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Private Sector and India’s Global Infra Push
Context:
On November 20, U.S. federal prosecutors charged senior officials of the Adani Group with allegations of graft and fraud related to securing a renewable energy project in India.
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- The business conglomerate has vehemently denied the charges and pledged to exhaust all legal avenues to defend its green energy arm, Adani Green.
- While the case’s merits remain to be established, its implications for India’s global reputation are significant.
The Fallout:
- Credibility: The indictment casts a shadow on the credibility of the Indian private sector and threatens to undermine India’s strategic global objectives.
- France: Notably, French oil giant TotalEnergies has halted financial contributions to its investments with the Adani Group.
- Kenya: Similarly, Kenyan President William Ruto has revoked an airport renovation and operational contract, alongside a $736 million energy partnership Adani had secured just weeks earlier.
- USA: The U.S. International Development Finance Corporation (DFC) has reopened its due diligence on Adani’s Colombo Port redevelopment project in Sri Lanka.
- Bangladesh: Bangladesh’s caretaker government, led by Nobel laureate Mohammad Yunus, is reassessing long-term energy contracts with Adani Group, amounting to 5 GW of power generation over 15 years.
Global Reach and Strategic Importance of Adani Group:
- Connectivity: The Adani Group plays a pivotal role in India’s global connectivity strategy, with projects spanning Tanzania, Israel, Greece, Indonesia, Nepal, Vietnam, and Australia.
- These include seven ports, four airports, and three metals and mining projects.
- Foreign Policy: Its initiatives align closely with India’s foreign policy frameworks, such as Neighbourhood First, Act East, and the vision of a Free, Open, and Inclusive Indo-Pacific.
- These policies aim to foster regional and international infrastructure development while positioning India as a strategic connector between East and West.
- Respecting Sovereignty: India’s overseas partnerships emphasise sustainable, affordable, and resilient infrastructure, promoting economic growth and trade while respecting sovereignty and local ownership.
- This approach contrasts sharply with China’s Belt and Road Initiative (BRI), criticised for fostering financial instability through predatory lending, corruption, and dual-use infrastructure projects.
- As a counterweight to BRI, India has sought to build trust and credibility in the developing world by offering a transparent and inclusive alternative.
Risks to India’s Connectivity Strategy:
- The indictment threatens to derail India’s development partnerships, with several nations reconsidering their agreements with Indian firms.
- Kenya, Bangladesh, Sri Lanka, and the United States are already reassessing their collaborations, and other countries like Greece, Australia, and Tanzania may follow suit.
- This could lead to increased scrutiny of Indian projects, delays in execution, and potential loss of trust in India as a reliable development partner.
- India’s connectivity strategy is vital for its aspirations to become a key player in the emerging East-West corridor, particularly in the context of the Indo-Pacific.
- However, with the Adani Group representing a major share of Indian private sector engagement in international infrastructure, the current controversy could harm India’s credibility as an alternative to China’s BRI.
Structural Challenges in India’s Private Sector:
- This episode highlights a deeper structural issue: the underrepresentation of Indian private companies in international development.
- India’s connectivity goals are overly reliant on a small number of firms, such as the Adani Group, which exposes the country to significant risks when these entities face challenges.
- The lack of a diversified private sector presence limits New Delhi’s ability to advance its foreign policy objectives.
- For India to maintain its global positioning and achieve its connectivity ambitions, a more robust and diversified private sector engagement is essential.
- Companies must step up to share the burden of developing critical infrastructure and reinforce India’s credibility as a partner in sustainable development.
The Road Ahead:
- The Adani indictment underscores the need for introspection and reform.
- Both the government and the private sector must work together to ensure that India’s strategic ambitions are not jeopardised by reliance on a few stakeholders.
- Expanding the pool of companies involved in international development projects will strengthen India’s connectivity strategy and reinforce its standing as a reliable and transparent partner in the global arena.
India’s future as a global connector depends on the resilience and adaptability of its private sector. The current challenges offer an opportunity to recalibrate and strengthen its foundations for a more inclusive and sustainable approach to global connectivity.
