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Multinational corporations are routinely complaining that they do
not have a level playing field in India - and that justice and WTO
alike demand that they get it. On the other hand, Indian
businessmen also feel that they are denied a level playing field
vis-a-vis MNCs and that they must be protected from the cowboy
approach of MNCs. Both sides, therefore, want a level playing
field. It should, therefore, be possible to examine where, to what
extent, for whom and how it may be levelled.
Indian businesses certainly have certain advantages in India. They
know the country and the people. They know their workers, their
managers and their consumers. And they know their government.
However, these are advantages enjoyed by every business on its
respective home ground.
Cheaper Labour
We have the advantage of cheaper labour; but this labour is not as
skilled as in the West. And, in any case, we have to employ much
more labour than there. Also, when an MNC starts manufacturing in
India, it also acquires the advantage of cheaper labour.
In addition, Indian business did, for years, have the protection of
import substitution and high tariff walls. However, today, these
walls have been all but pulled down. So much so that, to give just
one example, today many steel mills in India, big and small, have
had to close down because of cheaper imports. But, on the other
hand, the big foreign companies - the MNCs - have tremendous, even
overwhelming advantages. To treat Indian and these foreign
companies on par would be like throwing the lamb to the wolves - in
the name of 'equality'.
Because the West has -dominated the world for the last two
centuries, its domination shows in every sphere. Since it has more
wealth and more capital, interest rates are much lower in the West.
While an American MNC may have to pay only five per cent interest,
an Indian company has to pay 20 per cent.
The same with technology. The West is not only ahead of us in
technology, it often refuses to sell state of-the-art technology to
us. The US not only refused to sell cryogenic engines to us; it
pressed Russia not to sell them to us.
Although much of the oil comes from the Persian Gulf area, world
oil prices are determined by adding what it would cost to transport
this oil to Texas, in the Gulf of Mexico, and ' using it as the
base price. No wonder oil is cheaper in the US than in India. All
this is possible only because American and some other western oil
companies control the world petroleum market.
Smoking Message
These companies even organised the oil crisis of the seventies, to
raise oil prices high and earn oil super-profits. These oil
profits were then used by the World Bank as a bait to tempt
developing countries to borrow money by the billion - and so walk
into debt-traps. As a western rubber-baron, engaged in felling
even great 1,000-year old trees, put it candidly: "There's a story
about the golden rule. He who has gold, rules." Nor is this
western predominance confined to the material factors of
production. It is, if anything, even more pervasive in the
non-physical factors Of economic life. Today we are living in a
world of instant communications and informatics. And here again
the West is miles ahead of us. There are not only more western
satellites in orbit monitoring the world - and its marine and
underground resources western electronic media is penetrating every
nook and corner of the world. It is influencing not only economic
choices but also tastes and values. The western advertising blitz
is pushing western products. Today even Delhi police station
name-boards carry Pepsi advertisements. When developing countries
refuse tobacco ads, these MNCs sponsor sports events to promote
their smoking message. And so while smoking is going down in the
US - because of its known carcinogenic properties tobacco company
profits are going up! Mr Lawrence Summers, chief economist of the
World Bank openly advocated that polluting industries and garbage
be exported to developing countries.
In the name of a "level playing field", American banks have set up
shop in India. But they never fulfil the social responsibilities
shouldered by Indian banks, which latter have to open branches in
rural areas and give loans on concessional terms to agriculture,
small scale industry and co-operatives. This inequality shows even
in the realm of law. Foreign companies coming to India do not want
to be judged by Indian law; they invoke the law in a third country.
In simple words, the level playing field of MNCs amounts to "heads
we win and tails you lose."
The West has not only more guns and more gold - and even more grain
in a hungry world - with which to dominate the world. All the
powerful international organisations - the UN, World Bank,
International Monetary Fund, World Trade Organisation and
International Court of Justice - are based in the West and captive
to the West. As Mr Samuel P Huntington of Harvard candidly puts it
in an article in Foreign Affairs Quarterly: "Through the IMF and
other international economic institutions, the West promotes its
economic interests and imposes on other nations the economic
policies it thinks appropriate.',' This leads to resentment and the
emergence of a conflict between "the West and the Rest". And so Mr
Huntington concedes: "In any poll of non-western peoples, the IMF
undoubtedly would win the support of finance ministers and a few
others, but get an overwhelmingly unfavourable rating from just
about everyone else".
Speed-breakers
But instead of redressing the grievances of the South, Mr
Huntington wants "the West to maintain the economic and military
power necessary to protect its interests in relation to these
civilisations." This is the reason why the US does not want India
to go nuclear or develop a missile capability. If India developed
military muscle, the West would not to able to extract more and
more concessions from us for its MNCs. It will thus be seen that,
in the name of 'globalisation', the West is only trying to
perpetuate its hegemony on the world.
Coming back to the economic domain, we don't have to be taken in by
the glib talk of "free trade". Just as roads need speed-breakers,
developing economies need protection. A 100 years ago, when
Britain asked the US to abolish its tariff walls and engage in free
trade, then US President Ulysses Grant reminded it that the UK had
protected its industries for 1 00 years before launching out on
free trade. The US, said Grant, would also do the same after 1 00
years. And so may we in the fullness of time.
(The author is a BJP Rajya Sabha MP)
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