Wednesday, June 12, 2019

British Capital in India (1967)

From the February 1967 issue of the Socialist Standard

Class divisions are international. Nowhere is this better shown than in India. Surplus value extracted from the workers in this sub-continent finds its way to the capitalists of a dozen or more countries. The last official assessment of private foreign investment in India put the total at $1.29 billion; of this, British capital accounted for 80 per cent. But — since the calculation did not include banking capital, or capital engaged in construction and some other sectors of the economy — various economists have indicated that foreign-controlled assets are probably between 2-3 times greater than this figure implies. Michael Kidron in his Foreign Investments in India (1965) tentatively suggests that Rs. 1,400 crores [1] would be a more realistic estimate.

When the Reserve Bank of India published its breakdown of foreign investments in 1955 this showed that roughly one half was concentrated in manufacturing, plantation and mining companies and perhaps a further 30 per cent in trading and financial firms. British capital generally follows this pattern as well. The jute, tea and coal industries are are still dominated by British companies. Thus, in the early nineteen-sixties, about 70 per cent of the total acreage planted with tea was owned by English capitalists. Two U.K. organisations — Lipton (a Unilever concern) and Brooke Bond (Finlay) — handled 85 per cent of the retail distribution within India, while the export trade is largely a British monopoly. British capital also controls some of the largest cotton mills in the country — such as the Buckingham and Carnatic Mills of Madras, Kohinoor Mills of Bombay and Madura Mills of Madura. As might be expected, the motor-car industry is organised jointly with foreign manufacturers. Indian firms such as the Tatas and Birlas have agreements with British, American and European companies — Standard, Morris, Leyland, Studebaker and Fiat to name a few. A glance down the list of joint-stock companies operating in India shows that Indian workers are contributing to the profits of some of the really big names of world capitalism. For example Unilever, I.C.I. and Imperial Tobacco have all established plants or factories there.

Although the investments of the British capitalist class in India may soon be twice as large as they were at independence in 1947 this does not mean that the local bourgeoisie has not benefited from the exploitation of the country’s millions of workers. In just eight years, between 1948-1955, profits totalling Rs. 4,170 million were realized by foreign controlled enterprises; but this figure was dwarfed by the Rs. 12,460 million picked up by the Indian ruling class. There have, in fact, been some prominent transfers of control from British to Indian hands. For example, the Dalmia family took over from Bennett. Coleman and Co. of Bombay (owners of the Times of India newspaper) and from Govan Brothers of Delhi, while a whole group of British trading enterprises in Madras has been acquired by S. Anantharamakrishnan. In addition Indian capitalists now have a controlling interest in a number of nominally British enterprises. Thus, in Calcutta, the Goenkas, Bangurs and Kanorias have come to dominate agencies like Shaw Wallace, Octavius Steel, Kettlewell Bullen and Anderson Wright. Cases such as this have given much satisfaction to the ruling Congress party. This is understandable, since that party represents the interests of a majority of Indian capital. What is ludicrous is when it suggests that the workers, who continue to sweat in the factories, should be thankful for the change in ownership.

The American capitalist class also has a sizeable stake in the Indian economy; about $237 million from private investment sources at the last count. Commenting on these investments, the Economist said they left little scope for complaint in their profitability — the return in manufacturing industries being as high as 20.6 per cent in 1962. With profits running at this level, it is no wonder that India now lies second only to Britain in the amount of American capital it has absorbed. At the same time, capitalists in Holland, Japan, Italy, Belgium and so on find the Indian worker a no less attractive quarry.

Apart from this, something needs to be said about “foreign aid” to India. A large percentage of this takes the form of loans repayable at normal, commercial interest rates. As B. Ward pointed out in his book India and The West, “they do not constitute aid in any direct sense. They are either profitable loans or export credits for the donor country. To call them ‘aid’ stretches the word until it is almost deprived of meaning.” This has been well illustrated by some fierce competition to finance various “aid” projects. One such case was that of the Bokaro steel plant. An Anglo-American consortium offered to back the scheme by means of long-term credits totalling $368 million. This group was led in America by Mr. Vance Brand, head of an international investment company, and in Britain by Mr. W. S. Hindson of Wellman Smith Owen. It had support from a variety of powerful companies, such as Koppers, Blaw Knox and General Electric in the U.S. and Davy United and Woodal-Duckam in Britain. At about the same time as this group was negotiating, a high-ranking official from the West German combine of Krupp visited New Delhi to put proposals to India’s steel minister, and a French federation — backed by the Banque de Paris et Pays Bas — had been in the running earlier. As it happened, however, it was the Russians who pulled off the deal. The Economist reported that Soviet capital to the tune of £110 million was to be involved in the first stage of the project, at the relatively “soft” terms of 2½ per cent spread over twelve years.

This is only one of many examples. When the American General Electric Company was discussing investment terms for an electrical plant in India, the Economist again pointed out that international rivalry was becoming sharper: “The first such plant was built with the help of Britain’s Associated Electrical Industries, but the next three were picked up for financing by the Russians and Czechs — which underlines the need for fresh western initiative in this field.” In fact, by the beginning of 1963, east European countries (excluding Yugoslavia) had authorized a total of Rs. 437 crores for “aid” to India. The majority of “foreign aid” finds its way to the nationalized industries, but there are numerous cases of financing privately owned firms. Nor have the “Communist” countries been backward in this sphere. Even if we leave Russia out of the picture, we find that there had been well over sixty agreements of this type by the end of 1964. (East Germany — 38; Czechoslovakia — 14; Poland — 14; Hungary — 9; Yugoslavia — 5). There have also been reports that Hungary is prepared to set up aluminium plants in the private sector of the economy — in Kerala and at Koyna, Maharashtra.

Naturally, a number of lame attempts have been made to defend the imperialism of Russia and her allies. Thus K. M. Kurian in his Impact of Foreign Capital on Indian Economy argues that:
  In general, it is possible to differentiate between aid from capitalist and aid from countries in the socialist system on the basis of the differences in their repayment and servicing terms and conditions. The terms and conditions attached to loans and credits from the socialist countries, on the other hand, have generally been extended on more favourable terms.
In the same spirit, V. I. Pavlov whines:
  It is impermissible to draw a common balance between the hard-earned savings set aside by the peoples of the socialist countries to help their friends, and the capital of imperialist monopolies which they expect, sooner or later, to bring them profit. (India: Economic Freedom versus Imperialism).
Obviously both of these writers are dishonest. However much they squirm away from the facts, it is clear that interest and profits from India are flowing back to Moscow, Prague and Warsaw — just as they do to London, Washington and Paris. The Russian ruling class has sunk its claws into part of the surplus value wrung out of the Indian working class. It is true that the scale of Russian involvement nowhere near matches that of Britain. But this is only because Russia was such a late starter. The first Russian “aid” did not come until 1955, after Bulganin and Krushchev had visited India in that year. Even so. in the current Fourth Five-Year Plan (1966-71), it is thought that the supply of Soviet capital will be in the region of one billion roubles.

India also represents an important market for the manufacturers of many advanced industrial countries. However, the share of the market monopolised by British capitalists has been dwindling — as rivals in the United States and the .Soviet Union forge ahead.

Once again, in the struggle for markets, the fiercest competition is coming from Russia and her allies. In January, 1966 it was reported that the Soviet Union now supplied 12 per cent of India’s imports, compared to 4 per cent in 1960/61. In fact, taken over the last decade, Indian imports from the state capitalist countries of east Europe have built up from Rs. 5.70 crores (in 1954) to Rs. 123.74 crores (in 1963/64). On top of that, an agreement has been signed to double trade with Russia by 1970. Bearing these sort of figures in mind, how daft does it make the “Communist” parties look when they claim that production in Russia is not geared to the world markets?

Time and again the Indian leaders have asserted that their aim is to establish a “socialist pattern of society” in the country. They have now had twenty years of independence to put this into effect. Yet today, more than at any time in the past, the working class in India finds itself the prey of international capital. This should cause no surprise to any thinking worker. He has only to recall some of the definitions of “Indian socialism” which have been put forward. (For example: “The ‘socialism’ contemplated in India . . . is a system under which private enterprise has and will continue to have a vital role to play; it is a system which respects private property . . .” — H.V.R. Ienger, Governor of the Reserve Bank of India). Divided by religious and nationalist prejudices, the Indian worker is easy meat for his masters in London, Moscow and New Delhi.
S. C.

[1] *Rs. 1 crore = £750,000 = £2,100,000.