Mr. Subir Roy
Associate Editor (South) - Business Standard
 
The point before us is whether the global competitiveness that we have achieved in It whether it can thereafter be passed on to other sectors. The study which Dharen referred to that was done about 5 years ago and as the subtitle will tell you, emerging competitiveness I had looked at something which was very nascent and the main point in the study was that it has not yet arrived but it is getting there and the only sector in which Indian capabilities could be said to have truly arrived was in IT. Fascinatingly in the last 4 years or so a sea change has taken place in india as a result of which if you simply follow the popular press you will find expert after expert saying that in this sector and that sector and in that other sector Indians or indian capabilities are emerging as recognizably globally competitive. Now that is what I wish to look at that what is the nature of day to day and what is most important Is that have the rules of the game changed. That when you are at a very early stage of seeking to achieve a degree of global competitiveness then you need to follow one set of rules and you need a particular type of environment. actually the point in my study was that in the emergence of competitiveness in very selected fields and in selected companies. It is in these industries and in these companies have emerged competitive despite being in a what can best be described as a slightly hostile if not indifferent environment and one of the most provocative lines or quotes which is there in that study if of mr.Mahesh who runs sundaram brake lining and he quotes a Japanese expert as saying Mahesh don’t try to change india, build a wall around your company and make it world class,. I think that’s where we began. But today fascinatingly India is changing. It has changed enormously in the last few years and it is necessary to reformulate the rules of the game and what are the priorities today. Very simply in order to underline the change that has taken place it has been said that without a proper physical infrastructure you can get nowhere. But if you see today that exports have crossed a hundred billion, the share of foreign trade to GDP is going up but the ---are not collapsing, the state of the logistics in the country is much better. The simple point that I wish to make from this is that the fear of the infrastructure collapsing and not being able to handle growth of the faster order has been set aside. Then looking forwards we will see a whole ---of private public partnership in delivering infrastructure so that infrastructure will remain a problem definitely but it will not be something that will destroy the whole -----. I am just saying this by way of premilinary so as to identify what has changed. Now looking away from IT to other sectors the most obvious sector which comes to mind for most is pharmaceuticals where there is now a globally accepted recognition that Indian companies are competitive in specific ways. the interesting thing about pharmaceutical competitiveness was that it had historically arrived before IT but then why didn’t we talk about it. we didn’t talk about it because we were probably globally slightly embarrased about it. what we did was we produced generic bulk drugs and we supplied it to the world and became a global low cost high quality producer of generic bulk drugs and we reversed engineered or copied any number of patented drugs formulations of the world and sold them in the Indian markets and in the unregulated markets all over the world. now this is really something that you could not go to town on. So simply to say that that is another area where Indian competitiveness has not only emerged but in fact had emerged earlier and today It is now becoming more and more robust in the sense that leading Indian pharmaceuticals firms are going actively around the world and are picking up firms either by way of acquiring manufacturing capability or their intellectual property or their marketing set up to their brands. So pharmaceutical is the obvious first industry that comes to mind where competitiveness has spread or in fact had actually come earlier. The next area is auto components about which there is no need to talk about because that’s all there, then automobile assembly heavy engineering, power plant equipment produced by a company like BHEL, reactors produced by a company Larsen and Tourbo and Larsen and Tourbo in entire plant fabrications . then there is an emerging competitiveness in steel. Before one of the companies carefully studied in my earlier studies was of Tata steel which was pinpointed as a company which is globally competitive in an Indian industry which is not. Now today if you simply look at the number of global players and Indian players who are upping their capacity in steel in india you will realize that india as a location for cheap and efficient steel making in the world is being fully recognized. So that’s the fascinating transition that has taken place. 2001, Tata steel the only globally competitive steel company, Indian steel industry not globally competitive. Today Lakhsmi mittal , Tosco, you name it and they are all here. So this must be a place where global players feel they can very usefully set up steel making capacity. Then the other area again which does not need talking about but simply noting is chemicals and lastly and most importantly and this is where I look forward to listening to prof.jhunjhujwala, it is in RND capabilities. That company after global company is setting up very seriously their research capabilities in india,, what does it mean for Indians beyond simply there being job opportunities for Indian scientists and engineers that is the most important thing. Now when you see a whole range of industries coming up, stretching across the board an dbeing recognized as being slightly globally competitive and when you take the view that physical infrastructure will no longer be a constraint then what it is that can hold us back and what is it which we must look at. And here I would like to make a very critical point which is that there has taken place what one might call the unshuttling of the Indian entrepreneur over the last few years. actually the process started from 1991 and what we are seeing in the last few years and most fascinating is the degree of enterprise and risk taking and adventurous of the Indian entrepreneur which we had not seen earlier. What has enabled this simultaneously is the sea change on the capital availability front. Several years back over the latter part of the 90s interest rates came down and in the last 3 years or so the raising of cheap capital has become so much easier and simultaneously what we are seeing is that there is more and more of venture capital activity in the country , global venture capital funds, Indian venture capital funds , they are coming forward and are willing to invest more and more. So you got the component that the entrepreneur feels much more empowered, number two he is getting the capital which he wants and third thing which we have is we have the RND capabilities where people are researching and developing products for others. And simultaneously what has happened is because of rapid economic growth for three years the size of the domestic market us increasing very fast so companies are becoming critical in size so that you have simply the physical muscle to go and invest large amounts of money in developing new products so that you know that you will be able to amortize that development cost over your bigger sales and this is where I look forward to what Prof.Jhunjhunwala will say you sort of got the entrepreneur galvanized and you got RND. You marry the two and you get Indian companies making global class products and form there will come global brands and the journey for nations always begins at cost. First you are simply a low cost producer , you remember after the war those of you who were there then that the Japanese were known for their cheap shoddy products then one day they got quality. and today they have the Lexus which is the brand, it’s a top class brand which competes with BMW. Similarly it is fascinating that india is going through the same process. it started as a low cost center for writing codes in software and then it got quality with all the CMM certifications so you got cost, you got quality, now you got size, you got capital, now you go build brands. Now you go build brands. Thank you.
 
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