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I am not anti-MNC but pro-swadeshi, says George Fernandes - The Financial Express

Debashis Chaudhuri ()
March 9, 1998

Title: I am not anti-MNC but pro-swadeshi, says George Fernandes
Author: Debashis Chaudhuri
Publication: The Financial Express
Date: March 9, 1998

The following is the text of interview with Samata Party
president George Fernandes:

You have been talking about providing protection to the Indian
industry, what kind of protection do you think is appropriate?

Protection would primarily mean providing a level playing field
for the domestic industry which it has been trying for even
during liberalisation. But it never got it. Secondly, it would
mean that competition in whatever form should not put the Indian
industry, at a disadvantage vis a vis multinationals. The country
should not become a dumping ground for the industries from
abroad. The chemical units in Gujarat including BMT are at the
receiving end because of dumping and there is absolutely no
action on part of the government.

Thirdly, the volume of export. Obviously, we are not doing very
well in exports and we would have to find out the reason for it.
Whether it's quotas, or, tariffs, or, any overt or covert actions
of some industrialised countries which is making us fall behind.

In case there is a coalition government with BJP being the
largest party, what do you think will be its impact on overall
economic policy?

I do not think coalition has any effect on overall economic
policy as such. If its a matter of policy or framework and is
part of our domestic as well as global commitments then I do not
visualise any problem with regard to their implementations.

We have instances where coalition is the order of the day. In our
case, this is the third experience of such a case. Whether it is
the French economy or the Italian economy most of the post-war-
European economics prospered even when governments were coming
and going. So I don't think there is any substance to that fear.

You have been thinking of some disincentives to foreign companies
especially in the consumer goods. What are the kind of measures
you have in mind?

I am thinking more in-terms of incentives to the domestic
companies rather than disincentives to the foreign companies. The
western companies have colossal amount of wealth. Take for
instance our softdrink industry where two major Indian players
were reigning when Coke and Pepsi came. And, now the entire
Indian market have been captured by them.

Coca Cola's profit last year was $4.13 billion. Our total market
for soft drink last year was less than Rs 3,000 crore. In this
situation how do you think our companies can withstand such an
assault? I think that the question is to give incentive cover to
the domestic industry rather than providing disincentives to

In case of a by and large free domestic market, the foreign
companies can easily dominate the Indian companies, undercut
them. These are the areas where protection is required. Adequate
incentives should be provided to the Indian industries. I don't
see any reason why the country should become the graveyard of the
domestic industry.

Some of the sectors have been asking for antidumping duties. What
is your opinion regarding that?

A programme should be worked out on a priority basis rather than
a vague assurance.

How would you rank the sectors in terms of their priority for
securing protection from the government?

First priority would be those sectors which are facing sickness
like the small scale sector. Investment is needed where jobs are
created not affecting existing jobs. Unemployment is the most
crucial factor while framing economic policies. There are 40
million registered unemployed and in the rural sector the semi-
employed number another 100 million. The price that we are paying
is in terms of all types of social tension.

It is distressing that all the debates pertaining to the middle
and upper middle class in India are on the quality of goods.
People are arguing that protection should be removed so that
there can be competition and we can get the best in the world.
All those are important but as a nation we should see to it that
no one goes to bed hungry. Our targets have to be in that

Giving protection and incentives to Indian companies, some feel,
is though a colourful statement yet cannot be implemented. On the
other hand, statements that Coke and Pepsi should go out can have
a serious effect on employment situation?

I have never said that I want to throw out anybody. People keep
saying that I threw out Coke but I was well within law to ask
them about the formula they were so secretive about. The Indian
legislation stated that in such a situation I could either ask
them to go out or to dilute their equity to 49 per cent and they
opted for the first.

However, ever since Coke and Pepsi have entered the sector, the
smaller players, the bottlers, the entire industry is being
bought out by them. I see no reason why they should be allowed in
such low technology sector. Even entrepreneurs like Ramesh
Chauhan have come to me later after being bought out and

I don't see any reason why foreign companies should not be
allowed in hi-technology areas. But not protecting domestic
companies in low-technology areas would mean allowing economic
invasion on by foreign powers.

There is a gap between what the companies mention in the
agreements and their actual practice. The government should
initiate investigation on these lines.

Do you think government spending needs to he stepped up in
certain areas?

I think the areas need to be properly identified. Free market
does not mean that the government should be a referee while
others come and play football on our grounds. The government's
intervention is a must for the prosperity of the domestic
industry. Even the American President intervenes in order to
protect the interest of the US companies.

As the union railways minister I had to negotiate loan with the
World Bank and I was pressurised regarding the entry of Pepsi in
the country. I was taken aback that World Bank, which is not an
agent of Pepsi. is telling us that entry of Pepsi is the litmus
test for sanctioning loan. I told the negotiator for the World
Bank that we are not against allowing American companies in hi-
technology areas, which was evident in shortlisting General
Motors and General Electrics for projects of the Indian railways,
but in certain areas we need to be circumspect.

Don't you think you can face similar problems while negotiating
with World Bank once you are part of the next government?

It is too early to comment on this since no one knows who will
finally be part of the government. I do agree that the government
has to negotiate but it should do so in national interest. The
entire market is lying empty while the investment is coming only
in sectors like capital goods and automotives.

So much noise is being made that the world is watching, sensex is
falling. I am not impressed by sensex since it rises when Bal
Thackarey comes to the crossing and announces something. It is a
gambler's index providing a few their daily kill.

What do you think should be the policy?

Wherever there is breach of law it should be treated with
seriousness. If an Indian breaks the law, he goes to jail.
Somebody from the Mahatma Gandhi family has been facing such
consequences currently. However, if any of President Clinton's
relative does something similar one phone call can ensure
entertainment from the country's prime minister and red carpet
treatment. I think equality before the law should be ensued for
both Indian and foreign companies. I do not believe that western
capital is waiting for signals. They have the money and I hey
want to dictate terms. But in such a situation we should follow
China. In case of corruption, the erring companies should face

What are your views on the disinvestment of public sector units?

I personally do not feel that disinvestment should take place in
this manner. I think disinvestment should be reviewed and our
government should set up a commission for both disinvestment and
privatisation of the public sector. After all the money that has
gone in to the public sector is the tax payers' money and at a
value which is not the same as today. Then how come the shares
can be transferred at Rs 8 per share.

Would you allow closure of the terminally sick?

In a sick unit, workers are often targeted as the cause of
sickness. As a former industry minister and MP, I have studied
carefully that in nine out of 10 cases, bankers are the cause of
sickness. They do not play their role when required. We need an
integrated plan to address the real problem and identify the real
problem maker without pressurising the government exchequer.

What kind of message would you have for the MNCs and those
looking for entry?

First, they have to be law abiding and should be prepared to be
treated at par with the domestic companies. Second, there would
be level playing field prepared for the domestic companies.
Third, the core area is export where they should be focusing

I would like to make it clear that I am not anti-MNC but, pro-

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