India's U.S.-Style Lobbyists
NEW DELHI: Gaining political influence in India was once a simple
affair: You handed over a suitcase of cash, in nonsequential notes.
But in India, as elsewhere in the developing world, the old business
of corruption is meeting a new rival: the Washington-style business
of persuasion, in which companies garner influence through golf games,
planted news stories and PowerPoint presentations.
As global corporations woo a billion customers, there are tax breaks
and contracts to be wrested from Indian officialdom. Some companies
still get them by corrupt means, covering their tracks with middlemen,
as some foreign managers acknowledge in private and as high-profile
Indian media investigations have alleged.
But many companies, according to experts on India's corporate landscape,
are turning to lobbyists who use subtler tools of influence, partly
out of fear of anti-bribery laws like the U.S. Foreign Corrupt Practices
Act, which threatens jail time even for chief executives if they let
workers pay bribes overseas.
In Washington, lobbying is a huge, established industry and, of late,
a source of controversy. But in India, where there is a long tradition
of outright corruption, lobbying is regarded by many as a lesser evil.
Supporters say lobbyists are helping to pry open closed industries.
They are praised for introducing fact-based analysis into the debate
over liberalization, and for creating a cheaper alternative to bribery.
"To some extent, it will reduce corruption," said Abhijit Sen, an
economist who serves on the government's Planning Commission. "You
can get certain things now for free that you once had to pay for."
Unlike in the West, lobbying is virtually unregulated in India, as
in many other developing countries. And even as institutions like
the World Bank increase efforts to curb graft in developing countries,
lobbying will remain a gray area immune from equivalent scrutiny,
said James Wolfensohn, a former World Bank president.
"The earlier efforts of lobbying in the developing countries was really
writing checks to the parliamentarians and officials," he said by
telephone. "And we were focusing on that much more than on hiring
a lobbyist to promote the interests of Boeing in India."
But the rise of lobbying here has generated critics, who call for
more scrutiny. Consumer groups contend that Washington-style lobbying
can veer into manipulation, with fact-filled presentations supplemented
by other practices like planting misleading news articles and disguising
lobbying campaigns by multinational companies as indigenous grassroots
initiatives. Many of these practices, to which some of the lobbyists
freely admit, are within the law, but critics say it can be harder
to counter these tactics than more straightforward lawbreaking.
Sunita Narain, a well-known Indian environmentalist, describes the
new lobbying as corruption by other means.
"I'm not very happy with this legalized corruption," said Narain,
who for years has battled against the practices of multinational companies
in India. "Give me old-fashioned Indian corruption. Yes, it stinks.
But it's a stink that everyone knows."
Defenders of the new lobbying say it signals a new partnership between
the state and business in India. In the decades after independence
in 1947, India was a socialist republic notorious for its "License
Raj" - the lumbering bureaucracy that parceled out the permissions
needed to start, operate and close businesses.
Being a lobbyist meant begging for exemptions from a system that stifled
Today, the lobbyists no longer have to beg.
"You have in the government and in the bureaucracy people you don't
have to convince," said Prakash Karat, general secretary of the Communist
Party of India (Marxist). "They are themselves clear that you have
to implement policies in favor of the corporations."
So sympathetic are many bureaucrats that they often copy and paste
language from lobbyists' presentations into government reports that
grant the lobbyists their wishes. Sen, the economist, said that in
a country that lacks world-class research centers, officials have
little choice but to rely on the polished, fact- filled presentations
that the lobbyists provide.
Foreign companies seeking access to India's market often collaborate
with government officials to outline a deregulation approach that
satisfies the company without marring the government's political standing.
When the Italian clothier Ermenegildo Zegna wanted to open boutiques
in India, it was barred from doing so by law: India prohibits foreign
investment in retailing, because of lingering fears of undermining
millions of mom-and- pop shops.
But India's commerce minister, Kamal Nath, wanted to help Zegna and
even wears its suits, said Rahul Prasad, the designer's managing director
for South Asia. So Zegna's chief executive, Paulo Zegna, began discussing
with Nath creative ways to alter the rules. The two traded frequent
faxes and e- mail messages with various ideas, Prasad said.
Then, in a letter to the government, Zegna suggested a compromise:
Why not admit foreign retailers selling only a single brand - approving
firms like Zegna and Gap, but excluding hypermarkets that would compete
with small retailers?
In January, the government opened retailing to foreign capital for
the first time - and solely for single brands.
In interviews, some of Delhi's leading lobbyists described their methods.
When clients are accused of breaking the law by an Indian government
body, one strategy is to play that body off against other bodies in
India's labyrinthine federal system.
Deepak Talwar, a prominent Delhi lobbyist, represented Coca-Cola,
which had been accused of harming the environment. The company, which
declined to comment for this article, has denied the charges. Talwar's
lobbying approach was to ensure, among other things, that every government
or private study accusing the company of environmental harm was challenged
by another study.
In addition, Talwar said during an interview, he lobbied high-ranking
government officials to support the company's cause, in the hope that
their influence - in addition to the conflicting studies - might dissuade
government scientists from making a clear-cut judgment against the
"If they were examining a sample," he said of the scientists, "where
would they feel pressure preventing them from making a firm decision?"
Talwar has also represented, for $5,000 to $10,000 a month, McDonald's,
DuPont, American International Group, General Motors and GlaxoSmithKline,
Lobbyists say one secret of their craft is to invoke the public good
in support of their clients' interest.
When TetraPak, a European packaging company, wanted duties cut on
a raw material, it hired Dilip Cherian, a Delhi lobbyist who charges
clients $100,000 a year.
The company came out with a statement criticizing the duties. But
Cherian also attempted to create a groundswell of support for a duty
cut from milk farmers too destitute to buy the cartons at present
prices. TetraPak declined to comment for this article.
Cherian's team traveled to villages to persuade farmers' cooperatives
to lobby their local members of Parliament, who in turn lobbied the
By the time it reached his desk, what began as a foreigner's lobbying
campaign could well have appeared like a grass-roots campaign, and
the government, one eye focused on rural votes, obliged.
"What happens here is that actually policy-making is much more democratic
than it seems," Cherian said, when asked about lobbying's influence
on democracy. "In the push and pull, many players come in, and almost
every player gets a chance to be heard. Everyone gets their 15 minutes
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