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A new force called India
Ravi Venkatesan
Thursday, September 1, 2005
We in India have good reason to cheer. Our economy is doing well with the GDP projected to grow at 7 percent coupled with the excellent performance of Indian companies both abroad and at home. There are strong signs of growth in all sectors – Agriculture; Manufacturing; Infrastructure; Pharma; Services and Information Technology. Overall, inflation has been under control, the bank lending rates have steadily come down, and consumers are spending more money.

There are visible changes to show how the daily lives and outlook of the country’s one billion people are transforming. Let me paint a quick scenario here, consider this— at least 15 billionaires in the country have pledged Rs.750 million towards buying a Maybach.

Gauging the demand, Bentley has launched here its ‘Arnage R’ and ‘Continental GT’, which will cost Rs.1.6 million and 30 million respectively. On the other end of the spectrum consider a regular farmer in the predominantly agrarian India who has never had it this good.

A farmer in a remote Indian village has had a summer of plenty – with favorable monsoons and the ubiquity of information technology, brought about by ITC’s eChoupal initiative.

Over the Internet, he is able to get the best price for his bumper produce. He is now planning to buy a TV – and probably also send his children to the city to study!

These are the faces of a new India. Entrepreneurship, long-term vision, belief in oneself and the will to break free into the “big” world -– this is the social ethos of 21st century India. Every person – irrespective of age or stage in life – believes in the “opportunity” called India.

Such strength of belief and vision was probably seen in India only in the early years of the 20th century – when Mahatma Gandhi was leading India to freedom.

Today the focus is on a freedom of a different kind. The motivations are different – more personal, more democratic. This is a brave new India – and the mood is one of unbounded optimism. India is on a cusp of a global opportunity that seems to be coming true.

Successes in manufacturing such as Moser Baer, Sundaram Clayton; in pharmaceuticals such as Ranbaxy, Cipla have complimented the Great Indian IT Dream and has created a nation of believers. The unbounded population – that was often regarded as the Indian burden – has emerged as the shoulder that is carrying India into the modern age.

All this optimism is not unfounded. Based on Purchasing Power Parity, the Indian economy is the 4th largest in the world. With a large and steadily growing middle class the demand for a wide range of products, services and demanding state of the art technologies has increased.

The Indian market is among the most promising and demanding on the planet and one of the most complex to decipher with conventional wisdom and tools.

A recent Morgan Stanley report called ‘New Tigers of Asia’ refers to the rise of India and China as the “most important economic forces” in the world. According to the report, if the two countries followed their present GDP growth rates, China’s economy should be bigger than the U.S. in a decade, and India’s should be bigger than Japan’s, in terms of PPP.

The famed Goldman Sachs Brazil Russia India China report, of course, is the new Bible of this expectant nation. To become the world third largest economy in the next 50 years seems like a goal worth living and working for!

One of the biggest indicators of this new confidence is the consumer spending numbers. The recent KSA Indian Retail and Consumer Outlook has reported a consumer spending increase of 12 percent— the highest in the APAC region. Salary increases are estimated to be between 10 and 14 percent, the highest in the region again.

Indian knowledge and skills base have not only contributed towards taking India into the domain of the foremost knowledge economies, but also helped other nations achieve excellence. It is as you can see one of fastest growing marketplaces on earth with a rapidly growing consumer base demanding world-class products and services.

And not to forget the contribution of India’s IT industry which has led many to believe that “what oil is to the Middle East, infotech is to India.’’ Much has been written about India’s software services capabilities and emergence as a software powerhouse. The writing is on the wall…. India’s IT and ITeS/ BPO industry is here to lead and not just stay.

Today the ITeS-BPO sector continues to gain a grip, with more than 80 percent of the Fortune 500 companies evaluating off-shoring most of their non-strategic processes now. Captive units continue to account for 65 percent of the ITeS-BPO industry with a new captive center being added every week in 2003-04.

According to NASSCOM, some time between 2008 and 2010, annual export revenues from India’s information technology sector are predicted to hit $50 billion, up from $16.3 billion this year. Given that India’s total exports this year will be around $70 billion, NASSCOM’s view amounts to a phenomenal performance for an industry that barely existed until the 1990s!

With parallel government investments into infrastructure up-gradation, domestic de-regulation and international alignments have ensured that India has the right launch pad. Besides these, a strong judicial system, a stable geo-political scenario, increased government recognition and support to the industry— and the aggressive marketing of ‘Brand India’ have added to the attraction.

India has serious problems too. It still needs to build substantial additional infrastructure and provide minimum social amenities to those below the poverty line. Much of India’s success will depend on astute political guidance, coordinated and disciplined effort.

One thing is certain. India is a country that rewards the early adventurer, adopter and associate. Fortune will only favor the brave.

And quoting ‘The Elephant Paradigm’ of Gurcharan Das, a former business executive turned author, who is enthusiastic about India’s prospects - while India may never roar ahead like the Asian tigers, he argues, it can at least advance like a wise elephant, moving steadily and surely, pausing occasionally to reflect on its past and to enjoy the journey.

The bottom line—a billion people, by any yardstick, is a market hard to ignore. When intent and content come together, the combination is even hard to ignore. India’s time has come. Its time for the world to stand up and take notice!!

Ravi Venkatesan MD, Microsoft India
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