The government on Thursday approved Sweden-based truck maker AB Volvo’s plans to acquire 45.6

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per cent stake in a proposed joint venture with home-grown commercial vehicle maker Eicher Motors in which the foreign firm will infuse $275 million (about Rs 1,100 crore).

The government also approved Shipping Corporation of India’s (SCI) proposal to invest $238.2 million (about Rs 952.8 crore) to acquire four bulk carriers. The approvals were given at the meeting of Cabinet Committee on Economic Affairs (CCEA) held on Thursday.

Eicher and AB Volvo finalised their agreement to float a joint venture company (JVC) — VE Commercial Vehicles — in India in May this year. The two firms have agreed to transfer their existing commercial vehicle portfolio in India to the new JV.

Eicher would transfer its entire truck and bus operations to the JVC while Volvo would transfer its present and future truck operations, including distribution and service operations, to the new firm. Eicher also proposes to transfer its manufacturing unit in Pithampur, Madhya Pradesh to the JV firm.

The Indian firm would hold a majority 54.4 per cent stake in the JV. Volvo would also invest Rs 157.4 crore in EML to acquire an 8.1 per cent stake in the company. The Swedish firm’s economic interest in the JVC would thus increase to 50 per cent.

“The approval will be subject to compliance with RBI/Sebi guidelines, provisions of Press Note 1 and Press Note 9 and approval of the relevant high courts for the demerger of the distribution business of Volvo India. As a result foreign direct investment of $275 million will be received in the country,” information and broadcasting minister Priya Ranjan Dasmusi said.

CCEA also gave its go ahead to the acquisition of four Panamax Bulk Carriers of about 80,000 deadweight tonnes (DWT) by SCI at a cost of $59.55 million each.

The company would raise up to 80 per cent of the total investment external borrowing from banks and other financial institutions. While the remaining 20 per cent of the investment would be funded through SCI’s internal resources, Dasmunsi said.

“The vessels would provide replacement for SCI’s already scrapped Panamax bulk carrier and would augment its ageing bulk carrier fleet. Employment of Indian flag vessels for the trade would result in net foreign exchange savings for the country,” he added.

The CCEA also approved various road upgradation works in North East at an additional cost of Rs 150 crore. The approved projects include four-laning of Silghat-Tezpur stretch of National Highway 37 A, construction of a highway from Tezpur to Jamgudi on NH 52 and completion of the pre-construction activities and tendering for the four-lane project from Nagaon to Itanagar.

An investment of Rs 630 crore has also been sanctioned for implementation of a National Mission on Medicinal Plants Boards through department of Ayush during the 11th plan.

The execution of 444 mw hydro electric project at Vishnugad Pipalkoti to be developed by Tehri Hydro Development Corp at an estimated cost of Rs 2,491.58 crore as also approved at the CCEA meeting. The project, with four units of 111 mw each, would be commissioned by June 2013.