Forbes and Forbes Asia have given considerable attention to the remarkable story of India’s economic emergence. With this issue we mark the launch of a well-deserved, dedicated India edition and are excited to be working with one of India’s leading media groups, Network18, as
I doubt there’s been a better time for such an effort. In the midst of economic doom and gloom, India’s story is one of resilience in adversity and optimism for the future. Indian companies and entrepreneurs are making a global push while others are in retreat.
For instance, Tata Motors will bring car ownership to millions of people with the introduction of its new Nano car, its cheapest version priced at about $2,000. Tata has also moved aggressively into the high-end automotive sector, with last year’s purchase of Jaguar for $2.4 billion — this when most other automakers have been struggling with the recession.In recent months, we have also profiled such diverse entrepreneurs as billionaire Cyrus Poonawalla, who created the world’s fifth-largest vaccine maker, Serum Institute of India; and Ramakrishna Karuturi, whose Karuturi Global annually sells more than $100 million worth of cut roses across the world.
While China’s economic rise is well known, India’s emergence has been no less impressive or important to the global economy. Unlike many developed countries this year, India may continue to grow; projections are for about 5 percent, a rate with which the leaders of many countries would be happy. India now ranks as the world’s 12th largest economy, with a GDP topping $1 trillion. As the most populous democracy, India is proof that development and democracy can go hand-in-hand. Given its size and location, India will also be the key partner in any efforts to create regional cooperation in South Asia. The region lags Southeast Asia, where ASEAN has made headway. India is not immune to global threats, as recent tragic terrorist attacks have shown. Terrorists targeted not only rich tourists in the Taj hotel but also ordinary Indians in a train station. India can be a major player, along with Japan and China, in dampening the potential for dangerous volatility and creating stability in the region. To be sure, India is not without its internal issues, notably the long-running dispute with Pakistan over Kashmir. With its billion people, India can and should be a vast market of new demand, helping to revive the now-moribund global economy. Its capital markets provide another growth story. India has created vibrant and flourishing stock exchanges, vital to the creation of the private equity and venture capital that fund startups. India’s stock markets have helped channel millions in capital to deserving entrepreneurs and have created a huge pool of investors, both large and small.
One of India’s most important business contributions has been its huge success in outsourcing, now a $60 billion-a-year business. India’s outsourcers have helped lower costs and raise efficiencies at dozens, if not hundreds, of companies worldwide, as well as made billionaires of far-sighted entrepreneurs such as Azim Premji of Wipro.
As Indian outsourcing firms develop their skill-sets, they can move up the value chain, lowering costs and bringing efficiencies to more processes. One such example is helping major pharmaceutical companies discover and develop promising new drugs that might otherwise take much longer to come to market (potentially saving the lives and improving the health of thousands of people around the world). While science and engineering fail to attract many Western college students, they appeal to India’s population. There are a half-million Indian science and engineering graduates, a valuable resource in keeping our global tech industries strong.Of course, India’s agenda for growth is still far from complete. The new government must consider how it will prioritise this agenda. Here are a few things to consider. • Reduce taxes: This year India jumped a whopping 24 points on our global Tax Misery and Reform index, putting it squarely into the top 20 countries with the heaviest tax burdens. The government should be moving in the other direction.
• Financial sector: While India boasts some remarkable banks, such as ICICI Bank (whose former CEO recently won a Businessman of the Year Award), the banking and insurance industries are still too heavily state-owned and protected. The foreign ownership limits in insurance companies should be increased from 26 percent to 49 percent.
• Labour reform: The lack of a hire-and-fire policy makes it difficult for businesses to downsize or shut down.
• Foreign investment: India must attract foreign capital. The sums needed to alleviate the country’s woeful infrastructure bottlenecks are massive and cannot be easily funded from domestic sources.
• Major power projects: The infrastructure to support the generation of power is underdeveloped, and shortages are endemic. A reliable and widespread power supply is essential to support continued and sustainable growth.
• Education: The country’s higher education system could be made more competitive by permitting foreign universities to open within India.
•Agricultural reform: Improving the livelihood of millions who are tied to the agriculture sector could be achieved through better farm productivity and easier access to markets, both domestic and global, for agricultural products.
The need for prioritising this agenda in no way mitigates the government’s outstanding progress in recent years in improving the economy, helping to lift millions out of poverty and allowing entrepreneurs to flourish, some of whom have made it all the way into the ranks of Forbes’ rich lists in recent years. I envy the editors and reporters in this new venture. They have front-row seats in the chronicling of one of the world’s most exciting and fascinating business stories. I look forward as a reader — as I know all of you also do — to enjoying the fruits of their labours!
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(This story appears in the 05 June, 2009 issue of Forbes India. To visit our Archives, click here.)