Margins Have Been Better In Q2 And Q4 Of 1998-99
This raises yet again a question which has repeatedly cropped up after the country threw open its doors to foreign investment. Global corporations which were forced to go public under earlier Indian regulations are now keen to set up fresh, wholly-owned subsidiaries, thus creating the option to bypass the existing Indian subsidiary, which has Indian shareholders. There are two issues at stake here, one public and one private. The public issue concerns the need for a market-oriented economy to encourage the equity cult. Almost uniquely in Asia, India offers domestic investors a stake in some ofthe best known global brands, which in the rest of Asia are worked mostly by wholly-owned entities of the global companies. If the ordinary Indian investor is to share in the prosperity of the best and fastest growing areas of investment opportunity, sorne degree of local shareholding is entirely desirable. Hence there has been a continuous demand to not just disallow these new wholly-owned subsidiaries but also to subject new ventures to some kind of listing timetable.
A public argument against this is that it can stem the flow of foreign direct investment. Another argument is that the way to allow Indians to own a stake in global brands is to let them invest in companies listed abroad. But investment overseas will always be more problematic than investing in a domestic stock market; besides, Indian shareholders can hardly expect to have any say in the affairs of global companies, unlike in their Indian joint ventures.
The private argument against allowing fresh wholly-owned subsidiaries is the fate of the Indian partners, where there is one, of the earlier ventures. They are the ones who have been lobbying actively against the move by the prime minister's office to dilute the stipulation in the FIPB rules, that foreign partners have to obtain a no objection certificate from their existing Indian subsidiaries/associate firms before they get permission to start a new business. The public interest lies in promoting FDI and the equity cult. So a timetable for eventual listing for large foreign start-ups can be a good idea. But there is no public interest in protecting the future of Indian businessmen who have contributed little to the value of joint ventures and will contribute even less in the future, and whose position in the joint venture owes itself largely to their skill as an escort service or investment facilitator. nd of warming, directly correlated with local deforestation.
More importantly, there are structural problems, monoculture being an example. Ninety per cent of the apples grown in Himachal are of the Red Delicious variety. But Red Delicious is vulnerable to climatic changes and eventually tunis biennial. There has also been excessive use of pesticides, fungicides and fertilisers, creating its own problems in export markets. Also, pests Varn resistant. and stronger pesticides are then required. Often, pesticides, fungicides and fertilisers are spurious as government-administered monitoring systems don't perform. Excessive fertiliser usage alters soil composition and affects the growth of future plantings. Clearly, the answer lies in more research on management practices, and the use of biotechnology. Apart from enhancing yields and evolving varieties that are more amenable to processing, biotechnology leads to more pest-resistant varieties. It is thus more environment-friendly and economises on expenditure on pesticides, fungicides and fertilisers.
But the policy question is whether government-administered research systems can deliver requisite output. Judging by present trends, the answer is in the negative. The government's new crop insurance policy, whichisreally insurance forloans rather than crop insurance proper, doesn't even cover fruits. For the horticulture revolution to take place, one needs greater private and corporate sector involvement in research, extension services, refrigeration and processing, credit, insurance and marketing. Since global markets are cha