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India's Business Environment Deteriorating: GE's John Flannery

John Flannery tells Forbes India the environment for some of GE India’s businesses has deteriorated, and government statements is yet to translate into activity

Published: Mar 9, 2013 06:16:39 AM IST
Updated: Mar 10, 2013 12:58:46 PM IST
India's Business Environment Deteriorating: GE's John Flannery
Image: MustafaQuraishi for Forbes India

John Flannery
Last Designation: President and CEO, GE India
Education: Graduate of Fairfield University; MBA from the Wharton School at the University of Pennsylvania
Career: Spent 24 years at GE
Interests: Exercise, cricket, cooking and Sufi music

On the Indian economy

2012 was flying pretty low from an investor standpoint. The statements in the past six months have been a lot more encouraging. Many hot-button items like tax, FDI, and relaxation of diesel subsidy, are making people feel there’s a more strategic view from the government on economic issues. The sentiment is good but none of these things have translated into actual core activity. So, I don’t sit at my desk and go wow.

Growth pockets
For us, it’s a couple of things. We need to become more localised, more competitive. Then we can grow in those conditions [of low GDP growth]. The second thing is, even in this sort of malaise, there are pockets of activity in certain states; certain companies have significant investment programmes going on there. If we can stay disciplined on localising the company, getting better as an Indian company and aiming at pockets of activity, we can have decent numbers. If we just stand still and hope for the tide to take us for a ride, probably that wouldn’t be a good idea.

Ease of doing business in India
The ease of doing business hasn’t changed much. The macro-environment has deteriorated for a couple of our businesses, especially energy. We have a large drop in the power generation business owing to [short] supply of natural gas. It was a great business during the first two years I was here and it has been a graveyard in the last two.

GE’s health care business is not the lone bright spot
Except the gas turbine business, all the others [has seen] good growth: Water [has seen] good profit growth, renewable energy (wind is our biggest play) saw good growth. We’ve got a lot of measurement/control businesses related to power stations, which are still growing. So, you can take our heavy-duty gas turbine business and put it in its own box. The rest, across the board, are [growing].

On India’s nuclear civil liability regime [The Civil Liability for Nuclear Damage Act]

We are not comfortable with it. One, there is an established framework to have the liability structures work. Two, there are a number of different countries on a common regulatory regime. And we do business in those countries. India’s liability legislation is not congruent with that. And we are not comfortable.

Other people still pursue it in India. They tend to be more government-oriented, whether French or Russian. But we are a private enterprise and we just can’t take that kind of risk profiles. If the liability law stays the way it is, we won’t pursue the business.

(This story appears in the 22 March, 2013 issue of Forbes India. To visit our Archives, click here.)

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  • Taskforce101

    This article is akin to a foreigner asking an Indian why do you not eat with a fork and a spoon. Its much more hygienic. But the Indian continues to eat with his hand know full well than you cannot enjoy sex thru an interpreter! This interview is typical GE politics at its best. The leaving CEO runs down every process and effort that India takes to reach its goals. Is it not surprising that when John was a CEO he did not make all this noise and throw his toys in the corner? This interview is sad in a sense that the guest upon his departure runs down the host? Why now? Why not before? The answer is simple. He leaves as a bad guy so the new guy will be seen as a saint compared John. In the GE world, they still think this works! John would have done well to learn and see why Indians now make up a huge portion of CEOs of global companies and the colonial politics do not work anymore. And if John thinks Indians are still hapless, it would be wise to learn why GE Capital has not been able to grow beyond SBI JV in India.

    on Mar 10, 2013
    • Shivani

      Well! I completely agree on this.

      on Mar 14, 2013