U.S. Multinational Encounters Resistance in India

By William Pomeroy, in People's Weekly World
8 July, 1995, pg. 10.

LONDON - The investment drive into India by U.S. multinational corporations, which has accelerated since the Congress Party government opened the doors in 1991 to foreign entry, has been given a severe check in one of the leading industrial states.

Encountering unexpected nationalist opposition is the biggest U.S. investment project in India, the $920 million Dabhol power plant in the state of Maharashtra, which has Bombay as its industrial center and capital. Heading the consortium that was handed the contract last year by a Congress Party state government is the U.S. Enron Development Corp. which has 80 percent of the stake; Bechtel, handling the construction, has 10 percent and General Electric, providing the turbines, the other 10 percent.

Indian industrial interests insisted that the foreign investment reform follow the pattern of joint ventures with Indian companies. The Dabhol contract broke this pattern. It brought to a head simmering national opposition to a reform policy charged with selling the country to foreign interests.

In March, a state election in Maharashtra ousted the Congress Party from power. It was won by a coalition of two right-wing nationalist parties, the Hindu nationalist Bharatiya Janata Party (BJP) and the extremist Shiv Sena. The nationalist alliance accused the Congress Party of selling the state to foreign multinationals, and of corrruption in doing so.

People in Maharashtra have been especially aroused over excessive guarantees given to Enron of at least a 16 percent return at the minimum, with 24 percent or above more probably. This would lead to much higher electricity prices, adding to unrest over rising prices that have accompanied the reform progam in general.

The BJP - Shiv Sena victory and the threat to cancel the Dabhol contract that has arisen from it, have given a shock to foreign mulinationals, and sent a natiionaIist current through the rest of India.

The U.S. energy department in June warned that a cancellation of the Dabhol contract would "jeopardize most if not all of the other power projects being prepared for international financing." This statetment caused an angry reaction across India. The staid Hindustan Times editoriaIized that, "It is time the West realized that India is no banana republic which has to dance to the tune of the multinationals.

Supporting the stand of the new government in Maharashtra is a strong coalition of forces among the people. It includes trade union and middle class strata that are against multinational intrusion and against privatized power supply.

Maharashtra has already approved more foreign investment than any other state and a quarter of the total for India, reaching $1.I bllion in the last calendar year.

To the nationalsts, Dabhol is a wedge that can lead to a broadening domination.

On June 19 a nationwide strike was launched by teIecommunication workers against the inviting of foreign competition in the state-run telecom industry. The Commmnist parties have been holding demonstrations against multinational entry from the time the policy was initiated.

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