NORTH- Akalis on Warpath

April 7, 1973 it is decided to freeze the capacity of foreign majority companies producing so-called non-essential items, a subsidiary decision has to be taken as to the disposal of their profits. In case dividends are not to be permitted to soar beyond a point in order to prevent the drain on foreign exchange, the companies might legitimately seek to spread out laterally. Certain tax privileges, after all, accrue to a foreign company if, instead of declaring dividends, it ploughs back profits into new investment. Where such plough-backs are discouraged with- in the industry itself, the foreign majority companies would naturally demand permission to enter other spheres of activity. The government can now welcome them in 'basic, critical and strategic' industries. However, since the companies will be choosy, and will prefer industries with prospects for high and quick returns, an impasse is bound to be reached unless a definitional flexibility is built into the new-look industrial policy.