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Corporate Nov 30, 2012

Batting for corporates: Obama does it, why doesn’t our PM?

By Firstbiz Staff

An Indian company gets unceremoniously kicked out of a prestigious project in a neighbouring country - and all India does is to issue a statement criticising the move.

Contrast India's weak-kneed response to Maldives' rejection of GMR Corp with those of other world leaders when they felt that their countries' businesses had been treated unfairly in India.

When British telecom giant Vodafone was slapped with a retrospective capital gains tax on its acquisition of Hutchison Telecom's assets in India, British Prime Minister David Cameron batted proactively on Vodafone's behalf - and wrote to Prime Minister Manmohan Singh.

Contrast India's weak-kneed response to Maldives' rejection of GMR Corp with those of other world leaders when they felt that their countries' businesses had been treated unfairly in India. AFP

Similarly, when India rejected bids for a fighter jet contract from US companies Boeing and Lockheed Martin, it experienced the full force of America's "economic diplomacy"; even US President Barack Obama had lobbied on behalf of American interests.

When the Supreme Court cancelled 122 telecom licences in the 2G scam case, Russian Prime minister Vladimir Putin and Norway's Prime Minister Jens Stoltenberg turned the heat on India ever so gently on behalf of Sistema and Telenor respectively, which had to take a giant hit for not having done the due diligence in entering into shadowy transactions that left them holding the can.

But the Indian government hasn't gone beyond issuing proforma denunciations in the case involving GMR Corp in Maldives. The irony is that India was the first to recognise - and legitimise - the government of Mohammed Waheed, which took over in February after displacing the then president Mohammed Nasheed, with whom India enjoyed enormous goodwill. In fact, it was India's early recognition of the Waheed regime that gave it legitimacy in the early days, when there was enormous international pressure on the Waheed government.

The GMR Corp contract is the victim of that regime change: the contract was issued during Nasheed's time, but had run into trouble with the Waheed regime soon after. Yet, the Indian government failed to intervene to defend its commercial interests in a country where its foothold holds enormous strategic significance as well in the context of the ongoing turf jostling with China in the Indian Ocean.

In that sense, the termination of the $500 million contract earlier this week wasn't exactly a bolt from the blue. But India's failure to step up its economic diplomacy is no less pardonable for that. And to think that this contact - in a joint venture with Malaysia Airports Holding to build the Male airport - was one of the largest infrastructure contracts secured by an Indian company in a long time.

As Indian businesses step out and plant their flag on foreign shores, it wouldn't hurt the Indian government to be seen to be behind them and backing them up in the event that they face political hurdles. All that political heft from being an emerging superpower means nothing if we can't protect our commercial interest and Indian businesses when they are cut out unfairly.

by Firstbiz Staff

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