Americans Wanted

For a long time after India got its freedom, Socialist Jawaharlal Nehru regarded foreign investors with the narrow-eyed suspicion of a spinster convinced that friendly attentions from any man probably conceal evil designs. So U.S. investors passed India by. After all, there were plenty of other places for them to invest their money--places where markets were more developed and officialdom far less mistrustful. General Motors even closed down its automotive assembly plant in Bombay.

Two years ago, seeing its second five-year plan in deep trouble, and lacking foreign exchange, India sent high government officials and Indian businessmen to the U.S. to seek more dollars and also to sound out what was wrong, from the U.S. point of view, with investing in India. The Indian emissaries got plenty of straight-from-the-shoulder advice in Washington and New York.

When they got home, they made many policy changes. No longer in any new venture must Indians hold majority stock control. No longer are such fields as petroleum and synthetic rubber to be dominated by the "public sector," i.e., state-owned. American investors have been guaranteed dollar compensation if the Indian government should decide to expropriate a business. A new flock of tax incentives has been introduced, including a virtual tax holiday on profits during the first five years.

Progress & Freedom. Indian intellectuals were for a long time acutely sensitive to the dangers of economic colonialism. But some among them took another look at the way the young U.S. had developed after winning its freedom. After all, it took big injections of British and European capital during the 19th century to build the railroads that spanned the North American continent. But this foreign capital in no way diminished U.S. independence. And it was attracted to the U.S. in part by the assurance that lawful debts would be repaid and property would not be seized. In the same way, India could keep its independence.

By last week, India's change of attitude was beginning to pay off. Americans were all over the place. After getting over their first horror at poverty and squalor, many enthused over the opportunities, and over a spirit of cooperation in the government that they had not anticipated. In Uttar Pradesh, Kaiser Aluminum and India's Tycoon G. D. Birla were about to break ground for a new $42 million plant that will more than double India's present 18,000-ton aluminum capacity. South of New Delhi, Goodyear was putting in a $12 million tire factory; Firestone and an Indian partner plan another at Bareilly in North India. Nehru himself recently laid a cornerstone in Kerala for a tire plant owned in part by the Dayton Rubber Co.

Flashlights & Diesels. About 80% of all foreign investments are still British, but in new money the U.S. is pouring in more than Britain, and has now invested $260 million, seven times the level of 1950. Nehru's Cabinet is debating whether to ask Lockheed to manufacture commercial aircraft in India. Merck, Sharpe & Dohme and Bombay's Tata Sons are putting up an $8,000,000 pharmaceutical plant; Schenectady's Alco Products Inc. is making a deal with Indians to manufacture diesels for India's railroads. Barefoot villagers now use Eveready flashlights turned out at the rate of 4,000,000 a year by Union Carbide's Lucknow plant. General Motors is talking about coming back in.

On the record, India remains committed just as stoutly as ever to socialism, and Nehru likes to deliver chats on the moral superiority of state enterprises. But even in Nehru's Cabinet, exegetes are already reinterpreting the sacred texts of socialism. Finance Minister Morarji Desai, for example, recently described India's "pragmatic socialism" as no more than a determination to "seek the happiness of the people, make all the people strong, and see that they have equal opportunities." Regulation and control, added Desai, must not "hamper the development of the country or production. Production alone brings prosperity. We do not want to redistribute poverty."

The American businessmen talk in terms of production too, not the language of the cold war, or winning India for the West. But they also believe that American capital will be more useful to India than sympathy and more enduring than handouts.

Drawbacks & Prospects. Some American businessmen have reservations. They complain that it often takes three Indians to do one American's work, and that custom and caste deprive many Indians of ambition. They find that an enervating climate and a low standard of living result in much employee sickness. There are too many holidays, and labor unions are often irritating. Worst of all, the babu (clerk) mentality, developed by generations of bureaucracy, drives Americans mad. One U.S. corporation decided not to invest in India because New Delhi would not license it to import components and no Indian company could supply them. But other American experts swear by the natural ability of Indians, given good training.

In the vast potential Indian market of 400 million consumers, those who can afford to buy are now a mere drop, but still an impressive number. "There's going to be an enormous economic explosion in India," says Arthur Watson of IBM. "You can listen to all the experts, but you don't really see how big it is until you come out here."

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