Subba’s Serendipitous moments

September 7, 2010

Jugaad – National character, national shame.

Filed under: Business,India,Innovation — Subbaraman Iyer @ 7:59 pm
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Following my post on Juggling Jugaad is a dirty joke on India, I received about 12 comments on the blog and 45 emails. One of my friend Ajith Narayanan sent a response and requested that it be carried as a guest post. Ajith is from IIT Chennai and has one of the best engineering brains that I have come across.

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Jugaad is at work when there is single minded focus on the end goal, disregarding everything else that doesn’t contribute. Jugaad is lean and mean efficiency. So far, so good.

But the essential principle of Jugaad is about taking a short cut, cutting corners, not delivering in full measure, and getting away with it.

Jugaad then, is also about disregarding the impact of your actions on others, on the environment, on the common good, on established principles and structures of society, norms and standards and so forth.
Of course, the Jugaadist reaps a reward. Others begin to envy and emulate the Jugaadist.  Eventually Jugaadist thought and action takes root in every sphere.

Small innovations are to be lauded, and Jugaadism may have a role to play in early stage innovation. But, beyond that, Jugaadism is a mental disease, hard to overcome  when a critical percentage of the population has pledged their allegiance to Jugaadism.

When we rely on Jugaad, there is little need or use for principles, standards, guidelines, or best practices whether these be related to engineering, design, human factors, processes, safety, reliability and such, or to natural and procedural justice, fairness, ethics or dignity of the individual.

Jugaad defines our national character.

When our Election Commission ordered the arrest of the EVM researcher who demonstrated that  Electronic Voting machines can be tampered, (http://www.freedom-to-tinker.com/blog/jhalderm/electronic-voting-researcher-arrested-over-anonymous-source  ) wasn’t it taking a short cut ?  The EC found that crying "thief! thief!" and calling in the police was much easier, and rightly Jugaadist, than joining in the debate — on how secure an EVM Indian citizens deserved, and whether the EVM or operational procedures could be improved.  Jugaadism is expedient and has no slack for such diversions. Here you see the EC’s Jugaadism working against innovation. But then, Hari Prasad (the EVM researcher) procured an EVM by "other means" for his research, despite being denied access by the EC, and he did it through Jugaad ! One man’s Jugaad, another’s crime.

When established H1B-dependent body shops (that pay little taxes if at all), faced with visa quotas and resulting curbs on their lucrative slave trade, call protectionists racist ("discriminatory" — which is quite close. Protectionists are protectionists!), and hijack a whole country’s government to fight on its side, it is Jugaadism at work — in a supposedly mature industry.

But when such entities, big and mighty, rely on Jugaadism, something is wrong. Can they be truthful and just ? Can they innovate, in real terms ? Do they have social consciousness ?

Jugaadism also means no rule of law as Anand Giridharadas comes close to observing. The Jugaadist feels no need for any norms.

In my view, Jugaad is functional at primitive stages of development. To celebrate India’s Jugaadism as national character is a shame — but, perhaps we deserve that shame.

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May 14, 2008

Tips to doing business in India

Filed under: Business,India,Perspective — Subbaraman Iyer @ 9:23 pm
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Courtesy my friend Shrinivas Deo, saw this practical advice from Dian Schaffhauser on working with India. Having worked both in India and overseas, I can attest that all the observations are valid and the tips useful.

Her 18 tips are listed below:

–> TIP 1: Be ready for true hospitality.

Traveling in the US means renting a car and conferring with the map or grabbing a cab and showing up at the front office for your next business meeting a few minutes before you’re expected. That isn’t the way it works in India.

“It is likely that when you arrive, you’ll actually be picked up at the airport by the person you are supposed to meet and taken to your hotel,” says Dr. Schomer. “Much will be done to make sure that you are comfortable, maybe a meal that is completely social for you to be welcomed and a lot more hospitality and welcoming events than you are accustomed to in this country.”

How do you respond? Accept it graciously and don’t consider it a waste of time or an imposition on your personal space. Avoid saying, “Well, I really would like to be left alone.” According to Dr. Schomer, that goes against the rules of Indian hospitality.


–> TIP 2: Expect true culture shock and fuzzy thinking.

Since a lot of flights to India arrive in the middle of the night, you probably won’t be at your brightest that first day. Do what you can to rest up before business begins. Dr. Schomer recommends getting to the hotel, sleeping, taking a shower, having a quiet breakfast or lunch and spending some time adjusting. In other words, don’t think you’ll arrive and get right to work.

Along those same lines, even though we hear a lot about the “new India,” the fact is that the old India will hit you the moment you leave the airport — “crowds, the intensity of everything on the street, great variations of wealth and poverty, the sheer intensity of the culture,” as Dr. Schomer describes it. “People stare at you, pressing in on you. There’s lots going on and everything is just different — the temperature, the feel of the air.” Your brain is “not going to be 100% functioning.”

No matter what your usual company policy is, build in buffer time at the beginning of your trip. It’ll more than make up for the extra expense of hotel nights in sharper thinking on your part.
–> TIP 3 Remember to pack for business.

In an Indian business setting, men normally wear lightweight suits with ties. If the day is extraordinarily hot, you can dispense with the suit jacket, but start with it on and see how your hosts are dressed.

For women, pack lightweight pant suits with sandals. Leave the short skirts at home. And, just like in the typical US setting, the air conditioning can be pretty cold — if it’s working properly. So bring a shawl or a jacket.


–> TIP 4: Don’t expect to start punctually at 9 a.m., or 10, or even 11.

“Being respectful of other people’s time is not an Indian value, nor do people expect you to be very respectful of their time. It is just not important like it is [in the US]. Things are very fluid and constantly changing,” says Dr. Schomer.

Unlike in the states, where you make appointments a month ahead of time, when you arrive in India, you “almost start from scratch” on setting your schedule.

Ask your host, “Is 10 still a good time for us to meet?” You may find that the meeting times have changed.

It is not that the meeting won’t happen, says Dr. Schomer. “It will happen.” But she advises against scheduling back-to-back appointments, because often the first meeting won’t start on time. It will start whenever the primary person shows up. Likewise, the question about when it will end is also open ended.

That means you need to leave an enormous amount of time between appointments, especially if your next appointment is in another part of the city.

In fact, Dr. Schomer suggests that if you’re meeting with more than one service provider, plan to schedule no more than one meeting in a day.


–> TIP 5: Expect and intend to spend time on developing the relationship before you get to business.

Avoid the American tendency to get straight to business. Take time to let the person get to know you and for you get to know him or her. Suggests Dr. Schomer, “Talk about things that are not directly business related. Establish a pleasant relationship. It’s very important. India is a relationship-oriented culture… If you don’t do that, it is hard to go beyond that. You need to show that you are interested in your colleagues as human beings and not just as business entities.”

Safe topics of conversation:

* Your curiosity about things in India, showing an interest in what you are seeing and what you are experiencing.
* Sports — especially cricket. If you don’t know anything about cricket, that doesn’t matter. You can ask for an explanation of the basics.
* Movies.
* Travel to foreign places.
* Education. “They are very proud of their education and they are probably interested in what kind of an education you had,” says Dr. Schomer.

Topics to avoid:

* The weather.
* Poverty in India.
* The caste system.
* Election and foreign policy-type discussions.
* Questions about immigration.

So how will you know when it’s time to move on to the business at hand? Dr. Schomer suggests taking the lead from your Indian colleague. That might be half an hour into the conversation. It might be slightly shorter or longer. “But don’t rush to it,” she says.


–> TIP 6: Be prepared to use last names until you’re told otherwise.

If you’re meeting people for the first time, you’ll probably want to use last names until you get to know people a little bit better. Don’t immediately jump to first names. “In the IT world especially, you may find people switch to first names,” explains Dr. Schomer. “But when you first meet them — especially if they’re high status in the company you’re meeting with — use the honorific and their last name.”

Prepare for that before you go. Learn how to pronounce the names and find out whether somebody is a Mr., Miss or Mrs. (“Ms.” is rarely used in India.) Suggests Dr. Schomer, get information about everybody you’ll be meeting with from whomever you’re corresponding with prior to leaving.

Of course, names can be lengthy and look deceptively hard to say. How do you get through possible mispronunciation? If you’ve obtained that list of people you’ll be meeting with ahead of time, practice with the help of somebody in the US who’s familiar with Indian names. If that isn’t an option, once you get there and you meet somebody, just ask: “Mr. Sravanapudi, would you please help me to pronounce your name right? I need help pronouncing it.” Then practice it a couple of times after you’ve been told.

It’s important to get it right for two reasons: 1) You won’t be corrected if you get it wrong; and 2) if you get it right, it helps on the relationship-building that you’re there to do.


–> TIP 7: Get straight in your head about who’s in charge.

Be clear about the roles, titles and positions of the people you are meeting and to make your own role, position and title clear. Roles, titles and positions are important in India.

Explains Dr. Schomer, “There is a respect for hierarchical structure, rank and for position. People are not comfortable until everybody is clear on who they are.”

What’s the top title? It’ll probably be a managing director heading up the operation.

And you can expect the seating arrangement for your meeting to reflect that hierarchy. That means you’ll also want to ask them where you should sit, rather than simply taking a seat. You’ll probably be seated in a way that faces the lead person.

At the same time, you need to talk up your title in your own company’s hierarchy. Although VPs appear to be a dime a dozen in the US, it makes for an impressive title.

If you’re female, plan to put a special emphasis on your title. And if you’re at the meeting as the representative of the president or COO or CEO, make that clear too. “That will immediately give her respect, which she might not get as much of if she doesn’t show what her hierarchical rank is,” says Dr. Schomer.
–> TIP 8: When the business card trade takes place, pay attention.

Be prepared to exchange your card with the person in charge, or the person who seems to be leading the meeting. Don’t volunteer to give your card to everybody without knowing who they are. When you take a card from somebody else, pause long enough to look at it (though don’t get “ceremonial” about it, Dr. Schomer advises).

Make sure to use your right hand to receive the card and to hand over your card (unless physical circumstances prevent that).


–> TIP 9: Consider traveling with at least one other person.

This will help you in a couple of ways.

First, it enables you to uphold your stature. If you tend to take notes during a meeting to keep track of details, that second person can handle that function for you. Otherwise, you won’t look like the “big picture person” you’re trying to come across as. You’ll simply look like an emissary for somebody more important back at the office. That means the Indian decision maker won’t treat you as an equal.

Second, if you’re trying to remember everything that’s being said, you won’t be able to pay attention to what’s going on around you, as we’ll get to shortly.


–> TIP 10: Don’t be surprised if other people you haven’t heard about show up at the meeting or if other business takes place around you.

Aside from the occasional under-the-table Blackberry use in the US, we like to be very clear about when the meeting is going to be, what it is about and who is going to be there. “Things are more fluid in India.” Says Dr. Schomer, “Several people may show up along with the person you think you are meeting and it is not going to be clear to you why they are there.”

These people may not be introduced, nor will they say anything. He or she may simply be somebody of lower rank in the organization who is just there to give support. Says Dr. Schomer, “It’s not a great idea to direct questions at people who seem to be there in the support role.” Make sure you know who the chief person is with whom you’re meeting. Then direct all your conversation to that person unless you have been asked to do otherwise.

Besides people walking in and out, expect phone calls and questions to the boss during the meeting. “The Indian environment is strong on multitasking,” says Dr. Schomer. “So you may be sitting in a meeting with the head of a unit, and he will pick up on the phone and talk while you’re sitting there, and somebody will knock on the door and will just walk in to ask him a question, and he will just interrupt his conversation with you and then go on. In the Indian business style, this is not considered rude.” In other words, “don’t feel like you’re being blown off.”


–> TIP 11. Provide the biggest possible context for why you are doing whatever you want to do.

Americans have a propensity for boxing in conversation — keeping it narrow and focused: “I need somebody to do this piece of our work. How much can you do it for? When can you get it done?”

India has a “high context culture,” says Dr. Schomer. Plan to provide background information about your company, including its history. Then drill down to broader efforts related to that, then to specific initiatives, and only then to the specifics related to your visit. The goal is to help explain why you’re interested in the service provider.

Don’t expect to whip out your standard PowerPoint presentation and run the service provider staff through it. Slides emphasize bullet points and brevity. You want to expand.

Of course, by the time you reach the point of actually visiting India, you’ll already have had multiple conversations with people in the service provider about similar topics. But repetition is a useful practice. As Dr. Schomer explains, “The American mode of presentation is linear. It basically says, ‘OK, this is what I am going to say. I am going to say it. These are the points under each of the things I am going to say. And this is the wrap up at the end.’ Indian conversation tends to work in loops. Circling around and saying the same thing in many different ways, over and over again.”


–> TIP 12: Remember to pay attention to body language. It’ll reveal facets that the words won’t communicate.

You’re finally there in person, in front of a company you may be working with. Don’t act as if you’re still on the phone. Use your proximity to best advantage. “In general, Americans use their own body language as a way of reinforcing what their words are,” says Dr. Schomer. “But Indian culture is more indirect. The body language may be telling you something different from the words.”

Are people looking forward? Are they looking fidgety or uneasy as they say, “Yes”? If so, that may be telling you something.

At the same time, pay attention to how individuals in the room are interacting with each other, so that you understand a little bit of the dynamics of the group.


–> TIP 13: Don’t assume “Yes” means “Yes.”

So how do you tie the body language to the words being spoken? Let’s take an example, such as whether a service provider will be able to meet a particular deadline. According to Dr. Schomer, “We’ll try,” is the “diplomatic way of saying, ‘We really can’t, but we don’t want to tell you.’ Indians have a certain aversion to saying, “No.”

Americans want a direct “Yes” or “No. For Indians, the tendency will be to say, “Yes,” and try to make it happen at all costs. That can create wide miscommunication and variances in expectations.

How can you get at a clear understanding about what people are really thinking? Don’t bring up yes- or no-type decisions in the context of the meeting.

“Meetings are to discuss and to build the relationship and to see what the issues are,” explains Dr. Schomer. “But the real deciding is almost always made offline by the decision maker.”

If you sense hedging, just let it happen. Don’t press for a hard yes or no.

“Just assume that later on you’ll have a chance to sit alone with the decision maker — maybe over a meal. The topic may come up indirectly, and this decision maker may either tell you directly or indirectly that something is unrealistic. “It’s not likely to happen with a whole bunch of other people present,” she says.

What if you’re asking questions and you see heads nod, as if in assent? “Don’t interpret this as a, ‘Yes,'” says Dr. Schomer. “It really means, ‘I am listening… I understand what you are saying.'”


–> TIP 14: Pay attention during those last few minutes of the meeting — because that’s when some of the most interesting insights may occur.

Here’s another reason not to schedule meetings to take place on the same day. If you end having to say, “Well, I have to go in 10 minutes because I have another meeting,” you may miss the most telling points of the conversation.

Also, says Dr. Schomer, the American way is, “‘OK, here is what we are meeting about,’ and you get to it pretty quickly. Then if you have some time left over, you may do some chatting about other things. The Indian way of doing it is more the other way around. You will talk about all sorts of things and sort of circle around the topic, and then in the last 10 minutes of your time together, it will be, ‘Now about that deal we were talking about, maybe we could do this…’ But that may not come up until the end.”


–> TIP 15: You may find out that your host expects to take you out for dinner.

But since dinner won’t start until 9 in the evening, you can ask for a small break in between the end of the on-site business discussion and start of the social hour. (Pose it as their opportunity to provide you with good hospitality: “Of course, you’ll probably want a chance to talk among yourselves. Plus, I know you’ll want me to be alive and well to enjoy tonight’s festivities…”.) That’ll give you a chance to return to your hotel room and freshen up for the evening’s events.

However, if the conversation is going well, you’re learning lots, and you don’t want that break, don’t make the request. In other words, go with the flow.


–> TIP 16: Remember the right hand rule during dinner.

Don’t touch food with your left hand. If you’re reaching for bread, fruit or anything else, use your right hand. Don’t even use your left hand to tear bread apart. Use one hand for the operation. (Yes, this one will take practice — just like using chopsticks, says Dr. Schomer.)

When removing foods from communal dishes, don’t use your own utensils.


–> TIP 17: Stop saying, “Thank you,” so much!

The American propensity for saying, “Please,” and “Thank you,” comes across as a bit funny and unnecessary, even a little insincere, says Dr. Schomer. If somebody does something for which you’re grateful, a little nod of the head will suffice. That way, thankfulness is shown without much fuss and received without much fuss.

However, when the meeting is over and you’re either back home or you’ve moved on, plan to send an email thank-you to your host, which includes a summary of what you think happened during the visit. Frame it as, “My understanding of what we discussed is this… I’m checking in to see if this is your understanding too…”


–> TIP 18: Remember to reciprocate when you’re back in your own territory.

Expect to exchange favors. Act as host to your visiting guests from India — in a way that’s comparable to what you received.

And if you want a more cerebral article on the differences between US and India read this:


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May 12, 2008

Shift happens — Amazing facts and interesting implications

Filed under: Business,Perspective — Subbaraman Iyer @ 8:56 pm
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Did you know:

China will soon become the number one English speaking country in the world

The US ranks 20th in the world in broadband internet penetration

If MySpace were a country, it would be the 11th largest in the world

There are over 2.7 billion searches performed on Google each month

47 million laptops were shipped worldwide last year

For some more facts see here.

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April 29, 2008

Indian Education

Filed under: Education,India,Learning,Model — Subbaraman Iyer @ 12:12 am
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My friend and prolific blogger Atanu Dey has been shouting himself hoarse about the reforms that are needed in the Indian education system. He has written numerous posts on the subject and I only hope that he gets support.

A civilization which has Acharya devo bhava (The Teacher is GOD) as one of its basic tenets and which revered teachers and placed a high premium on education is clearly rotting.

Given my yearning for learning, I have attended several virtual learning programs including the one conducted out of Berkeley (HAAS school of business) over the video conferencing/ web. Even though I am not a student in the campus, I am amazed at the dedication of the faculty and the overall support the institution provides. When will we get even close?

The Times of India in a hard hitting piece brings the point home.

A few weeks back, one of my brightest students who, for some reason, resisted going abroad, asked me: “What is the difference between universities in the West and here?” A direct question on a subject like this can be difficult to answer.

There are visible differences determined by the funds at one’s disposal. But are there deeper ones? I tried to recall my experience as a student abroad and compared that to what my students in India go through. I zeroed in on two points.

The first concerns teaching, or rather with how teachers perceive their role and relationship with students. In our colleges and universities the proportion of teachers who prepare seriously for their classes is rather small.

Delivering a lecture is reduced to a routine, to the extent that one doesn’t think about individual classes, let alone individual students. The emphasis is on the number of lectures one delivers per week, not on their quality.

Even in cases where the quality is high because the teacher is an active scholar, interaction with students is minimal and concern for individual students and their progress is rare.

This is in sharp contrast to the treatment of students in the West. In most European and North American universities, each student is made to feel involved in the progress of the course. A lot of first-hand reading and writing is expected from everyone.

The teacher is expected to respond to each student’s writing as many times as the course calls for. Comments made on the student’s writing are not of a routine nature; rather, they convey the teacher’s incremental impression of the student’s work, including the reading done. As a student advances to higher levels, the teacher’s responsibility and involvement increases.

This is in sharp contrast to our universities where most doctoral students pine in vain for regular guidance. The teacher-student relationship here is a subset of the larger institutional ethos.

In universities, it is negative from day one when the student runs from one window to the next, completing admission chores. Regular teaching begins weeks after the academic session has officially started and remains sporadic.

Research students wait for months to receive their advisor’s comment which often turns out to be perfunctory.

Most teachers don’t care for their students’ intellectual progress or emotional well-being. The absence of kindness and concern in teachers’ behaviour is not confined to universities, as the recent spate of reports on severe corporal punishment shows.

The second major difference between universities overseas and ours concerns the condition of libraries. Why our libraries are so bad is a puzzle which cannot be explained by citing the paucity of funds alone.

I knew a librarian who was well-trained and cared for reading, but apparently did little to save his library from rapid decline. He said: “Most of our students study for marks and they can get marks without using the library”. What about teachers?

The frustrated man showed me records of books that teachers had borrowed over 10 years ago. Reminders and fines were of no avail.

The joy of browsing in a library remains alien to most of our students. Neither the syllabus nor the pedagogic relationship with teachers impels students to self-exploration.

As philosopher Mrinal Miri has pointed out, one can get through our system and do well, without coming across a single uplifting idea which can be sustained for a while. To get their entrance ticket for the examination hall, students are required to surrender their library tickets and obtain a ‘no objection certificate’.

This procedure shows how little we trust our students. We assume them to be cheats who run away with books. This attitude reflects the colonial character of our universities.

They have done little to overcome this legacy. They exist like relics of a bygone era, serving essentially as expensive babysitters for teenagers. It is a rare youngster who survives our higher education with self-esteem and a dream. Is it a surprise that such students normally want to proceed abroad to realise their dream?

Even while going abroad they face obstacles. American universities do not trust our mark sheets. They ask for a transcript freshly typed out and signed by the head of the relevant department. For this service, departments and colleges charge a bewildering variety of fees, ranging from Rs 25 to Rs 400 per copy.

The money is not all; the student must wait for days and run the stressful risk of losing the chance to go. In a recent case where the student had lost all hope of getting the transcript signed by the head of her alma mater, an authority no less than the vice-chancellor had to intervene. Mercy was finally shown but not without a farewell insult for using a short cut.

An alumnus who now resides in the US was less lucky. Her application for admission to a new course could not meet the
deadline because her old university in India failed to send a fresh transcript of the degree she had earned 15 years ago.

Should we be surprised that India did poorly in a recent ranking of the world’s 200 best universities?

I just saw another piece here which was equally heart rending. I am sure we all know someone at least remotely similar to these characters, but that doesn’t make it less tragic

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June 4, 2007

A perspective on India

Courtesy my friend Dr.Ananth found this interesting speech given by Scott Bayman–the outgoing head of GE India. I think it makes interesting reading and coming from someone who spent 14 years in India and saw the Indian economy and mindset change, it offers a penetrating yet a balanced analysis.

Now is India’s Time

We all know of China’s rise and its incredible growth story. India’s is still more a bet on the future. However, a future that is coming into sharp focus. Few have come forth with arguments to refute the 2003 BRICs study by Goldman Sachs. The report analyzed Brazil, Russia, India and China. In the study, Goldman projects that over the next 50 years, India will be the fastest growing of the world’s major economies. The report calculates that in 10 years, India’s economy will be larger than Italy’s. And, in 15 years, it will over-take Britain’s. By 2040, it will be the world’s third largest economy. By 2050, India’s economy will be five times the size of Japan’s, and its per capita income will have risen to 35 times its current level.

The World Economic Forum’s Global Competitiveness Index ranks India 43rd, well ahead of Brazil at 66, China at 54 and Russia at 62. India is the only one of the four that improved its ranking. The other three actually slipped.

Some argue that India’s path has distinct advantages. MIT’s Yasheng Huang points out that India’s companies use their capital far more efficiently than China’s; they benchmark to global standards and are better managed than Chinese firms are. Despite being much poorer than China, India has produced dozens of privately owned excellent companies like Infosys, Ranbaxy, Tata Steel, Bharat Forge and Reliance. Huang attributes this difference to the fact that India has a real and deep private sector (unlike China’s many state-owned and state-funded companies.) India has a well-developed, well-regulated financial system and a rule of law. Jeff Immelt explains, “China got the infrastructure right. Its government is superb at developing infrastructure. However, China has not developed a banking system, rule of law or private enterprise to the extent India has. India’s government, on the other hand, has failed to deliver the infrastructure that governments typically are required to supply in developing countries. But, its executives are proving to be world class. Their abilities to build and lead businesses far exceed what we see in China.”

Another example: every year Japan awards the coveted Deming Prizes for managerial innovation. Over the last four years, 12 Indian companies won the award. more than any other country, including Japan.

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Globalization has been a key initiative for GE since 1992, when Jack Welch declared India, China and Mexico priority countries for GE. Since that time we have increased revenues outside the US from 10% to 49% and employment from 10% to over 50%. But, I think globalization really does not describe what happened in GE and what is happening to company after company and country after country. I think interdependence is a better description. Globalization happened during colonization when a select group of countries and companies dominated other countries and trade tended to benefit only the colonizer. Today companies move beyond their borders for

Growth and Profitability

Access to markets,

Lower costs,

Higher quality,

Critical raw materials and components

And, to diversify their workforces.

Governments more and more recognize the importance of interdependent markets. Consider all the free trade agreements signed or being discussed. There is not a successful economy today that got there by being an isolationist and practicing protectionism.

The trends are visible in India. Multinationals are coming for all the reasons I just mentioned. And, Indian companies are moving outside their borders. Globalization opened new opportunities for Indian companies. opportunities that they now are in a position to seize-thanks to the changes in India’s own business and economic environment over the past 15 years.

Hindalco and Sterlite bought iron ore mines abroad because they wanted secure access to raw materials. Tata Tea’s acquisition of Tetley brought a leading brand and with it millions of customers and access to new, readymade markets. Tata’s acquisition of Corus and Hindalco’s takeover of Novalis immediately takes these companies to a size that would take 10 years or more to build organically.

Software services companies such as Wipro, TCS, Infosys and Patni established operations in the US, Europe and China to access markets and to serve customer requirements for non-English language skills.

Bharat Forge bought companies in Sweden, Germany, China and the US, because it wants to be the global leader.

Tata Motors’ takeover of Daewoo’s commercial vehicle business provided Tata with technology for producing heavier trucks for Indian roads.

Automotive components supplier, Sundaram Fasteners’, expansion outside of India puts it closer to its customers as it expands its position as a leading supplier to the global automotive industry.

India’s Transformation

As I mentioned, I have been in India for 14 years; surviving two GE Chairmen; six governments and five prime ministers. But, you know what? In those 13 years no one, not one prime minister, not one government has turned its back on liberalization. Sure, each has its own priorities or its own spin, but the general direction and the commitment has not changed.

Many were surprised at the last elections. On the heels of solid growth, attempts at accelerating reforms and “India Shinning”, all the pundits predicted a BJP route. The Congress led victory sent one clear message, in my mind, to all politicians. The electorate is not anti-reforms. It wants to be included. Reforms must touch and benefit those outside the metro cities, those who live in villages and those less fortunate.

Over the past four years, I have seen what I describe as four big events. First, the telecom revolution. When I arrived, you never knew if you would have dial tone when you picked up the receiver. If you had dial tone, there was a question of whether the connection would be made to the number dialed. If connected, you never knew how long you would stay connected. Today, Indian telecom approaches world-class standards. Cell phones are common, even in villages where landlines still do not exist. Between 2000 and 2005, India added about 18 million fixed phone lines and nearly 73 million mobile connections. Teledensity grew more than three -fold to 11.5 percent; in urban areas to almost 35 percent. Waiting lines for phone connections have ceased to exist.

I describe telecom as the “poster child” for privatization and deregulation.

My second big event is the creation of a new class of consumers driven by the emergence and growth of software, backroom processing, technology and financial services industries. Employees in these industries are highly educated and relatively younger than the workers in other industries. Ten years ago, this group likely would have lived in their parents’ homes and been under-employed or unemployed. Today, this group earns a good wage and has a propensity to spend. And, with the opening up of the economy, now has a wide choice of products and services to buy. For example, when I arrived in India, automobiles were in scarce supply and required a full down payment nine months in advance of delivery. Today, you can have delivery in two or three days at very competitive prices. Color televisions had to be purchased on the gray market, unavailable in quantity or variety. Today, virtually every manufacturer sells the latest models of color televisions. Computers and laptops attracted high duties and needed registered in one’s passport to be taken in and out of the country. The average age of a homebuyer in Gurgaon, a suburb of Delhi, has come down from 55 to 32. further evidence that this new class of consumer has real purchasing power.

The third big event is that Indian industrialists have gained confidence that they can compete on the global stage. At a Confederation of Indian Industry seminar on Manufacturing Competitiveness in April 2002, Chaired by My good friend Jamshyd Godrej, I said, and I quote, “Let me start by saying that Manufacturing is not India’s core competency. Can it be? Probably not, at least in the short run. Let’s face it, there are just too many barriers that all of us cannot control. Don’t get hung up in thinking manufacturing can be a core competence of India. It isn’t going to happen.” Unquote .

Well, I was wrong. I was dead wrong. Indian industrialists no longer worry about multinational companies; they are or want to be MNCs. They no longer talk of level playing fields. They argue for open markets, free trade and view the globe as their marketplace. Indian companies now think globally. The total value of takeover deals by Indian companies, which was less than $1 Billion in 2000, rose to $8 billion in 2006. January 2007 saw two mega deal – Hindalco / Novelis and Tata Steel / Corus. There have been 72 foreign takeovers by Indian companies, worth $24.4bn in the first four months of this year, according to the advisory firm Grant Thornton. In the same period, there were 38 foreign deals for Indian companies, worth $17bn.Indian companies possess the self-confidence to believe, to know, they will be successful in global markets. They are confident they will improve the performance of acquired companies. Whether it is Videocon or Suzlon, Tata Tea or Bharat Forge, companies are talking of becoming one of the world’s big two or three in their business, if not number 1.

Global trends also favor India as more companies in the US, Japan and Europe outsource manufacturing to lower costs. In addition to auto parts, telecom equipment and pharmaceuticals, India has the potential to be competitive in such skill-intensive industries as fabricated metal products, high-end chemicals, consumer electronics and computer hardware.

Across India, total exports are rising at an annual rate of 26 percent. The manufacturing sector is growing at 10 plus percent annually, compared with 6 percent a year from 1991 to 2004. Special economic zones, the model that drove China’s export-led industrialization, are beginning to spread in India.

From fiscal 2001 to fiscal 2005, capital expenditures increased from 8.4 to 24.2 billion dollars. What is striking is that over this same time, government owned enterprises’ share dropped from 33 to 25 percent; multinational companies’ share decreased from 8 percent to 4 percent while local private sector share of capital expenditures increased from 59 percent to 71 percent.

The rise of manufacturing could have a profound effect for a vast number of India’s poor. Forever, antiquated labor laws, creaking infrastructure and paperwork have handicapped manufacturing in India. For many of the three-quarters of Indians with less than a middle-school education, few factories meant few jobs.

The fourth big event is Civil Aviation. On my first domestic flight in India, I was 35 minutes early. Upon arriving at the tele-check-in counter, I was told quite rudely that I was late. To which I responded, “I still have 5 minutes.” The agent literally tossed the boarding card across the counter, and said, “You’re lucky.” Because of his attitude, I thought the flight was overbooked. In fact, it was only half-full. Today India has some of the best domestic airlines in the world. Moreover, that government owned carrier I checked in for on my first flight has significantly upgraded its service. Think, just think, what would have happened if the government had not allowed private air carriers.

Today, we are experiencing the benefits of open skies agreements with increased non-stop flights from more Indian cities to more cities around the world. Choice has brought competition and the consumer is benefiting.

Those of you who travel in India might say, “Yes, but what about the airports”. To which I respond, watch the impact of public-private partnership go to work. This is India. We wait for the demand, for the crisis before we respond. Once we strike out on a course of action, we know how to get it done.

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India is part of the changing world political and economic order. An Asian trading bloc is developing driven by:

  • The decline of Russian influence in India
  • China’s emergence as an economic power
  • India’s and China’s improving relationship and growing trade
  • India’s free trade agreements and discussions with Singapore, Thailand and Malaysia
  • India’s initiatives for open sky agreements within the region

Here is something to think about.

  • China, Japan, India and ASEAN providing the four pillars
  • Korea, Australia / NZ, and the rest of South Asia providing the four walls creating a very powerful trading block.
  • India becoming the bridge to the Middle East and former Soviet States.

Obviously, this is a long-term scenario, but one companies and western governments must think about as they develop their global strategies.

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Sometime back I was asked for a vision for India for 2020. That vision is very relevant to today’s discussion and in fact more real today than two plus years ago when I developed it. Please allow me to share it with you. Remember, this was over two and a half years ago.

My vision includes an enhanced stature in the global community. Relationships with the United States grow even stronger as both sides recognize that they are natural allies. China and India find ways to compliment each other economically and learn to live with their political differences. India plays a leadership role in helping combat the war on terrorism and re-building Afghanistan and Iraq.

My vision requires bold actions by Government to stimulate the economy over time and to accelerate additional reforms. Ports, roads, airports and seaports are improved and expanded. The trend in telecom privatization and increased competition continues resulting in lower rates, improved service and universal availability across the country. Tax policy, Companies act, labor law and land use regulation are revised and modernized helping drive economic growth.

Power sector reform takes off and accelerates. The financial troubles of the State Electricity Boards are behind us.most likely through privatization and separation of generation, transmission and distribution. Both local and foreign developers and investors return and become willing to start new projects. Lack of reliable, affordable power ceases to be an issue for most of India’s citizens and businesses.

My vision includes an economy that grows beyond the four to six percent experienced in the past few years to double this amount. Four to six precludes any real change in standard of living for many of India’s poorer, less fortunate citizens. Eight to twelve brings real opportunity for people to improve their lots in life.

I hope to see real progress in privatization. Privatization doesn’t necessarily mean government selling out but can be accomplished by divesting through the stock market to achieve broad ownership. Success in privatization results in government “getting out of the business of being in business” and into the business of being in government where it can do more good for the country.

When my vision becomes reality, foreign investment in India picks up. As China improves its position as a low cost supplier, including challenging India’s supremacy in software and technology, India also becomes a competitive manufacturing location for global companies. Indian software firms prove their metal, expanding into China and other countries to maintain global leadership. Unshackled from regulation and aided by strong local markets, more Indian companies become truly multinational.

Lastly, India assumes its rightful place among the world political, military and economic powers.

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Nine years ago at the US India Business Council, I made a talk about my perspectives of India. I was pretty hard on the country; pointing out the lack of progress across many fronts after much hype and promise. Today, as you can tell, I am happier with the progress of reforms and much more optimistic about the future.

Granted, not all is well and there are miles to travel. Pankaj Mishra described a number of challenges in a New York Times Article titled The Myth of the New India.

He points out that only a small minority of Indians will enjoy “Western standards of living and high consumption at least for the foreseeable future. The increasingly common, business-centric view of India suppresses more facts than it reveals. Mishra points out that recent accounts of the alleged rise of India barely mention the fact that the country’s $728 per capita gross domestic product is just slightly higher than that of sub-Saharan Africa. Despite a recent reduction in poverty levels, nearly 380 million Indians still live on less than a dollar a day.

Malnutrition affects half of all children in India, and there is little sign that they are being helped by the country’s market reforms. Facilities for primary education have collapsed in large parts of the country.

Mr. Mishra further observes that to date, India’s economic growth has been largely jobless. Only 1.3 million out of a working population of 400 million are employed in the information technology and business processing industries that make up the so-called new economy. No labor-intensive manufacturing boom of the kind that powered the economic growth of almost every developed and developing country in the world has yet occurred in India.

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During a question and answer session at an India Today Forum, I stood up to respond to similar examples of all that is wrong with India, to cries of “aint it awful”, to allegations that the government has failed the country and India has no chance. I made a point that Indians should stop beating themselves up so much. They should be proud or what has been accomplished. Indians should view the glass as half-full rather than half empty. I pointed to a number of examples such as: India is home to the best domestic airline in the world. Jet Airways matches up with the best of the best anywhere. India’s telecom industry moved from pitiful to world class in a very short period. Indian software and Business Processing Outsourcing firms are the best in the world. A robust auto industry evolved in just a decade. Component suppliers in India are world class. They are expanding offshore. While still nowhere near enough in numbers, modern medical facilities are opening at a rapid pace.

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India’s GDP is accelerating: from 1.0 percent average annual growth between 1900 and 1950 to 3.5 between 1950 and 1980 to 6.0 between 1980 and 2002 to 8.0 between 2002 and 2006. Wealth must be created before it can be redistributed.

To date, India’s economic growth has been largely jobless. But, as I pointed out earlier, manufacturing is expanding; and this is creating jobs. Consider the following.

  • India is the fifth largest commercial vehicle manufacturer in the world.
  • India is the second largest tractor manufacturer in the world.
  • Hero Honda Manufactures more motorcycles than anyone else in the world
  • Bharat Forge has the world’s largest single-location forging facility, its clients include Honda, Toyota and Volvo. all very demanding customers
  • The GAP sources about $600 million and Hilfiger $100 million worth of apparel from India
  • Wal-Mart sources in excess of $1 Billion worth of goods from India. And, it expects this to increase to $10 Billion in the next couple of years.
  • GE has grown from less than $100 million in local revenue to almost $3 billion with a target of $8 billion by 2010.

As manufacturing continues to expand to serve both domestic and global customers, it will create jobs.

India’s competency in high tech businesses also will create jobs.

There are 170 biotechnology companies in India, involved in the development and manufacture of generic drugs, whose business is growing exponentially.

The Indian pharmaceutical industry at $6.5 billion and growing at 8-10% annually, is the fourth largest pharmaceutical industry in the world, and is expected to be worth $12 billion by 2008.

India’s telecom infrastructure provides the largest bandwidth capacity in the world, with well over 8.5 Terabits per second.

India is among six countries that launch satellites and do so even for Germany, Belgium, South Korea, Singapore and EU countries.

India produces 200,000 engineering graduates and another 300,000 technically trained graduates every year. Soon India will have the largest working population in the World. Seven hundred million people out of 1.1 billion people are young. And, the young population will continue till 2050.

I don’t dispute the fact that the country must tackle huge social issues as pointed out in the Mishra article. I also don’t dispute that more could have been done and more needs to be done. However, there is progress. The incidence of poverty has declined from 44% in the 1980s to 36% in the 1990s to 26% in 2000. Literacy rates improved from 44% in the 1980s to 52% in the 1990s to 65% in 2000. In addition, over this same period, life expectancy increased from 56 years to 60 to 69.

In India, we have a woman born a Catholic / leading the most popular party / stepping aside so a Muslim president / could swear in a Sikh as Prime Minister / to lead a nation that is 82% Hindu / but has the second largest Muslim population in the world. And by the way, some of the wealthier Indians residing in the country are Muslim. I defy anyone to cite another country with such diversity and tolerance.

In my 14 years, I learned one big lesson. India is a confusing and difficult place to quickly enact change and make rapid progress. Consider:

  1. India is a 5,000 year old ancient civilization
  2. It has 18 official languages; with 325 spoken languages and 1,652 dialects
  3. There are 1.3 Billion people living in a land one-third the size of the US.
  4. There are 5600 daily newspapers, 15,000 weeklies and 20,000 periodicals published in 21 languages with a combined circulation of 142 million. Moreover, as those of you who read some of them know, each has a very strong bias on every issue.
  5. India is the world’s largest democracy with a parliamentary form of Government. That’s the good news. The bad news is; it makes taking tough decisions very difficult. However, I would never ever trade it for the alternative.

I argue the glass is half-full and filling; not half-empty and running out.

Thanks very much for listening.