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Ambani, Adani, Tata & Jindal: Driving Modi’s self-reliance vision in India

There’s a strong possibility that India, still a lower-middle-income economy, will have not one but two centi-billionaires in 2024.

The current consensus among political analysts is for Prime Minister Narendra Modi to retain power in next year’s general elections. In that case, expect a further consolidation of wealth in the hands of Mukesh Ambani, Asia’s richest businessman, and Gautam Adani, his closest rival — a validation of what Arvind Subramanian, a former economic adviser to the Modi administration, has described as India’s “2A variant of stigmatized capitalism,” in which the private sector as a whole can’t be trusted.

But while the 2As — Ambani and Adani — will be the most closely watched tycoons, they won’t be the only ones. Throw in the Tata Group, a sprawling conglomerate controlled, via charitable trusts, by 86-year-old Chairman Emeritus Ratan Tata, and steel magnate Sajjan Jindal, whose mother, Savitri Jindal, is Asia’s wealthiest businesswoman, and you have the four pillars of a national team. What distinguishes them from the rest of India Inc. is their capacity to commit to large, complex, long-gestation gambits while keeping their business goals broadly aligned with the Modi government’s slogans of self-reliance and “Make in India.”

Naturally, the biggest danger of allowing — even encouraging — a handful of business groups to aggressively branch into new areas and extend their control over large swathes of the economy is extreme concentration of power and wealth.

But the entry norms to an exclusive club can’t be kept too easy, either. After promising “a self-reliant Silicon Valley” in Modi’s home state of Gujarat, Vedanta Group’s Anil Agarwal has so far struggled to deliver a 28-nanometer fab. Foxconn, his Taiwanese partner, exited the joint venture in July. This is when the government, desperate for India to make its own semiconductors, is shouldering half the cost of such factories. Now, Agarwal’s London-based mining is busy getting bondholders to accept longer repayment periods to stay afloat amid a heavy debt burden.

Much of the country’s overleveraged corporate sector from 2014 has perished in the past decade. Mukesh Ambani’s younger brother, Anil, whom Dassault Aviation SA had selected as a local partner when Modi gave the French firm an order for 36 fighter jets early in his first term, told a London court in 2020 that his net worth was zero.

Which is why a smaller national team helps. The Tata Group, having become the first Indian iPhone maker, may be a more credible choice for the nation’s slow ascent up the global electronics value chain. The conglomerate is also reviving Air India Ltd., the loss-making national carrier that it won in a 2021 privatization deal. When Air India announced an order for 470 aircraft in February, potentially the biggest in aviation history, it gave the government a valuable diplomatic tool to project the country’s image as a buyer of growing heft.

Similarly, Adani, India’s largest port operator, now appears to be an important partner — to both New Delhi and Washington — in countering China’s Belt-and-Road offensive. Last January, with his fortune under attack from a New York-based short seller, the 61-year-old posed for cameras with Prime Minister Benjamin Netanyahu in Israel’s Haifa Port, which he had come to buy for $1.2 billion. In November, a US government agency announced $553 million in financing — its largest infrastructure investment so far in Asia — for Adani’s deepwater West Container Terminal in Colombo, Sri Lanka, a strategically important gateway to the Indian Ocean.

Then there is clean energy. New Delhi fears that a move away from fossil fuels might make it overly dependent on Chinese equipment. Jindal, the chairman of JSW Steel Ltd., the country’s largest steelmaker, wants to help. After pledging to make a top-end electric car, he recently bought a 35% stake in a joint venture with China’s SAIC Motor Corp. It was looking increasingly tough for SAIC’s MG Motor brand to stay independent in India, given the intense scrutiny of Chinese-owned enterprises by local authorities. But for the 64-year-old Jindal to venture into auto, he must first sort out the legal troubles that cropped up after the deal was announced. The businessman is being investigated by police after a woman accused him of sexual assault, an allegation he has denied.

Adani’s legal and regulatory troubles over alleged share-price manipulation, violation of listing rules, and undisclosed related-party transactions are mostly in the rearview mirror. His latest move is to infuse fresh capital into renewable energy, where he’s already the country’s No. 1 producer. As for proximity to Modi, which Adani says he has never used to gain an unfair advantage, only a surprise victory for the Congress Party-led alliance of opposition parties could put it under scrutiny. Investors, though, have all but discounted that risk after the prime minister’s party won key state polls in northern India earlier this month. Adani Enterprises shares jumped 25% over two days. For the first time, the capitalization of the overall Indian market swelled to $4 trillion.

That gives a taste of what to expect if Modi wins a third term. Assuming an unchanged political landscape, what investors will want from the national team in 2024 is a here-and-now recipe for value creation. Ambani, 66, needs to take his telecom and retail units public, take control of Walt Disney Co.’s Indian media assets, and start commercial production at his new solar-module factory. Tata will have to show that it can make a go of its expensive super-app ambition and turn Air India around. Jindal will have to demonstrate that his personal legal troubles won’t stymie expansion — not just in electric cars, but also in cement and ports, where his interests may collide against Adani’s.

Adani’s most visible undertaking in 2024 will be a controversial makeover of a large Mumbai shantytown. Under the deal, future skyscrapers in the commercial capital may have to pay billions of dollars to his project. Builders are grumbling, but Adani investors can’t wait for the cash registers to start ringing.

Now that Adani has seen off the short-seller attack that cratered the equity value of his infrastructure empire by two-thirds earlier this year, the 2As are within striking distance of each other on global wealth rankings — Ambani’s net worth of $96 billion puts him just $12 billion ahead. With an assured political runway for stigmatized capitalism, one or both may soon be centi-billionaires. This in a country where 800 million people still depend on free food from the government to get by. Bloomberg

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