BUZZ - The GBS Newsletter

Brand Mindbenders !

2008-01-03T17:36:00.000+05:30

Microsoft

The pace of quick footedness in technology development achieved by Microsoft is amazing; the downside being that consumer’s can often on feel out of date as soon as a product is purchase. Just think! You have recently invested in buying Windows XP and out comes Windows Vista – what do you do? The Microsoft brand represents speed and state-of-art and is also perhaps happy that it represents an element of risk in buying the brand. Bad publicity also, at times, works. For instance when they are doubts (and much publicity) about a new version of Windows, sales just keep on rising. It would seem that a lot of consumers out there would prefer to be a part of that leading edge, bugs and all!

What do you think the Apple brand represents?

The Ponds Image…

Pond’s a popular face cream brand was not accepted when it applied its name to toothpaste. In a blind taste most of the people could not differentiate between that of Colgate and Pond’s. However when the Pond’s name or logo were attached nobody was interested. Even though Pond’s had successfully extended its brand name to other products like soap, what they (Ponds) failed to see was that all its extensions were linked with a similar fragrance, whereas the main attribute of a toothpaste was and is its taste. This imbalance between taste and fragrance created a dissonance in the minds of the consumers.

Can you think of a beverages brand that was able to extend its brands to snacks successfully?

Globalization – making India competitive

2008-01-03T16:42:00.001+05:30

Financial Services:

In 1990 the Bombay Stock Exchange was a den of thieves, where crooked brokers and companies rigged prices and duped small investors. Once foreign investors entered the Indian market, they paid high prices for companies with good standards. For the first time, honesty actually paid. Indian companies have been forced to maintain clear financial books. We have, in the process, created one of the most efficient capital markets in the world.

Automobiles:

In the old days of self-sufficiency, the Indian auto industry emitted massive pollutants without a second thought. But competition with global auto majors, both in the domestic and export markets, have forced them to adopt Euro emission norms. Today Indian engineers are rapidly churning out new models more cheaply than their US counterparts.

Pharmaceuticals:

To cope up in a globally competitive environment, Indian drug companies have been forced to identify their core competencies. Today Indian pharmaceutical organizations are rapidly evolving into major global players with strengths ranging from reverse engineering to contract R&D, contract ingredient production, clinical trials and most interestingly new drugs research.

Virtual MBA for the Indian corporate sector

2008-01-03T16:08:00.000+05:30

Our economic past, characterized by scarcity, has been the driver for today's success. It forced us to be more efficient and do more with less. Not only did we get free lessons in optimizing our resources, but it also challenged us to find creative solutions and then test these in a tough operating environment. It was virtually like getting a free MBA!

If Indian IT learnt to walk in the west, it is now learning to run in India. Technology is helping bridge the rich-poor divide. We are creating innovative products aimed at the bottom of the economic pyramid. Products like Rs. 10,000 PC, a refrigerator immune to voltage fluctuations and a Rs. 100,000 car are all unique, indigenous and cost-effective solutions that could be exported. We are deploying technology to ensure that citizens can avail government services remotely and are manufacturing the cheapest mobile phones with low call rates of just Re 1/ minute. India is also innovating technology products for MNCs like Intel, Texas Instruments, Siemens – for the global consumer market. Take the case of the automobile revolution in India. If about three decades back all we could see we hoards of Ambassadors and Fiat Padminis, today global auto majors are queuing up in India, not only to sell their products, but setup large manufacturing bases. The story is being repeated in almost every other sector.

Our years of hard work, perseverance and innovativeness have forced the world to look to us for both quality and cost effective products and services, catapulting India into a major sourcing destination for a range of products and services. With the global market place shrinking, the need for trained human resources who can operate across economies and geographical boundaries is on the rise. Just think how many Indians today are leading global corporations.

Indian middle class: Origin and Relevance to India Inc.

2008-01-03T15:59:00.001+05:30

A lot has been said and written about the great Indian middle class. The sheer number of people that is the source of India’s enormous domestic demand and thereby the promise of a large market for a mind boggling array of products and services.

If one were to characterize and predict the behavior of this middle class, it would be important to understand how it emerged in the first place.

The seeds of emergence of the middle class lay in the one time behemoth public sector units run by the government. A vast number of people enjoyed a government position, with its permanent employment contract, guaranteed pensions and health care and a host of other fringe benefits that translated to security and predictability of income in the absence of any other social security mechanisms. This gave rise to a class of people with its own set of behavior and attitudes which went on to shape what we term as ‘middle class today.

The emergence of the private sector and the rapid decline of public enterprises coupled with a drastic reduction in the annual intake of people proved to be a watershed in the evolution of the middle class – both in its composition and outlook. During the end of the last century, IT services created a rich and wide employment channel for technology graduates and concepts like upper middle class and nuclear family emerged from this cauldron of events. We have seen the emergence of an educated young generation coming out from smaller pocket towns and cities, settling down and acclimatizing to life in the metros. The last few years have witnessed multiple industry verticals creating employment opportunities for this middle-income group, vis-à-vis Insurance, Telecom, Retail banking, Retail, ITES, BPO, Aviation to name a few. This has in turn created a confident young generation with high spending power and life on credit, as in the more developed western world.

Thus a new generation of middle class now straddles India’s social map and almost swamps it by their sheer numbers. The diversity in employment opportunities combined with the absence of a single dominant monolith like the public sector, suggests that the emerging middle class is going to be a lot more heterogeneous in its behavior than its earlier evolutionary avatar. This heterogeneity in consumer demand and expectations will provide shape and direction to future products and services coming out of India.

115, still going strong

2008-01-03T15:43:00.000+05:30

Business houses desire to identify the values on which a lasting business can be founded. Shrinivas Pandit, a veteran HR professional, too attempts to find out those values by studying Mumbai's, by now internationally famous, Dabawalas - a 115-year-old business enterprise. The organisation structure of Mumbai's dabawalas who collects home cooked food from homes and delivers them to respective offices during lunch have been the object of various studies.

To most of us it would seem to be a simple, no frills delivery service, but hold your breath and consider the numbers that we are dealing with here; the Dabalwalas collect and deliver 200,000 such lunches every day to people within a 60km radius within a 3 hour time period. Because they collect and return the empty boxes too, this amounts to around 400,000 transactions per day. As for their delivery method, they use people powered hand carts and the public railway system. And the kind of workforce behind this gigantic operations game – a 5000 strong team of dedicated and loyal semi literates!

By any stretch of imagination this simple business is actually extremely complicated.

It is not possible to list all of the lessons that can be extrapolated from the way they do business, but one that sticks in the mind and is a salutary lesson for all service providers is: “……..if you change just enough, you achieve embracive happiness.” With an error rate of one in 16 million transactions, they have clocked in a six sigma performance (99.999999%) without any technological backup. Dabawalas work as a Trust and each one of them is a shareholder to the Rs. 500 million turnover. Thus each one of them is self employed. They work as a team dependent on each other, knowing very well that unless the team works smoothly, they cannot earn a living. What is more fascinating is that an organization of 5000 people has no strike record!!!!!!

The association of dabawalas has a 13 member Governing Council that includes the President, the Vice-President, General Secretary and nine Directors. Under this body are the group leaders who manage the 5000 members of the society.

Each group leader manages 25-30 dabawalas. They are responsible for business development and continuance as well as customer satisfaction. Each group is almost an entrepreneur in its own way. The groups generate their own revenue and manage day-to-day functioning, including arranging for substitutes. Thus each group is a Strategic Business Unit (SBU).

These SBUs collaborate to get new clients. Knowing the operational areas of each group they share information on clients - a superb example of competitive collaboration. This is possible because the common thread between each group is ‘delivery’. Even though the performance of dabawalas depends upon team performance there is scope for individual improvement too. Each dabawala has to exercise extra skill and effort to convert the process into deliverable. The system is built on the collaboration between deliverables and group effort. No single Dabawala can succeed in achieving his target without the help of his group and chain.

The cardinal principle is that the dabba has to be delivered on time, within those three hours, without any excuses. When a dabawala is absent the others share his responsibilities. The whole organization works on the principle of shared responsibility and not allowing the team performance to drop. It is not that problems do not arise, but team work being the quintessence of their job they have also learnt to sort them out.

The Dabawalas have to constantly keep pace with the rapid advancement in technology – as any business would need to do and here lies their forte. With the introduction of faster trains they had to find a way to keep pace with them while keeping an eye on costs. They couldn’t afford motorised transport, due to the huge cost escalation that would have taken place, and had to instead use bicycles. Using bicycles they picked up their collection speed – relying on raw human power to give them that competitive edge. For the dabawalas, monetary satisfaction may not be very high but what matters more to them is the satisfaction of keeping the customers happy at a bearable cost.

In the competitive world, everybody is in a race to win, which has made the work life rhythm go haywire. The stress levels have gone up, causing health hazards for large sections of people.

At the same time, services have become prohibitive in cost, unreliable and inefficient for customers at the middle and the bottom of the social pyramid but it can be reoriented on an architecture of values that nurtures the genuine service mentality. The Dabawalas ability to identify this opportunity ahead of others, and their loyalty to old customers with a dependable delivery service, have provided them a lasting business.

Ref: Dabawalas by Shrinivas Pandit (Tata McGrawHill)

Quiz

2007-10-05T18:17:00.001+05:30

The ad featuring Moon Moon Sen’s daughter Riya Dev Varma for Nirma lime Soap looks very similar to the Liril ad. Could it be because it was directed by the same person? Who directed them?

Kailash Surendranath.

What was launched in 1959 in Kansas by the Carney Brothers?

Pizza Hut.

Flag Telecom, the bankrupt submarine cable company, was taken over by which Indian business group?

Reliance Group.

Mjunction (Formerly MetalJunction), the dotcom for procurement and selling services of steel products and ferro alloys, is the venture between which two Indian steel companies?

SAIL and Tata Steel.

In currency markets, what is known as the Greenback?

US Dollar.

The Indian born, who was recently promoted as the President of Pepsi Co

Indira Nooyi.

Which film-maker, along with Mani Ratnam and Shekhar Kapur, set up the production-house, India Talkies, in 1998?

Ram Gopal Varma.

What is the name of the new FM channel introduced by India Today?

Red.

Which international airline uses the slogan "Smooth As Silk" in its advertisements?

Thai Airlines.

Which Indian company forged a joint venture with the Michelin Group, one of the global tyre majors?

Apollo Tyres.

Marketing Mistakes

2007-10-05T18:02:00.000+05:30

"Learn from the mistakes of others. You can’t live long enough to make them all yourself." Eleanor Roosevelt

Electrolux: Scandinavian vacuum manufacturer Electrolux used the following in an American campaign: Nothing sucks like an Electrolux.

Gerbar: When Gerber started selling baby food in Africa, they used the same packaging as in the U.S., with the beautiful baby on the label. Later they learned that in Africa, companies routinely put pictures on the label of what's inside, since most people can't read.

Colgate: Colgate introduced a toothpaste in France called Cue, the name of a notorious porno magazine.

Coca Cola: The Coca-Cola name in China was first read as "Ke-kou-ke-la", meaning "Bite the wax tadpole" or "Female horse stuffed with wax," depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent "ko-kou-ko-le", translating into "Happiness in the mouth."

Management Jargons simplified

2007-10-05T17:42:00.000+05:30

Dilberted – "I've been dilberted again.”. (To be exploited and oppressed by your boss. Derived from the experiences of Dilbert, the geek-in-hell comic strip character.)

404 – "Don't bother asking him . . . he's 404. (Someone who's clueless. From the World Wide Web error message "404 Not Found," meaning that the requested document could not be located.)

Ohnosecond - That minuscule fraction of time in which you realize that you've made a BIG mistake by sending a wrong mail to right person or vice-versa.

Intellectual Property - Stuff you own that has no visible or tangible value. Next time you have an idea, put a price tag on it. A trumped-up lawsuit can soon make that money a reality.

Indian Entertainment Industry

2007-10-05T16:31:00.001+05:30

According to the widely discussed Goldman Sachs report of October 2003, over the next 50 years, Brazil, Russia, India and China - the BRIC economies - could become a much larger force in the world economy. “India could emerge as the world’s third largest economy and of these four countries; India has the potential to show the fastest growth over the next 30 to 50 years”.

One of the fastest growing sectors in Indian economy is the Media & Entertainment (M&E) sector. M&E is a perfect blend of creativity and commerce and provides vast investment opportunities. According to a report by FICCI and PricewaterhouseCoopers; the industry is poised to become INR one trillion (INR 100,000 crore) industry by 2011 from the current INR 43,700 crore. CRISIL Research, in its recently published report on the Indian M&E industry, has projected a doubling of revenues on an aggregate basis from an estimated Rs 361 billion (INR 36,100 crore) in 2005 to Rs 744 billion (INR 74,400 crore) by 2010, translating into an annual growth rate of 15.6 per cent during this period. The sector is expected to cross turnover of INR 100,000 crore by 2011.

Over the years, spending power is steadily increasing in India. Between 1995 and 2002, nearly 100 million people became part of the consuming and rich classes. Over the next five years, 180 million people are expected to move into the consuming and very rich classes. On an average, 30-40 million people are joining the middle class every year, representing huge consumption spending in terms of the demand for mobile phones, televisions, music systems, cars, credit goods and the basket of a consumption pattern typically associated with rising income. The consumption spending is rising due to rising disposable incomes on account of sustained growth in income levels and reduction in personal income tax over the last decade.

The segments constituting the Indian Entertainment & Media industry are as follows:

Filmed Entertainment
Television
Music
Radio
Print (Primarily Newspapers & Magazines)

Beyond traditional sectors, animation, gaming, Internet advertising, out-of-home advertising and live entertainment are also pulling the growth curve.

Key Drivers

Economic growth of the country in general and rising disposable income levels in particular.
Gradually liberalizing attitude of the government.
Greater interface with international companies.
Privatization and growth of the radio industry.
Advancement in Technology.
Favorable regulatory initiatives.
Liberalized foreign investment regime.

The M&E industry is expected to significantly benefit from this fast economic growth, as this industry is a cyclically sensitive industry that grows faster when the economy is expanding. It also grows faster than the nominal gross domestic product growth (GDP) during all phases of economic activity due to income elasticity wherein when incomes rise; proportionately more resources get spent on leisure and entertainment and less on necessities. India is interestingly poised to enter this phase of bullish growth for the sector. It is riding on the economic growth and rising income levels that India has been experiencing over the past few years.

Trend

The rapid evolution of digital technology is having a significant affect on the media business. Wireless distribution, on-demand technologies, limitless storage and advanced consumer electronics devices are increasingly making media products ever present and always available. Consumers will soon be able to enjoy anything they want immediately, and for a reasonable fee, whether by subscription or other pricing models. Going forward, it will become increasingly necessary for the media, technology and telecommunications players to collaborate in developing sustainable business models that leverage the strengths and innovation of each industry. Conventional distribution mechanisms in the industry are expected to change. This, in turn, will influence the bargaining power of the different players in the value chain, as also the form taken by content. "In television, we expect the balance of power to shift in favour of broadcasters with the adoption of alternative distribution platforms such as DTH (Direct-to-Home), CAS (Conditional Access System), and IPTV (Internet protocol television).

Globally, technological advances and the proliferation of broadband Internet are re-defining conventional business models in the sector that are based on pushing content through various distribution media to passive audiences.

The Indian film industry is said to be one of the largest in the world with 934 films produced in 2004. It is currently worth about US$ 1256 million and is expected to grow at 18 per cent compounded rate annually for the next 5 years.

Growth Drivers of the film industry
Emergence of crossover films
Increasing importance of regional cinema
International cinema dubbed in Indian languages
Growth of multiplexes
Growth in Cinema Advertising
Merchandising/Promotional Material Revenues

Financial Hurricane brewing in US market……Lets understand how does it work

2007-10-05T16:17:00.000+05:30

Ten years ago, the Asian financial crisis smashed markets and economies globally. Today, another financial crisis is brewing in the US mortgage market.

History repeats itself. An economic boom for several years creates the illusion that business risks have been lowered permanently, that big loans on easy terms can be made to people earlier viewed as non-credit worthy. Imprudent lending booms to Thailand and Korea sparked the Asian financial crisis. Another imprudent boom is now roiling sub-prime mortgages in the US.

A 10-year housing boom in the US lulled mortgage lenders into satisfaction. They started lending 100% of the value of a house to people with poor credit histories, often inducing them with teaser low interest rates, which later rose sharply. Today, house prices are falling, effective interest rates are rising, and sub-prime borrowers are defaulting. Lenders can repossess the houses, but these are now worth less than the outstanding loans. A modest rise in defaults can break a lender. Housing loans no longer stay on the books of the mortgage lender. They are sliced into small pieces, clubbed together with medium and high quality loans, and sold to investors as high-interest packages. These have been bought by hedge funds, private equity funds, and many other specialist funds. This spreads default risks among more financiers, and lowers the danger to the original lender.

In theory, all financial products are supposed to be valued at market price, and so a falling market price is supposed to give advance warning of troubles ahead. But many new financial products are hardly traded at all, and so are valued at face value. When a fund in distress tries to sell, it suddenly finds it can get only half the face value. So, huge losses can arise without warning, and can kill a fund.

The problem is worse in the case of derivatives and other complex financial instruments that are now traded in trillions. In similar situation, panic sets in and everybody tries to sell at the same time. So asset prices crash, causing the serial bankruptcy of many huge funds. Millions lose their savings, investment and consumption shrink, and this causes a global recession.

Similar situation has created the SE Asian crisis in nineties. India has saved itself with low FII exposure. Now India has huge Foreign Investment in all its sectors. At the same time, RBI has safeguarded Indian interest against a sudden fund pull by FII.

An Indian shield in a globalized economy.

Margin Vs Volume

2007-10-05T15:21:00.000+05:30

Historically, MNCs have had high profit margins arising from monopolies in technology and finance, and political influence translating into protectionism. In the US, trade unions fought for a bigger share of the surpluses, and obtained the highest wages in the world. In effect, MNCs and the trade unions shared monopoly profits at consumer expense in developed countries.

Wal-Mart has redefined this model.

Far from seeking high margins, it has relentlessly cut prices and kept profit margins so low that competitors give up. Its profit margin is just 3% of sales. Prices at Wal-Mart can be half or less than at major department stores. So, unlike historical Numero Unos, Wal-Mart has risen by cutting instead of raising prices, by reducing instead of increasing profit margins, by catering to the masses rather than the well-heeled, and by using the cheapest rather than the most expensive workers. Harvard University estimates that Wal-Mart's lower prices benefit US consumers directly by $18 billion a year. Besides, Wal-Mart obliges rivals to cut prices.

Wal-Mart aims at scale economies of every sort. By buying massively, it pays least to suppliers. It has massive stores with acres of parking space to accommodate hordes who drive in. This strategy needs cheap land, so Wal-Mart stores are typically in urban peripheries, small towns and rural areas. Petrol is cheap in the US, so Americans happily drive an hour or more to a Wal-Mart store 30-40 miles away.

Conditions are totally different abroad, so Wal-Mart has often failed in other countries. The farther Wal-Mart goes from the US the worse is its performance. It shut down in Germany after losing hundreds of millions of dollars, and sold out in Korea too. It now accepts the need to adapt to local conditions, but adaptation erodes the power of its US model.

Land prices have skyrocketed in India, so a US-style superstore would have to be situated miles outside a big city. We simply cannot see well-heeled Indians driving for hours to a big store on the outskirts of Delhi or Mumbai. Unlike in the US, the poor and lower middle-class in India do not have cars or cheap petrol to facilitate long-distance shopping. So, small shopkeepers will easily compete. They typically evade sales tax. Many pay low rents because of rent control. They are located close to consumers, and provide home delivery at no extra cost. Some even provide credit. Even if Wal-Mart is cheaper, many consumers will opt for the convenience of local shopkeepers.

Rs. vs $

2007-10-05T14:50:00.001+05:30

The Indian Rupee hit a 9-year high (39.91) against the mighty dollar on September 21, 2007. It was Rs. 44 a few years back.

Among many other factors, the major boost was the US Federal Reserve’s 50 basis point cut in the Fed rates. As interest rates of any economy decrease, the value of its currency against other currencies also decreases. This is the general principle of economics. Drop in interest rates makes a currency less sought after as the returns decrease. Hence investors move out of that particular country in search of higher returns. Importantly, for India as more and more foreign institutional investors (FIIs) started pumping dollars into the Indian economy the value of the Indian rupee soared.

Tough Time: The appreciating rupee will hurt every exporter having a major part of his income in dollar receivables. A loss of Rs 2 for every dollar earned. Imagine the condition of exporters having millions of dollars in receivables. Indian IT companies (those who have not hedged their dollar receivables adequately or efficiently), textile companies, auto component manufacturers, Indian BPOs will all have a tough time if the Indian rupee continues with its upward journey.

Happy Hours: For travellers and students happy days are here again. They will have to spend lesser rupees for every dollar that they purchase for their vacation or stay abroad. The rates of international tickets will come down as the cost of aviation turbine fuel drops. India imports 70-75 percent of its oil requirement. Even if the cost of oil per barrel has hit a record high of $84 in recent times, the appreciating rupee definitely helps to soothen the harshness of oil price increase. The rupee rise also helps to tame inflation.

India Shining

2007-10-05T13:02:00.002+05:30

With the GDP growth stabilizing at over 9 per cent, the world has woken up to the Indian success story and we are ruling the international investment market.

Reflecting the robustness of the economy, the value of mergers and acquisitions of corporate India has crossed $48 billion for the first eight months of this year with outbound acquisitions surpassing the inbound deals in terms of both value and number. There were 164 acquisitions made by Indian companies abroad, more than double the number of acquisitions made by international companies in the country (inbound deals at 73). Europe contributed 53 %, UK 40 % and the US 33 % among outbound deal value.

Major acquisitions made by Indian companies abroad till August are - the Tata Steel's acquisition of Corus for $12.2 billion, Hindalco's acquisition of Novelis Inc for $6 billion, Suzlon Energy's deal with RE Power for $1.7 billion.

The US invested 5.5 billion dollars in India between 1991 and 2006; a period of 15 years, but India invested 2 billion in just a year (2006-07) and is likely to cross 10 billion dollars by 2010. Indian investment abroad is spread across industries ranging from pharmaceuticals to telecom, automobiles and ancillaries to IT, paints and paper. Global financiers are willing to fund Indian acquisition over global whales.

If Indian IT learnt to walk in the West, it is now learning to run in India. Technology is helping bridge the rich-poor divide; distance education, telemedicine and micro-finance are helping achieve this. Less surprising, perhaps, is that India is creating innovative products aimed at the bottom of the economic pyramid. So products like a Rs 10,000 PC, a refrigerator built to survive voltage fluctuations and, of course, the Rs 100,000 car are all unique, indigenous, cost-effective solutions that could be exported. We are also deploying technology to ensure that citizens can avail of government services remotely without having to deal with India's mammoth bureaucracy. Innovation in technology is helping India. It boasts of the cheapest mobile phones and call rates of just Re 1 a minute and public transportation that runs on non-polluting gas. To top it all, it has a young population bursting with energy and aspirations - probably the only big market where first-time telephone users are cellular phone users that have bypassed landlines.

The fact that our multinational competitors are setting up shop in India is proof of India's competitiveness and the success of our business model. Innovative & creative products developed in India, supported by well-managed skill pool and open business policies are indicating that India is shaping a shining future for itself.

How Globalization is shaping India ?

2007-10-05T12:40:00.001+05:30

Predominantly, Indians are also quick learners. We have learned the art of adapting to global business dynamism. Today India joyfully rides the global trend in each of its business categories and the effect of open economic policy and globalization is visible. But the situation was dismal even a few years ago and our incompetence in developing long-term strategy has taken its toll.

In the old days of self-sufficiency, the Indian auto industry emitted massive pollutants without a second thought. But competition with global producers in the domestic and export markets forced them to adopt Euro emission norms. In 1990 the Bombay Stock Exchange was a den of thieves, where crooked brokers and companies rigged prices and duped small investors. But once foreign investors entered the Indian market, they marked down the price of dodgy companies while paying high prices for companies with good standards. For the first time, honesty actually paid. With a thorough reform, now Indian capital markets are among the best in the Third World. All of the top drug companies want to become multinationals, and have raised their standards hugely. Indian pharma is now a big global player, with strengths ranging from reverse engineering to contract R&D, contract ingredient production, clinical trials, and basic research for new drugs. None of this would have happened without strong patent rights for drugs, something the government opposed tooth and nail and was finally forced to accept in the Uruguay Round of 1995.

Banking standards were abysmal in the 1980s, and bank balance sheets were fairy tales. But after economic reforms, Indian banks adopted Basel-1 norms, and are now moving towards Basel-2 norms. During nineties, consumer surveys showed that three-quarters of all food products sold loose were adulterated. Today, India has become a significant exporter of processed foods, and companies have to maintain global standards. The auto industry, two-wheelers, four-wheelers, and components have flourished and become world-class. Why? Auto companies need constant new models and improvements to compete, and Indian engineers can do this faster and more cheaply than US engineers. Yet, a company like Bharat Forge now employs no blue-collar workers at all. Only engineers, and this skilled force has made it the second largest forging company in the world. Gone are the old days when it took more than 5 years to get a car.

A significant section of the Indian growth was unplanned.

Far from having a strategy for promoting computer software, government policy suppressed it for decades. Narayana Murthy of Infosys says, it took him almost two years to get a telephone connection and a licence to import a computer. Because of trade union pressure, the government discouraged computerization of Indian services. The infamous bank-trade union agreement of 1993, provided for branch computerization at the rate of just 0.5-1% per year. India was saved by Silicon Valley, which hired Indians to work on US projects, and created skills though learning-by-doing. These skills then came back to India, and helped launch the software revolution. This was a by-product of US outsourcing strategy, rather than Indian strategy. The boom in brain-intensive manufacturing was also unplanned. There was much talk in 1991 of India following the path of labour-intensive exports that East and South-East Asia had pioneered. Alas, India failed dismally in labour-intensive industries, thanks to political constraints on labour laws. Instead, India is now flourishing in brain-intensive industries such as pharmaceuticals and automobiles. All top US companies are setting up Indian subsidiaries in search of cheap skills: if they don't have a low-cost Indian operation, they will lose out to others who do.

Indians are gleeful about the terrible bashing China's image has taken after a spate of scandals about the quality of its exports to the US. China converted this scandal in a huge blessing in disguise. They have improved standards sharply across industries in a short span. It’s a lesson for us. Unforgettable lessons that can take us to new height of international business if we improve production standards but also ruin millions of Indian investors if we don’t learn from it.

What should we do in the future?

We need to focus on connectivity and deregulation, rather than specific industrial policies. We should try to develop a global village, a open & globalized India where policy framework will develop long term competitiveness.