INDUSTRIAL POLICY AND MNCs 17 ready to "supplement internal sources of capital with fbeign capital....in our mutual interests."10 Moreover, the influential Birla-owned Eastern Economist, in February 1950, approvingly referred to the new policy statement." On its pan, jthe Indian government had litde reason to reconsider its policy. It had, as Kidron has noted, adopted this policy largely because of severe economic constraints. Poor harvests together with the loss of food-marketing areas to Pakistan, necessitated large-scale imports of food-grains, rising from less than 1 million tons costing Rs. 26 crores for undivided India, to a peak of5lA million tons valued as Rs. 254 crores in 1951-52.12 Further, a lack of domestic capital investment forced the government to turn towards foreign capital.13 The urgency increased as the Congress leadership was aware that "something had to be done to start Indian industry moving lest social and political chaos engulf the country....."14 Under the circumstances, therefore, the government was not inclined to reconsider its policy towards foreign capital despite FICCI pressure, especially since some leading industrialists like G.D. Biria did not seem as perturbed.15 However, important Congress leaders like Sardar Patel and H. K. Mahatab sought to reassure the big bourgeois-led chambers and bodies by reiterating the Swadeshi principles.16 The 1952-53 recession and deflationary crisis in the Indian economy17 forced FICCI to sharpen its criticism of the liberal policy towards foreign capital. At its 16th annual meeting, FICCI aopted a "Swadeshi Resolution" in which it deplored "the present indifference to the importance of Swadeshi in the social and economic regeneration of the country...."18 In a confidential communique to the government, the FICCI claimed that foreign capital had created difficulties for indigenous industries "without any substantial gain to the country." It, therefore urged "that foreign capital, new or existing, should not be permitted to adversely affect parallel Indian industry", and reiterated its earlier stand that foreign investment be allowed only into the new and highly technical sectors of the economy where there was no Indian industry.19 By 1954, the economic situation eased.20 In May that year, a FICCI publication on imports and industrial development omitted all proposals for the regulation of foreign firms.21 In January 1955, a FICCI sub-committee including B.M. Biria, J.R.D. Tata and Tulsidas Kilachand among others, "generally welcomed the flow of foreign capital into India..... (including) in the consumers' industries, like textiles, cement, paper etc., where India has already established herself."22 A FICCI press statement in March welcomed foreign capital "as being of value to the rapid industrialisation of the country." But the crucial test was to be "how rapidly it (foreign capital—KMC) builds up local enterprise."23 Thus, by early 1955, FICCI had come to accept the liberal government policy towards foreign capital, as it no longer feared the latter's competition, in the improved economic situation.24 Thereafter, the trilateral relationship between the government, foreign capital and the Indian big bourgeoisie changed. In later years, it was the Indian big bourgeoisie that pressed the government to fdrther liberalize the entry of foreign capital, rather than the other way round . This notwithstanding, it