Economy

Investing In India, Where Opportunties And Outlaws Seem To Be Everywhere

Crime and corruption in Calcutta
Crime and corruption in Calcutta
Patrick de Jacquelot

CALCUTTA- Captain Manpreet Jolly has not quite recovered yet. Nothing in his career at the Haldia port authority had prepared him for this.

The captain was abducted by masked men in the middle of the night, and told at gunpoint to leave and never return to the port town.

"We were at my assistant's house along with a third colleague," recalls Jolly, the director of the ABG-LDA Haldia Bulk Terminal. "A group of around 30 or 40 men was roaming around the house, with their faces hidden in scarves. We called the police, who came and left soon after. At midnight, the masked men came back. Armed with hammers, they broke down the door of the apartment, grabbed my assistant and took him away at gunpoint. Fifteen minutes later, they forced him to call us, telling us to join him, as well as his wife and one-year old daughter, who also were in the apartment."

The captain and his collaborators, whose nightmare had only begun, were senior officials at a joint-venture between French operator Louis Dreyfus Armateurs (LDA) and Indian group ABG, in the port town of Haldia, near Calcutta. On the last Saturday of October, they were meeting to discuss the re-launch of their operations after several weeks of inactivity following political unrest at the port.

After winning the bid to operate two berths at the Haldia port after upgrading them, ABG-LDA had been trying to run them for past two years. But the operator had faced all sorts of hardships, including less cargo than had been initially planned, creating heavy exploiting losses.

The events that led to the October assault began a month earlier when the company laid off 275 people out of its 650 employees. Since the beginning, the company had faced a surplus staff – imposed by the trade unions, which are backed by local political parties.

The job cuts immediately sparked a wave of violence, blocking ABG-LDA’s berths from operating. On Oct. 19, the Calcutta High Court ruled that the state had to provide the company with a safe environment to operate – i.e. that police be deployed so that the company could resume its operations.

This was exactly what the “masked men” didn’t want. They put their abductees into the back of a van and drove them around for more than 45 minutes. "They kept repeating that they would kill us unless we left the city immediately," recalls Manpreet Jolly. After being dropped off at the local railway station, the ABG-LDA officials were put on a train to Calcutta with the injunction “never to come back to Haldia, or risk being killed.”

The captain, who has resettled in the far away port of Vizag, says that the police, who they called multiple times, did nothing to prevent the abduction: "These people clearly exposed their motives: ‘we told you many times that we would not let you work in Haldia,"" he says.

By settling in this West Bengal port, ABG-LDA had challenged powerful interests. Interviewed by Les Echos in early November, Edouard Louis-Dreyfus, the CEO of Louis Dreyfus Armateurs, openly pointed to Haldia’s other cargo operator, Ripley & Company Ltd, saying “the firm belongs to a member of parliament from Mamata Banerjee’s party.” Banerjee is West Bengal’s chief minister.

Collusion between politics and business

This accusation is shared by the state’s opposition party and many newspapers, who have all pointed to Ripley’s owner, Swapan Sadhan “Tutu” Bose’s influence on Calcutta’s business circles. If ABG-LDA ended up “facing a criminal situation," according to its general director Gurpreet Malhi, it is because the firm had dared to enter one of these “dark zones,” where the collusion between politics and business is rife.

The situation could have been even worse for the ABG-LDA officials. They could have had to deal with Ponty Chadha, for instance… Usually a discreet man, this businessman has been making Indian headlines since Nov. 17. On this day, Ponty had planned a meeting with his younger brother Hardeep, to discuss their conflicting views on how family assets should be shared after their father’s death. They settled the argument in a slightly radical way: None of them survived the meeting. The details of what happened remain blurry but what is known is that the two brothers where escorted by several armed men – including some of the police officers in charge of their safety...! – and that a shootout occurred, as their bodies were found riddled with bullets.

This tragedy put a remarkable industrial group in the spotlight. Fifty-five-year-old Ponty Chadha started his career working in his father’s small liquor store. From this modest background, he built an empire in a decade. His biggest success was in 2009, when the Chadha family won the alcohol retailing monopoly from the Uttar Pradesh government – India’s largest state with a population of 200 million. Controlling alcohol sales for such a large population provided them with unlimited amounts of cash.

Thanks to the support of local politicians, the family’s fortune increased exponentially. One of their subsidiaries, the Wave group, bought several sugar refineries at very cheap prices after they were privatized by the government of Uttar Pradesh. Chadha was also able to acquire land near the Indian capital of Delhi. His activities range from large-scale real estate to electricity, retail, food, paper and even the movie industry. If there was a single reason to explain such success, it is Ponty Chadha’s outstanding proximity with political leaders who apparently never said "no" to him. The Uttar Pradesh tycoon had accomplished the very hard task to become the favorite of political leaders – who all hate each other.

“Political patronage”

Exceptional, Ponty Chadha? His visibility and the spectacular aspect of his death undoubtedly were. But there are plenty of similar cases. "Everything that grows in a context where business and politics collide, is likely a product of corruption," explains the head of an Indian business daily magazine.

“Political patronage” is a reality, says Aman Agarwal, a professor at the Indian Institute of Finance. On the Haldia port events, Agarwal adds that “in India, like anywhere else, when a company linked to a political party loses a deal, the one that replaces it should expect serious hardships.” The unlimited needs of political parties and their leaders create a lot of corruption, especially in sectors controlled by local authorities: land and construction permit acquisition, mining licenses and forest exploitations.

In the eastern part of India, which is rich with mining resources and occupied by a violent Maoist rebellion, companies can face a another form of economic crime: They have to pay "a safety bribe" to stay out of trouble.

The Indian authorities are trying to find a solution to this problem. They have decided to try and make the license and permit acquisition process as transparent as possible – which is at odds with the current trend in Uttar Pradesh.

The use of new technologies, like online auctions for example, is encouraged. Such an evolution is positive, but observers note a worrying trend: When the acquisition is totally transparent, problems can shift elsewhere. The call for tender won by ABG-LDA in Haldia was totally legal yet it did not prevent them from later hardships.

A French businessman says he legally acquired a piece of land on the Internet to build a factory. But when finalizing the deal, new administrative problems emerged. The state Minister of Industry told the French businessman to come to his house to solve the issue. The message was clear: He’d have to come with a suitcase full of slush funds. In the end, the sale was cancelled.

It doesn't mean that crime is common in Indian business circles. Despite what happened in Haldia, Louis Dreyfus Armateurs, whose operations in other ports are doing well, is not considering leaving the country.

Abhey Yograj, the head of consulting firm Tecnova India, who has helped hundreds of foreign factories enter the Indian market in the past 20 years, says: “There is no endemic crime in the Indian industry as a whole,” he says.

Still, he has faced a few difficult cases: a company whose transport operations were in the hands of a trucking mafia, a joint-venture whose boss sold its waste to a powerful scrap merchants gang. The lesson is that before sealing a deal in India, it pays to dig deep to understand the local political context.

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Future

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.


But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

commons.wikimedia.org

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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