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Business Environment and Law-Foreign Capital And Collaboration

Fdi And The Indian Stock Market-Foreign Capital And Collaboration

   Posted On :  06.05.2018 10:31 pm

Fdi And The Indian Stock Market-Foreign Capital And Collaboration

Fdi And The Indian Stock Market


  • Stock market is an ideal form of organization, which by providing easy liquidity encourages the public to invest, and this brings out the latent surplus in the economy.

  • For this purpose, the shares of good promising companies should be listed on the market. During the 70’s and 80’s, a good number of blue chip TNC scripts got listed. Notable among them were: Abbot Labs, Burroughs Wellcome, E.Merck, Eskayef, Fulford, Hoechst, May & Baker, Organon, Parke Davis and Wyeth.

  • The chief objective of offering shares to the public by the affiliates could not be to raise fresh capital from the public, but was only a strategy of diluting foreign equity without reducing their foreign parent’s quantum of investment.

  • In the post-liberalization period, the policy was reversed. At the first available opportunity, many foreign affiliates raised foreign equity to majority levels.

  • While raising share of foreign equity to majority level, most TNCs indicate a tendency to avoid the stock market. TNCs are side-stepping the stock market and they sell off the existing units to locals and promote Wholly-Owned-Subsidiaries (WOS) or transfer certain divisions / products to Wholly-Owned-Subsidiaries of the parent company.
 
  • The number of technical collaborations declined from 629 in 1997 – 1928 to only 299 in 2003 – 2004. There was a tendency to convert purely technology transfer arrangements later into financial collaboration by buying the equity share of the concerns.
Tags : Business Environment and Law-Foreign Capital And Collaboration
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