New Delhi, June 23: The DM46-billion German chemicals giant BASF has backed out of its original proposal to start a range of research and development activities in the country through a new wholly-owned subsidiary, which was duly approved by the government.

Sources say BASF has now got a revised proposal cleared by the Foreign Investment Promotion Board (FIPB). The new proposal seeks to restrict its R&D activity to a few areas on the grounds that some of the items in the original proposal are no longer relevant to the German multinational's current business profile.

BASF plans to shift some of its key research areas to India for its exclusive use by the parent company. Obviously, the company had no intention to set up a joint venture for the purpose. A 100 per cent subsidiary would protect the confidential nature of such activity.

The company had announced, earlier this year, that it would set up a basic research centre in the country, the first of its kind by the company in the whole of Asia. The new centre is to be a part of the company's broader scheme of developing India as a major manufacturing base for BASF products.

The German chemicals giant is already represented in India through four associate companies, including BASF India, in which it holds 51 per cent. BASF India's investment in R&D during 1995-96 was a mere Rs 1.28 crore, 0.56 per cent of its turnover.

The other business activities which will be taken up by the new subsidiary are: manufacture of products using high technology; R&D activities for hi-tech chemicals products and processes; providing technical services in the application of specialty products manufactured from proprietary knowhow and acting as an exporter.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.