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Our Insights 27 Sep 2010

Vedanta and After… Community is King!

By Shankar Venkateswaran

In a letter August 31, 2010, the Indian Ministry of Environment and Forests rejected the environment clearance accorded to the mining giant Vedanta, to mine bauxite in the Niyamgiri hills in the eastern state of Orissa. With that, the proverbial curtain came down on a saga that could well have inspired David Cameron’s Avatar, but with a very important difference – the indigenous Dongria Kondh tribe that consider the Niyamgiri mountain its God fought a non-violent battle in the best tradition of so many protests in India.

At the end of the day, the red light to Vedanta came on a technicality. That they did not follow laid down procedures. It might therefore be tempting for companies operating in India to think that if they comply fully with all procedures, they can continue with business as usual. But is that really the case?

Land acquisition has always led to protests. But companies have to realise that in an open and democratic country like India, they cannot build and protect their assets if they do not get a license to operate from communities. Again taking Vedanta as an example, it is no coincidence that investors like the Church of England, PGGM  Aviva  pulling out from Vedanta well before the government decided to pull the plug. And they did it not because of any technical omissions, but because they saw the lack of the community licence to operate as a significant risk to their investments.

Civil society has been a natural ally of protesting communities. It has also understood that it can do more than to support sit-ins and get media involved. It can use the opportunities that a globalised world presents and reach out and internationalise the issue. And this can have significant consequences. ActionAid, for instance, facilitated the travel of community representatives to the Vedanta AGMs in London for several years running, who provided the alternative narrative of the impacts of Vedanta’s project to the company’s shareholders. They also met with investors and opinion leaders, persuading many to visit the site and see for themselves. So, engaging civil society is critical for success.

Perhaps the most significant change has been how political parties are beginning to respond to community protests. In the past, large displacements were a result of state projects, ostensibly for public purposes, and so protests were treated as law-and-order problems. But political parties are beginning to realise that the same rules do not have to apply when it comes to private sector projects, especially when the protestors are also voters who, in an age of coalition politics, can make or break their future. So, while the political party in power may support a company’s land acquisition process as part of promoting growth, there are many more parties sitting in opposition who see this simply as an opportunity.

So, here is another example of business as usual just not being an option! Companies discovered long ago that Henry Ford did not quite get it right when he offered his customers any colour of car as long as it was black. Customer was king. The lesson from the Vedanta experience is similar – community is king!

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