Paragraph on Multinational Corporations in India

Paragraph on Multinational Corporations in India!

MNCs have a strong hold over the Indian economy. The Indus­trial Licensing Policy Inquiry Committee stated that there were 112 companies in India in 1966 with assets worth Rs. 10 crore or more.


Of these, 48 companies were either branches of foreign companies or Indian subsidiaries of foreign companies. In addi­tion, there were 14 Indian companies virtually controlled by foreigners. These 62 companies had Rs. 1,370 crore worth of assets.

In March 1977, there were 482 branches of MNCs operating in India. Of these 319 were branches of U.K. based companies. Next to U.K., U.S. A. based companies had 88 branches in India. It is reported that the MNCs operating in India have raised the major portion of their financial resources from within the Indian economy. This fact goes against the argument that the MNCs bring in large amounts of foreign capital with them.

The real position is that the MNCs raise most of their capital requirements within the country itself. The MNCs are operating mainly in the field of agriculture and allied activities, commerce, trade and finance, processing and manufacture, transport, communication and storage, services and mining and quarrying in India.

A common form of MNC participation in Indian industry is through collaboration agreements. Between 1948 and 1988, 12,760 foreign collaboration agreements were approved in India. Of these, 6,165 were approved during the period between 1981 and 1988.


As a result of liberalisation measures announced in the 1991 Industrial Policy, there was a spurt in the number of foreign collaboration agreements. The Government had approved 8,137 foreign collaboration proposals during the period 1991-1995.

In India, the MNCs are controlled by the Government agen­cies such as the Ministry of Company Affairs, the RBI, the Min­istry of Industrial Development and the Ministry of Finance. Since there are a number of agencies, there is no close co-ordination in their working. There are no objective criteria for approving pro­posals. The procedure adopted by the various Ministries for ap­proval is lengthy and cumbersome.

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