Bajaj Attacks Mnc Buyout Of Local Firms

Rahul Bajaj, managing director of Bajaj Auto, yesterday launched a scathing attack on the way multinationals were muscling their way into the boardrooms of domestic companies.

Attacking ICI for its acquisition of a 9.1 per cent stake in Asian Paints, Bajaj said the British chemical and paints group had no right to buy shares a through secondary market deal.

In the paints industry, I believe, we can get foreign technology without selling ownership. I do not believe that ICI has bought these shares as a passive investor. They are not an FII, Bajaj said while delivering the 30th Shri Ram Memorial Lecture organised by the PHD Chamber of Commerce in Delhi.

 

It is neither a new project nor an expansion but just an acquisition, he added.

I understand that this deal will go before the FIPB for clearance and that a board resolution will be required. I also understand that the Danis, Choksis and Vakils have signed an MoU not to let ICI gain access, he said.

Bajaj asked the gathering: Do we want most of our large Indian companies to become subsidiaries of foreign companies? If not, then we have no option but to draw up a list of industries where we will henceforth not allow majority foreign equity; the list ought to include automobiles, textiles, paper, cement, sugar, soft drinks. He said the government should not allow foreign direct investment in areas like services, real estate and areas which have no export potential.

In the liberalisation process, we will ignore the issue of ownership at our peril, he said.

He said India had allowed majority FDI in every sector except civil aviation, telecom and broadcasting (when the policy is finalised). He wondered if it was a coincidence that the US also did not allow majority control in these three areas on grounds of national interest. But we are a developing country; we may need to protect more industries, maybe 30, he said.

He said that Indian industry also wants deregulation and liberalisation but the issue of furthering reforms had run into a stumbling block. We hear that there is political consensus on reforms but it seems there is consensus on not to privatise, on not to divest in PSUs below 50 per cent, on ensuring that there are no significant changes in industrial regulation, on slow financial sector reforms basically there is consensus that there should be no further reforms in many sectors, he said.