14 SOCIAL SCIENTIST foreign captial and technology did not lead to a dependent economy. This explicit belief governed official policy towards foreign equity participation, where the clause permitting majority foreign holding as an exception virtually became the rule in a number of industries, •including the drugs and pharmaceutical industry.^ Moreover, as H K Paranjapc has pointed out, "the need to keep aid-giving Governments and the World Bank happy was an important reason for the soft approach adopted by the Government towards foreign collaborations and foreign investment".7 The liberal policies towards foreign capital facilitated the dominance of MNCs in the Indian drug industry among others.8 The drug industry is a vitally important one because of its "role... in maintaining the health of the nation". Yet, even in this industry, the government made virtually no attempt to regulate the multinationals in national interest. After independence most multinational drug companies established themselves as trading concerns with insignificant initial investment.9 Initially they imported finished drug formulations from the parent company and marketed them. Subsequently, formulations were imported in bulk, and repacked locally. Later, because of belated government pressure, the ingredients of the formulations were inported as bulk drugs, which were processed into formulations on a''job-work" basis by Indian concerns. The Hathi Committee noted that "all these activities were carried on without investing in factories or employing technical personnel".1 ° Between 1952 and 1965, multinationals in the drug industry received "a big impetus to boost their turnover" as "permission letters" to produce 364 items were granted to 15 leading foreign units.11 Only four of these items were bulk drugs, the rest being formulations "many of which could have been easily manufactured by the Indian sector". These formulations included what the Hathi Committee termed "house-hold remedies" which did not require a doctor's prescription, for example, "cough mixture, ring worm ointments, 'health salts', gripe mixtures, laxative tablets, eye drops, malted tonics, digestive tablets" and so on. In a significant number of these cases no capacity was specified.12 In the 1965 - 1967 period, in the background of developing shortages in the drugs industry, the devaluation of the rupee and the liberalization of import policy, licensing policies were further liberalized. In 1966-67, existing manufacturers were allowed to diversify production into the manufacture of "new articles" and to expand licensed or registered production capacities up to 25 per cent, subject to the condition that no additional plant and machinery