Why it suits both Reliance and Modi to be seen as sharing a vision

On September 2, Prime Minister Narendra Modi’s photograph was splashed across an advertisement on the front pages of major newspapers. That in itself was hardly unusual. What was out of the ordinary was that the advertisement was not placed by the government or the Bharatiya Janata Party but by India’s largest private corporate entity, Reliance Industries Limited, headed by the country’s richest man, Mukesh Ambani, announcing the launch of an ambitious new mobile voice and data services venture, Reliance Jio.

It was averred that Reliance was furthering Modi’s vision of a Digital India, that it was one of those rare “life-changing movements” in the “journey of time.” While questions about the legality of the use of the Prime Minister’s picture to promote a private company’s service are probably misplaced, doubts about the propriety of the move remain. The question to be asked is why it suits both – Reliance and Modi – to be seen as sharing a vision and what implications this has for RJio’s future. Another question that is bound to arise is whether the RJio offering is truly as “revolutionary” as is being claimed or another instance of the kind of brilliant sales pitch that both the Ambanis and Modi are known for.

To those familiar with the trajectory of the Reliance Group, the couching of the RJio project in rhetoric that evokes the quest for the greater good of the public will come as no surprise. The group’s first major foray into a consumer business, in the form of the textiles brand Vimal, was pitched as a bid to clothe every Indian. Its entry into the oil and gas sector was portrayed as part of the national effort to gain energy self-sufficiency. Its maiden telecom venture over a decade ago was sold as making telephony as affordable for all Indians as a postcard. It is totally in character, therefore, that Ambani should say that “Reliance is not about blindly chasing profit.” Many are sceptical of such pious pronouncements.

The reaction to the announcement by RJio that it would make all voice calls on its network free for life and would drastically slash data charges was greeted by much of the mainstream media as a “revolutionary” move that showers on consumers benefits that they could not have dreamt of. This is, of course, far from the truth. Experts who have analysed the fine print of what RJio has to offer seem underwhelmed, suggesting that the public sector Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited are offering services that are not very different from what RJio is doing. Even if one assumes these are carping critics, there is the worrying question of whether this is “predatory pricing” by a private corporate entity with the deepest pockets in India aimed at crippling its competitors – mainly, Bharti Airtel, Idea Cellular and Vodafone, who together control around three-fourths of the market. There is yet another question: is the reported investment of Rs 1,50,000 crore by RJio too audacious a make-or-break business gamble?

The association of the Prime Minister with RJio adds layers of complexity – in public perception, if not in fact – to what is already an extremely bitter battle between the major incumbents and the brash new upstart. The Cellular Operators Association of India, a lobby group ostensibly representing the industry but in practice controlled by Airtel, Idea and Vodafone, has accused the Telecom Regulatory Authority of India of being in an undue hurry to usher in policy changes that are “heavily loaded” in favour of RJio. The suspicion is partly based on the experience of the early 2000s, when Reliance first entered the telecommunications sector through the fixed-line wireless in local loop technology which was meant to provide “limited mobility.” In practice, however, the technology enabled “full mobility” within the same telecom circle or geographical area. While the competition then accused Reliance of entering through the backdoor, the group argued that the distinction between mobile and fixed telephony had disappeared thanks to technology and should therefore be done away with. Reliance had its way then. The story seems uncannily similar since new internet technology (voice over “long term evolution” technology) is obliterating the difference between traditional telephony and internet-enabled telephony.

Ambani’s supporters, and there are many, point out that the group’s entry had brought down telecom tariffs sharply a decade and a half ago, irrespective of whether the means of entry were fair or foul. Will RJio’s entry again bring tariffs crashing down to benefit the consumer? Or has the Reliance Group overreached itself and needs its association with the Prime Minister should it need to be bailed out a few years down the line? Clearly, there cannot be definitive answers to these questions just yet.

This editorial was published in Vol. 51, Issue No. 37, 10 Sep, 2016 of the Economic & Political Weekly.