Sarin and the Indian lesson

Arun Sarin's sounding off against Indian business practice this week highlights some of the problems of operating in the emerging IT powerhouse. The Vodafone chief has claimed that 'vested interests' tried to derail his group's takeover of Indian mobile giant Hutchison Essar, which went through earlier this year for $11bn. Sarin griped that what he called 'the billionaire losers' club' tried to meddle in the regulatory approvals process, which ended up taking two months before giving him clearance.

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Last Updated: 31 Aug 2010

Sarin should perhaps have known that when it comes to dealing in the state, especially in proposing the largest foreign takeover in its history, you should expect the odd hurdle. As anyone with experience of operating in India knows, things don't work in the same way there. 'This is India,' as they say. Even more surprising is that he aired his grievance in public, a move that could come back to haunt him in future.

Vodafone's deal had come under intense scrutiny from India's Foreign Investment Promotion Board, the ministry of law, and the department of telecommunications. The company also faced media allegations that the deal violated foreign ownership laws, and was the subject of a lawsuit from Telecom Watchdog, an obscure activist group. Sarin's implication is that such attention was generated by other groups with their eyes on the Indian telecoms sector. After all, Vodafone's Hutchison win came at the expense of domestic bidders Reliance Communications and the Essar group, and overseas Indian business group Hinduja, meaning some not inconsequential noses may have been put out of joint.

It's a lesson for the world's largest mobile group, and anyone else eyeing the temptations of India's burgeoning economy. Indeed, third party interference in such processes is just one thing you need to be looking out for. MT's man on the subcontinent Andrew Wileman recently described a driving economy battling with some creaking idiosyncrasies. In the simple task of organising a university fresher's welcome party, his team incurred a £100 fine for not having a banner licence, £250 in bribes for not having the right elephant transportation papers, and having their beer confiscated for not having a beer permit. You can imagine an $11bn international takeover may take a while.

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