Adani’s Global Expansion and India’s Reputation

Source: The post Adani’s Global Expansion and India’s Reputation has been created, based on the article “Adani indictment in US damages global credibility of India Inc” published in “Indian Express” on 23rd November 2024

UPSC Syllabus Topic: GS Paper 2- International Relations-Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Context: The article discusses how the Adani Group’s global expansion, supported by the Indian government, has raised concerns over crony capitalism, corruption, and reliance on foreign finance. It criticizes the government’s involvement in backing the group’s questionable practices, damaging India’s global reputation.

What is the Adani Group’s global strategy?

1. The Adani Group has expanded globally, investing in projects from Australia to Greece, Bangladesh to Kenya, and beyond.
2. Its ventures, like ports and power projects, are supported by the Indian government as part of India’s geopolitical and geo-economic strategy.
3. For instance, the U.S. partnered with Adani, providing $533 million in financing for a port project in Sri Lanka to counter China’s influence.
4. An Indian diplomat even described this support as “geo-strategic,” using Adani’s projects to enhance India’s foreign policy goals.
5. However, critics argue that this has promoted crony capitalism, where political connections benefit certain businesses. The Indian government has been compared to South Korea’s chaebol model, supporting global expansion of large businesses with state backing. Critics argue that India’s version lacks accountability compared to South Korea.

How has crony capitalism evolved in India?

1. Crony capitalism in India began during the licence-permit-control era and later shifted to public-private partnerships and regulatory policies.
2. Political-business ties remain strong, with businesses relying on political support to secure contracts domestically and abroad.

What legal and financial issues has the Adani Group faced?

1. Unlike China, which uses its own funds to expand globally, Indian firms depend on Western financial markets.
   2. This dependence exposes them to foreign laws and legal risks, like anti-bribery regulations. A U.S. grand jury indictment highlights these issues.
   3. Similar concerns have arisen globally:
2. Sri Lanka: Reviewing an Adani power project.
3. Kenya: Plans to cancel an Adani airport expansion project.
4. Bangladesh: High Court ordered a probe into Adani’s power agreement.

What are the broader implications for India?

1. The government’s overt support for Adani has blurred the line between promoting national business interests and enabling unethical practices.
2. Indian firms like Tata and Infosys built strong global reputations through ethical practices and consistent effort. In contrast, Adani’s issues have harmed “Brand India,” undoing decades of progress in building the global equity of Indian businesses.
3. Critics call for action to restore trust and ensure ethical practices in business-government relations.

Question for practice:

Evaluate how the Adani Group’s global expansion, supported by the Indian government, has impacted India’s reputation and raised concerns over ethical business practices.