December 5, 1953
Swadeshi
Dr J S B a d a m i President, T h e
Indian Soap and: Toiletries Makers'
Association, has issued the following
statement to the "Press:
Some of the remarks made by the
Chairman at the Tata Oil
Mills
C o , L t d , at its last A n n u a l General
Meeting, have evoked adverse comments in a section of the Press. T h e
remarks referred to the dominating
position
of Lever Brothers in
the
.soap industry of the country and to
the policy they 'have been pursuing
in frequently reducing; prices, while
the members of the indigenous sector
of the Industry have been struggling
hard to keep their heads above -water,
.several
units having closed down.
T h e Chairman of T o m c o rounded
off his general
observations with a
request to Government " for an in
quiry into ah aspects of this Indus
try ", so as to bring the correct position under public scrutiny.
The existing productive capacity of
the Industry as a. whole is estimated
at' 264,000 tons a year of which
194.000 tons is attributed to Unorganised sector, and the remaining
70,000 to the cottage industry.
In
the organised sector, over 30 per cent
is under the control of Levers, it is
significant to note that, while Levers
arc working to their full capacity, the
indigenous
sector of the
Industry
has been able to utilise not more
than 20 per cent of their installed
capacity. The percentage may vary
Prom unit to unit, but the average
indicates the general plight in which
the indigenous units find them selves
today.
If, when most of the Indian units
in the Industry have to struggle hard
for preventing their sales from going
down, Levers alone can operate
almost to their full capacity, reduce
prices and plan for increased production, contrary to the recommendations of the Planning Commission,
the conclusion is inevitable that,
that concern must
either have
certain advantages which others
do not
possess,
or it
must
be
indulging
in
unfair
competitive practices. In any event, there
is nothing wrong in having the position examined by
an independent
body, as has been suggested by the
Tomco Chairman.
It in the contention of the indigenous
sector of the Industry
that
Levers are working with a view to
assuming a monopolistic position
either by elimination or absorption.
The section of the Press which has
championed the cause of Levers, on
Soap
the other hand, say that Levers are
looking after the interests of consummers which the indigenous sector of
the Industry is not in the least worued about. Suffice it to say that,
until
indigenous factories started
producing soap in India, the puce
which the consumer had to pay tor
the unpolled soap of Levers was very
much on the high side. 'There is no
doubt about the tact that the consumers' interests have been safeguarded, only after Indian soap factones started functioning in the
country. Prices of soaps in India are
about the lowest in the world.
Much has been made of their
anxiety to serve consumer interest.
the indigenous industry could
do
so in a greater measure and be automatically efficient if it was in a position to fully utilise its installed capacity, which is modern, and thereby
more than satisfy the entire country's
needs at economic prices. It should
be remembered that in certain other
countries the same brands of Levers
sell at higher rates unless where sub
sidised by Government. 'The essential fact is because of their inexhaustible financial resources they make
bids for monopoly spending lavishly
on selling and publicity, which is
not
always in the best traditions.
It may be mentioned that they also
have by far the largest vanaspati
interest, which is an allied industry.
Recent evidence of their monopolis
tie proclivities is to be seen in their
r e c e n t application for the import of
a new plant (involving a 15 pre cent
increase in capacity"), when the present one is definitely not obsolete
Moreover, if their current: plant
is
not
scrapped, their plant capacity
would be increased In 115 per cent.
It must be definitely understood that
opposition to their application does
not
imply discrimination
against
Foreign interest, because tins limitation applies to all interests in
the
industry, foreign or otherwise.
Referring
to
the
competition
within, the following extracts from
a Report of an impartial body like
the 'Tariff Commission in connection with the Dry Battery industry
which is similarly placed as the Soap
Industry
arc of considerable significance :
" W h i l e the industry as a whole is
at present not exposed to foreign
competition, the Indian sector of the
industry is seriously apprehensive of
a possible threat to its position arising from the fact that National C a r
bon, which has at its disposal the
technical and other resources of a
1365
powerful foreigen combine
with
world -wide ramifications, is already
supplying about Ho per cent, of the
home market, and is also able to
produce dry batteries at a lower cost.
The two Indian units, Estrela and
Solar, are already struggling hard to
maintain their position in competition with tins foreign unit. Normally
the interests of the country
should not he deemed to be adversely
affected if
internal
competition
results in weeding out the less efficient not . and in concentrating production in the more efficient ones,
in can of this industry, however,
which at present consists of 3 units,
the clirumation of two units will
results in the remaining unit acquiring
a monopolistic control of the entire
field and this is obviously not in the
long term interests of the consumer.
Irrespective of whether the unit
which acquires such a predominant
position is an Indian or a foreign
one, the emergence of a monopoly
is undesirable in itself "
It will not be out of place to mention that that Indian soap industry
has never approached Government
for any measure of "protection" f r o m
foreign competition, as has happened
in the ease of several of the indigenous industries.
It has also been
contended by
some of the critics that the observations of the Tomco Chairman are
far from favourable to the inflow of
foreign capital which
the country
needs. Nothing can he farther from
truth
The charge is against
the
tendency towards acquiring a mono
polistic position in an industry, and
not because the particular company
happens to he one with foreign capital. Resides soap,
Levers have a
fund of experience in divergent lines.
Their resources could, therefore, be
canalised info those avenues of enferprice where they are needed. T h e
gravamen of the charge is that, in a
society where competitive enterprise
is recongnised as the Keynote of expanding economy
resulting
in a
(uglier standard of living, the emergence of a monopoly is most undesirable irrespective of whether the
unit which acquires such a privileged position is an Indian or a foreigu
one. Let us not cloud the issue by
raising the bogey of the
so-called
consumer interest or discrimination
against foreign capital.
All that indigenous Industry suggests is a Commission of Enquiry,
and it is hoped that this elementary
request w i l l be acceded to. without
further delay,