As recession hits the Western economies, the Indian economy with a projected growth of 6.3% looks remarkably attractive. With only 15% of its GDP derived from exports, it is expected to escape the worst effects of the global slowdown. The lack of liquidity has meant that valuations have dropped to levels which are extremely attractive. Furthermore, with the drop in valuations comes a certain amount of realism. Having advised several U. K. listed companies on their strategies for India and in choosing partners, this realism has been very helpful in recent negotiations.

The tragic attacks in Mumbai are near the top of everybody’s mind when considering investments in India. It is important, therefore, to examine the facts. The attacks came against a backdrop of peaceful elections in Kashmir and the new civilian government in Pakistan making peace overtures towards India. Indeed, the Foreign Minister of Pakistan was in India when the attacks took place. Unfortunately, certain elements in the Pakistan army, in particular the Inter-Services Intelligence wing, are not entirely under the control of the elected government. The ISI for many years has created trained, armed and financed terrorist organisations like Lashkar-E-Taiba, which carried out these attacks. All ten gunmen in Mumbai came from Pakistan and were trained in a LEK camp. The one captured alive has given detailed information which has been corroborated by U. S. intelligence.

As soon as this became clear, people who know India were watching for any signs leading to two dangerous outcomes viz. Anti-Muslim riots in India or the Indian government beginning to build troops at the border. Within twenty four hours, it became clear that neither was to happen and everybody heaved a sigh of relief. There was no point in declaring war against a country, the elected government of which genuinely wishes to put an end to these activities. Nonetheless, it took enormous discipline and wisdom from the Indian government not to give in to public pressure.

India along with the U. S., presented irrefutable evidence to the government and the military establishment of Pakistan and told them to act against the LEK and the ISI immediately. The government has cracked down upon both LEK and its political front organisation, Jamaat-ud-Dawah. It has also started disbanding the political wing of the ISI. Several arrests have been made and many more are likely to follow. The rhetoric may suggest otherwise but action is being taken.

There were exaggerated reports of British and U. S. citizens being the specific targets for the attackers. Out of 183 people who lost their lives, 161 were Indian. One each was from Great Britain and the U. S. The vast majority of the people were killed, in indiscriminate firing; within the first sixty minutes at the railway station, a cafe and two five star hotels. When the gunmen started taking hostages, they did ask for people with British or U. S. passports. However, almost all the hostages were rescued.

Among the dead were 40 Muslims. All the Muslim burial grounds in Mumbai refused to give burial to the terrorists on the grounds that they had betrayed Islam.

The Jewish community was specifically targeted as Nariman House was a well known Jewish centre where the majority of the occupants at any given time were likely to be Jewish. The Jewish community has been in Mumbai since the second century B. C., when one of the ten lost tribes of Israel was shipwrecked at Navgaon, a small village south of Mumbai. One incident, however harrowing, is unlikely to alter the fact that the community is an integral part of Mumbai. Indeed, it laid the foundations of what is now Bollywood.

The immediate and understandable reaction of British companies was to cancel trips to India and question whether they should be investing in India. However, overseas companies which cancelled their investment plans in the U. K. following the bombings of Harrods, the City, Canary Wharf or the London Underground made a poor business decision and demonstrated moral cowardice. The U. K. has remained a good country to invest in. The current economic troubles are due to the credit crunch rather than terrorist attacks. Similarly, India remains a very attractive country to invest in and the events in Mumbai are not going to derail its economy.
 

Samuel Johar is Chairman of Buchanan Harvey & Co., an Executive Search and India Advisory firm.

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