One of the most immediate consequences of the Coronavirus outbreak and the growing resentment against Beijing, has been a prospective shift in Multi-National Corporations (MNCs) from China to India. For decades, China has been hailed as the “world’s factory”, over its low labour costs and export-driven economy. But foreign companies are now looking to exit China and their preferred choice to relocate, is of course, India. This is good news and even gives a whiff of India emerging victorious at the end, however, before we get too excited, we must recall the horrendous experiences with NGOs which have overturned India’s chances at getting FDI with various agitations.
Japanese companies are looking for a new location after the Shinzo Abe government announced a package worth US $2.2 billion to help manufacturers shift production out of China. The state of Uttar Pradesh, led by CM Yogi Adityanath is now planning to woo these companies fleeing China.
Also exiting China are South Korean majors such as Hyundai Steel and POSCO are looking to exit China and they plan to set up their factories in the state of Andhra Pradesh, in what can be a massive boost for PM Modi’s ‘Make in India’ initiative and FDI inflows into India.
The fast-changing world order goes very much in India’s favour and can propel India’s ambitions of becoming a US $ 5 trillion by 2024. In fact, foreign companies exiting China and entering India has long term benefits, as India could become the new engine of world growth.
But while this is a welcome development, the Modi government needs to take into account the spoilsports within the country who can block FDI and setting up of manufacturing facilities by Multi-National Corporations (MNCs).
At the forefront of this anti-development campaign to block foreign investments is the NGOs nexus that directly or indirectly sabotages crucial projects in the garb of farmer rights or environmental vigilantism.
According to a 2014 Intelligence Bureau (IB) report, foreign-funded NGOs such as Greenpeace, Cordaid, Amnesty and Action Aid have been “serving as tools for foreign policy interests of western governments” by sponsoring agitations against nuclear and coal-fired power plants in India.
These NGOs are said to work through a network of local organizations such as PUCL and Narmada Bachao Andolan, founded by Medha Patkar.
In the recent past, there have been umpteen number of examples where the NGOs have played spoilsport, effectively blocking crucial projects, including those that promised to bring in massive FDI into India.
In Tamil Nadu, protests had led to the closure of Vedanta’s Sterlite Copper Plant in Tuticorin, which not only hurt the copper industry but also thousands of medium and small sector units whose businesses were dependent on Vedanta’s plant.
Later, Chinese companies were alleged to have funded the anti-Sterlite protests in India that actually had a very negative impact on India’s Copper production, forcing the country to import Copper for the first time in 18 years.
The project had to be closed down owing to the vocal protests by left-leaning groups and NGOs which get substantial foreign funding. It was found that even the church was involved in organizing the protest against the Sterlite plant.
And then the anti-Sterlite protest is not the only example of how NGOs can play spoilsport and derail development. In fact, the state of Maharashtra is full of such examples where protests have led to massive projects getting derailed. The environment vigilante who block projects in the garb of protecting ecology are particularly prominent in this part of India.
Take for example the Nanar Refinery project in Maharashtra’s Ratnagiri- a ₹3 lakh crore project in which the Saudi petroleum and natural gas company, Aramco that is one of the biggest in the world, was going to invest heavily.
But the project has to be scrapped following agitations. Similarly, the environmental vigilante played spoilsport in a crucial Mumbai Metro project- the Aarey metro rail depot construction. The project itself was halted as soon as the Uddhav Thackeray government came into power in the state.
The Mumbai Metro project is being financed by the Japan International Cooperation Agency (JICA), but Ashwini Bhide, managing director, Mumbai Metro Rail Corporation (MMRC) feels that if the proposed Aarey car shed project is delayed then there could be a problem in its timely completion.
The ambitious Hyperloop and Bullet train projects in Maharashtra- both of which could have accelerated the state’s growth unprecedentedly have also run into trouble ever since the Uddhav Thackeray government came to power in Maharashtra.
In fact, anti-development agitations have been a political ploy for quite some time now, as foreign-funded NGOs along with political outfits often play spoilsport from the scrapping of the POSCO steel plant project in Odisha to the Singur agitation in West Bengal that had led to Tata Motors moving its Nano car project out of the state.
According to the 2014 IB report cited earlier, the “areas of action” of the foreign-funded NGOs have been anti-nuclear, anti-coal and anti-Genetically Modified Organisms protests.
But the report says that they have also been responsible for stalling big-bang industrial projects including those floated by POSCO and Vedanta. These NGOs are also said to be working to the detriment of mining, dam, and oil drilling projects in Northeastern India.
And this is not just about specific cases of protests, especially in the tribal, Naxal-dominated areas. The sheer vigilantism of the NGOs has led to obnoxious legislation like the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
This Act has created bottlenecks for several projects such as POCSO’s steel project in Jagatsinghpur, Odisha, and US investments in the Modi government’s flagship “Smart Cities” project.
When the Modi government tried to dilute the provisions of the controversial 2013 Act, it had immediately come under a fierce attack from the same NGO nexus.
Today, a number of companies are looking towards India, but the mighty Dragon won’t let the situation go out of its hands so easily. It might try to collude with the foreign funded NGOs in India, in order to push against its Indian competitors.
The foreign funding of NGOs keeps going up, despite the Modi government tightening the screws under the FCRA norms. The NGOs will in all probability continue with their hidden agenda, and it is time for the Modi government to effectively address all key stakeholders.
India offers the perfect conditions for any MNC, but the ambitions to emerge as a “manufacturing hub” could go down the drain given the hostile NGO ecosystem and networks within India.