INDIAN SCENARIO
Much has been written about the benefits of doing business in India — low input costs, easy access to labor and a massive consumer base. Less has been said about the ability of companies in India to thrive by bending rules, greasing palms and broadening ethical boundaries. At a time when the issue of corruption threatens the stability of the Indian government and scandals unearthed in sectors from sports to telecommunications total tens of billions of dollars, it is becoming increasingly critical for multinational managers to ask whether business success in India comes at an ethical cost. India’s lax ethical standards, coupled with a rigid bureaucracy and weak enforcement mechanisms, have certainly hurt the country in many ways. The causes of this fiscal pain can be seen at the government, corporate and individual levels. As Ratan Tata, chairman of the Tata Group, observed, “If you choose not to participate in corruption, you leave behind a fair amount of business.” Scandals in the political and business spheres seem to have become endemic in India. The infamous “2G” scandal of 2008, in which the government granted telecommunication licenses on a first-come-first-served basis instead of through an auction, is estimated to have cost taxpayers US$40 billion. Lax corporate governance has also hurt investor confidence, as illustrated by the revelation of questionable accounting practices at Satyam Computer Services. This 2009 scandal saw US$70 million in real assets transformed into US$1 billion in imaginary assets and sent the Bombay Stock Exchange tumbling 5% in a single day. Goldman Sachs India admitted that growth to date has been slow, as the company’s priority has been to protect its reputation by dealing only with clients with the highest ethical standards. The German firm Enercon, the world’s fifth-largest wind turbine manufacturer, was forced to walk away from its US$566 million joint venture after being intimidated by authorities and failing to find legal recourse to what it termed “government-abetted theft.” In a market economy, the customer is supposed to be the ‘king’ who determines what to produce, how to produce and by whom to produce. The economic wheel moves around his whims and fancies. Businesses which disregard the wishes of their customers fade away into oblivion, says management books. Yet, customers across all regions of India are taken for a ride by unethical business practices.In 2011, India received only 6.5 million foreign tourists as compared to 57 million in China, according to World Bank. Forget China, India could not match even a smaller country, Malaysia (25 million). Given our diverse geographies and rich cultural heritage, this figure is shamefully low by any standard. From airport to taxis, hotels, shops and tour guides – all try to fleece innocent tourists (more so if they are foreigners) in a country that claims to practice atithi devo bhava (a guest is like God). It has tarnished India’s image as a favoured tourist destination. Growing sexual assaults against women tourists worsen the already bad situation. The story of housing sector is no different. Raising prices in a period of slackening demand to retain investor interest, default on features or delivery time and unhindered use of black money in the purchase and sale of properties is driving middle class home buyers out of the market. Besides, exploitation of hapless customers may prompt tougher regulation from government – such as the proposed housing regulator with stringent penalties for defaulting builders. That will add to the cost of doing business, force a hike in prices and ultimately lead to erosion of sales and profits. Furthermore, Indian literary history fully embraces the concept of noble ends justifying dubious means. Three texts intrinsic to Indian culture and philosophy help to explain the current business landscape: the epics Ramayana and Mahabarata and the economic treatise Arthshastra. In both the Ramayana and the Mahabharata, even gods resort to deceit and trickery to accomplish their ends. In addition, the Arthshastra is often cited publicly by prominent politicians and businessmen as the foundation of their strategic thought. Written to advise a king on statecraft, economic policy and military strategy, the work advocates the use of deception and sometimes brutal measures for the common good.
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