Is India being fair to foreign investment?

Author: | Published: 1 Jan 2000

Aparna Viswanathan & Co, New Delhi, argues that recent developments in laws governing foreign investment favour domestic industry to the disadvantage of multinational companies

Nearly a decade has passed since India liberalized its economy, however, the results for international capital which invested in India since then have, at best, been mixed. Although the Enron project and a handful of others have reached financial closure, the rest of the Indian situation deserves closer scrutiny.

Innumerable joint ventures between foreign and Indian companies have unraveled, forcing investors to waste months, if not years, negotiating with their Indian partners over the premium demanded for a buy-out. Tens and hundreds of millions of dollars have been sunk in pre-development expenses, licence fees and suppliers credit, leaving investors, nonetheless, waiting for projects to move towards closure. Moreover, we are ending the millenium with the Confederation of Indian Industry describing the establishment of wholly owned subsidiaries by foreign companies which have existing joint ventures in...