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India: Bonfire of the Bikinis?

December’s Miss World com- petition was, if not the most good-natured, among the more memorable. Included in the usual recipe …

December’s Miss World com- petition was, if not the most good-natured, among the more memorable. Included in the usual recipe of bikini-clad events were a number of new ingredients: the most notable being a group of young women who promised to swallow cyanide capsules and then set themselves alight. It seemed likely to prove a hard act to follow.

The reason for this unexpected addition to Miss World 1996 was the event’s venue. For the first time, the pageant was staged in India, in the southern city of Bangalore. To say that the local populace greeted this honor with mixed feelings would be a drastic understatement. One man burned himself to death in anticipation of the contest, and the aforementioned group-the Mahila Jagran Samiti or “Forum for Awakening Women”-threatened to follow suit, but were thwarted by heavy police presence at the event. The motive behind these incendiary protests? Fear that India‘s ancient culture is being undermined by the tawdry mores of Western consumerism.

Among other ambassadors of this consumerism to have felt the sting of India‘s anti-Western wrath has been U.S.-based Pepsico, whose KFC outlet in Bangalore was recently wrecked by a xenophobic mob.

Drawn in by the drama, India‘s foreign investors may have viewed the 1996 Miss World contest with unaccustomed interest. What happened in Bangalore threatened to confirm anxieties born when the market-friendly government of Narasinmha Rao was replaced by the ultra-nationalist Bharatiya Janata Party (BJP) last May. Rao’s 1991 victory had been won on the promise of reforms aimed at weaning India away from Nehru’s ideology of “economic self-reliance” [translation: protectionism]. India, said a heterodox Rao, had to abandon her historical dependence on absolute, rather than competitive, advantage: that is to say, on using cheap labor to produce cheap goods behind high tariff barriers.

Accordingly, Rao set about trimming the country’s over-manned workforce, in hopes of attracting foreign investment to her newly streamlined economy. Five years of high unemployment and constant union strife later, he was rewarded for his pains by being removed from office.

The BJP’s victory represented more than popular disenchantment , with Rao’s economics, however. For the first time since independence, Indians voted for a party openly hostile to foreigners, their FDI inflows, fast food out? lets, and motor cars.

Even the BJP’s ousting in June by the foreign-friendly Union Party of H.D. Deve Gowda could not disguise that xenophobia in India was now deep rooted-as troubles in Bangalore would confirm.

To see the impact on foreign investment, take the train from Mumbai to Pune in Maharashtra State. (If neither city rings a bell, it may be because their names, formerly Bombay and Poona, were recently deAnglicized-a clue to the BJP’s local status.)

German auto giant, Mercedes Benz, made the same trip in 1995, and for good reasons. Although at the epicenter of Maharashtra‘s automotive cluster, Mumbai is also in the thrall of its pro-BJP unions. Recent strikes there-apparently led by anti-foreign agitators-crippled operations at two of Mercedes’ European compatriots, Peugeot and Fiat. Understandably, the Stuttgart car-makers chose to follow the lead of America‘s Ford in locating elsewhere. Even so, production at Mercedes’ Pune base has remained “rather slow”, reports company spokesman, Christian Dau-an understatement, given that fewer than 2,000 e Class sedans have actually emerged from it in two years. Plans for increasing future output-and investment—are, says Dau, being scrutinized “very, very carefully.”

Such caution is understandable. “The situation is a complex one,” says Marian Stanley, Boston-based VP in charge of the Polaroid Corporation’s extensive Indian operations. “I’m very enamored of Indian culture myself, and I don’t for one minute blame them for trying to protect it. But, yes: all this stuff has given me pause. We’ve just decided to take the long view here, and the government is being very supportive.”

This is not entirely surprising. India‘s beleaguered prime minister wants to attract $10 billion worth of FDI to his country annually and points to India‘s high growth rate (perhaps 6 percent this year) and burgeoning middle class as his lure.

The real question, though, is whether Gowda can convince this same middle class to spend its new money on foreign cars, cameras, and fried chicken (not to mention bikinis). While considering the hysteria sparked by December’s Miss World, investors might muse on a curious coincidence. The leader of the Forum for Awakening Women, Kinay Narayana Shashikala, is not some unlettered firebrand. Like Mahatma Gandhi, she is a lawyer.

Charles Darwent is senior correspondent for the World Economic Forum magazine, WorldLink, based in London. He was named the British business writer of the year in 1994 by the Periodical Publishers’ Association.

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