Reliance Industries Limited had proposed to enter into a joint venture with the Chinese company, RuYi. The Indian body that regulates fair trade, Competition Commission of India (CCI) has given its nod for the deal. CCI said that there is no anti-competitive issue raised through the deal. The Chinese company will now hold 49% share in the textile arm that will be incorporated by Reliance Industries as its wholly-owned subsidiary.
Reliance Industries will hand over its stakes to Shandong RuYi Science and Technology Group Company Limited. Its newly-formed textile arm will be now be partially owned by RuYi’s subsidiary, CSTT Co. Holdings Pte. Limited that is a Singapore based company. Reliance’s textile business will now be handled by the subsidiary.
Chinese textile company, RuYi has a subsidiary in India known as Georgia Gullini Fashions Private Limited. The license for ‘Georgia Gullini’ trademark has also been approved. On the other hand, the brand Vimal, that is the trademark of Reliance Industries will also be licensed to the textile organization.
Approval by CCI
CCI released an order on 5th March. The letter mentioned that the proposed deal will have a good effect on the competition in the industry.
It also said that both the companies are indulged in shirting and suiting business for men. They also deal in fabrics for trousers along with readymade trousers for men. In these sectors, the contribution of both RuYi and Reliance Industries is not very important. On 7th January, the regulating body got a notice from CSTT that waited for its approval.
Textile business of Reliance
Reliance Group started its business with textile. Today, the company has grown into $75 billion giant business. The company now plays a significant role in sectors of energy and retail. It is also extending its reach in the telecom sector. Reliance’s textile arm deals into manufacturing of yarn and also makes fabrics for shirts, trousers and suits of men.
Dhirubhai Ambani started the textile business of Reliance. Its first manufacturing sector is the Naroda Manufacturing Division which is situated near Ahmedabad in Gujarat. The brand Vimal then got large popularity in every house. Only Vimal is said to set up the first prominent retail chain in the country. With technology and innovation, the company’s textile business has grown a lot.
To maintain fair competition in the market, CCI was formed under the Competition Act in 2002 which was amended in 2007. It encourages healthy competition among varied players and helps to benefit the customers through this. Stiffer competition compels companies to provide better quality products in cheaper prices.
The central government initiated the CCI on 14th October, 2003. 6 members are positioned by the government who are headed by a chairperson. The commission is obliged to prevent unfair practices, help consumers, foster competition and let marketers enjoy free trade. It also advises, creates awareness and provides training to the people and traders.