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By Ruma Dubey

Two events have happened today which make us wonder at the perils of doing business abroad.

First, the Adani group must be having some sleepless nights, right since the time that it signed up for the coal mining project in Australia. This project has been mired in controversy ever since the time it was put on paper, mainly its threat to the environment. It has been in the making since 2010 and the cost is pegged at $4 billion. It had targeted first shipments to take off from March 2020.

But it has constantly been caught in one controversy after the other. Even the latest, where a project has become the ‘decisive’ factor in an election, just goes on to show how going global has its own set of issues. It is not something as easy as just setting up a shop and starting to sell lemonades. The political, financial, environmental and social ramifications are immense.

Another Indian company in the news today is the beleaguered Reliance Communication (RCom). The China Development Bank has filed insolvency proceedings against the company. The company, when it could not find any more willing lenders in India, tied up with the Chinese bank for Rs.8700 crore. This was split into Rs.6000 crore for refinancing 3G spectrum fee payment by Rcom and Rs.2700 crore as for equipment imports from Chinese Vendors. 

India could say that it going global with Indian companies now borrowing directly from the Chinese banks but does that make us global? China is killing two birds with one stone – not only is it getting borrowers, but the funding is linked with conditionality of equipment purchase, meaning direct boost to exports. The loan for Anil Ambani was approved on the understanding that Reliance would buy Chinese telecoms equipment from Huawei Technologies and ZTE Corp. Though this does not come as a “mandatory” rule to getting loans, it comes with a tacit understanding that Chinese banks would only lend to Indian companies if tied to future procurement orders. So who is the real global country here?

Or what about the Indian IT companies? Aren’t they today victims of America’s politics? Tata Steel, Hindalco and JSW Steel have either sold off the stake in their foreign subsidiaries or taken impairment provisions on their assets, which affected their overall earnings for a couple of years. As per data released by RBI, India Inc's investment in overseas ventures fell by nearly 39% to US$ 2.65 billion in September this year.

Isn’t there an inherent risk when one invests in another country? And in that context, isn’t investing in India also risky? Doing business in another country, making profits while managing to survive in its politics is like survival in the jungle. Is that how foreigners feel when they come into the great Indian jungle?

Just as it is tough for foreign companies to come and set shop in India, it is equally challenging for Indian companies to open facilities abroad. Apart from shedding all cultural differences, they have to adopt their ways of business and working. Localization is the key word. It is no small feat to have completely foreign employees on the shop floor and working as per their culture and ways of life. Ditto for political and environmental adjustments.

Everything, almost everything which the Indian Govt does is with a keen eye on the international community. It does not want to do anything which will irk the FIIs and their ilk. Thanks to that fear, many things gets done!  Many justify this obsession with ‘wanting to always look good’ for the FIIs as a necessity for a developing economy like India to grow. If that is true, if FII and FDI money is required to boost the GDP, how come, Maldives, whose population is 0.03%of India, did not care about ‘hurting’ sentiments when it very unceremoniously showed the door to GMR?  But at the same time, one needs to wonder whether, we will ever have the gumption to show a foreign company the door because the people were being overcharged?

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