Corporate controversies in far developing countries don’t make waves in Indian media
Earlier this month, the Chairman of Sri Lanka’s Ceylon Electricity Board informed the country’s Parliamentary Committee on Public Enterprises (COPE) that a contract had been awarded to an Indian business group, the Adani Group, to a renewable energy project without a call for tenders and that it was done under political pressure. The Sri Lankan opposition party, Samagi Jana Balawegaya (SJB), has accused President Gotabaya Rajapaksa of “pampering [Indian Prime Minister Narendra] Modi’s notorious friends” and the president tweeted “categorically denying” all such allegations.
While the chairman of the electricity board later recanted and said he had misspoken, having become too emotional, all available evidence suggests that the project was indeed awarded to the Adanis at the request of the Indian government.
This is not the first time that the Adani group has been caught up in a controversy. In Sri Lanka itself, he had previously been tasked with securing the Colombo West Container Port Terminal without a tender. Whatever the facts, such overseas corporate controversies do not go away easily, and the Adani Group is not the first Indian business group to come into the political crosshairs of a neighboring country.
A few years ago, the venerable Tata group was involved in a brouhaha of a different kind in Bangladesh. Caught between pro and anti-India politics in the country, the Tatas had to put plans to invest up to $3 billion in steel, fertilizer, electricity and other infrastructure projects on hold. To be fair, there have been no cronyism charges against the Tata group in Bangladesh, unlike the Adani imbroglio in Sri Lanka. If there is anything common to both situations, it is the challenge of an Indian company caught in the crossfire of domestic politics in a foreign country.
It is not often that Indian companies find themselves caught in such political crossfire abroad. Most of the overseas operations of even the largest Indian companies are not large enough to attract political attention in host countries, especially in developed western markets. Corporate controversies in faraway developing countries do not make waves in Indian media. Therefore, if an Indian company finds itself in political trouble in a country in Africa or Latin America, or even Eastern Europe, the news does not always come home.
India’s immediate neighborhood presents an entirely different context. The sheer size of India in its neighborhood creates a geopolitical context that plagues Indian businesses. Consider, for example, the dramatic exit of Maldives’ GMR Group, after securing a $500 million contract to operate Ibrahim Nasir International Airport on Hulhule Island, near Male’. The prize was awarded by the government of Mohamed Nasheed and quickly canceled by a rival political group that overthrew Mr Nasheed in a coup.
There have been less dramatic and less visible problems for Indian companies in other neighboring countries. In Nepal, the Dabur group has been repeatedly accused of selling adulterated soft drinks. Local authorities have seized thousands of cartons of Dabur’s Real juice. Nepalese media reported that the government’s Commission for Investigation of Abuse of Authority (CIAA) raided Dabur Nepal’s unit in Bara district and sealed cartons of juice for allegedly changing the date of manufacturing. Also in this case, senior Dabur officials blamed local political elements for targeting them in an anti-Indian tirade.
Further afield in South Africa, a business group of Indian descent, the Gupta family, has seen its members arrested on charges of business malfeasance and cronyism, but there too there is political advantage and diplomatic to the case. More recently, Indian businesses have faced a consumer boycott in the Gulf region due to the recent controversy over alleged anti-Islam remarks by an Indian political activist.
These incidents draw attention to the political risk of doing business abroad in general, and of doing business in India’s neighborhood in particular. There is no doubt that in each of the South Asian cases an element of anti-Indian, and perhaps pro-Chinese sentiment played its part. The two Asian giants cast a long shadow in the area. Anti-Indian sentiment becomes more prominent when political elements are able to show evidence of cronyism.
All of this underscores the need for the Indian business community to better understand the nexus between business, geopolitics and host country political risk. Globalized Indian companies must consider the political and diplomatic risk of doing business in countries where India is or is likely to be the target of domestic politics. At one time, Mukesh Ambani had a global advisory council with a retired American diplomat, a head of a British think tank and a former Japanese minister among its members. Businessmen like Sajjan Jindal of JSW invested episodically to gain a better understanding of the politics of the countries in which he had business interests.
Many multinational companies invest in seeking or retaining professional political and economic expertise on the countries in which they invest and, more broadly, on global and regional geopolitical and geoeconomic issues that could impact their business. Similarly, Indian companies venturing overseas should also remain aware of the domestic politics of the host country, home-host country relations and wider regional geopolitical issues that may arise. have an impact on business.
The lazy option for many Indian companies has been to depend on serving or retired Indian diplomats for advice and help in getting out of sticky situations. Most professional diplomats avoid such involvement to avoid getting into sticky situations. Several diplomats and officials have often complained that Indian companies approach them too late in the day if they have a problem and that stepping in to help them can then raise eyebrows at their superiors.
Of course, not all diplomats are so picky about their professional conduct and willingly double as advisers to influential business leaders in the name of economic diplomacy. Until a few decades ago, few diplomats ran the risk of getting too close to Indian affairs abroad for fear of attracting negative attention at home. More recently, as the lines between politics, business, government and diplomacy become increasingly blurred, more and more diplomats and officials are willing to go the extra mile for Indian businesses, until what a scam makes the headlines.