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August 13, 2007

Lobbying goes professional

Business Today has article on how lobbying in India is acquiring a more professional face.
Not too long ago, effecting such a policy change may have simply meant a quid-pro-quo, where money is exchanged for a favour. However, deregulation over the years has meant that there are fewer government approvals required, less bureaucratic control over rules and regulation, and far more access to information. The Right to Information Act, for instance, allows anyone to access information from government departments, including the freedom to "inspect works, documents and records". With their decisions open to scrutiny, bureaucrats want to play by the rules more than ever. Says a veteran of the lobbying business: "Corruption continues to be rampant in the government, but that is not a substitute for a convincing case." Moreover, to have a convincing case is no longer a sufficient condition; it is a necessary one. In other words, you may still have to pay money to get your work done, but you can no longer hope to blatantly violate the law. However, if a company believes that a particular law or regulation is counter-productive, it can lobby-by building favourable opinion among key stakeholders-for a change in it.

... Often times, like in the case of Vodafone, nothing less than intervention by the promoter suffices-especially, in the case of sectors such as petroleum and aviation that are in the throes of deregulation and hence the rewards are immense. Liquor-baron-turned-aviation-czar Vijay Mallya of Kingfisher fame, who recently acquired Air Deccan, a low-cost carrier, is well on his way to bringing down a policy wall that prohibits airlines that aren't at least five years old from flying overseas. Why? Kingfisher Airlines is just three years old, and Mallya is keen to fly foreign routes. The Union Cabinet is currently mulling such a proposal, and if the decision goes in favour of Mallya, then Kingfisher may start flying overseas next year.

...Retired bureaucrats also make key allies in the battle to woo the system. Until recently, such lobbyists have preferred to work within companies-either as board members or advisors-but the changing policy environment has emboldened a few of them to set up shop on their own. Take for instance, Pradip Baijal and C.M. Vasudev, former Chairman of TRAI and Expenditure Secretary, respectively. The two have floated Neoses, a consulting firm, that advises companies on how to deal with government departments. One of their clients is Huawei Technologies, whose application for clearence to supply equipment to BSNL has been hanging fire due to security concerns. Huawei is a Chinese company and is said to be owned by communists close to the Chinese establishment. Says Baijal: "We understand the processes involved in government approvals, and are hence able to help foreign companies do business in India."

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.