Financing Takeovers

Permit me to express my reservation on the stand taken in your editorial 'Cement Shows the Way' (June 10) on "financing by Indian financial institutions of takeover of Indian firms by foreign companies". You seem to believe that the reported objection of the finance ministry to Lafarge's takeover of the Tisco and Raymond cement plants because the takeover was financed in part by Indian financial institutions "makes little sense", even though you consider it "desirable to have a foreign firm bring in all of the takeover finance for an acquisition in India".

I am sorry to say that your argument against the stand of the finance ministry on foreign firms tapping Indian sources for financing takeovers is not at all convincing. The fact that India may be committed to treating foreign firms in India on par with Indian firms does not mean that once a foreign firm enters India it can go on liberally tapping Indian funds for financing its expansion, not to speak of acquisition of other Indian firms. You speak of the need for "a vibrant market for corporate control", but it is not clear why such a vibrant market has to be based on Indian funds to enable foreign firms enter such a market. In your concluding observation where you scoff at restrictions "on counts other than economic ones" you seem to overlook that the objection to "foreign firms tapping Indian funds for financing takeovers" is first and foremost on economic counts.