December 12, 2019
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Egg On Our Faces

Bizarre nation this. Cigarettes aren't infrastructure. So, our government allows 100 per cent foreign direct investment to further spread cancer. Airlines are infrastructure. Therefore, it treats Tata Airlines as a pariah. Who can ask for anything mo

Egg On Our Faces

RATAN Tata is not the type to slam his fist on a glass-topped table and scream "Basta! Enough!" I don't know how he reacted on Saturday, August 29 when he heard that the Tata Airline proposal was yet again put on a six-week hold. But his action on the morning of Tuesday, September 1 was a loud and eloquent expression of sheer disgust. And rightly so.

After Singapore prime minister Goh Chok Tong's visit in January 1994, Narasimha Rao encouraged Tata Industries to come up with an airlines proposal. Work began from March 1994. Quietly supported by Amar Nath Verma, the then principal secretary-cum-chairman of the Foreign Investment Promotion Board (FIPB), Tata prepared a feasibility study by December 1995, and submitted it to FIPB in February 1996. Since then, sundry politicians and bureaucrats of three governments have led Tata up the garden path—dangling a carrot here, wielding a stick there, randomly changing policies to debar entry, procrastinating, orchestrating opposition, and indulging in every dirty trick one can think of. There's a point after which no self-respecting person is willing to be jerked around. A delay of three years and six months with no light in sight is long enough for anyone to say, "Stuff it". That's what Tata has done.

The characters who have publicly led the anti-Tata Airline brigade at various points of time are well known. In 1995, the government's policy allowed private sector joint ventures in domestic aviation so long as the new entrant agreed to fly on certain socially desirable (i.e. commercially non-viable) routes, and the equity of foreign airlines was no more than 40 per cent. Remember that Jet Airways had 20 per cent equity from Kuwait Airways and 20 per cent from Gulf Air. Yet, then minister for civil aviation Ghulam Nabi Azad used one pretext or the other to stall the Tata-Singapore Airlines proposal. His tack: "The policy is OK. But our poor airport infrastructure simply can't deal with another entrant."

Then came the pillar of public probity in the history of independent India—the inimitable C.M. Ibrahim, a.k.a "Foreign airlines over my dead body". With help from his secretary Yogesh Chandra, the honest Ibrahim perfected the art of delay. Representatives of the ministry would fail to attend FIPB meetings or ask for more time to finalise their position. Soon, other opponents were roped in. In early 1996, Probir Sen, chairman of Indian Airlines, opined the age of monopoly had gone. Within a year, Sen started speaking on 'over-capacity' and entry at the cost of our state-owned airline. Since the Leftists and the hardcore swadeshi brigade are united in their hatred for the gora paltan, it didn't take much doing to secure their alliance.

Ibrahim found to his delight that he was getting huge support from Pramod Mahajan, who was then the chairman of the Parliamentary Standing Committee on Transport and Tourism. When Mahajan upped the ante by insisting that no private domestic airline can have any equity held by foreign airlines, Ibrahim went a step further by saying that since no country allows domestic airlines to have foreign equity, why should India be different? There are over 15 cases to the contrary. But, facts are mere illusions that must never come in the way of an argument.

 In December 1996, industry secretary N.R. Mohanty finally cleared the proposal at FIPB, subject to cabinet approval. It was here that Ibrahim did his death or glory number. During the last meeting of the Deve Gowda cabinet on April 1, 1997, despite opposition from P. Chidambaram, Murasoli Maran and Inder Gujral, Ibrahim managed to stall the proposal again.

Then came the new aviation policy: no foreign equity of international airlines in domestic aviation. In December 1997, Tata re-submitted its proposal minus Singapore Airlines and in line with the new policy. The delays thereafter have been achieved by babudom's two favourite instruments—seeking clarifica-tions and time for further examination.

Do you have indirect equity of foreign airlines? No. Can we have four weeks to examine whether that is the case? So sorry, Mr Tata, your proposal was not an agenda item for the FIPB meeting. But, you haven't told us who the foreign institutional investors will be? How can I tell you that unless you okay the project? Institutional investors don't make commitments until a project has taken off. Ah, that's interesting. We must have an expert committee to go into this. Six more weeks then. Don't worry, Mr Tata, be happy.

This is an honest description of the absurd drama of the last eight months. Any human being would have got nauseated. But, hey, Ratan N. Tata is a businessman and has no business to get publicly disgusted. Why did he take such an impulsive decision and quit when victory was in sight?

I don't believe that victory was near. Suppose that civil aviation minister Ananth Kumar truly wanted Tata Airlines to enter, but was asking for six weeks' breathing space for some backroom diplomacy. If so, he would have privately got in touch with Ratan Tata, explained his game plan, and asked him to cooperate. He didn't. Besides, those who waged successful war against Tata Airlines weren't going to throw in the towel. Many believe that Naresh Goyal of Jet Airways successfully masterminded the opposition to the Tata project. He'd be a fool if he didn't work overtime to prevent entry. Why should Goyal decide on August 29 to kiss and make up? To believe that the expert committee would favour Tata Airlines flies in the face of past evidence. I'll bet my savings that the committee would have first asked for an extension and then produced a report with enough caveats to put the proposal on indefinite hold.

I've heard another critique. Why is Ratan Tata so naive? Doesn't he know how to play the game? That is a valid point. Ratan Tata is an obstinate man who just won't do business the way we think it has to be done. I don't think that's naive. In my dictionary, it's called honesty—a silly quality but a virtue nevertheless.

Who has won? Jet, Sahara and Indian Airlines, of course—with the nationalised carrier winning without investing a penny in entry deterrence. Compared to that, what's a few irrelevant losses? Such as transparency and the image of Indian decision-making? When he heard of the Tata decision, a senior bureaucrat said, "Good. At last the government has been given a wake-up call." I wish it were true. Somehow, I feel that nothing has changed. Investments will come. Nobody loses face in India. Least of all the government.

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