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FOREIGN CAPITAL 
IN ‘FREE* INDIA 


Reprinted from 

COMMUNISTVol. 3 , No. 1 , January 1950 


HX 

632 

A1 * 

W9 

no, 1224 
MAIN 

:OMMUNEST PARTY PUBLICATION 


Price As. 6 






1. ROLE OF FOREIGN CAPITAL 


■V HE anti-imperialist masses of India, who had burnt 

tramcars of the British-owned Calcutta Tramways 
Company and attacked the offices of the Imperial Bank of 
India during the great postwar anti-imperialist upsurge, 
who had vented their wrath against imperialism by inclu¬ 
ding among their targets, these symbols of foreign capital, 
are now being told that there can be no economic progress 
except with the aid of foreign capital. Mrs. Pandit has 
announced that one of her official ambassadorial duties is 
to woo U.S. capital (Hindu, July, 16, 1949); the Finance 
Secretary of the Government of India flies to and from 
London and Washington to settle how double income tax on 
the earnings of foreign investors may be avoided; further 
it was no secret that Pandit Nehru’s visit to the USA was 
intended as yet another reassurance to foreign, especially 
U.S. capital, that India is most anxious to welcome foreign 
investors and give them every facility. There is hardly a 
speech by businessmen or top Government leaders without 
copious assurances to foreign capitalists and the glib asser¬ 
tion, meant for the ears of the Indian people, that foreign 
capital invited by a ‘free’ Indian Government cannot injure 
the ‘national’ interest. It is said that foreign capital is indis¬ 
pensable to develop Indian industries, make her economical¬ 
ly strong and self-sufficient, and thereby raise material 
standards. Thus foreign capital is now being made the 
sine qua non of ending the poverty of the Indian masses. 
When the erstwhile leaders of the anti-imperialist struggle 
execute such a volte-face, when the fact of their being 
enthroned in Delhi is advanced as the guarantee that foreign 
capital would now serve the ‘national’ interest, it is neces¬ 
sary to restate in fundamentals the real role of foreign 
capital. 

Lenin, in his work on Imperialism in 1916, laid bare 
the essential character of imperialist exploitation of back¬ 
ward countries by the highly developed capitalist ones — 



3 


where monopoly interests have come to dominate the eco¬ 
nomy—as wringing profits out of the cheap labour power 
in the colonies through the export of capital. He wrote: 

“Under the old capitalism, under which free competition 
prevailed, the export of goods was typical- Under the newest 
capitalism, when monopolies prevail, the export of capital 
has become typical... On the threshold of the twentieth cen¬ 
tury, we see a new type of monopoly being formed. First 
monopolist combines of capitalists in all advanced capitalist 
countries; second, a few very rich countries, in which the 
accumulation of capital has reached gigantic proportions, 
occupy a monopolist position. An enormous ‘surplus of capi¬ 
tal’ accumulated in the advanced countries. 

“It goes without saying that if capitalism could develop 
agriculture, which today lags far behind industry every¬ 
where, if it could raise the standard of living of the masses, 
which are still poverty-stricken and half-starved everywhere 
in spite of the amazing advance in technical knowledge, then 

there could be no talk of a surplus of capital_But then 

capitalism would not be capitalism.. .As long as capitalism 
remains capitalism, surplus capital will never be used for 
the purpose of raising the standard of living of the masses, 
for this would mean a decrease in profits for the capitalists; 
instead it will be used to increase profits by exporting the 
capital abroad, to backward countries. In these backward 
countries, profits are usually high, for capital is scarce, the 
price of land is relatively low, wages are low, raw materials 
are cheap.” (V. I. Lenin, Imperialism, The Highest Stage of 
Capitalism, PPH Edition, 1944, pp. 139-40) 

Pointing out how the export of capital becomes an 
increasingly important source of profits for the imperialist 
countries, Lenin, quoting another writer, says that while the 
national income of Great Britain approximately doubled 
between 1865 and 1898, the income ‘from abroad’ increased 
nine-fold in the same period (Ibid, p. 219). In the new data 
on Lenin’s work, compiled by Varga and Mendelssohn, we 
find the following comparison: 

Great Britain’s Income from Foreign Trade 
and Investments 
(in million £’s) 

1899 1912 1929 1932 

Income from foreign trade: 18 33 51 28 

Income from foreign investments: 90-100 176 250 145 

Thus between 1899 and 1929, while trading profits (i.e., 
profits based on the export and import of commodities) rose 
by a mere £33 million, profits derived from the export of 


4 


capital rose by £150 million. This preponderating share of 
the income on exported capital was described by Lenin as 
“the essence of imperialism and imperialist parasitism”. In 
other words, in the era of monopoly capitalism, the export 
of capital to the backward countries, is precisely the means 
by which the colonial peoples are exploited and super-pro¬ 
fits wrung out to fill coffers of the monopolists of the advan¬ 
ced capitalist countries. According to Lenin, therefore, the 
function of foreign capital in a backward country is not its 
‘development’ towards higher material and cultural levels 
but its intensified exploitation as more and more profits are 
drained out by the foreign investors. 

Palme Dutt, applying this analysis to India, estimated 
that the total of British trading, manufacturing and shipping 
profits from India were about £28 million in 1913. The same 
year, the total profits on capital investments and direct tri¬ 
bute (Home Charges) came to close on £50 million. “It is 
evident,” writes Palme Dutt, “that by 1914 the interest and 
profits on invested capital and direct tribute considerably 
exceeded the total of trading, manufacturing and shipping 
profits out of India. The finance-capitalist exploitation of 
India had become the dominant character in the twentieth 
century” (R. P. Dutt, India Today, PPH, 1947, p. 118). The 
mechanism for the exploitation of the Indian people had be¬ 
come essentially the investments of British capital in India, 
which enabled surplus value to be wrung out of the Indian 
toilers employed in British tea gardens, mines, railways, jute 
and engineering industries, etc. And in the measure that 
foreign investments in India grew in volume, the colonial 
exploitation of the Indian people was intensified. 

With whatever incomplete and approximate figures as 
are available (and it is no accident that statistics on foreign 
capital in India have been shrouded in secrecy), we get the 
following picture: 


Year 


Foreign Capital invested 
in India (in million £) 


1909-10 

1920-21 

1924-25 

1928-29 

1938-39 

1945-46 


365 

487 

596 

733 

741 

723* 


—Source: Sir George Paish and Report of Joint Stock Com¬ 
panies. 


* Provisional. 


From 1920-21 onwards, the figures do not include the 
Sterling Debt (£261 million in 1928-29) and the Railway 
Debt (£120 million in 1928-29); nor do they include the 








rupee capital of foreign companies registered in India (this 
latter being estimated at £75 million in 1928-29). The most 
recent overall estimate which includes all types of foreign 
investments in India appears to be that of the Associated 
Chambers of Commerce and relating to the year 1933, as fol¬ 
lows: £379 million— Government Sterling Debt; £500 mil¬ 
lion for companies registered outside India and operating in 
India; and £121 million for investments in foreign compa¬ 
nies registered in India and miscellaneous. If, for the capital 
of companies registered outside India but operating in India, 
we take the figure given in the official Report of Joint Stock 
Companies — £831 million in 1932-33 — we get an overall 
total of: 

(in million £) 

Government Sterling Debt. .. • • 379 

Capital of Cos. registered outside but 
operating in India • • • • 331 

Others and Miscellaneous .. • • 121 


Total: .. .. 1,331 

Within 23 years—from 1909-10 to 1933—the mass of 
foreign capital in India, on which were based the annual 
profits wrung out of the labour of the toilers of India by the 
foreign investors, rose from £365 million to £1,331 million, 
that is, by nearly four times. This intensified exploitation of 
the Indian toilers lay at the root of the anti-imperialist 
struggle which burst out with the commencement of World 
War II and which reached such gigantic proportions at the 
end of the war. 

Such was the sweep of this struggle that foreign mono¬ 
poly interests were forced to seek an alliance with the 
national leadership, were forced to don an ‘indigenous’ 
mantle in order to safeguard their stakes in this country. 
The Indian bourgeoisie, no less terrified by this mighty up¬ 
surge of the people in which the working class was assuming 
the role of the most militant advance guard of the fighting 
masses, was also thrown into the arms of imperialism, to 
come to a quick compromise with the latter and halt the 
struggle. The bourgeoisie faithfully fufilled the role that 
Lenin had so brilliantly predicted when discussing the Rus¬ 
sian revolution of 1905: “The proletariat is fighting; the 
bourgeoisie is stealing towards power.” After all, the fight¬ 
ing masses had vented their hatred of exploitation not only 
against the symbols of foreign capital, they had shown the 
same uncompromising hostility to the ‘indigenous’ capital¬ 
ists of Amalner, Coimbatore, Calcutta and Kanpur. 

Moreover, the huge accumulation of liquid capital in the 



6 


hands of the Indian bourgeoisie, extorted through brutal 
exploitation and profiteering during the war, could be 
invested, could bring profits only if machinery and capital 
goods for new industries were forthcoming. And these capital 
goods were the monopoly of the imperialist Powers. Hence, 
too, arose the need for the Indian bourgeoisie to accept the 
demand of foreign capital that it should have full scope to 
invest in new enterprises, in partnership with Indian capi¬ 
talists. Thus the acceptance of ‘independence’ from Mount- 
batten did not signify that foreign capital was on the way 
out from India, that the annual ‘drain’—representing the 
exploitation of the Indian masses by foreign capital—would 
cease. 


II. FOREIGN CAPITAL RETAINS 
ITS POSITIONS 

The new forms of foreign investment, viz., in conjunc¬ 
tion with Indian capitalist interests—had begun to appear 
towards the end of the war and have been studied in their 
origin in the book, Indo-British Big Business Deals—New 
Forms of Imperialist Exploitation by Arun Bose ( PPH Edi¬ 
tion, 1947). These deals, or new big concerns in which 
foreign and Indian capital collaborated, emerged in the 
background of the growing anti-imperialist indignation of 
the masses. They foreshadowed the coming together of the 
foreign imperialist monopolies and the Indian bourgeoisie iri 
a common front against the rising struggles of the people, 
politically, and jointly owned combines for the exploitation 
of the Indian toilers, economically. 

August 1947 has seen the transfer of formal State power 
to the Indian bourgeoisie but, in fact, the positions of foreign 
capital in our economy have not been really threatened 
since the fanfares of August 15 were announcements merely 
of a ‘wretched deal’, which had long been brewing, between 
imperialism and the bourgeoisie. And however much the 
Indian Government would have us believe that in the new- 
political set-up, foreign capital would be on sufferance, as 
it were, and would submit to the dictates of the Indian Gov¬ 
ernment, facts prove otherwise. True, the Government of 
the Indian bourgeoisie attempted to bargain with foreign 
capital, but it has been forced to accept every one of the 
latter’s basic demands. 

That the much-advertised reservation of 51 per cent 
shares in joint concerns for Indian nationals holds no terrors 
for foreign monopolists is borne out by the following com¬ 
ment by Capital while discussing the Pakistan Govern- 


7 


merit’s statement on foreign capital in April 1948: 

“Although there is no doubt that the 51 per cent rule 
will have a discouraging effect upon foreign investors, there 
is no reason to suppose that it involves any serious danger 
that control of the companies concerned will pass out of 
the hands of the foreign promoter. If the latter retain 49 
per cent of the shares, their voting strength would be strong 
enough to resist any attempt to take the control out of their 
hands. ...” (Capital, April 15, 1948) 

Actually, however, foreign capital has hung out for big¬ 
ger stakes and wrung out of the Indian Government the sig¬ 
nificant concession that ‘where in the national interest’, 
majority shares may be held by the foreign partner. Thus 
S. P. Mukherjee at a meeting of the Expert Committee on 
Investments, said: 

“The Government of India’s policy was that the majority 
of shares should be held by Indians, but in particular cases, 
where they find that in the national interest such a foreign 
concern should be opened in India, exceptions had been 
made...” (Statesman, July 30, 1949) 

Foreign capital has further obtained the specific assu¬ 
rance that if protection is given to any industry, units of the 
industry representing foreign capital would get the full 
benefit of such protection. A Press-note from New Delhi 
refers to the Tariff Board’s recommendation for protection 
to the Motor Vehicles Battery industry in these words: 
When protection is conferred on a particular industry, all 
units of that industry whether Indian-owned or not, will be 
automatically entitled to claim the benefit of such protection. 
(Hindu, July 17, 1949) 

Thus the road is cleared for yet higher returns on 
foreign investments in India. Foreign concerns will get the 
full benefit of the high prices charged by the technically 
less efficient Indian units under cover of the protective 
tariff. At the same time, since the foreign concerns can avail 
of the advanced ‘know-how’ of their parent companies, 
their real costs would be much lower than that of the other 
units and hence profits much higher. 

The guarantee has now been categorically given that 
foreign capital would have the unrestricted right to do what 
it pleased with the profits on its investments in India, that 
is, to convert the profits into the home currency and remit 
it out of India without hindrance. The ‘drain’ is to go on 
ad lib. Nehru’s first utterance on this in his April 1949 
speech was not considered sufficiently unequivocal. Foreign 
capital welcomed that speech, politely but frigidly. The 


8 


Bengal Chamber of Commerce confidential Bulletin wrote: 
“Nehru’s speech has fallen flat”. It was required that the knee 
should be further bent and Nehru has obliged. The measure 
of Nehru’s surrender to foreign capital is to be seen in the 
protest called forth even from that dogged breaker of strikes 
and propagandist of class collaboration, Ashok Mehta, who 
states: 

“The Prime Minister, Pandit Nehru, in an interview 
to the North American newspaper, Alliance, given on August 
21, held out certain official assurances to U.S. investors. The 
assurances were: (1) U.S. investors would be assured of the 
safety of their investments and reasonable profits; (2) pro¬ 
fits could be taken out of India in dollars; (3) in the remote 
event of nationalisation of certain industries, the U.S. inves¬ 
tors would be compensated in dollars; and (4) the clarifi¬ 
cation of the policy of nationalisation... The clarification 
runs as follows: ‘As to key industries, despite previous plans 
for State ownership, we have done nothing about them and 
we are putting off their consideration for at least ten 
years’.... 

“It will be realised that these assurances tally almost 
word for word with the conditions laid own on September 4 
by Mr. Snyder, U.S. Secretary of Treasury. Pandit Nehru evi¬ 
dently does not expect dollar aid on a Government-to-Gov- 
ernment level, and hopes to induce American capitalists 
during his visit to the USA to invest capital in India 

Since, in the foreseeable future, India cannot earn 
surplus dollars or sterling (with which to compensate 
foreign investors) nationalisation of foreign concerns is 
indeed a ‘remote’ possibility. Foreign capital has begun to 
rub its hands — after the first few months of uncertainty 
and the ‘crisis of confidence’ since August 1947 — in the 
knowledge that India’s economic and political climate has 
been air-conditioned to suit the exacting tastes of trans¬ 
oceanic investors. There is a note of positive gloating in the 
article of Sir Alfred Watson, ex-Editor of Statesman, when 
he writes: 

“The idea with which both Dominions embarked on their 
independence, that in a brace of shakes India might become 
practically self-supporting in industry, agriculture and in 
transport overseas of her surplus products, has been sub¬ 
jected to the chill winds of reality. The planners who built 
the airy castles of self-sufficiency are discredited even among 
their own people, since years have gone by and most of the 
plans are still on paper and have contributed little to the 
country’s wealth. On letters now passing through Indian Post 


9 


offices is stamped a Hindi inscription officially translated as 
‘May God grant sense to everyone’. There are at the moment 
more evidence in Pakistan than in India that the solemn 
injunction has been taken to heart.... British capital and 
technical assistance have brought into being a cigarette 
factory, another for the manufacture of switchgear and a 
third for making telecommunications equipment in Karachi, 
an alloy steel works in West Punjab and a couple of enter¬ 
prises in Bhawalpur State. In some of these developments 
there is Pakistani capital; others are wholly British owned. 

. .Nor is the same will to face actual conditions want¬ 
ing in India. In so many words Pandit Nehru has discounted 
any idea that nationalisation could be effective for many 
years to come. Dr. Mukherjee dots the i’s of this pronounce¬ 
ment.... As one sees the picture, there is dawning on Gov¬ 
ernment circles a clear realisation that India must be attrac¬ 
tive to foreign capital.... The Dominions are seeking help, 
which will be readily given now that there is no longer the 
idea that terms can be dictated from the side of those who 
seek aid.” (Great Britain and the East, May 1949) 

The truth, is, therefore, that foreign capital has reas¬ 
serted for itself every one of those privileges which it enjoy¬ 
ed before ‘independence’. Foreign capital has shown that 
its role remains precisely what Lenin had characterised •— 
surplus capital accumulated by the monopolies of advanced 
countries seeking fields of investment in the backward areas, 
ensuring its high rate of profit on the basis of cheap labour 
power and materials. The new political set-up has changed 
not a jot this essential role of foreign capital seeking invest¬ 
ment in India. All that has changed is that in the new foreign 
enterprises to be started, Indian capitalists would have a 
sizeable share, while the onus of ensuring the supply of 
cheap labour power—by savagely suppressing the working 
class movement—would fall on the more ‘popular’ shoulders 
of national leaders representing the Indian bourgeoisie. 

III. PROGRESS OF INDO-BRITISH DEALS 

Grave dangers to India’s genuine national interests lie 
inherent in the growth and consolidation of Indo-British (or 
Indo-American) business combines. They were underlined 
in the study already referred to, Indo-British Big Business 
Deals, as follows: 

—Foreign capital digging in on a bigger scale than ever, 
thus adding to the ‘drain’ out of India in the form of profits 
on foreign investments, royalties, etc. 


10 


—Foreign capital getting into the very vitals of Indian 
economy, viz., whatever new basic and strategic industries 
that are started. 

—Decisive control of the new industries by being in sole 
control of technical direction, and also through share hold¬ 
ings. 

Since the first deals of this type which were examined 
in the above book, several other joint ventures, involving 
foreign capital in greater or less measure, have been announ¬ 
ced. Some of the more important ones, as reported in the 
Press, are listed below. The list is not exhaustive but will 
serve as a reliable index of the trends. 

Pnaineerina: (Heavy Industry) 

a) Ashok Motors Ltd., for import and assembly for auto¬ 
mobiles. Issue—Rs. 50 lakhs. Based on an agreement bet¬ 
ween Indian businessmen and Austin Motors Ltd., for the 
assembly of cars and trucks, the deal appears to be on the 
same pattern as the earlier Birla-Nuffield agreement. Not 
only is ‘production’ controlled by Austin technicians, but 
the Board of Directors includes a leading Austin execu¬ 
tive, and there is direct shareholding by Austins. 

b) An automobile factory is to be started shortly in 
Vandalur, Madras. A company which goes by the name of 
the Standard Motor Products of India Ltd., will in the first 
instance assemble cars from imported parts and progressive¬ 
ly manufacture automobiles. The promoters are the Union 
Co. (Motors), Madras. 

Announcing this deal, Sir John Black, Managing Direc¬ 
tor of the Standard Motor Company of the U.K., said that the 
new company had been registered with an authorised capi¬ 
tal of Rs. 1 crore. It would assemble Standard ‘Vanguard’, 
models. 

c) The same company, in agreement with Harry Fergu¬ 
son Ltd., a giant tractor manufacturing concern of Britain, 
would also develop in the future, the assembly of Ferguson 
tractors in India. 

Standard Motors and Ferguson have working agree¬ 
ments in the U.K., and it would seem that this combination 
would have preponderating influence, as compared to their 
Indian partners, in the newly-formed Indian company. 

d) The Rootes Group, another of the Big Six which 
dominate Britain’s automobile industry, has just registered 
a new company in India, in conjunction with Indian part¬ 
ners. It will be known as the Automobile Products of India 
Ltd., and will begin assembly of trucks and cars from im¬ 
ported parts, in Bombay. The new company has bought out 


11 


a Bombay automobile firm, Motor House (Gujerat) Ltd., 
which had earlier set up an assembly plant in collaboration 
with the American firm of Kaiser-Fraser. 

The authorised capital of this new firm is Rs. 1 crore. 
Crossroads, a Bombay progressive weekly, had revealed 
that the Government of India had agreed that the majority 
shares in this new concern could be held by Rootes. In this 
connection, it is relevant to recall that Dr. Mukherjee dec¬ 
lared recently that exceptions had been made to the rule of 
majority holdings by Indian nationals. 

e) Birla Bros, have entered into an agreement with the 
Associated Company in India of the British firm, Babcock 
and Wilcox, for the manufacture of boilers in the Texmaco 
works at Belghurria, near Calcutta. The agreement pro¬ 
vides for technical assistance, advice and design and the 
training of Indian personnel in the manufacture of smoke 
tube boilers and associated plants. 

f) Parimal Ltd., described as an ‘Indo-foreign’ under¬ 
taking for the manufacture of textile machinery. Issue: 
Rs. 150 lakhs. 

g) Indian Mining & Construction Co. Ltd.—Issued ca¬ 
pital—Rs. 45 lakhs. Foreign issue—Rs. 23 lakhs. 

h) Indo-Belgian Engineering Co., Allahabad. Authori¬ 
sed capital—Rs. 4 lakhs. Shares worth Rs. 1 lakh to be issued 
to a Belgian national. (The nature of business is not speci¬ 
fied for this firm but it is stretching the point to regard it 
as representing heavy industry). 

Light Industries & Miscellaneous 

a) A cycle factory is to be started in Madras by arrange¬ 
ment with the BSA Company of Britain. The sponsors of 
the concern have raised Rs. 25 lakhs as share capital and 
the BSA Co. have agreed to invest £100,000. The Madras 
Government will also purchase shares in the concern. 

b) Another Indian firm has entered into a deal with the 
Tube Investments Ltd., of Great Britain for starting a plant 
in Madras to make Hercules cycles. It is proposed to 
assemble cycles in the first instance and develop manufac¬ 
ture in the course of five years. (Hindu, August 13, 1949) 

c) In conjunction with the well-known British firm of 
cycle manufactures, Raleigh, a joint firm by the name of 
Sen-Raleigh Co. Ltd., has been registered with an authorised 
capital of Rs. 10 lakhs. 

d) Acme Aluminium Rolling Mills Ltd., (also an ‘Indo- 
foreign’ undertaking) for the manufacture of aluminium 
foils and linings. Issue—Rs. 25 lakhs. 

e) T. I. Exports Ltd., for the manufacture of metal tub- 


12 


ings, fishing rods, bicycle frames, etc. Authorised capital— 
Rs. 3 lakhs. 

f) J. B. Advani & Co. of Bombay for the manufacture of 
printing ink. Authorised capital—Rs. 250,000 out of which 
Rs. 62,500 will be issued to the firm of Lorilleaux and Bol¬ 
ton, London. 

g) The Udyog Vikash Ltd. A company with a proposed 
issue of Rs. 21 lakhs for producing in partnership with fo¬ 
reign firms—raw films, cut films, X-Ray films, cameras and 
accessories. 

h) Tribeni Tissues Ltd., described as an Tndo-foreign’ 
concern for the manufacture of cigarette paper. Authorised 
capital—Rs. 130 lakhs. 

The above enumeration of Indo-foreign firms supple¬ 
ments (although the list is possibly incomplete) the descrip¬ 
tion of the earlier joint ventures given in Indo-British Big 
Business Deals. The vicious features of those earlier deals 
persist in these subsequent ones, viz: 

—Complete technical control in the hands of the 
foreign partners, witness the Birla-Babcock deal and the 
automobile deals. 

—In most of these new deals, the foreign partners 
represent powerful finance-capital interests, whose re¬ 
sources and relative strength guarantee their dominance 
in the new joint enterprises. Rootes, Standard Motors, 
Austin, Ferguson, Babcock and Wilcox, are without ex¬ 
ception some of the most powerful monopolies in Bri¬ 
tain’s engineering industry. Even in the proposed cycle 
firms, the British partners involved—BSA, Raleigh and 
Tube Investments—control between them almost the 
whole of this branch of British industry. 

—The foreign partners are guaranteed substantial 
profits from these seemingly indigenous concerns 
through heavy payment for technical aid and also direct 
share-holdings. Where there is no direct shareholdings, 
royalties and commission on sales are doubtless part of 
the agreements, as in the past. At the same time, since 
these new plants envisage assembly rather than manu¬ 
facture (as we shall see in detail later) the ‘home’ facto¬ 
ries will continue to receive orders for components 
which will be assembled in the joint conerns in India. 

Thus, though we are supposed to have become an inde¬ 
pendent nation in the meantime, the foreign monopolies 
continue to control and dominate the new joint undertak¬ 
ings precisely as they had done before ‘independence’. Two 
new features may be noticed, however, in these recent deals: 


13 


i) Whereas in some of the earlier deals, shareholding by 
the foreign partners was substituted by royalties, etc. (Bir- 
la-Nuffield; Chrysler-Walchand deals), in the above list 
there is open and direct shareholding by foreign capitalist 
interests in every case except the Birla-Babcock deal. What 
is still more dangerous is that even the fig leaf of majority 
shareholding by Indians is being abandoned. Dr. Mukherjee’s 
frank admission and the example of the Rootes Group deal 
are clear evidence that foreign capital has cleared the way 
for asserting its open and direct domination in such joint 
ventures. Further confirmation on this point is provided by 
the New Delhi correspondent of Capital in a recent des¬ 
patch: 

“A statement of the American Treasury Secretary, Mr. 
Snyder, has aroused some comment. Speaking before the 
Senate Banking Committee, Mr. Snyder declared that if 
( foreign nations were to forbid Americans to have majority 
control in new industrial enterprises, it would be a ‘signi¬ 
ficant deterrent’ to prospective American investors. India’s 
position has already been clarified on this issue. With the 
exception of about half a dozen key industries India will not 
object to majority control by Indians, Britons or Americans. 
There is almost a free zone outside the ‘key’ industries 
reserve...” (Capital, August 18, 1949) 

(ii) Indo-British partnerships have now become a uni¬ 
versal pattern, not confined only to heavy industries which 
require great technical skill. These joint concerns — through 
which foreign capital secures new fields of exploitation—are 
springing up like mushrooms. There is no longer even a pre¬ 
tence at restricting foreign capital to industries where com¬ 
plex technical processes are involved. Fishing rods and 
printing ink are not the only products—presumably of great 
national significance—to manufacture which foreign capital 
is being invited. A certain Bombay firm was reported to be 
sponsoring a factory, in conjunction with non-Indian ‘spe¬ 
cialists’ to manufacture — umbrella ribs and handles! 
( Capital, February 13, 1948) And Eastern Economist was so 
carried away by its adulation of foreign capital that it 
solemnly suggested the need for asking foreign concerns 
to undertake the highly technical job of organising India’s 
tourist traffic! These mushroom-like Indo-foreign deals are 
guided by no other consideration than getting quick returns 
with the least trouble, irrespective of the economic impor¬ 
tance or otherwise of the enterprises involved. And, fur¬ 
thermore, these Indo-foreign small business deals provide 
corroboration of the fact that the Indian bourgeoisie, as 


14 


a class, have forged a common front with foreign capital, 
that is, with Anglo-American imperialism. 

IV. STATE ENTERPRISES AND FOREIGN CAPITAL 

On the other hand, where heavy industries are being 
started (though with considerable limitations, as we shall 
see later) by Indo-foreign combines, it is resulting in instal¬ 
ling a Trojan horse in the very nerve-centre of our economy. 
In automobiles, heavy chemicals (the Tata-ICI deal), textile 
machinery making, boiler and tractor manufacture, all basic 
industries, foreign monopolists are in technical overlordship 
and have financial stakes. The most ominous development in 
this respect is the close association of giant foreign monopo¬ 
lies with the projects for State-owned key industries. Some 
such State-owned key industries have already been started 
in conjunction with foreign combines. Others are projected. 

The Mysore Government has reached an agreement with 
the Chemical Construction Co. of New York for the esta¬ 
blishment of a 50,000 ton fertiliser factory at Bhadrawati at 
a cost of Rs. ZV 2 crores. The Government of India are report¬ 
ed to have made a successful deal with the well-known 
Swiss combine, Oerlikon Co., for the setting up of a State- 
owned machine tool factory costing Rs. 15 crores. The Swiss 
firm will be in technical control for 20 years from the date 
production starts and they will also have a financial inter¬ 
est in the project (Hindu, April 26, 1949). An economic 
sub-committee of the Central Government is considering a 
proposal of the Orissa Government to start a factory for the 
manufacture of tractors in partnership with Messrs. Ingham 
Ltd., of Great Britain (Statesman, April 23, 1949). An Amer¬ 
ican firm is said to have submitted a scheme to the Govern¬ 
ment of India for establishing two oil refineries in India 
and have offered to subscribe 49 per cent of the share capital 
as well as provide technical supervision. 

Besides, Westinghouse representatives have arrived in 
India at the invitation of the Government of India to recom¬ 
mend suitable sites for a plant to manufacture heavy elec¬ 
trical equipment; British and American big business firms 
have, at the instance of the Government of India, submitted 
project reports for the proposed iron and steel plants (cost¬ 
ing Rs. 100 crores) to be started by the Government; a syn¬ 
thetic petrol plant, it is said, is to be erected at Durgapur at a 
cost of Rs. 70 crores—an American company is likely to be 
given the contract for the construction of the plant and 
supervision work is to be entrusted to a German firm. 

These are dangerous developments which serve tc 



15 


expose the fraudulent claim of the ‘national’ Government 
that it would not permit private interests to get a strangle¬ 
hold over the key sectors of economy. While casting aside 
the rattle of ‘nationalisation’ with which the Government 
of India had tried to fool the people into accepting its anti¬ 
capitalist bonafides, the Government of India had loudly 
asserted that in the ‘new’ industries, in the ‘key’ industries 
the principle of ‘national’ ownership and control would be 
fully applied and profit-making interests would have no 
say. Even this bluff has been called by the actual course of 
events. 

The above news items show that the Government of 
India has not stopped short of seeking technical advice from 
foreign monopolists—though even ‘technical advice’, as in 
the case of 1 other Indo-foreign deals, is a cover for decisive 
control by foreign interests. The machine tool deal with the 
Swiss firm should make this clear —for 20 years the Swiss 
combine will be in sole technical control and would be 
in a position to retard the development of this basic industry. 
But apart from technical control, foreign monopolies asso¬ 
ciated in these State-sponsored key projects are being given 
a direct profit-making interest through holding of shares, as 
in the machine tool deal and the proposed tractor and oil 
refinery deals. 

That these are no isolated cases but portents of things 
to come, is amply borne out by evidence from well-informed 
quarters. The New Delhi correspondent of Capital, whose 
despatch we have had occasion to quote earlier, also furnish¬ 
es the following significant comment: 

“The participation of foreigners even in the ‘reserve’ 
field (key industries) may be considered. Although the Gov¬ 
ernment would prefer cent per cent or majority control in 
such undertakings, the need for their rapid development 
and financial considerations may compel modifications in 
the original plan-” (Capital, August 18, 1949) 

The financial difficulties of the Government—caused by 
the generous tax relief to capitalists, the squandering of 
money on embassies and delegations, reckless expenditure on 
police departments, etc.—are now being advanced as the 
plea for handing over control and ownership of basic indus¬ 
tries to foreign monopolists. A document which circulates 
among the inner sanctum of British Big Business in India, 
the “Strictly Private and Confidential” India Bulletin of 
the Bengal Chamber of Commerce, wrote in its August 
issue: 

“In consequence of the screening of development schemes. 


16 


a Government department, in at least one case already, has 
turned to private enterprise to enquire whether a scheme, 
formerly reserved for Government operation, can be under¬ 
taken by them without cost to Government.” 

Referring to Nehru’s August speech in which he stated 
with reference to nationalisation of key industries—“Frank¬ 
ly speaking we have not got the resources to do it” — the 
Bulletin goes on to say: 

“These remarks add point to the suggestions now being 
made in Delhi that a number of new industries in which Gov¬ 
ernment had planned to participate, will fall under the eco¬ 
nomy axe and that foreign enterprises may be offered free 
scope to start them, if they will. This is particularly mention¬ 
ed in connection with steel plants. But the Americans are 
in no mood for anything less than complete control... 

“Government’s plans to set up three shipping corpora¬ 
tions show practically no progress. Two of the corporations 
may be described as indefinitely postponed. The setting up 
of the third is tied up with negotiations between Scindias 
and Government for the sale of the Vizag shipyard_Scin¬ 

dias want payment in cash while the Government would 
prefer to pay at least half the purchase price in shares. The 
economy axe may fall on both projects and it is not altoge¬ 
ther unlikely that Government will tire of their negotiations 
with Scindias and may even turn to ‘foreign’ interests to 
help them out with their plans_” 

In the words of Sir Alfred Watson, the solemn injunc¬ 
tion of ‘May God grant sense to everyone’ is now being 
taken to heart in India: Nehru is at great pains to prove that 
when he had earlier spoken of nationalisation of key indus¬ 
tries he did not really mean nationalisation! “Frankly we 
haven’t the resources”, and so, foreign monopolies, which 
have the resources, are confidently awaiting the Govern¬ 
ment of India’s invitation to welcome them into one key 
industry after another in the true spirit of India’s hospitality 
■—“Come in, gentlemen. What is mine is yours”! The Gov¬ 
ernment of India may attempt to save its face through some 
form of nominal control, either by holding some shares, or 
reserving some shares for Indian businessmen, etc.—but the 
central fact emerges that foreign capital is being entrenched 
in a big way in the few basic industries that have been or 
are to be started in India. The collaboration between the 
bourgeoisie and imperialism could not but lead to this 
disastrous result. 


17 


V. “INDIA LIMITEDS” 

Foreign capital, as we have seen, has safeguarded its 
future in India by going in for deals with Indian business¬ 
men and forming joint combines. It was also being offered 
scope for investment in large key undertakings nominally 
under State control. Yet another form in which foreign capi¬ 
tal has entrenched itself in India during the last few years 
is by setting up rupee subsidiaries of giant trusts, in which a 
fraction of the shares are offered to Indians. To further 
heighten the ‘indigenous’ effect, some leading Indian capi¬ 
talists are taken on the Board of Directors. So widespread 
was the influx of foreign capital in this form that even a 
committee of the imperialist regime, the Bombay Industrial 
and Economic Enquiry Committee (1940), was forced to 
note the powerful positions occupied in Indian economy by 
‘India Limited’ concerns. 

In the period immediately preceding and after ‘indepen¬ 
dence’, this process has continued and several India Ltd. 
companies representing powerful foreign interests have 
been registered: 

(in lakhs of Rs.) 

(Authorised Capital) 


Coates of India Ltd. (Printing ink business) 

Exide Batteries (Eastern) Ltd. (Dealers in 
electrical goods) 

Sankey Electrical Stampings (Electrical stam- 
ings, etc.) 

Associated Battery Makers (Eastern) Ltd. 
(Dealers in electrical goods) 

Osier Electrical Lamp Mfg. Co. (Manufacturers 
of electric lamps and appliances) 

F. & C. Osier (India) Ltd. (To acquire assets of 
P. & C. Osier) 

Thomas W. Ward (India) Ltd. (Manufacturer 
of electrical eng. equipment & agricultural 
implements) 

Lewis & Tylor (Mysore) Ltd. (Woven belting & 
Fine Hose) 

Goodyear Tyre & Rubber Co. (India) Ltd. 
(Tyres, etc.) 

Haywards Distillery 

Brooke Bond Estates Ltd. (Tea) 

British Drug Houses (India) Ltd. 

Drug Products Co. Ltd. (subsidiary of a New 
York Co.) 

Cadbury Fry (India) Ltd. (Chocolates & Con¬ 
fectionery) 


20 

30 

20 

100 

100 

100 

5 

12 

300 

10 

70 

15 

15 

5 


These are companies registered in the course of the last 
three years alone. The figures of paid-up capital are not 
available, the above denoting authorised capital. The over¬ 
whelming extent to which foreign capital is involved despite 



(8 


offer of shares in India is indicated by figures quoted for a 
few of these concerns. Thus, out of Rs. 5 lakhs authorised 
capital for Cadbury’s, Rs. 3.2 lakhs are to be issued to U.K. 
residents. The entire amount of the first issue of capital of 
Thomas W. Ward (India) Ltd., is being taken up by the 
parent British firm. In the case of British Drug Houses 
(India) Ltd., Rs. 5 lakhs worth of shares are being issued 
to the original London Company. If this is the proportion of 
foreign-held shares for the smaller India Ltds., there is no 
doubt that with the bigger concerns like Goodyear, Osier, 
Exide, etc., the volume of shares held by Indians must be 
small and the actual proportion of foreign capital invested, 
very substantial indeed in the total figure of Rs. 8 crores 
representing the authorised capital of the above firms. 

Precise details are yet lacking about other foreign firms 
which have recently been given permission to set up sub¬ 
sidiaries in India. But they deserve mention if only to 
expose the bankruptcy of the Government’s claim that 
foreign capital is being encouraged only in industries of 
national importance. 

Among the foreign monopolies which have latterly 
obtained the Government of India’s sanction to set up 
‘India Ltd.’ branches are the British firm of Slazengers, to 
manufacture sports goods; the American firm of Coca Cola 
to manufacture sweet drinks; certain other foreign firms, 
it is understood, have also been permitted to set up here to 
manufacture biscuits and... Vanaspati! As noted above, 
for the greater glory of India’s industrialisation, foreign 
capital will also flow in to set up distilleries and chocolate 
plants. 

An additional index of foreign capital entering India 
in recent years is provided by data on ‘further issues’ of 
capital by established foreign firms in this country, whether 
registered here or abroad. Below are quoted instances of 
such additional issues of capital by foreign concerns in the 
last few years—again, the data should not be regarded as 
exhaustive. 


Paid-up capital Increase 


(in Rupees) (in Rupees) 
(* in £) (* in £) 


Alcock & Ashdown 
(Shipwrights etc.) 


(1943) 1,669,700 

(1947) 3,342,200 1,672,500 


Britannia Bldg. 
& Iron Co. 


(1943) 500,000 

(1947) 1,000,000 500,000 


Alkali & Chemical 
Corp. 


(1941) 9,196,440 

(1947) 9,300,000 103,560 


Indian Copper Corp. 


(1940) 900,000* 

(1947) 949,000 49,000* 



19 



Assam Match Co. 

(1941) 

(1947) 

500,000 

1,400,000 

900,000 

Bird’s Investments 

(1941) 

(1947) 

3,000,000 

4,400,000 

1,400,000 

Indian Aluminium Co. 

(1944) 

(1947) 

13,650,000 

20,000,000 

6,350,000 

Indian Rubber Mfrs. 

(1941) 

(1947) 

621,050 

1,655,970 

1,034,920 

Parry & Co. 

(1946) 

(1947) 

3,658,120 

5,000,000 

1,341,880 

Muir Mills 

(1940) 

(1947) 

3,000,000 

6,000,000 

3,000,000 

Madura Mills 

(1940) 

(1947) 

8,751,240 

17,502,480 

8,751,240 

Buckingham & Carnatic 

(1944) 

(1947) 

11,054,100 

19,978,000 

8,923,900 


The above, of course, excludes industries such as jute, 
tea, mining, etc. It is based on figures of paid-up capital for 
engineering, chemical and some textile miscellaneous com¬ 
panies as given in Kothari’s Investors’ Encyclopaedia and in¬ 
cludes companies which have mixed shareholders, (i.e., 
Indian and foreign). But, despite its limitations, the above 
table serves to illustrate that substantial amounts of foreign 
capital have been invested here recently in the form of ‘fur¬ 
ther issues’ by foreign concerns. This is also indicated by a 
list of foreign firms which were given permission to increase 
their capital issue during 1947 and 1948 and as reported in 
Capital. 



Consent given to fur- 

Name & Objects of company 

ther 

capital issue of 


< 

in Rupees) 

Indian Oxygen & Acetelyne Co. 


1,800,000* 

A. F. Harvey Ltd., Madura (Merchants & 



Mfg. Agents) 


3,000,000* 

Larsen & Toubro (Importers of machinery) 


3,000,000 

Western India Match Co. 


7,700,000 

Dunlop Rubber Co. (India) Ltd. 

(1947) 

5,000,000 

(Tyres, etc.) 

(1949) 

5,000,000* 

Silvertown Lubricants (India) Ltd. 


750,000 

Chloride and Exide Batteries (Eastern) Ltd. 

(1949) 

1,485,000 

Associated Battery Makers (Eastern) Ltd. 

(1949) 

4,985,000 


* Bonus Issue 

Of special note is the recently announced (fully sub¬ 
scribed) issue of £ 1,420,882 (June, 1949) by the Calcutta 
Electric Supply Co., which represents no less than a 30 per 
cent rise over its paid-up capital as at 1947. And thereby 
hangs an interesting story... .With the end of the war, heavy 
replacements of machinery, wires and cables which were 


20 


long overdue, were deliberately held up because of the talk 
in the air of the Calcutta Electric Supply Co. being taken 
over by Government. Meanwhile, behind the scene negotia¬ 
tions over compensation were dragged out. Ultimately, when 
by the end of last year it became quite certain that the 
Calcutta Electric Supply Co. would not be touched, and in 
the background of vociferous assurances to foreign capital, 
this cent per cent British company has found it safe to consi¬ 
derably raise its capital issue. 

The substantial increases of capital issue announced by 
this and other foreign firms, particularly during the last 
two years, plainly demonstrate once more that India re¬ 
mains a most profitable field of exploitation by foreign 
capital. 

VI. DIRECTION OF FOREIGN INVESTMENT 

We come finally to the question of foreign capital being 
instrumental in developing basic and heavy engineering in¬ 
dustries in India. This is supposed to be the unanswerable 
argument in favour of allowing foreign monopolies to invest 
in India—the high degree of technical skill involved in set¬ 
ting up such industries necessitates (we are told) the ‘coope¬ 
ration’ of foreign capital. 

Once again, it must be clearly stated that in the stage 
of monopoly capitalism, in the stage when the productive 
capacity of imperialist countries has outstripped the limits 
of the internal market, foreign capital seeks fields of invest¬ 
ments which do not compete with the basic industries at 
‘home’; foreign capital seeks such fields of investment as 
open up new markets, make available cheaper raw materials 
etc.; it does not ‘develop’ in the backward countries basic 
and heavy industries which would render the latter self- 
sufficient and independent of the monopolies of the imperial¬ 
ist countries who desperately need new markets. Such are 
the reasons which have prompted the consistent opposition 
by the imperialist countries at recent ECAFE conferences 
towards all proposals to establish heavy engineering indus¬ 
tries in the colonies. Their stress has been: irrigation—to 
lower food costs and raw material costs; communications— 
which obviously do not compete with home industries but 
rather provide a market for their locomotive building and 
automobile industries, while opening up larger areas for 
markets, etc.; mining and extractive industries for minerals, 
etc. 

Leontyev in his study on American expansionism has 


21 


quoted valuable evidence of the direction of U.S. foreign 
investments: 

“According to data for the end of 1940, American foreign 
capital investments in the extractive industries amounted to 
more than 2,000 million dollars and in the manufacturing 
industries to less than 200 million dollars. Yet in the U.S. 
proper, the relation was seven times more capital invested 
in manufacturing industries than in extractive ones...” 

The same trend is noticeable in U.S. foreign investments 
in 1947. 

“Last year,” says an article in Capital (November 11, 
1948), the net total of 636 million dollars invested directly 
abroad was the largest on record.. .The bulk of this invest¬ 
ment was made by the petroleum industry—about 455 mil¬ 
lion dollars (in Latin America and the Middle East).” 

Thus, about 72 per cent of the entire foreign invest¬ 
ments of U.S. monopolies in 1947 went into the extraction 
of oil. 

An examination of the trend of foreign investments in 
India during the period 1928-29 to 1945-46 will reveal a simi¬ 
lar pattern. (Table A) 

Banking, Loans and Insurance—which do not represent 
investments in manufacturing industry—show a rise of 19.13 
per cent during the period; miscellaneous trading and ma¬ 
nufacturing — that is, light industries and trading firms 
which by no means represent heavy industry—also show a 
rise of 21.26 per cent; mills and presses show a 13.1 per 
cent rise, while the most spectacular rise of foreign invest¬ 
ment is noticeable in (‘key’ industry indeed) — Breweries 
and Distilleries (166.66 per cent)! Agencies—whose function 
is to sell products of foreign monopolies—likewise show a 
huge rise, of 70.13 per cent. 

On the other hand, those which can be called heavy 
industries show the smallest rise and even a falling off in 
foreign investment. Thus, chemicals and allied trades regis¬ 
ter a decline of 22.28 per cent; iron, steel and ship-building 
record the insignificant rise of 6.39 per cent; engineering 
does indeed show a rise of 15.34 per cent, but as is well- 
known, British-owned engineering firms in this country 
have confined themselves to bridge-building, construction 
work, manufacturing of wagons, signal equipment, etc., and 
servicing of machinery. Only recently, British engineering 
firms reached the high water mark of their achievement in 
India—assembling India’s first road-rollers! 

If we turn to Table B, we can compare the volume of 


22 


foreign investment in different branches — examine which 
branches of Indian economy account for the bulk of foreign 
investments. In 1928-29, as will be observed, mining and 
quarrying accounted for the largest share in the total of 
foreign investments in India—23.3 per cent. Banking, loan 
and insurance companies came next with a share of 21.3 per 
cent. Transport and transit account for ten per cent and 
various light industries and trading concerns for 11.2 per 
cent of the total paid-up capital of foreign concerns at work 
in India. We see, therefore, that banking, insurance, extrac¬ 
tion of minerals, communications and various light indus¬ 
tries absorb, between them, over 65 per cent of the total 
volume of foreign investment. 

Chemicals—a basic industry—attracted even less foreign 
capital than tea and rubber plantations and accounted for 
a meagre three per cent of the total investments. Iron, steel 
and shipbuilding also accounted for a very small percentage 
—6.4 per cent. As for engineering, we have already noted 
that this represents at best light, constructional engineering; 
hence, the figure of 11.7 per cent against engineering does 
not reflect the development of a really basic engineering 
industry. 

And what has been the progress achieved by foreign 
capital in the two decades since 1928-29? What actual proof 
do we find to bear out the loud claims of foreign monopolies 
and their Indian apologists that foreign capital is instrumen¬ 
tal in developing basic industries in a technically backward 
country? The figures for 1945-46 in Table B will reveal that 
in the course of nearly two decades, the progress towards 
basic industries, under the aegis of foreign capital, is exactly 
nil. The relative share of chemicals has fallen; that of iron, 
steel, ship-building is static; engineering had absorbed a 
higher percentage of total investment by 1945-46 but is con¬ 
sidered by foreign capital to deserve no more attention than 
miscellaneous trading and manufacturing concerns, for 
each of these branches accounted for 13.8 per cent of the 
total foreign capital invested in 1945-46. The major portion 
of foreign investment still flows to banking, mining, light 
industries and transport. 

By its very nature, foreign capital, capital exported by 
the monopolies of imperialist countries, cannot—and in fact 
has not—‘developed’ basic and heavy engineering industries 
in India. 

An analysis of India’s machinery imports for 1948-49, as 
quoted by the Eastern Economist (July 1, 1949), offers addi¬ 
tional proof that those who supply us the machinery—the 
monopolies of the advanced countries — have endeavoured 


23 


to restrict their machinery exports to the traditional lines: 
textile machinery, generators, boilers, etc. 


Total Imports of Machinery 

Locomotives 

(in crores of Rs.) 

7S.65 

1.07 

Engines (gas, oil, steam) 


8.76 

Electrical Machinery (i.e., generators, etc.) .. 


12.75 

Boilers 


3.65 

Mining Machinery 


1.04 

Refrigerating Machinery 


1.31 

Sewing and Knitting Machinery 


1.94 

Typewriters 


1.14 

Machine Tools 


4.04 

Cotton Textile Machinery 


9.14 

Jute Textile Machinery 


2.63 

Other Textile Machinery 


3.24 

Agricultural Machinery 


2.53 

Oil crushing: paper mills; pumping; rice 
& flour mills; saw mills; tea and sugar 
machinery 


6.09 

Other Machinery 


19.02 


Compared to prewar imports, the only new item is agri¬ 
cultural machinery (tractors, etc.). Far and away the most 
important item is textile machinery of various kinds which 
is obviously of no relevance for building up heavy industry. 
Machinery for generating and distributing electric power 
forms an important element but is no indication that heavy 
industries are being set up. On the contrary, the one item 
which does relate essentially to heavy industry — machine 
tools, needed for manufacturing machinery—is about the 
same in value as... typewriters and sewing machines! 

If we revert to the sections in this article on new enter¬ 
prises where capital has of late been invested, we find that 
the old pattern continues. Production of bicycles, confection¬ 
ery, tyres, batteries, electric lamps, sports goods, etc., con¬ 
stitute the branches to which, generally, foreign capital has 
turned in the last two-three years. Similarly, the further 
issues of capital of foreign-owned concerns are the most sub¬ 
stantial in the light industries field—in concerns relating to 
electric supply, textiles, batteries, tyres, matches, agency 
business and (the one exception) aluminium, a key industry. 

(a) It was clear by the end of the war that the increas¬ 
ed ambitions of the Indian bourgeoisie could not be satisfied 
by permitting it to set up only textile and jute mills or 
sugar refineries as in the past. Indian capital, whose whole¬ 
hearted collaboration was necessary if the foreign mono¬ 
polies were to continue their sway in India, had to be given 
some scope for investing in new engineering and heavy 






24 


industries. Recognising that some development in this direc¬ 
tion had to be permitted in order to buy over the Indian 
bourgeoisie, foreign capital has endeavoured to limit it to 
the simpler and secondary branches of heavy industry. 

A leading figure in the Federation of British Industries 
(FBI) outlined foreign capital’s streamlined postwar policy 
with regard to new industries in the colonies thus: Speak¬ 
ing at an Export Conference of the FBI in late 1946, Col. 
H. B. Rigall (a member of the FBI Grand Council) said 
that inevitably the Dominions and other countries abroad 
would tend increasingly to produce for themselves. 

“It is rather for Britain,” said Rigall, “to encourage 
them (the Dominions, etc.) by providing technical know¬ 
ledge and manufacturing technique to make general pur¬ 
poses equipment for themselves which they are capable of 
making, while we push on with the manufacture of the high¬ 
er grade and more complicated products in which our tech¬ 
nical skill can be used with the greatest advantage....” 
(Capital, December 12, 1946) 

Thus, with the benign cooperation of foreign capital, 
India is now to ‘produce’ light Diesel engines, small electric 
motors, textile machinery, boilers, road rollers, automobiles 
and perhaps, tractors and steam locomotives. One looks in 
vain for other industries which are the true hallmark of an 
advanced and really independent economy—heavy electrical 
equipment manufacture; production of modern type loco¬ 
motives such as Diesel electric and electric locomotives, air 
craft manufacture; manufacture of machinery for industries 
other than merely textile; a diversified heavy chemicals in¬ 
dustry ( and not merely production of fertilisers); the manu • 
facture of steel alloys, etc. 

The fundamental fact is that foreign capital has con¬ 
ceded only the manufacture of lighter types of machinery 
and the simpler types of engineering products, while retain¬ 
ing the monopoly of manufacture of basic equipment and 
‘more complicated’ products. A recent comment in Capital 
organ of British Big Business in India, also bears this out: 

“India is assuming increasing importance in Britain’s 
overseas electrical trade. British firms are now concentrating 
on developing subsidiary organisations here which in the 
short term might seem detrimental to British interests. It 
is felt, however, that if Indian consumers can be increasing¬ 
ly interested in electrical appliances, there will be an in¬ 
creased demand for electrical generating and distributing- 
machinery.” (Capital, August 18, 1949) 


25 


No doubt foreign capital is developing backward India 
when Osier & Co. set up a branch to make lamps and appli¬ 
ances (heaters, kettles) so that with the increased consump¬ 
tion of electric power in India, the heavy electric industry 
of Britain will find a wider market for their generators, 
transformers, etc.! No doubt, the Indian branches of the 
giant British electric monopolies—GEC, AEI—are satisfy¬ 
ing Indian aspirations by producing ceiling fans and switch- 
gear! But where is one concrete piece of evidence that the 
altruism of foreign capital has extended to complete manu¬ 
facture in India of the basic electrical equipment—the gene¬ 
rators and turbines themselves? 

(b) Secondly, even while foreign monopolies are setting 
up some heavy industries in partnership with Indian capital, 
they are taking good care to see that the stage of assembly — 
as distinct from complete manufacture—is as protracted as 
possible. 

The basic components are to be imported from the 
‘home’ factories of the foreign monopolies and then assem¬ 
bled in the Indian plant; only some minor components will 
be manufactured here. Being in supreme technical control, 
the foreign monopolies can, at any moment, paralyse these 
‘Indian’ heavy industries by withholding technical secrets 
and the basic components. In the meantime, the process of 
‘assembly’ can be dragged out indefinitely. 

For instance, under the terms of the deal for making 
Hercules cycles in Madras, assembly from imported parts 
will be carried on for five years before manufacture is com¬ 
menced. Presumably, even a bicycle is much too complicat¬ 
ed a machine for the ‘backward’ Indian worker or tech¬ 
nician to understand before that period! 

General Motors (India), a subsidiary of the worldwide 
American trust, has been established at Bombay for about 
20 years. Its net contribution to ‘developing’ the automobile 
industry in India has been the assembly of automobiles 
from ‘completely knocked down’ (ckd) condition, and—at 
last—the manufacture of batteries! 

The strategy of foreign monopolies in limiting the gen¬ 
uine development of new heavy industries which they are 
starting in semi-colonies was plainly outlined by Lord Nuf¬ 
field, the British automobile magnate. Questioned about 
the opening of the first Morris plant in Australia, he explain¬ 
ed that the Australian company would not affect the run¬ 
ning of his 63 factories in Britain. The U.K. factories would 
produce the main car parts which would be sent to Austra¬ 
lia to be welded, assembled, and receive the finishing 
douches. 


26 


This clear and succinct formula — welding, assembly 
and finishing—describes perfectly the nature of work done 
at the Hindustan Motors (Calcutta), five years after the 
Birla-Nuffield deal was signed. First hand enquiries elicit 
the information that, if all goes well, in a year from now, 
the rear axle will be manufactured here! When the basic 
component—the engine—will be manufactured here nobody 
even speculates upon. And Hindustan Motors is reputed to 
be the ‘best-equipped’ automobile plant in this country! 

Consider, again, the case of the much-trumpeted loco¬ 
motive plant at Chittranjan. Work has been going on for well 
over two years on this project but recently, a high railway 
official, when approached for a photograph of the plant, 
frankly admitted that the picture v/ould show only bricks 
and mortar. Negotiations with foreign experts to supply 
equipment and ‘know-how’ have not yet achieved any re¬ 
sults. In October, fresh consultations were held with repres¬ 
entatives of British locomotive trusts. This is how a British 
Tory paper unwittingly reveals the real intentions of these 
well-meaning foreign gentlemen: 

“Leading locomotive markets in Britain are going to help 
Indians establish their plant (at Chittranjan).. .They will 
also supply the key personnel needed to get the plant going 
.. .British companies know that by exporting their ‘know¬ 
how’ they will lose orders in the end. But it will take years 
before the Indians can build all the locos they need...” 
(Daily Express, October 10, 1949) 

The sentence which we have emphasised above fur¬ 
nishes clear evidence that our good friends from abroad, 
once entrenched in key technical positions, will retard pro¬ 
gress to the utmost. Meanwhile, the market of the British 
locomotive trusts will not really be affected for, instead of 
the completely assembled locomotive, basic parts will be 
imported and then assembled in India. 

“British makers are taking the chance that by helping 
Indians to get their own industry going they will retain 
a big stake in the market.” (Ibid) 

Indian aspirations are ‘satisfied’ and the British mono¬ 
polies retain their market and profits—all at one stroke. And 
even this little — the assembly from imported parts — has 
been yielded under the lash of competition from rival Amer¬ 
ican monopolies.... 

“If they (the British makers) refused this assistance, it 
is more than likely that Indians would call in the Amer¬ 
icans.” (Ibid) 


27 


Doubtless, wheels, axles and half a dozen other items 
will be manufactured locally and we shall be asked to sing 
praises of foreign capital which has assisted in producing 
this ‘Hindustan’ locomotive. Such is the narrow horizon of 
every new basic industry being set up under the aegis of the 
Anglo-American imperialist monopolies partnered by the 
Indian bourgeoisie. Such is the plain truth about the trump 
argument of the Indian bourgeoisie in favour of foreign 
capital—that it ‘helps’ to make us economically strong and 
self-sufficient. 

VII. FURTHER SELL-OUT TO FOREIGN CAPITAL 

Nehru’s visit to the USA has convinced the hard-boiled 
American businessmen that there wasn’t going to be any 
more fancy talk about ‘nationalisation’ and about ‘control’ 
of foreign enterprises. 

Preceding his visit, the Government of India, replying 
to a memorandum of the Federation of Indian Chambers of 
Commerce, had unequivocally declared: 

“The policy of the Government of India was to allow 
foreign capital to come in to operate freely in the industrial 
field... Every attempt must be made to secure the maximum 
possible influx of foreign capital in the shortest possible 
time... The Government of India categorically declared that 
permission to retain a majority of non-Indian interest in the 
ownership and effective control in some cases could not ipso- 
facto be considered as detrimental to the interests of the 
country. The Government did not therefore propose to insist 
on majority control by Indians in the formative stages of 
industries, irrespective of all other considerations.” (The 
Hindu, September 19, 1949) 

Nehru assured the American capitalists that “Com¬ 
munism was being dealt with”, that ‘fair’ profits were 
guaranteed to foreign investors, that “India welcomed 
foreign capital”. The U.S. monopolies declared themselves 
satisfied. 

The New York Times was reported by PTI as stating 
editorially that it was ‘gratifying’ to find Pandit Nehru had 
given the guarantees sought by U.S. investors. The net result 
of Nehru’s visit with regard to foreign capital was summed 
up by PTI quoting American experts, as “preparing the way 
for speedy participation of American venture capital to 
develop Indian industry.” 

In Britain, too, effusive praise was being lavished on 
Nehru’s industrial and labour policy by the spokesmen of 
the trusts. Addressing a meeting of the shareholders of the 
British-owned Calcutta Tramways Company, in November 


28 


in London, its Chairman said that if he had a large sum of 
money to invest he would be delighted to invest it in India. 
His remarks, we are told by Reuter, “were applauded by 
shareholders.” (Amrita Bazar Patrika, November 10, 1949) 
Official figures are now being released to show the in¬ 
creasing influx of foreign capital into India. With bold head¬ 
lines saying LARGER FOREIGN INTEREST IN INDIAN 
INDUSTRY, a despatch from the special representative of 
the Statesman in Delhi reports: 

“Last year’s foreign investments in Indian industry 
amounted to Rs. 4.4 crores out of a total industrial invest¬ 
ment of Rs. 5.14 crores. This year’s total capital is already 
Rs. 16.96 crores.” (Statesman, November 25, 1949) 

Krishna Menon, India’s High Commissioner in Britain, 
testified on November 29, at a meeting in London that there 
was more investment of British capital in India than for a 
long time. 

The sell-out to foreign capital in the field of key indus¬ 
tries is now reaching alarming dimensions. Even Steel, it 
seems, that most basic of basic industries, is to be handed 
over to the tender mercies of the foreign monopolies. Dr. 
Mukherjee, who visited Nagpur in November in connection 
with the proposed steel plant to be set up in the Central 
Provinces, hinted that the “possibility of foreign capital par¬ 
ticipating in this venture is not excluded.” (Free Press 
Journal, November 5, 1949) 

It is not for nothing that Eugene Black, President of the 
World Bank, has given the all clear signal to the Anglo- 
American monopolies—“India is a good risk,” he has certi¬ 
fied. Foreign capital had nothing to fear. 

The deals mentioned above are mostly Indo-British 
deals; and the foreign investments mentioned above are 
mostly British. British capital had already had a strangle¬ 
hold over Indian economy. Through the Indo-British deals 
British capital seeks to strengthen its strategic position in 
Indian economy by bringing in the Indian capitalists. 

But a still more menacing development is taking place 
since the end of the war, and especially since the establish¬ 
ment of Nehru’s “free” India; and that is the entry of 
American capital—the most blood-thirsty capital—on the 
Indian scene. 

American capital in its drive to exploit and subjugate 
the world, and to find new avenues for investment in back¬ 
ward countries like India, is trying to get a complete grip 
over Indian economy and enslave and subjugate the people 
of India. 

The Indian capitalists, ever ready to barter the freedom 


29 


and independence of their country for the sake of paltry pro¬ 
fits have been wooing, appealing and grovelling before the 
Americans to come and invest in India; have been offering 
one concession after another to make India an inviting dish 
to satisfy the profit-hunger of the American monopolists. 

The American monopolists are waiting for the complete 
and open surrender on the part of India. They have already 
secured the assurance that there would be no nationalisa¬ 
tion; they have the guarantee of good profits and guarantee 
of exports of these profits; guarantee of no discrimination 
between them and Indian concerns—which means putting 
the Indian concerns at a disadvantage. But they are wait¬ 
ing for all these guarantees and many others to be embo¬ 
died in a trade treaty. 

Nonetheless they have not allowed the grass to grow 
under their feet. In the last year they have perhaps invested 
or offered to invest more capital in India than the British 
have done. 

In 1949 the U.S.-controlled International Bank agreed 
to advance a total loan of 41 million dollars including 34 mil¬ 
lion dollars for rehabilitation of the Indian Railways. The 
terms and conditions attaching to this loan completely un¬ 
mask the exploiting monopolists who want to keep India 
economically backward and coin profits out of her back¬ 
wardness, and suppress her people. As Dyakov, the Soviet 
commentator, puts it: 

“India provides a striking example of the real nature 
of U.S. assistance. Earlier this year when the question arose 
of a U.S. loan to India, the U.S. Ambassador to India Loy 
Henderson asked for definite guarantees. 

“In the first place the U.S. capitalists investing in India 
were to be guaranteed the possibility of drawing and export¬ 
ing their profits in dollars. He also asked for an undertaking 
that the U.S. investors would be fully compensated in the 
event of the enterprise in which they had sunk their capi¬ 
tal being nationalised. 

“The very same conditions as those put forth by Hen¬ 
derson were stipulated by the commission of the Interna¬ 
tional Bank, which, as is known, is U.S. controlled. More¬ 
over, it demanded guarantees of India’s political stability, 
and this is not a mere coincidence. Does it not show whose 
interests the U.S. Ambassador to India is serving? In a word 
it means that the democratic national liberation movement 
of India will be combated more intensely. 

“The Government of the Indian Union agreed to these 
conditions, and in August 1949 in order to please the U.S. 
monopolies the Constituent Assembly passed a law prohibit- 


30 


ing the confiscation of any private property without full com¬ 
pensation to the owner. Prior to this, even Nehru, the Prime 
Minister of the Indian Union, declared repeatedly in his 
official statements that U.S. investors would be guaranteed 
suitable profits and the right to export their profits to the 
U.S. in dollars. 

“The loan which the Indian Government received from 
the U.S. through the International Bank was made on the 
condition that it be used for agriculture and transport. 

“The idea of putting this restriction is perfectly obvious. 
The U.S. capitalists have granted these loans on the condi¬ 
tion that not a dollar of them goes to industriailse India. 
This fact alone, that the U.S. opposes the industrial develop¬ 
ment of the backward countries, reveals the predatory nature 
of their plans for ‘aiding’ these countries. 

“It is as clear as daylight to everyone that it is essential 
to industrialise a country if a base is to be provided for the 
national development of the backward countries in the 
direction of economic and political independence and com¬ 
plete emancipation from colonial oppression- 

“U.S. intelligence agents posing as specialists and experts 
have wormed their way into various committees dealing with 
problems connected with India’s economy. Thus very valuable 
information concerning India’s economy falls into the pos¬ 
session of U.S. agencies. Nehru’s visit to America and the 
negotiations he has entered into for the signing of a treaty 
of friendship, navigation and trade will have the effect of 
making India more subservient politically and economically 
to the U.S. 

“This is evident from the speeches Nehru made while he 
was there. In his address at the Foreign Press Club in New 
York he assured U.S. businessmen investing capital in India 
that they would have reliable guarantees and that they would 
have complete freedom of action. 

“Such are the prospects held forth by the U.S. pro¬ 
gramme for technical assistance to India. U.S. imperialism is 
playing on the fact that Britain is economically dependent 
on the U.S. to gain a hold on the biggest member of the so- 
called Commonwealth of Nations and to gradually edge out 
the former rulers of India. Under the guise of executing their 
plan of technical assistance the U.S. monopolies are not only 
turning India into their raw material appendage but are 
trying to make it the principal base for aggression and in 
their preparation for a new war in Asia. 

“The reactionary home policy being pursued by the 
Indian ruling circles, the repressive steps against the work- 
ers, peasants and other progressive democratic organisa- 


3 ? 


tions are directly linked with the implementation of the 
U.S. programme for aid to underdeveloped areas. The U.S. 
imperialists are trying to stamp out the democratic move¬ 
ment in India in order to turn that country into a base for 
reaction in South-east Asia, as a gendarme of the U.S. in the 
Pacific” 

What is the interest of U.S. monopolists in rehabilitat¬ 
ing Indian railways, apart from profits? Dyakov says: 

“A good portion of the loan granted” will go “in restor¬ 
ing and developing the very railways which are either strate¬ 
gically important or which make it more convenient for 
transporting raw materials. Importing railway equipment 
and rolling stock without promoting the whole engineering 
industry cannot, of course, solve India’s railway problem. 

“The railways will have a chance merely to resume more 
or less normal traffic which the foreign imperialists need. It 
will give them the opportunity to pump out cheap raw mate¬ 
rials and send them a flood of their own manufactures.” 

In its eagerness to secure exclusive possession of India’s 
resources, the American monopolists are attempting to oust 
their British rivals—so that India could be exploited by 
them alone. To quote Dyakov: 

“The deepening economic crisis in the capitalist world 
is causing the struggle for markets between the monopolist 
circles in various countries to sharpen. We have an illustra¬ 
tion of this in the competition between British and US. busi¬ 
nessmen to supply railway equipment and rolling stock to 
India. 

“During the Second World War the railways of India 
fell into a very sad state due to the ruthless way they were 
exploited. For the whole six-year period of the war the Bri¬ 
tish colonial authorities made no capital repairs at all to 
the tracks and no extra rolling stock was supplied. Certain 
sections of the track were pulled up, and the rails used in the 
construction of military strategic roads. Sometimes they were 
even dispatched outside the country. The railway lines that 
were working were overloaded to the extreme. The result was 
that the railway system quickly deteriorated and both rolling 
stock and track were ruined. 

“The biggest hindrance to the restoration of the railway 
system is the policy of the ruling circles inside the country 
who are keeping India as an agrarian and raw material ap¬ 
pendage of Britain and the United States. Another hindrance 
is the fact that there is no engineering industry in India, the 
result of 200 years of British colonial rule. 


32 


“The present fight that is going on between Britain and 
the United States to supply railway equipment to India weighs 
definitely in favour of the US. monopolies. Britain’s exports 
of railway material are falling off. U.S. businessmen are 
squeezing out the British partners with whom they shared 
colonial plunder. In February this year, the U.S. had orders 
for 303 railway engines from India; Britain, only 190. Certain 
of the Canadian firms which have received big orders for 
railway equipment for India are also controlled by the U.S. 
monopolies. 

“British influence in India is being undermined by the 
U.S. monopolies through the International Reconstruction 
and Development Bank. Only recently the Bank granted a 
loan of 34 million dollars to India for reconstruction and 
development of Government railways. Through this loan U.S. 
capital is inching its way further and further into Indian 
economy, especially into those branches that are of strate¬ 
gic importance, and all this will heighten the exploitation 
of the masses of Indian working people- 

“In easing out their British rivals from the strategically 
important business of economy, railway transport, the U.S. 
businessmen have their own mercenary imperialist aims in 
view. Those aims are to have easier access to the sources of 
raw materials they need to have greater opportunity for ex¬ 
ploiting the Indian people and for converting the country into 
a vantage ground in combating the national liberation move¬ 
ment in South-east Asia. 

“This struggle between Britain and the U.S. to supply 
railway equipment to India is a struggle between two robbers 
and it can only have one result. The Indian people will find 
the regime of colonialist exploitation intensified. 

“Only if the colonialists are driven off and there is a 
truly democratic transformation of the country, can there be 
a real opportunity of solving the most important economic 
problem, including that of railway transport. Only democratic 
transformation can make the railways of India a lever in 
the development of national economy and an improvement 
in the wellbeing of the broad masses of the people.” 

American capital is everyday making it plain that it 
wants untramelled right to loot and plunder India; that it is 
not satisfied with making loans to the Government but 
wants to directly invest in concerns in India. 

The bourgeoisie had tried hard to meet its need for fo¬ 
reign exchange for purchase of capital goods, etc., through 
the medium of State loans, where the rate of interest is fixed 
and is relatively low, and where control which goes with 


33 


the loan operates less directly. It has been given the blunt 
retort that if it were serious about acquiring sterling or 
dollars for industrial projects, it should make the political 
and economic climate of India healthy for direct investment 
by foreign capital. Thus in reply to the many pleas for a 
Marshall Plan for Asia, Truman’s answer has been a curt 
admonition to encourage the flow of private U.S. capital to 
‘develop’ backward areas. The World Bank, on which such 
high hopes were placed, has, after two years and many ‘in¬ 
vestigations’, condescended to grant two loans totalling 41 
million dollars for the purchase of tractors and locomotives 
as against the original application of 100 million dollars—a 
clear hint that if India wanted more dollars she should open 
her doors wide to private U.S. investors. The British mono¬ 
polies have achieved the same result by the niggardly relea¬ 
ses of India’s Sterling Balances so that sterling requirements 
for new industries should arrive in the form of investments 
by the British monopolies. 

With every new approach made by the bourgeois Gov¬ 
ernment, the American Government or other spokesmen of 
monopoly capital demand openly that India’s resources be 
mortagaged to America. Thus when Nehru attempted to ne¬ 
gotiate a loan of one million tons of wheat he was told to 
hand over India’s manganese and mica production. Manga¬ 
nese is a strategic war material used in tempering steel; 
while mica is essential for electrical goods. American mono¬ 
polists thus want to lay their hands on India’s strategic mate¬ 
rials and monopolise them for stockpiling for purposes of 
war. They want to draw India into the war economy of the 
Anglo-American bloc with India asked to produce raw mate¬ 
rials and connon fodder. Besides this they demanded that 
India must openly join the Anglo-American bloc against the 
Soviet nion, China an dother countries of Asia. With the rout 
of Chiang Kai-shek they seek to make India their war base 
and demand suppression of all democratic movements in the 
country. They thus demand open enslavement of India. 

The Indian capitalists are daily surrendering to this 
attack of American capital, thus opening the country to 
the most brutal exploitation. For the capitalists are prepar¬ 
ed to betray the people into the hands of the American mo¬ 
nopolists, sell the independence of their country for the sake 
of their profits, for the sake of a few crumbs from the Amer¬ 
ican table. 

Need one wonder why India’s capitalists ‘voluntarily’ 
joined the British empire—euphemistically called the Bri¬ 
tish Commonwealth? The bonds created through joint ex¬ 
ploitation of the Indian people, the bonds of Indo-British 


34 


deals have proved more powerful than the interests of the 
country and the freedom and independence of the people. 
Before the money-making power of these bonds, the humi¬ 
liation and oppression of the last two hundred years is for¬ 
gotten and the Indian capitalists consider themselves free to 
collaborate with the British in strengthening the chains of 
slavery and intensifying the exploitation of the people. It is 
through these bonds that Nehru finds himself in the com¬ 
pany of Malan in the Empire Conference — Malan, the 
Indian-baiter, the oppressor and persecutor of Indians in 
South Africa. 

The delicate ties between Indian and American capital 
that are being created through the Indian Ambassador in 
Washington are again proving more powerful than the inter¬ 
ests of the country, than the freedom of the people. They 
have torn off the mask of neutrality in foreign politics and 
reveal that on every vital issue India’s representatives at 
UNO side with the Anglo-American war bloc. It is a strange 
neutrality that supports at the UNESCO meeting the 
American plan for exploitation and enslavement of back¬ 
ward areas including India but rejects the Soviet plan for 
free development of the economy of backward countries and 
for all help to them without attaching any conditions en¬ 
croaching on national sovereignty. It is neutrality indeed 
which rejects the Soviet proposals for peace, for destruction 
of atomic weapons, including atom bombs in possession of 
the USA; but supports the Anglo-American war proposals 
in the name of peace, proposals which allow USA its stock¬ 
pile of atom bombs. 

It is these new ties that explain the fact that while the 
USA is exploiting the Kashmir issue against the interests of 
the people of Kashmir, India and Pakistan—the representa¬ 
tives of the Indian and Pakistan Governments are to be 
found in the American camp; the fact that the Indian Gov¬ 
ernment recognises the Bao Dai Government, the puppet of 
the French imperialists, while it does not recognise the Peo¬ 
ple’s Government of China headed by Mao Tse-tung; and 
finally, the fact that Nehru’s Government does not protest 
against direct and indirect American support at UNO to 
South Africa, to its policy of racial persecution of Indians, 
but at the behest of American imperialists protests to the 
People’s Government of China against alleged ill-treatment 
of an American Consul. 

These same ties explain why every effort is made to 
build economic and trade ties with Britain and America, 
while there is no attempt to build any broad economic rela¬ 
tions with the Soviet Union. How can camp followers of 


35 


the imperialist camp think of building economic relations 
with the Socialist Soviet Union though this might be in the 
interests of the people of India? 

There need be no surprise however about this alliance 
of the Indian capitalists with American and British capital¬ 
ists against their own people, against the democratic and 
Socialist forces in the world. The capitalist class always 
places its selfish interests above the interests of its country 
and people. Lenin had pointed this out when he wrote: “the 
general alliance of the imperialists of all countries lying 
at the basis of the capitalist economic alliance, an alliance 
which is natural and inevitable for the defence of capital 
which knows no fatherland, has proved by many of the 
biggest and greatest episodes in world history that capital 
places the preservation of the alliance of the capitalists of 
all countries against the toiling people above the interests 
of the fatherland, of the people and everything else.” 

CONCLUSION 

(i) The volume of foreign investment is growing 
inevitably resulting in a heavier ‘drain’ of the products of 
the Indian toilers’ labour, in their more intensified exploita¬ 
tion and the sharpening of the struggle between the work¬ 
ing masses and imperialism, that is, the foreign monopolies. 

(ii) The pattern of foreign investment is now unmistak¬ 
ably in collaboration with the Indian bourgeoisie. Foreign 
capital is being guaranteed a safe and secure future for ex¬ 
ploitation by taking in as partners the Indian capitalists and 
the bourgeois State. The struggle against the tyranny of 
capital becomes a struggle against this common front of the 
exploiters—of the foreign monopolists and Indian landlords, 
feudal Princes and capitalists, which is directly and aggres¬ 
sively defended by the Indian bourgeois State. 

(iii) The prospect for the Indian masses is not rising 
living standards through transformation of our feudal, colo¬ 
nial economy into an advanced, industrialised one. Petty 
progress in the setting up of light and secondary industries, 
the entrenching of foreign monopoly interests in key 
branches, the handing over of technical control of the 
entire economic structure to foreign capital—such are the 
‘gains’ in return for which the Indian bourgeoisie and their 
State have agreed to offer every facility to foreign capital, 
and tie our economic future—and inevitably, our internal 
and foreign policy—to the Anglo-American monopolies. 

(iv) Against this treachery, against this plan which will 
retain in essentials the colonial economy of India, against 


36 


this prospect of renewed and more intensified exploitation 
by the combined front of foreign monopolists and Indian 
capitalists and feudalists, the working masses must be con¬ 
solidated into a solid fighting camp, fighting against national 
enslavement to Anglo-American imperialists and for the 
real independence of the country; fighting against the war- 
plot of the foreign monopolists and Indian ruling circles 
which seeks to make India the war-base against the USSR; 
fighting for a policy of peace in alliance with the Soviet 
Union, China and the other countries of People’s Democra¬ 
cy; fighting to replace the present Government of impe¬ 
rialist-bourgeois-landlord alliance by a People’s Democratic 
Government which alone can guarantee real independence 
and open the way to end all economic misery and exploita¬ 
tion. 


TABLE ‘A’ 

PAID-UP CAPITAL OF COMPANIES AT WORK IN (ALL) INDIA 
BUT REGISTERED ELSEWHERE 

In £ (000) 

Description 1928-29 1932-33 1936-37 1939-40 1942-43 1943-44 1944-45 1945-46 1928-46 


37 


IS) 

QjO 

cu 


-f- I I 


^-00 
05 CO 

© o 


*H 

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H-v O LO 

IflN 00 CD 

HCO iH if 

w t- w © 

1-1 LO 


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NH 
w ©" 


t~ © 


if CO 

lo © 

wCO 


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If © 


CO 
© LO 
^°0 
00 


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<M CM © © 
r-(CO t-H if 


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If If 


H-. © 

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iH if iH If 

w i> w ©" 

rH © 


© © 
w°0 

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t-H if rH if 

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© © 


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HH CM 05 
w ©" w ©~ 


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© © 


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W ©" 

if 


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© © © © 

HH H CM 


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CM © 


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C ~ T "t 
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CM CO O © 

HCM^ CM if 

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39 

TABLE ‘B’ 

PERCENTAGE SHARE OF DIFFERENT BRANCHES 
OF FOREIGN INVESTMENT IN INDIA 


Per- 


Description 

Paid-up 
capital 
1928.29 
(£ 000) 

Percentage 
of total 
paid-up 
capital 

Paid-up 

capital 

(1945-46) 

centage 
of total 
paid-up 
capital 

1. Banking, etc 

156,189 

21.3 

186,068 

25.7 

2. Transport & Transit 

73,533 

10.002 

77,640 

10.7 

3. Public Service Cos- 

12,838 

1.7 

8,853 

1.2 

4. Chemical and Allied 
trades 

22,286 

3.04 

17,320 

2.3 

5. Iron, Steel, Ship¬ 

building 

47,431 

6.4 

50,465 

6.9 

6. Engineering 

86,461 

11.7 

99,801 

13.8 

7. Agencies (including Ma¬ 
naging Agencies) 

1,875 

.2 

3,190 

•4 

8. Miscellaneous Trading 
& Manufacturing Cos. .. 

82,522 

11.2 

100,068 

13.8 

9. Mills & Presses 

3,605 

.4 

4,080 

.5 

10. Planting Cos. 

31,552 

4.3 

30,071 

4.1 

11. Mining & Quarrying .. 

170,984 

23.3 

125,377 

17.3 

12. Breweries & Distil¬ 
leries 

600- 

.08 

1,600 

.2 


(Source: Annual Report of Joint Stock Companies at Work in 
India. The percentage figures have been calculated on the basis 
of the grand total shown in Item 13 in Table A. In this table, too, 
all classes of companies have not been included.) 


Printed by Jayant Bhatt, at the New Age Printing Press, 190-B, Khet- 
wadi Main Road, Bombay 4, and published by V. M. Kaul for the 
Communist Party of India, Raj Bhuvan, Sandhurst Road, Bombay 4. 









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215 pages Price As. 6. 

What is Socialist planned economy? What is its role? 
How is this planning done? How is the plan checked up 
and implemented? How does the entire planning organisa¬ 
tion function? Through what stages of planned economy 
has the Soviet Union passed since the victory of the October 
Revolution? 

A clear and lucid exposition of all these questions which 
would be of interest to beginners and experts alike. 


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BOMBAY, 4