India's criticism of Infosys, Tata worries businesses
A public diatribe against two Indian business giants by Prime Minister Narendra Modi's officials and his ideological allies has unnerved the business community, several industry executives told Reuters.
Over the weekend, a magazine run by members of the Hindu nationalist Rashtriya Swayamsevak Sangh (RSS) launched an attack on Indian tech giant Infosys for failing to resolve glitches in the income tax website it manages.
The group, which is the ideological parent of Modi's ruling party, called Infosys "anti-national" for letting down the tax system, sending a chill through Indian industry wary of falling on the wrong side of the Modi government.
Just last month, the finance ministry "summoned" Infosys' CEO over the tech issues and in an unusual step took to Twitter to announce the summoning, heightening a media frenzy around a company that has been the face of India's IT's prowess.
And in August, the commerce minister publicly lashed out at the $106 billion Tata Group for criticizing proposed stringent rules for e-commerce and said local companies should not only think about profits.
In India, safeguarding domestic businesses has been Modi's priority. While government or RSS criticism of foreign businesses like Amazon and Monsanto is common, local businesses are rarely caught in the crossfire.
But the latest events have raised concerns among business leaders about whether Modi is now taking a hardline approach towards domestic giants as well, five industry sources said.
One venture-capital executive said the criticism was akin to "harassment" of businesses and risks souring investor sentiment. Another executive working at a global consultancy said "everyone is scared" as businesses don't want to run foul of the government.
"The frontal attack on iconic elements of Indian businesses have only buttressed the need for companies to ensure they are conforming, not just with tax issues, but with other government initiatives," said Dilip Cherian, an image guru and co-founder of leading Indian PR firm Perfect Relations.
R.C. Bhargava, chairman of Maruti Suzuki, defended Infosys, saying it had played a key role in building India's software reputation globally.
"It needs to explain the glitches, but it doesn't mean there is a conspiracy to damage the country," he told Reuters.
A senior member of RSS, however, said there's nothing wrong in the way the companies have been criticized, saying they must be thick skinned and held accountable.
"Why should questions not be raised, have corporates become a holy cow?" said the RSS official who declined to be identified.
Infosys and Tata didn't respond to a request for comment.