There is a certain mindset doing rounds in the psyche of the nation, which is denouncing the competition in business vis a vis the foreign companies and FDI.
Various twisted theories are being touted to prove how the nation is being robbed off ( or of) its riches and how very soon we shall be poorer.
It may have been alright if these theories came from the general population, unfortunately they emanate from various professionals of the business community or who support the business community like MBAs.
Here is why I think that such theories are outdated:
1. In modern business world , capital in form of currency is not restricted within boundaries of any countries. A plain load of wealthy tourists can easily spend more money on a 2 week holiday than the bottom line of a small cap company balance sheet. In turn they need not even get any durable or non durable product back into their country.
2. Whether it is a foreign or a domestic company they have to pay customs, excise , corporate and Income tax alike. There is no discrimination.
3. Competition does not mean loss of jobs- as with competition various latent demands of products is created.
4. Most of the swadeshi brands like Neem toothpaste that we think are Indian are already owned by MNCs and various brands like Burnol which belonged to British company are owned by Indian companies.
5. With the onset of liberalization of 1991, the Indian companies have no doubt expanded , but they have also siphoned out the profits by way of under and over invoicing. This money that is coming by way of P-notes into the economy is actually and factually not FII but the Indian money routed back.
6. In keeping with the above it is better to have the foreign funds come in as FDI rather than FII; since the latter vanishes with the season.
7. If we are so fixated about promoting Indian companies , then why do these Indian companies not introduce some cutting edge technologies or develop greenfield factories with entire Indian input in terms of material resource and Indian capital.
8. Why should these Indian companies be allowed to set up by importing finished and semi finished machinery. At the end of the day IF anyone is going to set up a company in India- they will use Indian human capital- so why the fuss.
9. Last but not the least quite a few large Indian conglomerates have started appointing their CEOs from foreign countries. Well if they can't find someone to head from India then why the patriotic cry.
Various twisted theories are being touted to prove how the nation is being robbed off ( or of) its riches and how very soon we shall be poorer.
It may have been alright if these theories came from the general population, unfortunately they emanate from various professionals of the business community or who support the business community like MBAs.
Here is why I think that such theories are outdated:
1. In modern business world , capital in form of currency is not restricted within boundaries of any countries. A plain load of wealthy tourists can easily spend more money on a 2 week holiday than the bottom line of a small cap company balance sheet. In turn they need not even get any durable or non durable product back into their country.
2. Whether it is a foreign or a domestic company they have to pay customs, excise , corporate and Income tax alike. There is no discrimination.
3. Competition does not mean loss of jobs- as with competition various latent demands of products is created.
4. Most of the swadeshi brands like Neem toothpaste that we think are Indian are already owned by MNCs and various brands like Burnol which belonged to British company are owned by Indian companies.
5. With the onset of liberalization of 1991, the Indian companies have no doubt expanded , but they have also siphoned out the profits by way of under and over invoicing. This money that is coming by way of P-notes into the economy is actually and factually not FII but the Indian money routed back.
6. In keeping with the above it is better to have the foreign funds come in as FDI rather than FII; since the latter vanishes with the season.
7. If we are so fixated about promoting Indian companies , then why do these Indian companies not introduce some cutting edge technologies or develop greenfield factories with entire Indian input in terms of material resource and Indian capital.
8. Why should these Indian companies be allowed to set up by importing finished and semi finished machinery. At the end of the day IF anyone is going to set up a company in India- they will use Indian human capital- so why the fuss.
9. Last but not the least quite a few large Indian conglomerates have started appointing their CEOs from foreign countries. Well if they can't find someone to head from India then why the patriotic cry.
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