Janmejaya Sinha, chairman (Asia Pacific), Boston Consulting Group speaks to Outlook Business on the ocassion of Smart Enterprise 2016.
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00:00 The interesting dichotomy is that India's manufacturing capability is more than its
00:07 performance. In fact, if you look at it, when we started way back in the 50s, and for good
00:16 reasons and bad reasons because of import substitution, we actually built up a pretty
00:21 good core. We make our own cars, we make our own commercial vehicles, etc. We have our
00:26 own steel plants. But if you look at manufacturing being 16% of GDP, it is a disappointment.
00:33 We needed to have it 10 points higher. And we haven't reached our full potential, even
00:40 though we started with some strong capabilities. And so we haven't built on it, and we've actually
00:46 impeded it. And so we need to figure out how to unlock it. Now at least we are focusing
00:52 on it. But clearly, we are not where we should be. Look, we haven't done very well with scale.
00:59 If you really look, we have a lot of players who are very high quality. Look at Bharat
01:04 Forge, you know, I mean, they are the best in their field. We have got, you know, whether
01:09 it's Hero or Bajaj, their motorcycles are fantastic. You know, we now look at, you know,
01:16 the way we are coming out with the, you know, even some of the higher end motorcycles now.
01:23 So we have got good quality, we can do good design and small scale. But we have not done
01:28 well with scale. We really haven't. Now in some of the core commodities, we are building
01:33 scale, and we've got good pricing in it. But we are not close to, I mean, if you look at
01:39 the scale of China, and you look at our scale, there is such a huge gulf. So, actually we
01:46 have played a particular game. I don't know that that's the only game to play. You know,
01:52 I mean, we should actually be able to build more scale. And there are areas where we have
01:57 to. Let's get some of the basics in place first. Let's get roads, let's get ports, let's
02:04 get power. You know, I mean, even before we can, we need the infrastructure for manufacturing.
02:10 Look, I must say that putting make in India as a clarion call, even though people say
02:16 it's just a call, actually I like it. Because it brings focus. You know, it, we start focusing
02:22 and trying to how to ease the ability to do business more easily in India. These are good
02:28 things, right? But the fact is, look, I always say that Nitin Gadkari is just doing a fantastic
02:35 job, you know, with roads and with ports. But we have to really go fast on that. We
02:40 really need to, you know, if you look at the core infrastructure, it is creaking. The cities,
02:47 they are creaking, you know. So, we really need to build some of this for us to really
02:52 take full advantage of make in India, to take full advantage of our demographic dividend,
02:57 to take full advantage of the fact that we have got a cost arbitrage advantage, if we
03:02 can take advantage of that. So, we really, what else? We really need to improve skilling.
03:07 And we need to improve skilling in the ways that these old ITIs set up for an earlier
03:12 era have to be upgraded. Their skills have to be improved. What is taught in them has
03:18 to be made more, more customized and real, right? I mean, for the current needs. I think
03:24 we need to be more predictable, more stable and more consistent. We don't want policy
03:31 swings. They are completely unnerving. People don't want, I mean, we should have ready-made
03:38 projects given out. You don't want projects getting stuck for one clearance or the other.
03:44 You don't want foreigners to come in with money and then not be able to build their
03:49 plant. So, we really, really need to rethink how we actually put projects online. How do
03:56 we get all these public-private partnerships? Why did they get stuck? Because of environmental
04:01 clearance, because of land clearance, because of mineral and mining licenses. These are
04:06 good concerns. But let us give those projects after these clearances are in place, so that
04:12 we don't get people to come in, waste time, waste money and go back with a bad taste in
04:17 their mouth. And then we really also need to take out the pinpricks, you know, of the
04:23 small inspectors who come and the government is making progress on this. I think Make in
04:28 India is a good thing because the government gives its intent, I want to make it easier,
04:33 please come. But there is this baggage and we have to clear up this baggage as we move
04:39 forward. So, that's the journey. It's an important journey. We are starting to make progress.
04:46 It will take a little bit of time, but there is a lot of baggage. Commodities are more
04:51 affected by economic cycles. Policies help. If you take a 15-year period, India has done
04:58 quite well as an economy. You know, we have gone from a $480 billion economy to a $2 trillion
05:04 economy. We've almost grown five times in 15 years. That's not bad. The truth is, policies
05:11 enable. Infrastructure enables. You know, getting skills in the right place with soft
05:18 infrastructure, education and health care enables. These are of course government-based.
05:23 But the entrepreneur is not waiting for the government. They are going forward with it.
05:29 Some entrepreneurs therefore get affected. Steel has gotten affected because the commodity
05:33 cycle has gone against it, etc. But you know, if you take a 10-year view, these will come
05:38 back, right? I mean, they will come back. And the success is such that as we reach certain
05:43 levels of per capita, there is a further demand that gets created. And this demand will have
05:50 to be met. So, there will be a huge entrepreneurial opportunity, which some will be able to take
05:55 advantage of and others will not. In this period, as policy becomes easier but not perfect.
06:01 We have such an exciting background. BCG is pleased to be a part of Outlook Business,
06:06 Smart Enterprise event. I want to see you there.
06:09 [MUSIC PLAYING]