63.
India’s Tryst
With Multinational Corporations
The existence of Multinational Corporations (MNCs) in India is approximately three centuries old. As such, the historical background of MNCs in India can be traced back to as early as 1600s whereby the British capital came to dominate the Indian scene through their Multinational Corporation known as East India Company. However, demarcation of the clear boundary lines of this history is hampered by the lack of abundant and authentic data. Moreover, such outlining is also obstructed by the discontinuity in the nature of the data relating to these MNCs. Furthermore, the data available with regard to such FDI in one secondary source do not match with that of another source (Nayak, 2006).
As a result of this, researchers could not portray the complete history of Multinational Corporations and FDI pouring in India even during the post independence era.
To discuss the historical background and policy framework for the MNCs, the analsysis has been divided into two periods i.e. pre and post independence era:
As a result of this, researchers could not portray the complete history of Multinational Corporations and FDI pouring in India even during the post independence era.
To discuss the historical background and policy framework for the MNCs, the analsysis has been divided into two periods i.e. pre and post independence era:
Pre Independence Era Policy
According to Nayak (2006), the period from 1900s-1918 can be called as the first phase of FDI in India when there were no restrictions on the nature as well as type of FDI pouring into India.
Majority of these investments at those times were exploitative in nature and were just concentrating in the sectors such as mining and extractive industries to suit the general British economic interest.
It is a noticeable fact that even in the post independence era, a major pie of the FDI source of India continued to come from the same source. It is interesting to note that despite of allowance of this free flow of FDI, no other country was interested in investing in India other than UK and all FDI coming to India during that period were sourced through the Managing Agents from UK
However, the period from 1919-1947 is considered to be more important when the FDI actually originated in India. This phase can be called as second phase of pre-independence FDI history in India. Import duties were introduced during this period to stimulate various British companies to invest in the manufacturing sector in order to protect their businesses in India. Though some Japanese companies also enhanced their trade share with India, yet UK maintained its position as most dominant investor in India during this period.
Majority of these investments at those times were exploitative in nature and were just concentrating in the sectors such as mining and extractive industries to suit the general British economic interest.
It is a noticeable fact that even in the post independence era, a major pie of the FDI source of India continued to come from the same source. It is interesting to note that despite of allowance of this free flow of FDI, no other country was interested in investing in India other than UK and all FDI coming to India during that period were sourced through the Managing Agents from UK
However, the period from 1919-1947 is considered to be more important when the FDI actually originated in India. This phase can be called as second phase of pre-independence FDI history in India. Import duties were introduced during this period to stimulate various British companies to invest in the manufacturing sector in order to protect their businesses in India. Though some Japanese companies also enhanced their trade share with India, yet UK maintained its position as most dominant investor in India during this period.
Post Independence Era Policy
After independence, various issues relating to foreign capital and its accompanying expertise sought attention of the policy makers. With the changing times, the policy of Indian governments kept on changing as per economic and political exigencies prevailing at the time. Accordingly, it can be spilt into four phases (Kumar, 1998 and Chopra, 2003). Whereas in 1960s, these policies were quite liberal, yet these became very stringent in 1970s. However, these were again liberalized in 1980s and real liberalization occurred in 1990s.
But inspite of these changes and modifications in the policies, the underlying principal remained the same - exploitation and plunder. The colonial plunder went on for two centuries but it was not limited to that. They plundered the internal resources of the populace as well by the process of ‘mind colonization’.
The slavery was not only physical and financial but intellectual as well. So much so that after India gained independence, post-independence leaders, coloured by the ideas and institutions of Western colonialism largely ignored what were seen as the idiosyncratic views of Mahatma Gandhi, the revered father figure of the Indian independence movement. They preferred the familiar structures of the British Raj. The sad result was the continuation of colonial legacy, at times in its more hideous form. The brown British were to prove worse than the original white British.
And this brings us to the biggest loot ever in mankind’s history, the looting of India by her leaders in the post independence era. Trillions of dollars were siphoned off and deposited in the safe heavens of Swiss banking systems while millions died of malnutrition and hunger back home.
Swiss Banking Association report. 2008, gives a break up of countrywise deposits. Here are the top 5 countries.
India—- $1,456 billion
Russia —$ 470 billion
UK ——-$390 billion
Ukraine – $100 billion
China —–$ 96 billion
Source: Swiss Banking Association report 2008
This is more money than all the money in all the banks in India taken together. There is more Indian money in Swiss banks than rest of the world combined.
Is India a poor country? An amount 13 times larger than the country’s foreign debt stashed away in secret Swiss accounts, one needs to rethink if India is a poor country. This ill-begotten wealth is even higher than India’s GDP and three times that of market capitalisation on national stock exchange.
Corrupt industrialists, politicians, bureaucrats, cricketers, film actors, sex trade and protected wildlife operators, to name just a few, are the accomplices in this historical heist. But this is just the story of Swiss bank accounts. What about other international banks?
But inspite of these changes and modifications in the policies, the underlying principal remained the same - exploitation and plunder. The colonial plunder went on for two centuries but it was not limited to that. They plundered the internal resources of the populace as well by the process of ‘mind colonization’.
The slavery was not only physical and financial but intellectual as well. So much so that after India gained independence, post-independence leaders, coloured by the ideas and institutions of Western colonialism largely ignored what were seen as the idiosyncratic views of Mahatma Gandhi, the revered father figure of the Indian independence movement. They preferred the familiar structures of the British Raj. The sad result was the continuation of colonial legacy, at times in its more hideous form. The brown British were to prove worse than the original white British.
And this brings us to the biggest loot ever in mankind’s history, the looting of India by her leaders in the post independence era. Trillions of dollars were siphoned off and deposited in the safe heavens of Swiss banking systems while millions died of malnutrition and hunger back home.
Swiss Banking Association report. 2008, gives a break up of countrywise deposits. Here are the top 5 countries.
India—- $1,456 billion
Russia —$ 470 billion
UK ——-$390 billion
Ukraine – $100 billion
China —–$ 96 billion
Source: Swiss Banking Association report 2008
This is more money than all the money in all the banks in India taken together. There is more Indian money in Swiss banks than rest of the world combined.
Is India a poor country? An amount 13 times larger than the country’s foreign debt stashed away in secret Swiss accounts, one needs to rethink if India is a poor country. This ill-begotten wealth is even higher than India’s GDP and three times that of market capitalisation on national stock exchange.
Corrupt industrialists, politicians, bureaucrats, cricketers, film actors, sex trade and protected wildlife operators, to name just a few, are the accomplices in this historical heist. But this is just the story of Swiss bank accounts. What about other international banks?
"In an era rife with globalization, transparent business practices and zero tolerance to fraud and misconduct are key concerns for companies doing business in India," according to a recent KPMG India fraud survey report. The global professional services firm found that top-level executives in India were reluctant to discuss the topics of bribery and corruption. Some 71% of survey respondents felt fraud was an inevitable cost of doing business. A global survey by Ernst & Young is equally blunt about the country: "Seventy percent of India respondents to our survey think that bribery and corruption are widespread in the country."
By allowing the proliferation of tax havens in the twentieth century, the Western world explicitly encourages the movement of scarce capital from the developing countries.
Often corporations target new markets in developing countries as Nestle did in the 80's and more recently, the tobacco industry. In these and many other cases, corporations deny any health risks to their products, even in the face of overwhelming scientific evidence, in order to maximize profit. Nestlé's fierce marketing of powdered milk in the 80's caused the deaths of an estimated 1.5 million children through the contaminated water used to make the infant formula.
Nor are human rights observed. Chevron and Coca Cola have been indirectly involved in the violent killings of workers and union officials in developing countries in attempts to suppress workers rights. Instances of kidnappings, torture, discrimination, health violations, fuelling conflicts, privatizing and contaminating local water sources, using child labour and even sex trafficking have all been documented as occurring under the responsibility of the largest corporations. Sweatshops are often used in developing countries by the apparel industry which usually pay negligible wages to under age workers who often work long hours in terrible conditions.
~Rajesh Makwana
