Social Scientist. v 12, no. 133 (June 1984) p. 23.


Graphics file for this page
ASHOK V. DESAI*

New Forms of International Investment in India

New forms of investment, to use the term designed by Charles Oman (1), have one characteristic in common, namely that the "investor", whether he actually invests in the enterprise that he assists or not, receives a price for the assistance that in one way or another depends on the economic performance of the enterprise. His interest therefore lies not simply in selling somethingóbe it technology, management expertise, marketing services, or some other valuable serviceóbut in ensuring that the service actually benefits the enterprise. It is possible to identify a large number of marketable services which share this characteristic to a greater or less extent. But some of them have witnessed a great boom in the postwar period; it is to these that Oman's paper refers.

The present paper discusses the new forms of investment which have been prevalent in India. Some of the new forms are virtually absent in India; we mention them below and give the reasons which in our view account for their absence.

Franchises differ from other licensing arrangements in that the element of marketing assistance, including the assignment of a brand name, is their dominant feature, whilst the transfer of technology tends to predominate in licensing agreements. They have been inhibited in India by the fact that the import of trade marks divorced from technology was disallowed from the time when technology imports catne to be regulated. Since the late sixties there has been a general embargo on the use of foreign brand names in domestic sales. The only prominent arrangement which could be called a franchise was that of Coca Cola, which assisted Pure Drinks, a Delhi bottler, to set up Coca Cola bottling plants all over the country using concentrate imported from the parent corporation through a subsidiary from the fifties onwards. The Indian subsidiary was under constant pressure from the government to produce the

* National Council of Applied Economic Research

This paper was written at the personal request of Charles Oman over a weekend in Paris paid for by the OECD Development Centre. Apart from that it owes no debt, financial or intellectual, to the OECD, the NCAER, or anyone else, and the views expressed, right or wrong, are entirely mine.



Back to Social Scientist | Back to the DSAL Page