On second thoughts...

Changing policies, like those on aviation, is good, but doing it so late defeats the very purpose

THE car used for the terrorist attack on Parliament, it is true, had a fake home ministry pass, but since that lulled the security forces a bit and enabled the car to get past the first tier of security, expect a lot of tightening in the days to come.

Almost everyone and his uncle in India’s security apparatus has been screaming about the excessive privileges given to MPs and other VIPs for many years now — the stickers on their cars, several of which are passed on to other people, enable them to pass without any security checks, for instance. This happens each time there’s a security scare — such occasions are also when proposals on ‘smart’ ID cards are brushed up — but once that passes, we’re back to normal.

So, on second thoughts, maybe you shouldn’t expect any tightening of security in any material sense — adding the army to the fortresses of Atal Bihari Vajpayee or Sonia Gandhi is quite pointless isn’t it, especially given what happened in Parliament?

But that’s us isn’t it, the post-facto country? Almost all the right, or even wrong, things are always done after the event. That’s also why they serve little purpose, except to give rise to the question, if we did the right thing, why didn’t it work?

The same mindset is apparent elsewhere too. The country’s civil aviation establishment, along with the Planning Commission, is currently working on a policy that will allow foreign aviation players to hold up to 49 percent of the equity in Air-India. That’s great if it finally goes through, but why think of it now? Singapore and other airlines made it abundantly clear when they first began looking at Air-India that they would be keen if they had full control of the airline — who would want to sink in billions of dollars into an entity without having full control? And, given the dismal shape of the aviation business globally, who cares if India now changes its policy?

So even the brownie points that you would get at global fora, such as the WTO, are not forthcoming. Meanwhile, there will be a vocal section in India that will be shouting about a sellout. And sell-out it will be, in the sense that Tata-SIA would have paid a much higher price for Air-India pre-September 11, than they or anyone else will pay, say, next year.

The same second thoughts, not surprisingly, are being applied in the case of the domestic aviation sector. The new policy being discussed plans to allow limited foreign investment as no serious bids were received the last time around for Indian Airlines. Again, it is good that the government is being realistic, but pause for a moment to remember that the Tatas had put in a proposal for a domestic airline many years ago, and this was rejected precisely because they had roped in Singapore Airlines as a partner.

Dig just a bit, and you will come up with scores of such examples, of changing the rules after the big opportunity has come and gone. Suzuki would have paid a king’s ransom to get control of Maruti when it was the only serious auto player in the country five years ago, but all we did was squabble with them. And now that all auto majors are bleeding, we are getting ready to woo Suzuki, which is making it clear it is not willing to spend anything more than small money — Suzuki’s press interviews are currently focussed on how long the haul for Maruti is going to be.

To cite another example, successive governments have decided to keep out foreigners from the Indian retail market, ostensibly on the grounds that this will kill India’s small retailers. Given that just 2-3 per cent of India’s retail trade is in the organised sector, that is an argument which doesn’t sound too convincing. But leave that aside and assume that it is government policy to keep out foreign stores. Does that mean that brands like Marks&Spencers, which has just set up shop in India, are illegal? They are not.

The government’s policy allows foreign brands to come in as franchisers — Marks&Spencers has got a franchise agreement with Planet Sports. So, Planet Sports can set up as many stores for Marks&Spencers as it likes, but the parent firm cannot come in on its own. There’s now a move to allow foreign investment directly. Again, why wasn’t it done earlier?

Another piece of mindlessness, similar to the example just cited, is not allowing foreign newspapers to set up base in India. All sell in India anyway, and each one is accessible through their websites. There’s no second thoughts on this one, by the way — the government continues to stick by its 1955 policy resolution, though most other policies of this vintage have been given the go by in the name of economic reform.

What really takes the cake, of course, is India’s policy on foreign investments in telecom. We’ve given a commitment to the WTO to allow foreign equity up to a maximum of 26 per cent, even though we actually permit up to 49 per cent directly, and up to 74 per cent through a legalised back door system of holding companies. So why not increase our commitment at the WTO as it will allow us to gain concessions in other areas of trade negotiations? For that, we’ll have to wait for the famous second thought.

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