MULTINATIONALS AND SELF-RELIANCE 15 other than indigenously procured balancing equipment, was installed.13 Later, in 1970, this concession was withdrawn, and the diversification which had taken place earlier had to be regularized through "carrying-on-business" (COB) licence. Under this new procedure, 12 foreign and five Indian companies obtained COB licences covering 215 formulations and 20 bulk drugs. The above liberal policies, the Hathi Committee noted, were mainly responsible for the foreign hold over the drug and pharmaceutical industry. This resulted in an outflow of foreign exchange amounting to about Rs 26 crores towards the payment of royalty, technical fees and dividends during the period 1969 to 1973 alone. Further, this figure did not include the additional foreign exchange remittances in the form of purchases of bulk drugs, intermediates and so on by the foreign companies at prices dictated by their foreign principals. "These prices", the Hathi Committee averred, "bear no relation to either the cost of manufacture of the final products or international prices."15 The Hathi Committee also highlighted the fact that the MNCs in the drugs industry "usually discourage" their R&D staff from developing "technology on their own". These practices made "our industry permanently dependent on overseas expertise and technology".1^ Taking into account the above facts, the Hathi Committee pointed out that the "continued presence...of the highly profit motivated multinational sector can but promote only the business interests of this sector. Their presence in India, as a part of their global effort to capitalize on human suffering in an organised manner, must therefore cease as early as possible". The majority in the Committee therefore "strongly recommend(ed) that the multinational units in...drugs and pharmaceuticals should be taken over by Government and managed by the proposed National Drug Authority".17 All members however agreed that the drug industry should not be eligible to preferential treatment as specified in the guidelines of FERA (Foreign Exchange Regulation Act) of 1973 and Appendix I of the Industrial Licensing Policy of February 1973. The Committee recommended that foreign drug units should not only "be directed to bring down their equity to 40% forthwith... (but should) further reduce it progressively to 26%". Moreover, it was recommended that the dilution of foreign equity "should not take the form of dispersed holding(s)...by a large number of Indian nationals, ..because such widely dispersed holding will not, in any way, reduce the effective control of the foreign equity shareholders. In order to serve national