On Friday (November 19th), members of South Asian Business Association (SABA) met with the Director General of the Confederation of Indian Industries (CII), Mr. N. Srinivasan, to discuss the current economic situation in India. Mr. Srinivasan was bullish on India and expressed his optimism that India will continue to be a major player on the world stage. During an hour and a half conversation he mentioned following things that point to the robustness of the Indian economy:
The Indian economy was designed on the socialist model after Independence. The centralized planning and excessive government control restricted the competitiveness of the Indian industries. The dominant policy of the government was of import substitution. The consumer was paying more for lower quality as few companies monopolized the Indian business environment. The change in the system was introduced by Mrs. Indira Gandhi who allowed Suzuki to enter the Indian car market in early 80’s. The liberalization of 1990’s changed the landscape completely.
Today the mindset has changed as people are talking about efficiency, productivity, quality, competitiveness and building truly multinational companies. Mr. Srinivasan mentioned that many Indian companies have received the Deming award for excellence in quality. This is a major shift for an economy that was protected for more than 40 years. He joked, quoting a leading Indian industrialist who said “My life is all about QSQT (Quarter se Quarter tak)” or in other words, people are feeling the pressure of delivering results every quarter.
“We have just scratched the surface in Indian manufacturing,” offered Mr. Srinivasan quoted leading Indian industrialist Mr. Mahesh Krishna. He said that manufacturing sector is poised for tremendous growth and there are signs to validate it. The success story of the TVS group has proved that India can be the best and the cheapest in manufacturing. He admitted that Indian manufacturing has a long way to go but is on the right track. CII has been working with the government and the industry to increase the competitiveness of Indian manufacturing.
The infrastructure development is key to the success of Indian manufacturing. The Golden Quadrilateral project (connecting Delhi, Bombay, Chennai and Calcutta) is almost 80% complete. The government is committed to modernization of the Indian airports and shipping ports. He mentioned that the infrastructure will see a huge facelift in the next five years.
India vs. China
Mr. Srinivasan said that the future is not about India versus China but about India and China. Both the countries are going to play a major role and all multinational companies will have a strategy with India and China in mind. He said that Indian business community is not competing with China, but rather looking at ways to benefit from China. Many Indian companies have invested in China and he sees the trend towards more of collaboration between the countries.
Mr. Srinivasan emphasized the importance of agriculture in India. He pointed to the fact that 68% of the Indian population is still dependent on agriculture – 68% of over one billion makes any growth in the agriculture sector have a huge impact on India’s GDP growth. The Indian agriculture is still dependent on the monsoon. He mentioned that the present government is serious about reforms in the agriculture sector and has good plans in place to modernize it.
Political and Business
“The economic momentum will continue despite the government,” said Mr. Srinivasan. He mentioned that any political party that comes to power in India will continue to support the path of reforms started in 1990’s. He mentioned that the present Government has very competent people at key decision making positions, namely the Prime Minister (architect of India’s liberalization), finance minister (an HBS Alum) and the chairman of the planning commission. The fears of investors about the political risks are unsubstantiated. He was very confident that the present government will complete its five year term.
His talk was energizing and motivating for students interested in India. “I am going to talk to my summer employer to make substantial investments in India” said Naveen Tewari (OF), who worked for Charles River Ventures over the summer. His talk can be summarized in words of Sid Taparia (OI), SABA speaker chair who said “I am so happy that I did not interview for U.S. jobs during hell week. The opportunities in India are endless. I can’t wait to finish my MBA so that I can return to India and play a major role in the economic development of my country.”