The Hindu Business Line : Will safety concerns weigh on auto investments?

Mumbai, Nov. 28 French automaker Renault’s decision to keep its corporate offices in Mumbai temporarily closed following the terror attacks clearly showed that it was taking no chances with employee safety. The company also issued a directive to its staff in Chennai that they would not be allowed to fly out of the city in these troubled times.

Top sources in Renault told Business Line that this was only a precautionary move and could no way be compared with what its counterpart in France, Automobiles Peugeot, had done 12 years ago when it abruptly decided to exit its India operations. Renault sources reiterated that the situation was different this time around, especially with the impact of live coverage on television across the world.

“This does not imply that we are thinking of an India withdrawal because we are here to stay. However, the security of employees is top priority,” company sources said.

Growth bait

Like Renault, there are a host of companies in the auto arena keen on increasing their exposure in India. Some like General Motors and Ford are floundering back home. India still remains the best bet during these troubled times when most other countries really have little to offer in terms of economic growth. However, this bait could be neutralised with the safety issue.

Terrorism is a subject that gets Europe and the US, in particular, terribly paranoid especially after 9/11. The recent terror attacks in Mumbai had left the world shell-shocked. What has been especially disconcerting is the fact that the terrorists were specifically looking out for British and American passport holders.

Experts maintain that critical investments will inevitably be put on hold till companies in the West are convinced that the clouds have cleared. They believe that Korean and Japanese companies are less paranoid in contrast. “One reason could be a sense of empathy with a fellow Asian country,” they explain.

This again could be a debatable point considering a director of a top Japanese car company had once told this correspondent that future investments here were being constantly reviewed because “of the uncomfortable breeze blowing between India and Pakistan”.

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