Apprehending serious threat to JV and consequential adverse effect on Indianpartner and other shareholders, CII opines that the cooling period will giveadequate time to the JV to consolidate and put itself in the position ofbeing able to meet the challenge posed by 100 per cent subsidiary. This ismere wishful thinking, to say the least. Access to latesttechnology/know-how and innovative ways of doing things is a prerequisitefor the survival of any company and its growth. TIl now, JVs got all thesefrom MNCs without much problem. This was because the latter stood to gainfrom whatever equity was offered - in some cases, exceeding 50 per cent -even as the 100 per cent subsidiary route was not available.

Now, if an MNC is allowed to set up a 100 per cent subsidiary, it is mostunlikely that it would take any interest in the affairs of the JV. This isespecially true, if the former intends to operate in the same area as thelatter. In fact, the MNC's prime goal would be to ensure closure of the JVin order to establish complete hold of its 100 per cent subsidiary in themarket. The fact of its being privy to sensitive information about the JVwill help it achieve this goal faster.

Thus, talk of so-called cooling period is inconsequential. Even if demand isconceded, this would only mean postponement of Doomsday by a few more years. The JV could survive only if the Indian partner is reasonably confidentthat it can continue without the support of the MNC. But such cases are few.Indeed, these are what one may describe as Indian multinationals, which cantake on foreign companies not only in India, but in overseas markets too.However, no policy decision can be taken with such a narrow focus.

A suitable approach towards foreign investment should take into account theneed for maintaining the viability of the majority of JVs. These includeventures where even though no Indian company is involved, but, significantequity is held by the public and financial institutions (for instance,Pfizer India). And, finally, we must also not forget the impact on companieswhich are 100 per cent Indian-owned.In the event of unfettered andlarge-scale entry of 100 per cent subsidiaries, survival of companies in allthese categories will be endangered. Given the MNC approach and ways ofdoing things, large-scale loss of employment and income is inevitable. Whichmeans unprecedented socio-economic problems as well. Additionally, we haveto consider the impact on the country's BOP situation due to increase inoutgo of foreign exchange towards repatriation of profits etc.

What is the gain in permitting 100 per cent subsidiaries of MNC? Why are ourpolicy makers so keen to give them a red carpet welcome, even at the cost ofknocking out our own companies? Is there something more to it than just aglobalisation mania or for that matter, psychological satisfaction ofgetting words of appreciation from developed countries? The pro-MNC lobbyoften talks of consumer welfare. It argues that the so-called intensecompetition due to the presence of 100 per cent foreign owned companies willresult in the supply of high quality goods and services at low prices. Thisis a myth. The writing on the wall is clear. Once JVs and wholly-ownedIndian companies are annihilated, 100 per cent foreign- owned companies willtake even consumers for a ride. The government needs to do seriousintrospection on the question of allowing 100 per cent subsidiaries of MNCs.

It should muster the courage of saying `No' to them, as this is the onlyviable way of protecting/safeguarding the interests of the JV andwholly-owned Indian companies. In the absence of more attractive options(read 100 per cent foreign-owned), MNCs would remain wedded to JV.