Tarun Das, former Director General and Chief Executive of the Confederation of Indian Industry from 1967 to 2004, after which he served as chief mentor from 2004 to 2009, and considered the godfather when its comes to the development and promotion of Indian industry, says that despite the economic malaise both in India and the US, Indian investment in America and vice versa were growing exponentially.
Das, among the panelists at the Carnegie conference on Restoring Momentum to the US-India Relationship, said India’s favorite destination for investment still remained the US ‘because essentially the ease of business, scale of market and all of that,’ followed by the ASEAN region.
He said, Indian companies operating in the US ‘are doing well, they are growing - growing their investment, they are growing their employment, they are growing their profitability.’
"By and large, the feedback we have is that it’s a very happy experience," he added.
Meanwhile, American businesses, for all their griping, were also doing equally or even better vis-à-vis their investment in India.
In fact, he noted, "I know that some US multinationals are growing at 30 to 40 per cent a year, which is not bad going at all for any corporation."
Das acknowledged that ‘there are issues on both sides, but then it’s not a one-way traffic—it’s two-way traffic—and if we can remove some of these issues then we can move from this $100 billion trade that we talk about between India and the US, to a much larger figure, maybe $150 billion or $200 billion or more.’
If that happens, he quipped, "Then we could have direct flights from Delhi to Washington, which we don’t have right now and have to come through New York or Chicago."
As soon as he said that, fellow panelist and leading industrialist, Jamshyd Godrej said, ‘(direct flights from) Mumbai to Washington.’
But Das retorted to much laughter, "This is the Parsi community. They run India, and they want Mumbai all the time. (But) Some poor people live in Delhi!"
Das acknowledged that ‘the domestic business environment in India has been very tough in the last few years and as GDP went down, business has been under pressure. But, it is a very strong level playing field for multinationals and Indian companies that face he same kind of problems.’
He said what India needed were good managers even above policies. "It is essentially about management and I have felt very strongly that we have not managed the economy well."
Das (left) argued that ‘it’s not so much about policies but about management, and I’d like to see more people coming into the government from areas where professionals have managed their sectors—whether it’s atomic energy, whether it’s manufacturing, or whether it’s services.’
"And, we have people like Nandan Nilekani, ex-Infosys, (Subramaniam) Ramadorai, still with Tatas but in a non-executive capacity, Arun Maira, of Boston Consulting Group, who are in government and making a difference in the way things are done. But, we have to multiply those numbers to make a difference."
Das said, "Because of being under pressure, corporates are continuously restructuring and trying to get higher and better levels of competitiveness, which is good because then it avoids complacency."
He noted that ‘in the 1997 to 2000 period, companies had got complacent with the first five years of liberalisation - euphoria had come and they thought it will always last and that the heavens have opened and it will never go back to the days of pain and decline in growth."
Das said what was needed during these tough times were innovation, ‘bringing out low cost products and services for the market, especially for the 600 million people who live in the rural areas and who are now connected to the market through television, telecom, and IT.’
"This is making a huge change in the pattern of development within the country and it’s making a huge change for industries be it in the public sector or in the private sector."
Das predicted that 2014 ‘is going to be better in terms of growth than last year and my sense is that all the projects and all the infrastructure programs that were stuck for the last few years because of poor management and poor decision-making, which have been cleared recently, will hit the ground and going beyond the privatisation of airports, which have happened.’
He said one would see a lot more action in the energy sector and other infrastructure sectors, which would push growth to near 6 percent by year’s end.
But T N Ninan, chairman of Business Standard, wasn’t so sanguine, saying, "We are at the lowest point in terms of economic growth that we have in two decades."
The recovery will be slow and not as quick as some government spokesmen have it, he said, and argued, "The low growth rate is not directly or inevitably linked to the global situation."
Ninan said, "A lot of it has to do with what we’ve done or not done domestically. In some senses, we are paying the price for the excesses of running up big budget deficits, large trade deficits, and running up record level of inflation, and all of these are now things we have to digest and correct."
"So, now, we are actually in a phase of trying to contract - this is a period of correction," he added.
Ninan said, "We don’t yet know in any detail what a change of government will mean in terms of change of policy. But even if policies don’t change, the better management of issues should create and improvement of the overall situation."
What all this does for Indo-US relations, he said, was a no-brainer because ‘the better the economy does, it is better for bilateral ties.’
Ninan said, "I remain optimistic, but I am not bullish about growth rates going back to the rates we’ve has in the earlier decade."
During the interaction that followed, he said that unlike other Americans, "US business leaders have a longer term view of India…they are able to see the long-term and see the long-term trajectory the country is in and are willing to take long-term bets."
But, Ninan noted, "The negative is when they have a dispute, they tend to demonize the other side, and often don’t see that maybe there is something to be said from the other side as well."
"Indeed, there may be something on your side of the table on the same issues, which are a mirror reflection of what you are criticising," he reminded one US business and industry representative, adding, "There is a lack of perspective which comes into the picture."
Ninan said the pharmaceutical question was a good example of this demonisation and said on the issue of compulsory licensing over which India was being hit over the head, "The fact is compulsory licensing exists in Canada—across your border, it exists in the EU, it exists in a whole number of countries. Do you take the same position as you do, everywhere?"
He argued that ‘some of the cases which were causing some excitement actually had to do with court decision where the argument was that this was the evergreening of a product and not new technology with any fresh patent.’
"So there are nuances to these situations,’ Ninan said, and added, ‘Keep in mind that while you are perfectly entitled to push your viewpoints and interests, but to keep that in perspective is my point."