Make in India and List in India

The concept paper ‘Make in India and List in India’ (an interesting extension of PM’s popular slogan 'Make in India' makes the assumption that ‘capital account convertibility’ may not happen in India any time soon. Therefore, Indian citizens will not be able to buy global stocks very easily.

The concept paper pursues an equitable logic i.e. Global Multinational Companies’ market value must be equitably distributed across nations in such a way that value derived out of a particular nation must be available to investing citizens of that nation. MNCs may like to perceive 'listing' as a kind of good Corporate Social Responsibility (CSR) activity. Currently, all market value is concentrated in New York Stock Exchange or NASDAQ or FTSE or DAX. This is unfair.

All global MNCs prepare quarterly financial statements for the countries that it operates in (such as India) and these are consolidated at its headquarters. Therefore, listing in India will not involve much additional work for them.

If global high quality multinational companies list in India, it will immensely benefit Indian Citizens by providing them inflation beating investing options.

A short version of this concept appeared in April 2017:

Make in India and List in India

Circa 1978, Janata Government [(BJP (Jana Sangh) was part of it] stirred nationalistic sentiments with its diktat that foreign multinationals (MNCs) must comply with Foreign Exchange Regulation Act (FERA) and dilute parent shareholding to 40% and list their shares in India. Majority of MNCs got diluted and listed in India. To comply, Colgate-Palmolive made an offer for sale of shares to the Indian public so as to reduce the non-resident holding to 40%. Investors benefited immensely by investing in listed global multinational companies (Hindustan Lever, Bosch, Nestle etc). For example, in 1978, Colgate India IPO listing pegged its market cap at Rs.4.9 Crores. Colgate market cap grew approximately 5,500 times in past 39 years to Rs.27,000 crores [Rs.10,000 investment has become Rs.5.5 Crores (~ 25% annual return) plus Dividends].

Interestingly, as it turns out today, this controversial listing decision was ahead of its times and is in line with current thinking. This is evident in a recent Bloomberg article that says ….
Australia would block any attempt to move BHP Billiton’s (world’s largest mining company)
main sharemarket listing to the U.K. and if BHP implemented this proposal, “it may commit a
criminal offence and could be subject to civil penalties” Please note the choice of words ‘criminal offence’ indicating that stock market listing is an issue of national pride and sentiment.

MNCs actions reminds one of British East India Company

The guilt of 1978 compulsory listing episode (perceived as unfair) lingered on for past 4
decades. Today, MNCs such as Toyota are operating in India without listing. In fact, taking
unfair advantage of guilt sentiments, MNCs have taken actions that may not qualify as best
corporate governance practices. The pendulum has swung in the other direction and something needs to be done to restore equilibrium.

Consider the countless examples of global MNCs (Pharmaceutical, Consumer) that are selling more profitable products through their 100% owned private arms. Maruti Suzuki India and its Gujarat subsidiary is a recent example of division of value. Maruti Suzuki and ABB paid more than 45% of their pre-tax profits (seems unreasonable) as royalty to the parents.

British East India Company never had to share its profits with Indians and exploited Indians for a century and things may not be much different in the 21st century. In spite of media debate, nothing has happened in favor of MNC’s minority shareholders.


Compulsory Listing and Preventing Diversion of Value through 100% subsidiaries

PM could extend his slogan by saying that ‘Make in India and List in India’ while asserting that India has one of the best capital market system in the world. One can make exclusions for certain Industry sectors; define threshold sales limits above which listing would be compulsory etc. Most objections to listing proposal can be addressed by rational debate based on facts and data. The government could take steps to prevent parallel formation of private India subsidiaries to prevent diversion of value.

Here is why such listing makes perfect sense:

The proposal is fair, equitable and safe

As against the 40% non-resident shareholding norm of the 1970s, the current liberal norms
allow multinationals to hold 75% in the listed Indian subsidiaries. With increased importance of India market access, the probability of global multinationals leaving India is minimal today.

Moral ground and Listing Logic - I should get a share in the wealth that is getting created
because of me, else I am just like a helpless farmer who loses his land during industrialization.

Indian consumer pays for MNC products and this transactional relationship ends. Most Indians use Facebook and What’s App and part of Facebook’s US Market Capitalization is attributable to several million Indians using it. It would therefore be just and fair if Indian Mutual Funds are potentially able to earn handsome returns by participating in the growth of Facebook India by buying its India listed stock. As another example, consider that Indian consumers paid more than Rs.90,000 Crores for Samsung products during 2015 & 2016. Just to put this figure in perspective consider that this amount is greater than the Budget 2017 Education outlay of ~ Rs. 80,000 crores. Through listing, part of this value has to rightfully accrue to Indian consumers.

What’s in it for the MNCs?

Listing is likely to improve the Listed Company’s Net Promoter Score (NPS) i.e. loyalty of the consumer. Listing is kind of an acceptance of corporate social responsibility (CSR) by these MNCs that creates goodwill and strengthens their India market access and favorably influences the consumer and the government. I have always bought products of company stocks that I own e.g. Nestle (as against Danone) and Maruti. My purchase contributes to the profits and increases my wealth by a factor of PE (Price Earning) multiple. In his annual meeting, even legendary Investor Warren Buffett encourages his shareholders to buy goods and services of investee companies.

Global Precedents

Countries do protect their National Economic Interest through various means e.g. Requirement of a silent local partner in gulf countries, UBER’s exit from China, China's promotion of local businesses such as Alibaba v/s Amazon and Baidu v/s Google,  offset clauses in defense contracts

Recently, commenting on Visa issue, Airtel Chairman Sunil Mittal said …. How about banning Facebook and Google? This statement is an example of awareness that economic benefit is a two way street.

Benefits of Listing

If these global multinationals are made to list in India, Indian Mutual Fund and Pension Fund
Investors would be able have a wider choice to invest in high quality businesses thereby
probably beating inflation (in this low Fixed Deposit Rate scenario) and live a dignified life in

India’s equity market capitalization stands at around Rs.1.8 Trillion. Even if MNCs representing 2% of MSCI World Index market cap get listed, it might add 50% to India’s equity market cap. This is huge and may absorb liquidity and make Price Earnings Ratios reasonable and market less expensive.

For MNCs the benefit would be a much stronger bond with its consumers and goodwill.

Thus ‘Make in India and List in India’ could be a win-win proposition for India and the foreign


This is a personal opinion of the author and the narrative, quotes and figures mentioned in this blog are from secondary media sources and not verified from original source. 


  1. Profits of enterprises should be distributed with public for inclusion and sustenance of public savings at large irrespective whether it is MNC or Indian private company. The best way to do this is for example tax profits of unlisted companies at 35% and listed companies at 30% above 100 crores of capital. All unlisted companies will fall in line.

  2. very well said...and need of the moment issue.


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