INDIA : THE FUTURE IS HERE

The entire world nations, institutions, corporations, opinion leaders, media, and every movable and immovable economic agent is currently talking, breathing and eating China. Such is the awe of this nation that every other day new synonyms are evolving for this dragon in heat. In reality though, it may not be the dragon but the elephant sitting beneath it that is going to be the real thing. Yes! You guessed it right. The future is probably where you are sitting right now reading this article… in India.

India is arriving. And perhaps its time to look beyond trite examples of the Mittals, TCS, Infosys, Reliance, Sabeer Bhatia et al that are used by everybody everywhere! They are there alright, but for the time being, let us appreciate the strength of India by itself as an idea, whose time has finally arrived.

Today, India is already the biggest future fear for native workers across the US and Europe. India is seen as a country which can ruin the economic future of many a nation. After forcing and blackmailing developing nations to be a part of WTO, the same countries are talking of barriers to outsourcing and off-shoring a completely non-free market oriented thought; all thanks to a country called India. Different states in the USA are now forming their own laws and passing bills against the outsourcing of work (targeting only India) announcing that national treaties signed by the US are not applicable to them at the state level!! That’s the kind of fear India is evoking around the world. Gone are the days when India meant a land of snake charmers and elephants. India is certainly the next big thing. Even at the current average rate of growth of 6.5 per cent, our GDP is all set to double every 11 years, which means that by the year 2025, the Indian per capita income in terms of PPP dollars would stand close to around a very respectable $12,000 while the American per capita income would be around $50,000 (at its current average growth rate). Given the fact that we are about four times their population, the time is not far away from when we become an economy bigger than that of America and our GDP goes beyond theirs. If we were to take into consideration the fact that given the slightest commitment from the government, this 6.5 per cent current average rate of growth can be easily taken up to 10 per cent, India looks all set to be this century’s biggest super power. But then one might wonder, what about China?

True, China is there, and there big time at that. But political and economic indicators and some recent happenings clearly suggest that there could be big trouble brewing in China. Unlike in the past, as in the case of Japan, wherein, people were excited about their rise and the rise of high quality products; a look at the way China has flooded the world markets with products at prices impossible will tell why no country is welcoming their onslaught. No country is welcoming because they know it is false. They know there is something fishy happening down there. As Vivek Lakhotia, a Delhi based manufacturer of designer CD stands put it, “Here I know I’ve used the best of technology, reduced costs to the maximum possible and made it at $25 and there comes a Chinese and offers me the same product in six months time at $2.5! I know its not possible. No technology, nothing can make it possible. Even if the Chinese government gives them the raw material (plastic and steel in his case) free of cost its not possible.” In Italy, according to a latest report, there were a dozen Chinese made high quality bras being made available for 50 cents!! No wonder then that countries around the world now want to put an end to this mindless unnatural process of dumping. And soon they will, unless of course, before someone else does that, the economy on its own collapses.

The biggest impediment to this looming collapse is the completely irrational pegging of the yuan to foreign currencies. Just a fifteen minute (the Chinese claim it was completely accidental) open trading session of the yuan in the international currency markets last month had increased its value by about 7%, leaving one to wonder what will happen if the yuan were left to float freely in the markets permanently. Given China’s low cost of labour (33% lower on an average when compared even to India’s anyway abysmally low costs) and other economies of scale, thanks to large scale production made possible by the State through subsidies and loans (which are regularly defaulted on) Chinese are in a position to sell almost anything at a price which has no competition.

Store shelves on American and European streets are sagging with merchandise like shoes, garments, toys and electronics or for that matter the entire world market might be over-flooded with consumer durables ubiquitously labeled as ’Made in China’, but what is serendipitous is that none of these are from a single homegrown Chinese firm. In fact China didn’t even have its own stock exchange till as late as 1990 and its first IPO was executed only in 2002!
On the other hand, India’s consensual democratic model could provide a more nurturing and enabling environment for homegrown entrepreneurs who are defiantly competing with the best in the world. Starting from IT to ITeS, Entertainment to Health, High-end Knowledge processes to Pharmaceuticals, Automobiles to Biotechnology, everywhere, homegrown Indian firms have been able to make a mark for themselves.

According to AT Kearney’s survey of American automobile industry executives, India had been ranked as the top most outsourcing destination with 24 per cent votes; out ranking China with a mere 15 per cent of votes. In 2003, four Indian companies in the auto part industry, Brakes India Ltd, Mahindra and Mahindra, Rane Brake Linings and Sona Koyo Steering Systems, won the prestigious Deming award in Total Quality Management. Similarly, India has moved up three notches in the 2004 Global Retail Development Index and has become the second most attractive destination among 30 emerging markets for retailers. While Russia remained the most preferred destination, India has overtaken China, which is ranked third, as per the retail benchmark study by the same consulting firm. Moreover, India ranked 6th in corporate governance and China 19th, in a survey of 25 emerging economies conducted in 2000 by Credit Lyonnais Securities, Asia.

In a recent survey of leading Asian companies by the Far Eastern Economic Review (FEER), India registered a higher average score than any other country in the region, including China (the survey polled over 2,500 executives and professionals in a dozen countries; respondents were asked to rate companies on a scale of one to seven for overall leadership performance). Indeed, only two Chinese firms had scores high enough to qualify for Asia’s top 10 list. Tellingly, all of the Indian firms were wholly private initiatives, while most of the Chinese companies had significant state involvement.

There are many supporting evidences to justify the emerging industrial strength of India. The Japanese Institute of Plant Management has rewarded 18 manufacturing plants belonging to 10 Indian companies for excelling in Total Productive Maintenance. ONGC, Reliance, Hindustan Lever, IOC, Wipro, SBI, Infosys, ITC, Ranbaxy and HDFC, figure in a Business Week survey of the top 200 emerging market companies.

In the sunrise sectors Indian dominance is ubiquitous. According to American management guru Peter Drucker’s interview with Fortune magazine at the end of 2003, India’s huge lead in higher education explains why its process is “far more impressive” than that of China. Drucker further goes on to state that “a medical school in New Delhi is now perhaps the best in the world.” Today India “ranks second only to the U.S. in the number of global Drug Master Fillings every year,” according to Kotak Securities; India’s share has risen from 2.4 per cent in 1991 to 19 per cent in 2003.International management consultants McKinsey & Co. forecast that by 2012, India will earn over $2 billion a year from “healthcare tourism.” India is a potential source of low cost, highly skilled English speaking brainpower. It may soon have a farther-reaching impact on the world economy than China. Indian knowledge workers are continuously moving up the value chain.
But finally it is something else that is India’s biggest advantage when compared to China. And that is our democratic political set up. Even with its highly disintegrated and diverse geography, demography and psycho-graphy, India and Indians have shown the strength of its democracy. With 28 states, 6 Union territories, 18 official dialects, and with 5 of its states being led by women Chief Ministers as late as in 2003; public sector, private sector, trade unions, civil societies and strikes and movements, India is a universe in itself. Freedom and secularism have always been India’s key strengths. No other country can perhaps boast of a more culturally and religiously diverse set of leaders and idols: The president of the country Dr. A. P. J. Abdul Kalam is a Muslim; Dr. Manmohan Singh the prime minister of India is a Sikh; Sonia Gandhi, an Italian born Roman Catholic presiding over the oldest political party; Michael Lyngdoh, a Christian, who headed the supremely powerful Election Commission (infact it is the Hindutava party which is sitting in the opposition!); Ratan Tata, a Zoroastrian Parsi heading the largest business conglomerate of India; Azim Premji, chief of WIPRO; Mohammed Azharuddin (cricketer), Shahrukh Khan (actor), Bhaichung Bhutia (footballer), Ustad Bismillah Khan (maestro-Indian classical instrument), Ustad Zakir Hussain (maestro-Indian classical instrument)... the list goes on.
Democracy is the most non-negotiable human right. And it also is India’s biggest long run strength over the Chinese. In an environment where there is no dissent there is also effectively no warning system. In such a country systemic problems are bound to keep accumulating till it can take no more. As experienced more than once in the past by the Chinese during Mao’s Great Leap Forward, the downfall then is beyond controllable parameters and has catastrophic effects which can take away all progress and leave you reeling for years to come.

The only wish was that the governments in India could have been more committed and we could have already been where China is today, and beyond. However, democracy in India at least permitted the rise of an unstoppable Indian breed called the Indian entrepreneurs, who are all set to drive India into super stardom- if we could borrow a phrase from Bollywood.

So, it is only a matter of time for India before it emerges out victorious and the world gets to deliberate, reiterate and commemorate that: ’The future is here’.

Source : IIPM Editorial, 2006