Collect data on foreign technical and financial collaborations for two different

periods 1985-90 and 1991-2001 and write a detailed note on the annual trends of
these collaborations.
Ans Table 1. Foreign Investment Inflows
Year FDI(Net) Flls Euro Equities Total
and Others
1990-91 97 00 03 103
1996-97 2651 1926 1386 5963
1997-98 3525 979 849 5363
1998-99 2380 -390 322 2312
1999-2000 2093 2135 889 5117
2000-01 3272 1677 913 5862
2001-02 4741 1436 516 66693
2002-03 3611 342 602 4555
2002-03 2768 -186 537 3119
(April-Dec)
2003-04 2513 7219 403 10,135
(April-Dec)

(Source: Economic Survey, 2003-04, p. 101)

The figures form 2000-01 include reinvested earnings and other capital.
A. foreign Direct Investment (FDI) : Aggregate FDI inflows declined by more than US
$1 billion in 2002-03. It was US $3.6 billion in 2002-03 as compared to US $ 4.7
billion in 2001-02. Net FDI inflows are sum total of FDI inflows into India and FDI
outflows from India. A category-wise analysis reveals that net FDI inflows into India
were lower by US $1.5 billion in 2002-03, compared with 2001-02 (Table 1). Net
FDI inflows maintained their subdued trend in the first nine months of 2003-04,
registering a marginal decline of US $0.25 billion compared to the corresponding
period of the previous year. According to the data on monthly inflows of foreign
investment compiled by the RBI, FDI inflows for the full year of 2003-04 have been
estimate at US $4.5 billion, which are slightly lower than US $4.7 billion recorded
during 2002-03.

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B. Portfolio Investment: Aggregate portfolio investment inflows exhibited a declining
trend between 2000-01 and 2002-03. The declining trend of portfolio investment
observed during the above said period, however, witnessed a sharp reversal in 2003-
04. During the first 3 quarters of 2003-04, net portfolio investment stood at US $7.6
billion with aggregate portfolio inflows at US $17.3 billion.

Policies in the post-reforms period have emphasized upon greater encouragement

and of non-debt creating private capital inflows for reducing reliance on debt flows as
the chief source of external resources. Progressively liberal policies adopted in this
regard have led to increasing inflows of foreign investment in the country, both in
terms of direct investment (FDI) as well as portfolio investment.
The need of foreign capital was recognized by the planners in national policy
towards foreign capital in the early phase of planning period, but decided not to
permit it to occupy dominant position. As a result, foreign collaborators were
allowed to keep their equity within the ceiling of 49%. Further, the Government
allowed foreign collaborators to enter into priority areas and especially in those areas
where we lacked behind in technology. But as a whole, the policy towards foreign
collaborations remained selective and restrictive. It is evident from the fact that
during 1961-70, a totals of 2475 foreign collaborations were approved and during the
next decade, i.e., 1971-80 another 3,041 collaborations were sanctioned.
Government relaxed its policy in eighties towards foreign collaborations. It
includes the package of exemptions allowed to investors from Oil Exporting developing
countries. The exemptions allowed were:
(1) Investment upto 40 per cent in equity of new ventures could be made in specified
segments without being linked to technology transfer.
(2) NRIs were allowed to invest in Indian Industrial Units under the defined scheme
within the framework of the conditions laid down by the Government.
Technology Policy Statement of 1983
In January 1983, the Government of India issued a Technology Policy Statement
(TPS). The major objective of the statement was to ensure that the imported technology
is the latest and appropriate to resources and requirements of the country. The
Government also liberalised licensing provision under this policy. These measures were:
(1) Except 26 industries all other industries were exempted form licensing in case of non-
MRTP equipments;
(2) Private sector was allowed to participate in the manufacture of telecommunication
equipments;
(3) A number of electronic items were exempted form MRTP Act;
(4) Foreign companies were allowed to manufacture electronic components;
(5) MRTP companies were allowed to set-up industries in backward areas;
(6) MRTP companies could commercialize the results of their R &D or of those of
national laboratories;
(7) A number of new items were added to the list of industries allowed to set up by
FERA and MRTP units;
(8) Broad bending of a licence for a number of industries was allowed.

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These technical collaborations were allowed on royality or lumpsum payment or both.
Due to these relaxations, the number of approvals reached at a figure of 7436 involving a
total investment of Rs. 1,274 crore during the decade 1981-90.
Table 2. Total Foreign Technology Agreements (FTAs) and Foreign Direct
Investments (FDI) Approvals
(Amount in Rs. Crore)
Year Number of Approvals Amount of FDI Amount of FDI
(April-March) Approved Inflows
Total Technical Financial

1997-98 2,157 629 1,528 42,992.02 16,142.94

1998-99 1,831 564 1,267 33,920.59 14,279.80
1999-2000 2,287 484 1,803 21.564.32 15,209.57
2000-01 2,156 411 1,745 43,038.71 20,590.57
2001-02 2,347 281 2,066 20,312.45 21,497.67
2002-03 2,051 293 1,758 7,928.26 17,768.28
2003-04 1,929 299 1,630 6,833.31 16,409.28

Table 2 shows that total amount approved and the inflows of FDI in India. It indicates
that the FDI inflows in India have increased over the years, peaked at US $4.74 billion in
2000-01 and declined thereafter to US $3.73 billion in 2002-03 and further to US $3.57
billion in 2003-04. The amount of FDI approved also showed a declining trend.
Takeovers and Implementation of Foreign Collaborations
TNCs have taken over the well-known Indian brands and Indian entrepreneurs seem to
have lost their bargaining power.
Takeovers do not add new production capacities, rather they ad to higher outflow of
foreign exchange, which causes adverse BALANCE OF PAYMENT situation. Actually,
it has been noticed that the motive of foreign techno collaborators is not the transfer of
superior technology. Their main objective is to sell their old technology and capture
market.