These three men reshaped the world’s most populous country into an economic powerhouse

These three men reshaped the world’s most populous country into an economic powerhouse

In March, a quiet coastal town in the western Indian state of Gujarat might give Davos and Coachella a run for their money.

That’s when millionaires and movie stars from all over the world fly to Jamnagar, overrunning its small airport with private jets and charter flights. They were all there to party with Asia’s richest man, Mukesh Ambani.

The 67-year-old chairman of India’s most valuable private company, Reliance Industries, threw a lavish pre-wedding party for his son, welcoming some 1,200 guests from Silicon Valley, Bollywood and beyond. Mark Zuckerberg, Bill Gates and Ivanka Trump were among the many high-profile celebrities in attendance.

The three-day celebration, which saw performances by pop star Rihanna and magician David Blaine, wowed India and further underscored Ambani’s growing global influence.

But Ambani was not the only Indian businessman at the party whose influence and staggering wealth reshaped the world’s most populous nation.

Fellow billionaire Gautam Adani, founder of the Adani group, was also invited. The infrastructure tycoon has stunned the world with its meteoric rise in the past decade. In 2022, he briefly unseated Jeff Bezos as the second richest person in the world.

“They are extraordinary entrepreneurs, who have been able to maintain steady growth and development in the vibrant but sometimes chaotic political and business environment that exists in India,” said Rohit Lamba, an economist at Pennsylvania State University.

Investors have cheered the duo’s ability to bet wisely on sectors prioritized for development by Prime Minister Narendra Modi, who is campaigning for a third consecutive term to lead India.

The South Asian country is poised to become a 21st-century economic powerhouse, offering a real alternative to China for growth-hunting investors and manufacturers looking to reduce risk in their supply chains.

Reliance Industries and the Adani Group are sprawling conglomerates worth over $200 billion each, with established businesses in sectors ranging from fossil fuels and clean energy to media and technology.

As a result, these three men – Modi, Ambani and Adani – played a fundamental role in shaping the economic superpower India would become in the coming decades.

The new Rockefellers
In India’s financial capital, Mumbai, the two businessmen’s fingerprints are everywhere, starting with the busy international airport, which is operated by Adani.

Their names are plastered all over the city — from the bubble letters of the Adani Group logo propped up next to highways to high-rise apartment buildings branded Adani Realty, to cultural institutions named after the Ambani clan.

Some spaces don’t need a clear name or label, but their relationship is just as obvious. Everyone in Mumbai knows who lives in Antilia — Ambani and his family’s private skyscraper, which reportedly cost $2 billion to build and boasts a spa, three helipads and a 50-seat theater. The 27-story building sits on a street dubbed “Billionaires’ Row,” its striking geometric architecture towering over the neighborhood.

The kind of power and influence that these Indian tycoons enjoy has been seen before in other countries that experienced periods of rapid industrialization.

Both Ambani and Adani are often compared by journalists to John D Rockefeller, who became America’s first billionaire during the Gilded Age, a 30-year period in the last decade of the 19th century.

During those decades, industrialists saw their wealth rise to staggering proportions thanks to the rapid expansion of railroads, factories, and urban centers across America. Other notable names including Frick, Astor, Carnegie, and Vanderbilt also shaped the nation’s infrastructure.

More recently in Asia, “chaebol” or giant family-run conglomerates have dominated the South Korean economy for decades and many of them, including Samsung and Hyundai, have become global leaders in semiconductors and cars.

“India is in the middle of something that America and many other countries have gone through. Britain in the 1820s, South Korea in the 1960s and 70s, and you could argue China in the 2000s,” said James Crabtree, author of The Billionaire Raj, a book about India’s rich.

It is “common” for developing countries to go through periods of rapid growth, which sees “income accumulation at the top, increasing inequality and a lot of crony capitalism,” he added. Indian economy has many such characteristics.

Worth $3.7 trillion in 2023, it will be the world’s fifth-largest economy, jumping four places in the ranking during Modi’s decade in office and leapfrogging the United Kingdom.

It is comfortably placed to grow at an annual rate of at least 6% over the next few years, but analysts say the country should aim for growth of 8% or more if it is to become an economic powerhouse.

Continued expansion will propel India higher in the ranking of the world’s largest economies, with some observers predicting the South Asian country will be number three behind only the US and China by 2027.

Despite these successes, rising youth unemployment and inequality remain persistent problems. In 2022, the country will rank a lowly 147th in gross domestic product (GDP) per person, a measure of living standards, according to the World Bank.

Coal to solar, oil to internet
To spur growth, the Modi government has embarked on a massive infrastructure transformation by spending billions to build roads, ports, airports and railways.

It also greatly promotes digital connectivity, which can improve commerce and daily life.

Both Adani and Ambani have been key allies as the country embarks on this revolution.

“These conglomerates are very, very important and very connected,” said Guido Cozzi, a professor of macroeconomics at the University of St Gallen in Switzerland, noting that the Adani Group and Reliance Industries were founded years before Modi came to power.

“They are not the usual stagnant monopolistic conglomerates. They are quite dynamic,” said Cozzi. Not only do they play an “important role” in building infrastructure, which helps “growth directly,” the two business groups also help the country grow “indirectly” by increasing connectivity through digital innovation, he explained.

Reliance was founded by Ambani’s father, Dhirubhai, as a small yarn trading firm in Mumbai in 1957. Over the next few decades, it grew into a large conglomerate spanning energy, petrochemicals and telecommunications.

After his father’s death, and following a bitter feud with his younger brother, Ambani inherited the company’s major oil and petrochemical assets. He then spent billions turning it into a technological behemoth.

In less than a decade, Ambani has not only boosted India’s telecom sector, but has also become a major player in sectors ranging from media to retail.

His ambition and pace of expansion is matched by Adani, a college dropout who now leads businesses from ports and power to defense and aerospace.

A first-generation entrepreneur, the 62-year-old started his career in diamond trading, before setting up a commodity trading business in 1988, which later evolved into Adani Enterprises Limited (AEL).

According to a January note by American brokerage firm Cantor Fitzgerald, AEL “is central to everything India wants to achieve.”

The company serves as an incubator for Adani’s business. Many have turned around and become leading players in their respective sectors. According to Cantor, the firm’s current focus on airports, roads and energy makes it a “unique long-term investment opportunity.”

And while both barons built much of their wealth from fossil fuels, they are now investing billions in clean energy. Their green energy pivot comes at a time when India has set itself some ambitious climate goals.

The world’s fastest growing major economy has other conglomerates as well. The 156-year-old Tata Group wields considerable power over a range of key sectors from steel to aviation, but it often does not invite the same scrutiny as newer conglomerates, mainly because it is controlled by philanthropic trusts and not run as a family dynasty.

‘Too big to ignore’
Ambani and Adani are considered vocal champions of Modi. Prominent politicians from India’s opposition parties often question Modi’s ties to India’s wealthy, and Adani’s meteoric rise became a hot issue last year.

In January 2023, the group was rocked by an unprecedented crisis when an American short seller Hindenburg Research accused it of being involved in decades of fraud.

Adani denounced the Hindenburg report as “baseless” and “malicious.” But that failed to halt a spectacular stock market slide that, at one point, wiped more than $100 billion off the value of its listed companies.

Political leaders from India’s main opposition parties fiercely questioned Adani’s relationship with the prime minister, with some even saying they were being punished for pursuing the issue.

Since then, Adani has made a remarkable comeback, with shares in several of its companies hitting record highs. Despite the scandal, the group has also managed to attract billions from new foreign investors, including US private equity firm GQG Partners.

“While the report reveals serious concerns, we believe the company has taken action to reduce liquidity risk, improve governance and increase transparency,” Cantor said in its report. “Therefore, at this point, we believe Adani is too big to ignore, and for India, we believe the country needs Adani as much as Adani needs the country.”

Now, as India votes, Modi’s perceived ties to billionaires are once again being questioned by rivals.

Prasanna Tantri, professor of finance at the Indian School of Business, said he had “no reason to believe that things are worse than before” when it comes to crony capitalism in India.

Several processes, notably more transparency in the allocation of India’s natural resources and an overhaul of the country’s bankruptcy laws, have been key reforms under Modi, he added.

Experts say that some closeness between politicians and business elites can help in developing the country faster.

“The optimal level of corruption in an economy is never zero,” Crabtree said, adding that India needs to build more independent institutions that can keep it under control.

However, the uncontrolled dominance of such large groups may stifle competition and innovation, and ultimately lead to stagnation in the economy.

The new government needs to encourage entrepreneurship and innovation by making it easier for smaller firms to raise money and get rid of archaic laws, including land and labor regulations, that can hinder business. Failure to do so, could stifle India’s future growth.

Some big conglomerates can’t absorb a million people joining the workforce every month, said Lamba, who is also co-author of Breaking the Mold, a 2023 book that examines how Asia’s third-largest economy could grow faster.

“India cannot become rich before it grows old on the backs of some big firms like Adani or Ambani,” he said. “India should create more firms.”

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