lannin in ndia      5.43
     used to consider the PSUs as the ‘temples of               (i) It was not either ‘direct’ (as we see FDI
     modern India’.                                                  during the reform process) or ‘indirect’
                                                                     (as the PIS ), but via technology transfer.
     PhAse-ii (1970—73)                                        (ii) Foreign entities could enter only those
     With the enactment of the Industrial Policy of 1970             industrial areas which were open for the
     we see GoI deciding infavour of including ‘private              Indian private sector (under Schedule B of
     capital’ in the process of planned development—                 the Industrial Policy Resolution, 1956).
     but not in a big and open way. The idea of ‘Joint               The ‘monopoly’ industries under GoI
     Sector’ comes under which a combination of                      (some of the most attractive industries
     partners—Centre, state and private sector—could                 for the private sector) remained closed for
     enter the industrial sector. This was done basically,           entry.
     to make private sector come up in areas which              It also means, that India failed to articulate
     were open for them, but due to certain technical      an investment model which could tap the better
     and financial reasons they were not able to take      elements of the foreign capital—state-of-the-
     part. In due course of time the government did        art technologies, better work culture and most
     quit such ventures and such industrial settlements    importantly, scarce investible capital. Experts
     came under complete private control.                  believe it as a missed opportunity for India. By
                                                           1965–66, the South East Asian economies like
          This is for the first time we see the government
                                                           Malaysia, Indonesia, Thailand and South Korea
     inclining on private funding for planned
                                                           had opened up their economies for both forms of
     development, but we do not see any private entry
                                                           foreign investments—direct as well as indirect—
     in the GoI’s monopoly areas of industrial activities
                                                           and the governments there ‘decontrolled’ the
     (which takes place only after the reform process
                                                           industrial sectors, which were earlier fully under
     begins in 1991).
                                                           government controls (it should be noted here that
                                                           these economies had started exactly the same way
     PhAse-iii (1974–90)
                                                           as India had started after Independence). This gave
     With the enactment of the FERA in 1974 we see         those economies a chance to tap not only scarce
     the government, for the first time, proposing to      investible fund into their economies, but the state-
     take the help of ‘foreign capital’ in the process of  of-the-art technologies from the world and world
     planned development—but not via cash foreign          class work culture and entrepreneurship, too.
     investment—only through the ‘technology               Soon these economies came to be known as the
     transfer’ route that too up to only 26 per cent of    Asian Tigers.
     the total project value proposed by the private            The period after 1985 saw dynamism in the
     sector. Basically, under FERA government              area of resource mobilisation— two consecutive
     tightened the flow of foreign currency inflow         Planning Commissions suggested for opening
     into the Indian private sector, which started         up of the economy and inclusion of the Indian
     hampering the technological upgradation process       and foreign private capital in industrial areas
     and initiation of the state-of-the-art technologies   which were hitherto reserved for the government.
     from the world—the technology transfer route          It suggested that GoI to withdraw from areas
     was put in place to fill this gap. It means that      where the private sector was capable and fit to
     even if GoI tried to include foreign investment       function (for example, infrastructure sector) and
     in the developmental process its entry remained       concentrate on areas where private sector would
     restricted in two ways:                               not be interested to operate (for example, the