India’s criticism of Infosys and Tata worries companies

NEW DELHI, Sept. 8 (Reuters) – A public diatribe against two Indian business giants by Prime Minister Narendra Modi officials and his ideological allies has upset the business community, several industry executives told Reuters.

Over the weekend, a magazine run by members of Hindu nationalist Rashtriya Swayamsevak Sangh (RSS) launched an attack on Indian technology giant Infosys (INFY.NS) for failing to solve the problems of the income tax website that manage.

The group, which is the ideological father of Modi’s ruling party, called Infosys “anti-national” for bringing down the tax system, sending a chill into Indian industry wary of falling on the wrong side of Modi’s government.

Just last month, the Ministry of Finance “summoned” the CEO of Infosys for technological issues and, in an unusual step, took to Twitter to announce the call, which increased the media frenzy around of a company that has been the face of India’s IT skills.

And in August, the Commerce Minister publicly attacked the Tata Group’s $ 106 billion to criticize the proposed strict rules for e-commerce and said local businesses should not just think about profits.

In India, the protection of domestic companies has been Modi’s priority. While government or RSS criticism of foreign companies such as Amazon and Monsanto is common, local companies are rarely caught in the crossfire.

But recent events have raised concerns among business leaders about whether Modi is now also taking a hard-line approach toward national giants, five industry sources said.

A venture capital executive said the criticism resembled “harassment” of companies and that it runs the risk of dampening investor sentiment. Another executive working at a global consultancy said “everyone is scared,” as companies don’t want to hurt the government.

“The frontal attack on iconic elements of Indian companies has only reinforced the need for companies to ensure that they comply, not only with tax issues, but with other government initiatives,” said Dilip Cherian, image guru and co-founder of leading Public Relations Company Perfect Relations.

RC Bhargava, president of Maruti Suzuki, defended Infosys, saying it had played a key role in building India’s software reputation globally.

“He has to explain the problems, but that doesn’t mean there is a conspiracy to damage the country,” he told Reuters.

A senior RSS member, however, said there is nothing wrong with the way companies have been criticized, saying they should have thick skin and should be held accountable.

“Why shouldn’t questions be asked, if companies have become a holy cow?” said the RSS officer who did not want to identify himself.

Infosys and Tata did not respond to any requests for comment.

INDIA INC. GREAT SILENCE

So far, the Modi government has not commented on the reaction on social media or politicians. None of the sources who spoke to Reuters wanted to be identified as they fear retaliation from the government and there has been no Indian industry pressure group that has spoken out against the government or the RSS.

The Indian Express said in an editorial that “it was time for India Inc. to stand up,” and said business leaders had maintained “a studied and perhaps strategic silence on vitriol that has been leaking into public discourse.” .

The Infosys controversy is related to the government’s new website to file income taxes launched on June 7th. But there were many problems that Infosys could not solve, despite the guarantees.

When the CEO of Infosys was convened in August, the finance minister conveyed “a deep disappointment and concern,” which he gave the company until September 15 to sort things out.

Panchjanya magazine said the company made the same mistakes over and over again, raising doubts about its motives. “There are allegations that Infosys management is deliberately trying to destabilize the Indian economy,” he said.

After the furore over the article, Sunil Ambekar, the joint head of the RSS advertising wing, tried to distance himself from organizing the content and said Infosys had made a key contribution to the country.

But the concerns remain others that can also be pointed out.

An investment fund manager with Infosys and Tata Investments said he was concerned, as he indicated that “the government was not in favor of companies”, and there were fears that other companies could face this backlash.

Reports of Aditya Kalra in New Delhi; Additional reports from Aditi Shah; Edited by Sanjeev Miglani and Kim Coghill

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