CNPC, Sinopec, Chinalco, Shanghai Electric and Huawei Technologies are not ordinary Chinese enterprises. They are extended arms of the Chinese Government, often fulfilling strategic objectives beyond the commercial.

This cannot be said about ArcelorMittal, GMR Infrastructure, Bharti Airtel, Jindal Steel or Karuturi Global. They are privately-owned entities having overseas business interests, but hardly discharging any strategic functions on the Indian Government’s behalf.

Nor would their establishing steel plants in Europe or Bolivia, airports in Maldives, or telecom and corporate farming operations in Africa help secure vital raw materials, leave alone create jobs here. The profits from these operations, too, belong to only their private shareholders.

That being so, why should the Indian Government be expected to safeguard global investments made by these groups? There is something called entrepreneurship: While taking decisions, you should fully know the risks accompanying them. That includes political risks — from regime changes, the new rulers not honouring contracts entered with predecessor ‘friendly’ governments or being populist/socialist to the point of threatening expropriation/nationalisation of assets, and so on.

Not that these are unknown to Indian businesses themselves. The Nattukottai Chettiars, Shikarpuri Lohanas, Sindworkies, Kutchi/Sindhi Bhatias and Khoja Muslims have a history of venturing into distant lands — from the Far East, Straits Settlement and the Persian Gulf, to the African continent, Central Asia, the Mediterranean and Latin America. They did business in these regions not through state support or gunboat diplomacy, but by building a certain positive reputation among the local communities and administrations.

Our businessmen today shouldn’t be doing anything differently in their desire to become multinationals: The word itself conveys an ability to negotiate and straddle diverse business cultures and environments.

If the Maldives Government has unfairly terminated GMR’s contract for developing the Male airport, the right way is to go in for international arbitration and seek appropriate compensation for expropriation. The Indian Government cannot do much: It should certainly not do what the British Finance Minister, George Osborne, did by raising the Vodafone tax issue while visiting India. No sovereign nation likes being lectured to; the risks to future investments from reneging on contracts are for it to independently weigh.

The only overseas investments deserving of Indian Government intervention are in strategic areas such as energy, fertilisers and other mineral resources that are in short supply here. That would mean investing greater diplomatic resources in Kazakhstan, Jordan, Morocco, Tunisia, Senegal, Togo or Senegal.

But this should be more in the spirit of the old Non-Alignment Movement, with business at its core. The image of an India that is non-threatening and nurses no imperial ambitions — unlike its more overbearing neighbour — can actually be an asset for its businesses.

(This article was published on December 7, 2012)
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