The row started with the announcement of Suzuki Motor that it is planning to set up a Rs 1,000-cr plant in India on its own, without the involvement of Maruti. For background, Maruti Udyog Ltd is a joint venture company majority-owned by Suzuki Motor Corp, where the Govt of India is the minority shareholder. Maruti Udyog is a listed company and the rest of the stake is held by public shareholders.

The announcement raised hackles in the upper sarkari echelons. Maruti Udyog issued a statement the next day saying it is very much a partner in the new plan. Suzuki did not take cognizance of this statement. Meanwhile, Maruti stock witnessed a run, eroding about 10% of its price. Punters who thought Suzuki's solo flight plans will hit Maruti Udyog's future, sold out.

The government, who no longer runs Maruti, took offence. Minister for heavy industries Santosh Mohan Deb, under whose tutelage Maruti once grew up, shot off a letter to the Suzuki top brass asking it to explain its action. The minister also went to press, saying the "Suzuki action has hit Maruti's good name and its market capitalisation to the extent of Rs 300 crore." He also asked Suzuki to send its representative to call on the minister. Deb added that according to the JV understanding, each partner is expected to take the other into confidence before taking decisions regarding Maruti Udyog.

This is a classic case of an uninformed mantri taking umbrage at a progressive proposal from a firm foreign partner. Unlike many of our ministers and minions, Suzuki is not the aaya ram gaya ram type our mantris are familiar with. Suzuki has been in India since the late seventees, when it sewed up a joint venture with the Government of India, of all people. IMF and World Bank were not yet in India. Manmohan and liberalisation were nowhere to be seen. Bangalore was only a proper noun; it would become a verb much later.

On the other hand, Soviet Union and Sanjay Gandhi were very much alive. Suzuki came in with the intention of staying for a while. Which it did. Maruti Suzuki survived and became the country's biggest carmaker, helped by generous import duty concessions. A little later, it tied up with Sundaram Iyengar of Tamil Nadu, bringing IND Suzuki 100 cc bikes into the crowd of phut-phut Yezdis and Rajdoots. No one ever heard of those ageing legends again. In its two-wheeler venture, Suzuki regularly rolled out new models. In its two-wheeler and four-wheeler avatars, the Suzuki JVs consistently delivered models suited to India and cornered good market shares.

The criticism against Suzuki setting up its own plant is based on unfounded paranoia that the venture may overtake Maruti and kill it slowly. This logic is quite funny when it comes from a layman, but when ignorance flows from the mantri's mouth, it scares us. For Deb's information, Suzuki paid Rs 3,200 crore to acquire the government's stake in Maruti Udyog. Deb may not know this since he was passing time in opposition benches when the baton passed from GoI to Suzuki Motor. Can anyone in his right senses believe that a company which invested Rs 3200 crore into Maruti Udyog will not be concerned about its future? Whereas the Govt of India is an entity which sold its stake in Maruti and transferred its control to Suzuki. Mantri's shortsightedness prevails over Suzuki's business future.

Again, think. During Maruti divestment, the first right of refusal lay with Suzuki. Instead of letting the company go to alien hands, Suzuki coughed up the huge sum and brought Maruti home. Does this look like a disinterested partner who is least concerned about Maruti's future?

The Indian government, when it is into business, is yet to learn the role of the responsible partner. The urge to control businesses from ministries runs deep. The government still cannot figure out why it cannot control companies like VSNL and Maruti even after they are privatised. In a simlar move, the earlier government tried to supervise VSNL's business decisions after it passed to Tata's hands. The government has not truly come to terms with its role as a junior partner.

Now, what does a responsible partner do in a case like this? Look into history. Tata Motors (earlier Tata Engineering and Locomotive Company - Telco) had a tie-up with Daimler for manufacturing trucks. The JV went well for quite some time, when Tata realised that it had grown up and started making its own trucks without the Daimler crutch. Daimler was offended, but not the way Santosh Mohan Deb was. The company snapped the JV and left India. Meanwhile, Tata went on to become the country's largest truck maker while Daimler made money in other markets.

More recently, Honda Motor decided to roll out its own premium bike under the Unicorn brand name. The Bajaj Auto stock took a hit. Hero Honda, with whom Honda has an existing JV, is in a situation similar to that of the government of India. But Hero Honda did not go to court and make a fool of itself. Hero Honda is still the country's largest selling bike brand and there is no sign of its sales slowing down because Unicorn entered the premium segment. It was the stock of Bajaj Auto that suffered - which sells the premium bike Pulsar. Hero Honda was unscathed.

Well, the Maruti stock was hit; so what? Long-term business decisions are not driven by short-term stock sales by ill-informed market players. Suzuki's decision to start a solo venture is a business decision prompted by the need for expansion. It is highly unlikely that Suzuki will roll out models that directly compete with Maruti models and exterminate them. Suzuki has a greater interest than the Government of India and Santosh Mohan Deb to see that Maruti survives and flourishes. Suzuki is not one of those post-liberalisation MNC junkies who washed in with the outsourcing wave. Suzuki's plan to invest Rs 1000 crore, coming barely a couple of years after it spent Rs 3200 crore to buy Maruti stake is proof of its commitment and loyalty to the Indian market. The government must keep its hands off the affair and learn to be a responsible junior partner and short-sighted mantris would do well to stay off business.

BY JM