This is an audio transcript of The Morning Brief podcast episode: Mission MNCs: Harassed or Hide? 

BG Sound  

This is the morning brief from the economic times. 

Ratna Bhushan  

On July 5, Twitter sued the Indian government on content takedown orders, escalating its fight with the government. The move which upped the stakes of free speech in India sets the stage for the social media company's biggest showdown yet with the government. 

BG Sound  

Twitter versus government situation Twitter has taken on the center to the court rather over block orders. 

Ratna Bhushan  

Around the same time, vivo the second biggest smartphone brand in India was booked by the enforcement directorate or the ED for a string of very serious allegations, including money laundering. The ED seized assets of more than 465 crore rupees belonging to the Chinese mobile company and its associates. Vivo retaliated within days by dragging ED to court over freezing of its bank accounts. Last week, also saw the Income Tax department accusing Huawei's Indian unit of repatriating nearly 750 crore rupees to its Chinese parents for at least two financial years to reduce its taxable income in India, even when its revenue was reducing drastically. The assault on Chinese mobile companies does not end there. Xiaomi has already been under the ED spotlight for weeks now. And the matter also landed up in court. The issue somewhat similar to its peers, allegations of dubious payments to third parties. The EDI has alleged that the Chinese smartphone company has been remitting money illegally under the guise of royalties.

Raghav Ohri  

Predominantly the allegations are these one, the source of foreign funding is of doubtful nature as alleged by the agencies. Second, they allege that there has been an illegal transfer of money by these companies but guys have royalty payments and other illegal means. Third is the routing of money. Fourth is the alleged illegal remittances to their parent companies in China, and alleged money laundering.

Ratna Bhushan  

It's Tuesday, July 12. I'm Ratna Bhushan from The Economic Times and you're listening to mission MNCs. harassed or hide on The Morning Brief. You just heard my colleague Raghav Ohri who tracks the investigative agencies very closely. But these probes are raising several questions. Has the bilateral stress made the Chinese companies defensive in India, especially compared to American companies like Amazon or Twitter? Or do they enjoy diplomatic heft and significant financial muscle backing them? You might recall six weeks back I did the episode The Great MNC migration, highlighting that 2783 global companies have shut shop in this country in the last eight years. So will these ongoing probes and spotlights make more and more MNCs jittery about India?

Gurcharan Das  

Well, there has to be a balance. Certainly if a company such as vivo has done all the wrongdoing that a government claims also if it owes taxes to the country. Those taxes must be recovered. But there has to be a fair and a friendly atmosphere for all companies.

Ratna Bhushan  

That's good. Gurcharan Das, former chief executive Procter and Gamble India and acclaimed author who at 50 took early retirement to become a full time writer Gurcharan will also join Raghav and Surbhi Agarwal, ET's technology editor as we try to get to the bottom of this. Twitter has retaliated by suing India. Vivo has dragged ed to quote, India has intensified its stance. China has issued stern statements that the investigations are damaging the confidence of foreign companies operating in India Gurcharan What message are we sending out?

Gurcharan Das  

The reality is that people feel that India's government is hostile to enterprise. And I know the government also has made an effort to repair this but India has to work harder.

Ratna Bhushan  

Vivo and Xiaomi are India's Top Two smartphone brands. Suddenly the investigative agencies are gunning for the Chinese. What's changed Raghav

Raghav Ohri  

Ratna Some might blame it on Galvan , some might blame it on the recent tense relationships between India and China, we can speculate about it all we want for sure there has been an increasing launch of prosecution, so to speak against the Chinese companies, in particular, in the recent past. So if you were to go by the claims of the investigative agencies, all they say is that they have received certain inputs from the intelligence agencies, and they have, quote, unquote, incriminating material against these Chinese companies. As far as the Central Bureau of Investigation is concerned, you have access to an FIR registered by the agency. But when it comes to the ED, no one can have access neither the accused nor anyone else, to the FIR that they register against an individual or a company or an entity. And when you ask me what has suddenly changed, one thing is for sure, the Chinese manufacturing companies are under a kind of, you know, prosecution attack.

Ratna Bhushan  

In case of Twitter, the debate is about free speech. Surabhi is Twitter ready for consequences in its face off with the center 

Surabhi Agarwal  

Last year in May as well. Twitter had a similar kind of a run in with the Indian government, where the ministry of electronics and IT which was then led by Ravi Shankar Prasad had threatened Twitter that it would lose, it's a safe harbor that a social media intermediary enjoys in the country, if it does not follow the rules and regulations which have been set in place that time the matter was pertaining to the IT rules that were just notified. So this time, it's more about, you know, the takedown notices that the Indian government has sent Twitter. And while the government claims that Twitter has not been compliant, Twitter, at some level is saying that it's compliant, while the petition that it is filed in the Karnataka High Court, it is claiming that you know, whatever compliance is being done is being done in protest, which means that Twitter in some way maybe is being pressurized by the Indian government to take down these accounts on your URL. If you just look at the numbers, they're huge. They're more than 1400 accounts that the government has asked them to take down there are 39 blocking orders. These go back to February of 2021. And Twitter is sort of protesting about all these orders that the Indian government has sent them.

Ratna Bhushan  

Twitter has called the government's takedown orders as arbitrary and disproportionate. Pretty strong objection there.

Surabhi Agarwal  

So what is interesting in this case, this time around Ratna is that we don't exactly know, what are these orders pertaining to, because neither has the ministry of IT talked about it. Nor has Twitter mentioned that what are these orders on which there is this tussle with the government even in the affidavit that they have provided to the Karnataka High Court, even in that petition, they have not publicly stated the accounts, which the government has asked for a takedown, all this information is under sealed covers, which means that nobody can access them except for the code. Now to your question about using these words about the orders being disproportionate or draconian, this is something which has been going on for a while. Because if we look at this space, while the government has clear laws on, you know, takedown, etc, companies are governed by their own policies on what kind of content will be allowed on their platforms, or what kind of content will be taken down. Often, the laws of the land, do not match with the laws of the company, something which the Indian government might find, not in the right spirit, a company might feel that it's fine. So that is where the tussle begins.

Ratna Bhushan  

In the past two years, the government has accelerated scrutiny against Chinese companies, and their funded entities alleging money laundering and tax evasion. But can India afford to take the Chinese head on when it comes to big ticket foreign investments

Gurcharan Das  

in taking action against the Chinese companies, we have to ensure that we don't get harmed in the process. The Chinese have achieved a hell of a lot in many areas. We need those Chinese companies just to be competitive. And so I think it's very important not to mix politics with economics. So we should be welcoming to the right kind of Chinese investment. And if the investor has done wrong, it should be investigated. Again, I think the investigation should be in a friendly spirit Investment that's leaving China should come to India. I'm sorry, but not enough of that is coming to India.

Ratna Bhushan  

Don't mix politics and economics. Quite a strong statement they Gurcharan but as I said before, Compared to China, American companies seem to be far more compative, Amazon and Twitter, both having fought several such battles around the world don't give in so easily. You can argue the same for British companies like Kane and Vodafone. It's not universal, though. Look at Facebook, they have avoided confrontation with the Indian government. So much so that they have been multiple allegations that they have actually been partisan towards the ruling establishment in a key market like India. But for China, is defense the best offense? Are we seeing any impact in foreign investments already? Or what are the other consequences?

Gurcharan Das  

Well, I think, first of all, it's not yet a extensive, I mean, I'm aware only of Twitter, Vivo, maybe some sort of hostility towards the E commerce giants like Amazon. And we should not be unduly concerned. But the government should be very, very careful that India's perception is not a good one right now, and has not been, frankly ever, and the kind of jobs that the country needs money Mr. Modi got elected in 2014, when he talked about Vikas he talked about those jobs. These were not Mgnrega jobs, these were decent jobs, which would people could aspire into the middle class, those jobs have not come. And so we have a long way to go.

Ratna Bhushan  

Even as speculation over diplomatic motives influencing many of these investigations rages. The allegations are very, very serious. India has tightened scrutiny of China based firms. And the ministry of Corporate Affairs has started the process of inspecting books of accounts of over 500 Chinese companies.

Raghav Ohri  

Okay, let's assume even if there is some motivation for the want of a, better word for the launch of these investigations against them. Ultimately, it is to be adjudicated, not to be speculated. What I mean to say is that whatever charges these investigating agencies come up with, they will have to stand the scrutiny of law. So whether there is a motivation or not, I don't think anyone can answer that. Because if there was anything to substantiate these allegations, I'm sure these companies would have gone to the court as they have, they would have alleged this as they have, but somehow or the other, it has not really cut ice with them.

Ratna Bhushan  

And in the case of Twitter, the equation between the social media platform and the government started going downhill. From early 2021,

BG Sound  

The police has landed up at the offices of Twitter in Delhi and in Gurugram. Just days after Twitter, the social media giant labeled tweets by BJP leaders like Sambit Patra as manipulated media.

Ratna Bhushan  

Since then, things have only worsened between the two sides.

Surabhi Agarwal  

The custom has always been about the government asking Twitter to take down certain content or to suspend or block accounts and Twitter sort of taking a stand when it says that we do not want to take down this content, because according to us, it will go against the freedom of speech and expression in the country. And that is around the time when the government notified the new set of it rules under which there were new responsibilities, which were put on the significant social media intermediaries, apart from other new mandates for all intermediaries. And the mandates was significant social media intermediaries had requirements like tracing the originator of content, which is what led to WhatsApp also taking the government to court. And it also required companies to have voluntary verification. Government's orders had to be taken down under a set set number of hours or days, that is when it's all hit a crescendo. And companies were also supposed to appoint these three key officers like the compliance officers and the grievance officers. And that is where the government had an issue with Twitter directly where they said that Twitter has still not appointed these officers. And if it doesn't, in a set period of time, then it will lose its intermediary status. Now, intermediary status or the safe harbor means that a company is not responsible for the content, which is posted by third party users on its platform. And if a company loses that safe harbor, then it becomes liable for each and every content which is posted on its platform, which means that its officers can be jailed, and which is exactly what happened where Manish Maheshwari, who was Twitter's head that time was summoned by police for certain content on its platform. And then Manish and Twitter again, sort of went to the Karnataka High Court to object and to file a petition against that order. So all that happened, and eventually there was a truce between the two sides, where they agreed to appoint these three officers and Meet the government halfway where they said that we will agree to these new IT rules, there was a lull in between where things seem to be settling down. And then suddenly, again, we saw beginning of this month where things went back to where they started. And we were surprised to see that the government has sort of sent them a warning letter, where they said that this is a last chance to Twitter that if it doesn't comply, then it will lose its intermediary status. And just one day before, the deadline for that last chance was supposed to end, which is Fourth of July, Twitter went to Karnataka High Court and again filed a petition against the government. And in that petition, it is not just talking about the recent or the blocking orders that the government has sent them, but it is talking about the orders, which is which have been sent starting from February of last year,

Ratna Bhushan  

but is a middle ground possible between Twitter and the government?

Surabhi Agarwal  

It's going to be very, very difficult. I think going forward. The point that I'm trying to make here is that there is a lot of mandates that are required by the companies to be followed under these new rules, and that the government can pick and choose anything that Twitter has not complied with. And they can basically be held accountable to that. So in this light, I think this situation is very critical, because Twitter has taken the government head on

Ratna Bhushan  

many MNCs are clearly fighting back, look at Amazon, this still not giving up the good fight against future group and reliance. What are some of the others fighting a losing battle in India.

Gurcharan Das  

I'm glad they've gone to court and let the court give a proper decision on it. I'm glad they did not get cowed down, it's very easy to be again critical of these big social media giants, but they have created a huge benefit. Of course, it's a double edged sword, social media. One, it makes it possible for people to express their views like never before, in human history. And second, it's an example of free speech. And that is something that our Constitution guarantees. The only thing is that it's also capable of being misused in fake news. So, there is a case for a regulation. But again, that regulation should be done wisely lightly. These are the words that every regulator in India needs to remember,

Ratna Bhushan  

multiple red flags, different sets of investigations, different companies,

Raghav Ohri  

let's take the case of vivo Jammu and Kashmir company GPI Cpl. So this company was incorporated somewhere in December 2014 in Jammu and Kashmir and this was incorporated as a distributor of vivo. Now vivo was incorporated in India in August 2014. So this company, the j&k company I'm referring to was set up four months after. Interestingly, this company never projected itself as a distributor of vivo. It always projected itself as a subsidiary of vivo. This itself is a red flag, now projecting itself to be a subsidiary of vivo. It indulged in various businesses and transferred lots of monies as alleged by the investigating agencies. And when I say in investigating agencies, I'm not only confining myself to ED, the economic offences wing of Delhi police is also involved in this they've register the FIR on the basis of an internal probe conducted by the Deputy Registrar of Companies, which was prodded by the Ministry of Corporate Affairs, which received information from the intelligence agencies. So it is not that just one investigating agency got a whiff of information and got into it. It's more of a loop.

Ratna Bhushan  

Some have even gone to the extent to say much of this is copied shadowboxing Raghav are the crackdown selective,

Raghav Ohri  

the CBI, the Central Bureau of Investigation, that is, they've arrested five senior officials of Tata projects limited. Now. Tata Projects Limited is the company, which is building the new parliament. Right. And we all know the new parliament is a pet project of the current political establishment. So if posters could get you any immunity from the investigating agencies, then I think a company as big Tata projects, Ltd, which is building a new Parliament would have got this immunity from the investigative agencies, which clearly has not happened. So again, we can speculate as much as we can. But across the corporate spectrum, there are so many CEOs who have been booked who have been behind the bars for a substantial period of time.

Ratna Bhushan  

And in the middle of all this, even high profile executives and professionals are getting trapped in if it was Manish Maheshwari, the former Twitter India head who was booked under several cases of the IPC for showing a wrong map. It's Manu Jain, former chief executive at Xiaomi. The poster boy for Digital India, not too long back Maheshwari's badluck seems to continue even post Twitter, having left Invact, metaversity, the startup he co founded just six months ago, following disagreements with co founders and investors, leaving the entire project under a cloud. But how do such investigations which are very serious impact these brands, Chinese mobile phones or equipment have been pretty much the backbone of the Indian telecom sector.

Gurcharan Das  

My view about China should not colour my views of the performance of companies who are serving a purpose for the Indian economy, who are creating 1000s of jobs, we should not try to keep them out on ideological grounds. If they've done wrong, then the law should take its course. But ultimately, people are driven by self interest. And if the product continues to be very good, and if it's affordable and cheaper than the competitors product, people will continue to buy it.

Ratna Bhushan  

All the companies under the spotlight is Twitter set to lose the most.

Surabhi Agarwal  

What is happening between Twitter and government is very critical, because there are so many new mandates that companies have to follow. And if the government chooses, it can just hold a Twitter or any other company accountable to lapses in those mandates and where they've sort of not followed these rules. So it'll be very interesting to see where this fight goes, plus situation is so tense. And Twitter has decided to take the government head on, they are putting their foot down and clearly calling a spade a spade where they're clearly disagreeing with the requests that the government of India has sent their way. 

Ratna Bhushan  

So where's the legal battle headed, 

Surabhi Agarwal  

given the fact that Twitter is not just talking about the takedown orders that have been sent its way in the last two months, but they are talking about the orders which have come in the last one year, what I feel is that whenever this matter comes up for hearing, and whatever the courts finally decide, you know, it will be very key for the social media space in the country, because the decision in this matter will settle for once this entire controversy between the government of India policies not matching with the company policies of the social media intermediaries, because there is a mismatch there. And maybe the decision that the court takes will be a guiding light for the government as well as the companies to be on the same page. And it will also be very, very critical for for this entire point about freedom of speech and expression in the country, because ultimately it impacts us all.

Ratna Bhushan  

But legal battles get dragged out in India. Till then will it be business as usual?

Surabhi Agarwal  

I think that they continue to work as they were normally, for example, this entire controversy over about the film poster where Goddess Kali is shown as smoking government again, send them an order asking them to take down the poster and they did so the interaction between the government and Twitter continues even as this larger fight rages on.

Ratna Bhushan  

And in Twitter's case too the fight is fundamentally about content's regulation, and how it could impact all other social media platforms. A thin line between regulation that is weaponized and freedom of expression is a key tenet of a thriving democracy.

Gurcharan Das  

You have to strike the right balance, the default position should be maximum freedom. But occasionally, if there is content that will incite people to violence, that is wrong. But otherwise, I'm a great believer in free speech. There seems to be an industry of hurt sentiments. And this industry needs to also learn to be a little more thick skin we should only curb liberty in the most extreme circumstances.

Ratna Bhushan  

Do you see a middle ground for both parties to soften their sign?

Gurcharan Das  

Well, I wouldn't want to be in the place that judge who has to fear this because it's really tough to find that middle ground. You're absolutely right to be skeptical, but it has to be found. If there is an imminent danger of violence, only then should the government intervene. Otherwise everybody will say acha I've got hurt. He has hurt me. Also, don't just be hurt by everything. Relax.

Ratna Bhushan  

Chinese brands are in the headlines for all the wrong reasons, a complexed angle of politics and economy is playing out. More than 321 Chinese apps have already been banned by India, including short video app Tik Tok, and the mobile game pub G. In Twitter's case. Last week's developments clearly indicate that the fight over strict censorship on social media platforms is set to intensify. A debate that first broke out in early 2021, when the government directed Twitter to block multiple posts in connection with the then ongoing farmers agitation. Each of these matters could have massive consequences. As the heat intensifies on both sides, the companies their global headquarters, the investigative agencies and courts. But as Gurcharan said mixing business with politics is never a profitable pursuit. And in today's polarized world, this is becoming a worrying trend. I'm Ratna Bhushan and you've been listening to mission MNCs harassed or hide on the morning brief. 

This episode was produced by Bhavya Dilip Kumar from the economic times and Saundarya Jayachandran from Aawaz sound editor Indranil Bhattacharjee from the economic times and Swati Joshi from Aawaz executive producers Anupria Bahadur and Arijit Barman from the economic times. We hope you enjoyed listening to the episode do share the episode on your social media networks. The morning brief airs every Tuesday, Thursday and Friday. do tune in to ET play our latest platform for all audio content, including the morning brief. Thank you for listening and have a nice day ahead. All external sound clips used in this episode belong to the respective owners. Credits are mentioned in the description.

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