July 18, 1953

Made in India
Plight of Fountain Pen Ink Industry

T A R I F F protection is granted to
an industry to help it to w i t h -
stand competition from imports.
however, it ranged between 10 and
15. One special feature of the i n -
dustry to which the Board drew
granted to the industry induced
foreign manufacturers to explore
the possibilities of establishing
Such assistance is generally given to pointed attention was that the i n - manufacturing units in the country
' infant industries to allow them dustry was established mainly by and two of them, one Japanese
to establish themselves on a sound educated middle class people w i t h and the other American, have suc-
footing or to allow an established comparatively s m a l l financial ceeded in establishing new units in
industry to tide over the handicaps resources. the country. They are the Pilot
of transition vis a vis similar indus- The Board, however, could not Pen Co ( I n d i a ) L t d , and the Par-
tries situated in foreign countries. make a complete survey of the i n - ker Pen Co ( I n d i a ) L t d . Their
jn other words, the central idea of dustry then. Its investigations were combined capacity is 6.6 lakhs
tariff protection is to check the free limited to 23 units, those which dozen bottles of 2 02 each as against
flow of lower cost imports so as to were mostly situated in cities and the estimated Indian demand of
give the domestic industry a shelter-. b i g towns. T h e total rated capa- about 7.5 lakh dozen bottles. W h a t
cd market for a specified period of city of these units was assessed at chances can the small manufac-
time, so that it can try to get over 15.9 lakh dozen bottles of 2 oz turers have against the combined
its handicaps and in course of time, each and their actual production strength of the two giants of inter-
compete w i t h imports on equal was about 2 lakh dozen bottles or national repute? The small manu-
terms. But after .granting protec- 12 per cent of rated capacity. T h e facturers were aware of this dan-
tion to an industry; if its foreign evidence placed before it convinced ger and they requested the T a r i f f
competitor is allowed to establish the Board that the ink manufactur- Board to recommend a ban on the
a unit of production w i t h i n the ed by some of the units was of a establishment of foreign concerns
country, the very object of protec- fairly good quality and if necessary in India.
tion is defeated. It is against this encouragement was given, others Dr Naidu's survey unfortunately
background that the present plight also could come up to the standard. did not throw any light on the
of the Fountain Pen I n k industry T h e Board, therefore, recommend- question how the foreign manufac-
should be viewed. ed the conversion of the revenue turers got licences to establish
T h e pioneer attempts at manufac- duty on fountain pen ink into a factories in the country. In this
ture of w r i t i n g inks go back to early protective duty and also made a few connection, his reference to the
days of the Swadeshi movement. useful ancillary recommendations. Prime Ministers statement on
T h e first factory to produce fountain The progress of the industry since foreign capital made on A p r i l 6
pen ink in I n d i a on a commercial the grant of this protection was re- does not appear to be quite rele-
scale of w h i c h there is official re- viewed by Dr B V Narayanaswamy vant to the issue. T h a t statement
cord was the Krishnaveni Inks in Naidu, Member of the Tariff Com- only guaranteed equal treatment to
Madras in 1920. A few more units mission, in his opening speech the existing foreign interests a n d
have come into production in the at the Commission's public i n - foreign interests allowed to . be
following years in different parts of quiry into the q u e s t i o n o f established in the country in the
the country; but real progress was the continuance of protection to future. It did not in any way give
made during the war when the en- the Fountain Pen I n k industry be- up Government's powers to regu-
tire demand in the country for ink, yond December 31, 1953. Dr N a i d u late the flow of foreign capital into
both civil and military, was met by stated that the number of units now the country and as such, it is diffi-
domestic production. Before the in production has increased from cult to understand how these two
industry could consolidate itself 77 in 1950 to 103. The average foreign units managed to, ' j u m p
after the war, fountain pen ink was annual production of the 43 units over' the tariff wall and establish
placed under Open General Licence covered this time is about 5,40,000 themselves comfortably, "thus negat-
for imports. Between November dozen bottles as against the average i n g the very idea of protection to
1948 and M a y 1949 as many as production of a little less than 2 the domestic industry. There have
twelve units both individually and lakh dozen bottles before protection been similar cases in the past also,
collectively applied for protection was granted. D u r i n g this period, eg, that of batteries for motor vehi-
to the Government, w h i c h in its due care was taken of the domes- cles. Are the views of the T a r i f f
t u r n referred the case to the T a r i f f tic- production, in granting i m p o r t Commission ascertained by the
Board for investigation. licences. T h e I n d i a n Standards Government before issuing licenses
According to the information Institution had also finalised the to foreign units to start production
received by the Tariff Board in draft standards under consideration behind tariff Avails?
1949, there were 77 units manufac- at the time of the last inquiry and The Industrial Policy Resolution
turing fountain pen ink in the more and more units arc now distinctly stated that the conditions
. country. T h e industry was mainly manufacturing ink to standard under w h i c h foreign capital was to
composed of small units, but of specifications. Moreover, a few participate in I n d i a n industry
widely varying size. T h e capital units have modernised their equip- should be carefully regulated in the
employed in different units ranged ments and better processes of national interest. Not only were
from Rs 250 to Rs 2 lakhs; in the manufacture are being gradually the principles enunciated but it
majority of cases, however, the introduced. was also mentioned that suitable
amount invested was below These achievements, however legislation would be introduced for
Rs 20,000. The number of workers creditable they may be, have a this purpose; that such legislation
generally below five; in a few cases, pathetic side also. The protection w o u l d provide for the scrutiny and
803
 July 18, 1953
approval by the Central Govern- to undertake preliminary work. in private limited company under the
mentof every individual case of connection w i t h the establishment off Indian Companies Act.
participation of foreign capital and the National Research Development (iii) To appoint staff subject to
management in industry (italics Corporation. the prior approval of Government
ours); that as a rule, major interest Among the functions and powers being obtained in case of posts carry.
and ownership and effective control of the Committee are: ing a salary of Rs 1,500 per mensem
should always be in I n d i a n hands; (i) To draw up the Memorandum and above.
that power w o u l d be taken to deal and Articles of Association of the (iv) To undertake preliminary exa-
w i t h exceptional cases in a manner proposed Corporation. mination of projects awaiting deve-
calculated to serve the national (ii) To take necessary steps for the lopment and decide the order of
interests. In the subsequent state- registration of the Corporation as a priorities.
ment made by Pandit Nehru a year
later, it was repeated that as a rule
the major interest in ownership
and effective control of an under-
taking should be in Indian hands;
the intention clearly was that
foreign capital should supplement
I n d i a n capital; but the special
legislation which had been referred
in the industrial policy statement,
however, was abandoned as the
Government found that such regu-
lation as was necessary could be
secured through existing laws.
Subsequent legislation on the
subject is incorporated in the Deve-
lopment of Industries (Control and
Regulation) Act which provides
that all new units for Scheduled
industries wilt require a license.
What about industries outside the
Schedule? Apparently in such cases
restrictions are last, even that
about control of management
being predominantly in Indian
hands. H o w else to explain that
the Parker Fountain Pen Company
( I n d i a ) L t d of course, which has
set up manufacture of inks can
have 60 per cent of American capi-
tal? This is a subject which if it
is not directly within the purview
of the T a r i f f Commission should
clearly be made so. For unless this
is done, the purpose of tariff pro-
tection w i l l continue to be defeated
as in the present case of fountain
pen ink, so in the case of many
other industries. T h e principle i n -
volved is of the highest concern to
the future development of the
country, as much for fostering
I n d i a n enterprise as for avoiding a
source of friction between foreign
and Indian capital. It is to be
hoped that the Tariff Commission
is duly apprised of the situation
and w i l l deal w i t h this matter ade-
quately, failing which the issue
should be raised in the Parliament
before it is too late.

Research D e v e l o p m e n t
Committee
A Committee has been appointed
by the Government of India with
Shri Kasturbhai Lalbhai as Chairman
804