compared to  Malaysia and Taiwan that are much ahead of India. India needs to have IPR infrastructure including IPR managers, IPR attorneys and IPR enforcement machinery.

Decreasing India's piracy rate by 10 points from 2002 to 2006 would add 2.1 billion dollars to the GDP, thereby creating more than 48,000 new jobs and generate 92 million dollars in tax revenues.

The IT giants have realized that ignorance about licensing is a key reason for the high rate of piracy at the corporate level. The industry needs to raise awareness among people. As India is a cost-sensitive market, the IT industry needs to provide software at an affordable price. In addition, it should provide free software to schools and colleges.

However, innovations which help contain the piracy rate, need to be protected. As India's Patents Act still did not extend to intellectual property (IP) protection of software, India protects software under its copyright law. Earlier, the Government amended the 1970 patent law for the second time in May 2002 in order to protect IPR. But that was only one step taken to raise India's intellectual property protection to make it world class.
 

Favorable decision for Ranbaxy

Recently, a Norwegian court  handed down a favorable decision for Ranbaxy Laboratories Limited (RLL) in its case against Pfizer, involving two patents on Atorvastatin in Norway. Atorvastatin is a cholesterol-lowering drug which is marketed by Pfizer as Lipitor.

According to a press release by the company, the Oslo City Court sided with Ranbaxy by finding non-infringement of two of Pfizer's Norwegian patents (No. 177,566 and No. 180,199) covering particular intermediate compounds. Earlier in November 2005, the Norwegian Court had found Ranbaxy's atorvastatin product not to infringe one of Pfizer's process patents (No. 309,322) but to infringe another of Pfizer's patents (No. 177,706) covering a particular intermediate compound.

Ranbaxy has already appealed to the Norwegian Court of Appeals against the negative judgment on the one remaining intermediate compound patent.

Ranbaxy Laboratories Limited, headquartered in India, is an integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies.

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