Ambani spat highlights India's coalition politics

By Alistair Scrutton and Devidutta Tripathy

NEW DELHI (Reuters) - India's feuding billionaire Ambani brothers, whose businesses make up about 5 percent of the Asian giant's economic output, have taken political centrestage and underscored how a new government ally is already generating headlines.

The controversy highlights one problem of coalition politics in India, where political commentators say smaller parties with corporate or social interests can have a disproportionate sway.

After communist parties ended support for the government last week in protest against a nuclear deal with the United States, Prime Minister Manmohan Singh won backing of the regional Samajwadi Party (SP) to avoid losing a confidence vote and facing snap elections.

The party has close links to Anil Ambani, the head of Reliance Communications and one of the world's richest men, who has been in a long dispute with his even richer and elder brother Mukesh, chairman of Reliance Industries.

The dispute led to the split of the Reliance empire in 2005 into two groups controlled by each of the brothers. Together they represent about a fifth of the Sensex share index and operate in sectors from petrochemicals to mobile networks.

So when Mukesh Ambani met the prime minister on Monday, it sparked headlines across India that he was trying to defend his business interests amid fears his brother now enjoyed greater access to the government thanks to his SP links.

The meeting followed SP General Secretary Amar Singh saying his party would push for a windfall tax on private oil refiners, a move that would directly hurt Mukesh's plans to have the world's biggest refinery complex in India.

"Corporate Games in PM's Office" was the headline of the Mail Today on Tuesday.