24 SOCIAL SCIENTIST
concentrate domestically, but warded it off by exporting various goods like advertisement hoardings and tea and earning import replenishment licences thereby. In 1977 the government asked Coca Cola Corporation, under the Foreign Exchange Regulation Act of 1974, to reduce its shareholding in its subsidiary to 40 per cent, and rather than do so, Coca Cola left India Pure Drinks began to manufacture a concentrate which was a close substitute of Coca Cola; and with its help managed to capture for its new brand, Campa Cola, virtually the entire market commanded by Coca Cola.
Management and service contracts are quite unknown in India These are prevalent in countries with severe shortages of professionals and managers. Not cnly are these in plentiful supply in India, but their salaries are considerably lower than abroad. Hence foreign enterprises also tend to use predominantly Indian managers. This may also be due to the fact that the Indian business environment—government controls, labour relations, the working of the markets—makes it difficult for foreign managers to use their skills with advantage.
Product-in-hand contracts, which are a combination of turnkey and management contracts, are also absent for the same reasons.
Production-sharing and risk-service contracts find extensive use only in the oil industry. When Exxon (then Stanvac) built a refinery in India in the early fifties, it also took up an exploration contract for some blocks in northern India. In 1956 the government took the decision to exclude the private sector from the oil industry, so no exploration contracts were given till the oil crisis of 1973. Then the urgency of oil exploration was realized, and production-sharing contracts were made with Reading and Bates for the exploration of a block off Kutch on the west coast and Asamera for the survey of a block off Vishakhapatnam on the east coast;
neither contract led to any discovery. After the next rise in oil prices in 1980 the government again put out a large number of onshore and offshore blocks on offer. Though over sixty offers were received, only one contract was signed with Chevron for an offshore block off the west coast.
International subcontracting has also ,been far less important in India than in some Asean countries and South Korea. Since it has failed to grow despite strong encouragement from the government, it merits more detailed discussion We shall' return to it in section VI
The plan of this paper is as follows In section I we discuss the evolution of government policy towards foreign investment In section IT we discuss foreign direct investment. We go on in section III to joint and minority ventures, and in section IV to licensing arrangements In section V we discuss plant construction, within whose context we place turnkey contracts In section VI we turn to subcontracting. In section VII we conclude with our overall view of the forces that have shaped the new forms of investment in India.