CLAUSE 116.—(Subsidies for the encouragement of trade or industry.) (Hansard, 27 March 1935)

§ The ATTORNEY-GENERAL
I beg to move, in page 70, line 14, to leave out "public moneys in India," and to insert "the revenues of the Federation or of a Province."

§ The CHAIRMAN
Does the Noble Lady desire to move her Amendment, to leave out Sub-section (2)? If so, I must reserve my right, after she has explained it, to rule it out of order if I find that it involves repetition of a discussion which has already taken place.

Duchess of ATHOLL
I beg to move, in page 70, line 30, to leave out Subsection (2).
The Sub-section says: Notwithstanding anything in this chapter, an Act of the Federal Legislature or of a Provincial Legislature may require, in the case of a company which 2051 at the date of the passing of that Act was not engaged in British India in that branch of trade or industry which it is the purpose of the grant, bounty or subsidy to encourage, that the company shall not be eligible for any grant, bounty or subsidy under the Act unless—

(a) the company is incorporated by or under the laws of British India; and

(b) such proportion, not exceeding one half, of the members of its governing body as the Act may prescribe, are Indian subjects of His Majesty; and

(c) the company gives such reasonable facilities for the training of Indian subjects of His Majesty as may be so prescribed."
The Committee will see that the Subsection imposes very serious restrictions on companies which propose at some future date, at a date to be selected by the Indian Legislature, to trade in India and so to become eligible for some bounty or subsidy that is proposed to be given. I cannot help feeling that conditions (a), (b) and (c) with regard to the giving of the bounty are reminiscent of conditions which were imposed on British companies in India during the time of the boycott in 1930–31 as a condition of being allowed to carry on their business. Those were not the only terms that were then imposed. The conditions as a whole which were imposed on British companies constitute one of the most humiliating documents I have ever had in my hands. I cannot describe my feelings when I realised that British firms all over India had been subjected to the humiliations therein imposed, and it seems to me very terrible to find that in this Bill, which is going to give a new Constitution to India, there should be conditions very similar to the conditions in that terrible document. It seems to me lamentable that the Government should embody in the Bill conditions clearly allowing such discrimination.
The Sub-section is absolutely unjustified. It allows discrimination to be made in the future unless certain anomalous and unparalleled conditions are complied with. In this country no such conditions are required. I understand that in the case of foreigners who wish to have a company incorporated here the fact has to be entered that so many directors are of foreign origin, but nobody suggests that we will not have more than a certain number of foreign directors, and it is not the case that we 2052 are foreigners in India. It is a case here of Indians refusing to treat us as British subjects who have a right to trade in India. This seems to me to be flying in the face of what we always understood was to be one of the conditions under which powers would be transferred, namely, that no discrimination would be imposed on British trade in India.

§ Viscount WOLMER
This Sub-section appears to me a very good example of "directly and indirectly." I cannot help wondering whether my hon. and learned Friend did not have it on his official note in support of the Amendment he was moving just now that the words direct and indirect were inconsistent with Clause 116, Sub-section (2). It appears to me that they were. I strongly support the Amendment of my Noble Friend. When one remembers what Britain has given to India in the shape of security, peace, prosperity and trade, it is intolerable that the Indian Legislature should be in a position to discriminate directly or indirectly against British companies in this matter. That action, I think, is not taken against companies of this country in any other part of the British Empire, except Southern Ireland. If the Government are content with a framework, a shop-window camouflage of accession to the British Empire, I am not, and I would much rather see those parts which are working against British trade outside the protection of the British Flag. It appears to me wrong in principle that it should be admitted in an Act of Parliament that any part of the Empire should be entitled to discriminate against British companies in the fashion contemplated in this Sub-section. I am aware that in India there is a very acute feeling against certain Dominions, particularly South Africa, and I think also Canada, where it is felt there has been discrimination against Indians in those Dominions. I think I am right in saying that the Bill, while in some parts it gives India the power of retaliatory action against those Dominions which have discriminated against India, in every other part it puts the inhabitants of these Islands in a different position.
Great Britain has never discriminated against India. What public man has ever ventured to say that an Indian company with a majority of Indian shareholders, and a board composed en- 2053 tirely of Indians should not be able to claim in Great Britain every right which is enjoyed by a British company? No one in public life has ever dared to advance such a proposition. I prefer to think of Indians and Englishmen as equally British subjects. Here you are allowing the legislature of India to effect a discrimination in their bounties and subsidies against firms which are British. That is deplorable. It is opening the door to further diminution of British trade in India; it is admitting a principle which is fundamentally wrong and which cannot be justified by any moral consideration as long as India remains a part of the British Empire and enjoys the privilege of the defence of the Empire.

§ Sir J. WARDLAW-MILNE
I feel rather sorry that I cannot follow my two Noble Friends in their denunciation and indignation of the Clause. I suggest that they are reading something into it which does not exist at all. The principle embodied in this Sub-section is nothing new. It was accepted long before any new constitution for India was thought of. From my own personal knowledge I know that this matter was discussed 20 years ago and accepted by Governments in India, which had no tendency towards a new constitution. The question really has nothing to do with prejudice or discrimination. It is simply this, that if and when the Government of India decide to give Indian taxpayers' money to support or promotae a new enterprise by means of a subsidy, it is suggested that it is only right that the subsidy should be given to a company which has a certain number of Indian shareholders and Indian directors, and which gives certain facilities for the trade of Indians in that particular industry. It is a question when Indian taxpayers' money is being spent. You may say that it is wrong that India should lay down these conditions. The Noble Lord asked most emphatically whether such a thing could be suggested in England. I say that it is very natural to suggest when we are going to give British taxpayers' money as a subsidy to industries in this country, that the companies must be British, with British capital and British shareholders. India does not ask that all should be Indians, but that there should be a cer- 2054 tain proportion of Indians. That is not an unreasonable proposal.

§ Viscount WOLMER
Does the hon. Member suggest that the Dutch—