From: Arun Mehta <amehta@giasdl01.vsnl.net.in>
Date: Wed, 14 Aug 1996 06:17:11 +0800
To: cypherpunks@toad.com
Subject: Re: India, Productivity, and Tropical Climes
Message-ID: <1.5.4.32.19960813173132.002f7834@giasdl01.vsnl.net.in>
MIME-Version: 1.0
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At 13:15 11/08/96 -0700, Timothy C. May wrote:
>At 4:17 AM 8/11/96, Arun Mehta wrote:
>>One of the
>>reasons that IBM was thrown out of India in the mid seventies was
>>their practice of shipping only outdated computers from the US to
>>India.

>This I tend to disagree with. I recall that India had some laws in the
>1970s which required companies to dislose trade secrets to them. As a
>result, IBM chose not to stay in India. I recall that Coca-Cola also
>refused to turn over the formula for Coke, but this may've been urban
>legend. The IBM case is pretty well-documented. IBM would've sold the
>latest and greatest technology to India if: a) it was profitable to them,
>b) if India could've paid for a 370/90 or whatever in 1975, c) if COCOM
>regulations would have allowed such a sale (doubtful, given the Ghandi
>dynasty's cozying up to the Sovs in the 70s.
>
>I don't think shipment of "old technology" to India was at all on IBM's
>list of concerns, certainly not back then.

Sorry, the response took a while: George Fernandes, who was the
industries minister at the time, is an acquaintance, so I thought
I'd get the story from the horse's mouth.

In the aftermath of the oil crisis, India was short of foreign
exchange, so it passed the Foreign Exchange Regulation Act (FERA)
under which foreign equity in an Indian company could only exceed
40% if the company was hi-tech or  produced something of critical
national importance. The government saw no reason why precious
foreign exchange should go out as profits on the sale of
toothpaste or cola. Coke claimed that its secret formula
qualified it as a hi-tech company, and so it should be allowed
100% ownership of its Indian subsidiary. The government saw no
reason why: that was easy. The Indian government wasn't asking
Coke to reveal its formula, merely dilute its holding to 40%. That one was easy.

As regards IBM, its agreement with the government of India, under
which it was allowed to operate in the country, stipulated that
it would produce here, and transfer some technology. Instead, as
the government found, all it did was sell time on second-hand
computers (1401's as I recall, and this was mid  to late '70s).
IBM was asked to either dilute, or live up to its original
agreement, which it wasn't prepared to do, so it left.
>
>As attractive as this sounds, historically this has not happened. And as
>many will tell you, the climate of the Bay Area in particular and
>California in general is extremely benign and delightful. The average
>winter temperature is only about 10C cooler than summer temperatures.

Didn't Mark Twain say that the coldest winter he had ever
experienced was a summer in San Francisco? I do agree, SF and
environs are great: but US immigration laws being what they are,
not everyone can move there -- some day, "routing around" might
make those places more attractive which have the least
restrictive immigration laws.

Arun Mehta Phone +91-11-6841172, 6849103 amehta@cpsr.org
http://www.cerfnet.com/~amehta/  finger amehta@cerfnet.com for public key