Why Suzuki And The Govt Made Up
What prompted Suzuki Motor Corporation and the Indian government to go in for a compromise solution in the dispute over Maruti Udyog Ltd?
As the story slowly unfolds, insiders point out that the move was primarily prompted by the opinion of the legal counsel to the government, led by the attorney general, which clearly indicated that the government was on a weak legal ground in the case against Suzuki Motor in the international court of arbitration.
In case the government were to lose the arbitration case, this would lead to a tremendous loss of face for India globally even if the government were later successful in overturning any adverse arbitration award by challenging it in the Indian courts, felt the advisors. They also pointed out that this would adversely affect the sentiment of foreign direct investors as well.
Insiders disclosed that the fear of a legal loss, combined with the keenness by the government to send conciliatory signals to the Japanese government in the wake of the economic sanctions slapped by that country after the nuclear tests, spurred on the BJP-led government's search for a compromise solution with Suzuki.
The new Japanese ambassador had earlier, within days of presenting his credentials to the President of India, conveyed personally to the industry minister Sikander Bakht the willingness of Suzuki Motor to resolve the dispute with the Indian government.
Thus, point out sources, by resolving the contentious issues between the two partners, the government has sought to send investor-friendly signals to Japan, a country with which India has enjoyed healthy bilateral relations for decades.
This compromise would go a long way towards rapprochement with Japan which came out with one of the severest international criticisms and sanctions against India in the wake of its nuclear tests, feels the government.
This hopeful mood was reflected by industry minister Sikander Bakht, who, while announcing the compromise at a press conference on Monday announcing the compromise, said: "With this, we hope that the possibilities of Indo-Japanese cooperation in other areas will increase".
The compromise on Jagdish Khattar, who will take over the post of the managing director as government nominee from RSSLN Bhaskarudu on January 01, 2000, is also believed to be achieved with the help of active support from certain sections of the bureaucracy based on his credentials as a bureaucrat before he left the civil service to join Maruti Udyog Ltd.
It is understood that Khattar's elevation to the post of the managing director from Jan 01, 2000 was ratified by the government inspite of the industry ministry suggesting that incumbent managing director Bhaskarudu be allowed to continue till December 2000 when he attains 60 years of age.
However, Bhaskarudu's term has been curtailed till December 1999 as part of the compromise formula worked out. In an internal report on the company, the ministry had questioned Bhaskarudu's decision to restrict the number of Maruti dealerships to its current strength of about 125 in the face of a sales of about 3,57,000 while closest competitor Daewoo Motors has already set up over 120 dealers in the country on the strength of car sales of about 50,000 a year.
Most significantly, Suzuki Motor was also successful in building bridges with various functionaries in the top echelons within the BJP. The Japanese carmaker had sent numerous senior-level teams over the last six months to the country. The team, apart from routine meetings with the industry ministry functionaries, spent a considerable amount of time interacting with political heavyweights.