Business Today

The new face of lobbying

The traditional suitcase-style lobbyist is alive and kicking, but the deregulated economy has spawned a new variety that believes in using 'case law-style' advocacy to effect policy changes.

By Balaji Chandramouli and Aman Malik         Print Edition: July 15, 2007

This is one deal that ought to have spent the least amount of time in the government's court, since it only involved a transfer of ownership from one foreign company to another.

Instead, it took three long months of intense lobbying by CEOs of four top-rung companies, the active services of several independent lobbyists and support of some key, industry-friendly, government officials and scores of visits to the Department of Industrial Planning and Promotion by Matthew Kirk, Director of External Relationships, Vodafone, and a former UK diplomat, to push the deal through. {mosgoogle}

The deal: the $10.9-billion acquisition of Hong Kong-based Hutchison Telecom's stake in Hutchison Essar by UK-based telecom major, Vodafone.

The CEOs in question-Ravi Ruia of the Essar Group, Max Group's Analjit Singh, Hutch Essar's Asim Ghosh and Arun Sarin of Vodafone-could have raised a toast to the deal much earlier but for a query from the government on whether or not Vodafone was breaching the foreign equity limit of 74 per cent, since Analjit Singh and Asim Ghosh's equity in Hutch Essar was guaranteed by Hutchison. Had the government not finally accepted the telecom major's contention that the nationality of the equity holder and not the guarantor counts, Vodafone's hard-fought, big-bang deal would have come unstuck. Says Max's Singh: "For me, lobbying is about filling information gaps in the system."

Well, things may not be that simple yet, but Singh has a point. The Vodafone deal demonstrates the evolving nature of lobbying in the country. "Lobbying has graduated from 'suitcase-style' lobbying to 'case law-style' lobbying," points out Dilip Cherian, a Partner at public relations firm, Perfect Relations, who was part of Vodafone's lobby group. His point: there's a growing realisation among companies that it's important to argue their case with the government on merit, and not by greasing the palms of politicians. Agrees Ramesh L. Adige, Executive Director, Corporate Affairs, Ranbaxy Laboratories, who is the pharma major's chief liaison with the government: "Lobbying is fast becoming a professionally-managed and, therefore, an ethical and transparent activity."

To bolster his point, Adige, who previously worked in the automotive industry with Fiat, cites the recent case of extension of policy that allows pharma companies tax relief to the extent of 150 per cent on R&D spends. The policy, which was to expire in March this year, got a five-year lease on life, despite Finance Minister P. Chidambaram's initial disinclination. "I logically argued my way up the system and convinced the finance minister," claims Adige. Result: Ranbaxy, which has an annual R&D budget of Rs 500 crore, saves close to Rs 100 crore a year in taxes over the next five years.

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