4 SOCIAL SCIENTIST companies had earlier found a lucrative export market in India and the imposition of tariffs and quantitative restrictions on imports in the post-independence period meant that the mere defence of the exisiting markets required that they begin operations within the country. And oligopolistic rivalry made such a decision imperative. However, the acceptance of even those restrictions imposed on foreign companies by the government meant that in many, if not all, instances, the profits earned through conventional channels like dividend repatriation, technical fees and royalty payments fell short of the critical minimum aimed at. Royalties are a given percentage of sales and hence ensure'only a certain minimum margin. Technical know-how fees, similarly, are a once for all given. On the other hand, in the case of dividends, the dilution of equity implies that the share that foreign investors who control demestic firms can obtain from a given distributed profit is decreasing over time. Finally, all the items are subject to the tax laws of the land so that the extent of repatriation increasingly falls short of the foreign claim on distributed profits as the size of this claim increases. Thus, new mechanisms had to be devised for repatriating profits abroad, so that these companies could encash the benefits of the monopoly power they wield. In fact, it is the source of this monopoly power, namely, the control over technology, which explains the ability of these companies to earn planned returns despite controls on dividend payments and high rates of taxation. Technology itself, it is now widely accepted, is a package consisting of machinery and equipment, intermediate products, people's skills and even systems of marketing and distribution.1 Hence control over the marke for technology implies a certain degree of control over the market for associated inputs as well, since the package (along with foreign capital) can be offered as an integrated whole to buyers of technology. Most often, along with the offer of foreign capital and technology, developing countries are forced to accept a set of restrictive clauses which inhibit the diffusion of techniques, prevent the export of products to countries where the multinational corporation already operates an independent profit centre, and above all ensure the purchase of intermediates from the parent company or an associate. Even if these conditions are not stated explicitly, control through ownership and technology could ensure their acceptance. The last of these conditions, namely, the tied purchase of intermediates permits the multinational corporation to charge prices on the sale of intermediates far in excess of the ruling international price. This process of "transfer pricing" which is much discussed in the literature, permits the transfer of surplus to areas where taxes on pr6fits are the lowest, and amounts to a concealed repatriation of profit that is by no means affected by the laws with regard to ownership, profit repatriation or taxation. With the expansion in the operation of the multinationals and, therefore, an