Swadeshi flights of fancy

Keeping Air India 'Indian' is a pointless exercise

No one will deny that India has been a significant beneficiary of globalisation after the licence raj was dismantled. The insecurities of Indian businesses and politicians — notably those of the Bharatiya Janata Party (BJP) — saw a brief flowering of a modern “swadeshi” movement in the nineties until the limitations of this outlook became manifest. From the prime minister’s frequent overseas trips to meetings with international investors to gussying up the Ease of Doing Business rankings to attract global investment, the current BJP-led regime has become an enthusiastic votary of foreign investment. This ideological progression makes Mohan Bhagwat’s comments about divesting state-owned Air India only to an Indian appear particularly dated. In the ordinary course, comments from non-elected Hindutva leaders can be overlooked. But Mr Bhagwat heads the Rashtriya Swayamsevak Sangh (RSS), which serves as the organisational cadre base for the BJP and whose power grows increasingly critical as the 2019 Lok Sabha election approaches. As such, Mr Bhagwat's views demand some consideration. The fact that no one from the government has chosen to respond may reflect the government's discomfort with Mr Bhagwat’s statement. But as the disinvestment programme gathers momentum, it may be necessary for office-holders to educate Mr Bhagwat on the fundamental contradictions of his stance.

Air India has been a non-performing asset for well over a decade, with debt of over Rs 520 billion, partly on account of poor aircraft purchases by the previous regime; but working capital loans and other liabilities account for more than half, which points to the deep-seated operational inefficiencies. Even assuming lenders agree to take a haircut, few Indian corporations have the wherewithal to turn the airline around — which is why major domestic airlines have been lukewarm in their response so far.

For another, the national provenance of the ownership of a flag carrier has long been moot. The widely-held German airline Lufthansa, for instance, is 13.4 per cent owned by US shareholders, and it owns and runs Swiss, Austrian, Italian and Belgian airlines. Air France is a joint venture with the Dutch flag carrier KLM, British Airways is owned by an Anglo-Spanish conglomerate in which Qatar Airways has a 20 per cent shareholding. Etihad owns 24 per cent in Jet Airways. None of these foreign owners has harmed national interest or security.

This argument extends to the definition of an “Indian company”. Companies like Maruti Suzuki, Hindustan Unilever, ICICI Bank, HDFC Bank, Bharti Airtel, Jet Airways or Flipkart are considered Indian companies, but they all have major overseas shareholdings. As long as the company in question is serving Indian markets and consumers and is expanding jobs and opportunities in India — as all these companies do — its ownership should not matter. The same criterion applies to the nationalities of corporate management, a stipulation that has crimped the growth of several sectors including insurance. Mr Bhagwat’s swadeshi-tinted lenses may blur the fact that nationality does not define talent and ability. It is worth noting that several Indian airlines — including the largest and most profitable, IndiGo — are run by foreign aviation industry experts. The employment of foreign management, and pilots too, has seen the sector grow exponentially, creating jobs and incomes for thousands of Indians. At the same time, the government’s many attempts to turn around Air India have failed. Indian entrepreneurs are well aware of the pitfalls of a bloated, highly unionised organisation mired in public sector sloth to enter the lists. If an intrepid and wealthy owner is willing to take a chance on Air India, it makes little sense to reject the bid on grounds of nationality alone.