Posted by: John Elliott | May 20, 2009

Wall Street Journal wins on India’s 20-year approval cycle

Can Rahul Gandhi, heir apparent to be India’s prime minister, begin to make the sort of changes that people dreamed about when his father Rajiv Gandhi became prime minister in 1984?

The thought is prompted – odd though it may seem – by The Wall Street Journal (WSJ) on Monday becoming the first foreign newspaper to be published in India with full government permission, some 21 years after the Financial Times first approached the government for clearance.

When Rajiv Gandhi became prime minister in 1984, I wrote an article that began with a story of how the government had the year before placed a £50m order for goods wagon air brakes that had first been mooted 25 years earlier in 1959. The next paragraph talked about the power failing in Connaught Circus as a new Wimpy burger bar opened shop.

Now, more than two decades later, the story hasn’t changed. The WSJ has come in 20 years after foreign newspapers became interested in India. And in 2004, the government ordered $1.45bn British Hawk jet trainer aircraft that I had first written about as a potential order twenty years early. Power supplies still fail in Connaught Circus.

Rahul Gandhi of course isn’t becoming prime minister, as his father did in 1984. But the mood of expectancy that India’s new government will usher in a new era – epitomised by Gandhi’s emergence at or near the top – is much the same.

The key question is whether this government will be able to begin to break at least some of the grip wielded by vested interests, both Indian and foreign, that try to throttle advances until they have won whatever it is they are after.

The order for railway trucks’ gear had been blocked for over 20 years because rivals tried to defeat the preferred, and eventually successful, British contractor. The Hawk order was similarly delayed, at the end by the US, which had also been stalling the railway contract.

In both cases, bureaucrats and ministers were constantly “persuaded” by competitors not to make a final decision, officially by rivals producing endless technical and other adjustments but obviously also by other inducements.

The story is the same with foreign newspapers. In 1988, the Modi and Hinduja business groups approached the FT for a printing joint venture. Those approaches came to nothing, but the FT did become interested in India. It is however still waiting for permission, having been blocked by both foes and supposed friends since then  – click here for that story and here for a follow-up on foreign magazines, with Forbes magazine  launching its India edition this week.

The WSJ’s appearance is therefore a long overdue partial defeat of vested interests, led by The Times of India’s Bennett Colman business group that has tried to block foreign entrants, especially the FT, for two decades. (Bennett Colman even prints a thin supplement called Financial Times every week to secure the title.)

Owned since 2007 by Rupert Murdoch’s News International, the WSJ is being printed and distributed by The Indian Express group in Mumbai and Delhi. In line with government rules, it has set up an Indian company, Wall Street Journal India Publishing, which is wholly owned by Murdoch’s Dow Jones business that he bought ion 2007.

But the government has not entirely shaken off the media vested interests’ influence, and there are still rules that restrict circulation and profits.

Although 100% foreign (FDI) ownership has been allowed since January (before it was only 26%), the paper printed here must be a “facsimile” edition. That is an intentional use of a word from a slightly outdated technology to establish that it has to be a precise copy of an edition published abroad with no change in advertising or editorial. This makes it far less commercially viable than it might be because the paper cannot have India-specific content.

Dow Jones received permission to bring in either its US or Asia edition and decided, after much agonizing, on The Wall Street Journal Asia from Hong Kong – but today’s edition (the first I have been able to buy this week from my local newsstand) has only one India story tucked in at the bottom of an inside page, though there are others on Pakistan and Sri Lanka

Pricing is difficult, unless the paper is to be a loss leader, which Murdoch seems to tolerate because of his love of the print media – his London Times loses £1m a day.

The figures in India however will not be very big – Murdoch’s government-approved investment is just Rs21m ($450,000). The paper is priced at Rs25 (roughly 50c or 30p), seven to ten times that of India’s main business dailies such as The Economic Times, Mint (produced for two years with Wall Street Journal syndicated content) and Business Standard, so it will probably have little appeal below senior management.  

The restrictions show that the Indian media’s vested interests still have a grip on government policy, and thus on the competitiveness of foreign rivals, though the extent of their luddite influence is waning.

The question now is whether the new government can begin to change India in the way that optimists hope.

As I suggested last Sunday,  a starting point would be to ensure that bounty-chasing regional parties such as the DMK and NCP do not get lucrative posts such as telecoms, highways and aviation, which urgently need the firm hand of a minister genuinely interested in progress and efficiency. One could add environment, power, petroleum, and others to that list in addition to external affairs, home, finance and defence.

Vested interests – ie rival companies – will of course always have a big influence, and politicians of all shades of honesty and dishonesty and personal greed will always be on the take,

But India needs a government that cuts into what I have typified here as a 20-year long hold on decision-making!


Responses

  1. It’s time the Indian government stands up to pressure from Indian publishers and allows foreign investment at least in the business media. The Mint has raised the standards of business journalism over the past two years and I am sure the availability of the WSJ and, hopefully even the Financial Times soon, will make insidious and pernicous practices like paid-for editorial content a thing of the past. At Rs 25 a copy, the price is high, but those who can afford these papers will have access to them — just as they have to foreign TV channels in their homes albeit at much lower cost.


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