India Rising

DAVOS - The "India Everywhere" advertising campaign and the attendance of an Indian "dream team" has grabbed the attention of the World Economic Forum's influential participants.

This year's delegation of 100 is the largest from any country and includes India's Ministers of Finance, Commerce and Industry plus other high-ranking officials and dozens of prominent Indian business leaders.

Ironically, one of the largest players in India is not part of the delegation - Canada's Tom Bata whose corporation employs thousands manning its large manufacturing facilities and thousands of retail outlets. "Bata" is a huge brand name in the country and Tom and Sonja Bata have stuck by the country for 60 years despite its setbacks.

"We are extremely happy with our investments in India," said Tom in an interview. "We have always believed in India."

The advertising campaign is plastered everywhere from village buses to periodicals and all the billboards in Zurich Airport where delegates arrived from all over the world.

India has also sought, and caught, the attention of U.S. policymakers who see the world's largest democracy as a natural ally and counterbalance to China's growth and influence in Asia. This is why President George Bush is visiting India in March.
The aggressive ad campaigns and diplomacy emphasize India's strengths such as democracy, rule of law, political stability, economic reforms and 7% growth in 2005.

"People who arrive in Mumbai may think it's a lot of hype when they see the state of our cities and infrastructure," said Anand Mahindra, Vice Chair and Managing Director of Mumbai-based conglomerate Mahindra & Mahindra. The publicly listed outfit employs 24,000 workers and posted revenues this year of US$3.3 billion in auto parts, auto assembly, real estate, infrastructure and financial services operations.

"What's different is that India has thrown off its colonial mentality and its people live in a country where they are free to aspire and innovate," he said.

Similarly, R. Seshasayee has found confidence flourishing. He is managing director of Ashok Leyland of India which makes buses and employs thousands.

"Indian entrepreneurs have always been very aggressive. Two centuries' ago India's trade was twice the size of Europe's," he said. "Now we see a level of entrepreneurship which is unusual compared to the recent past and there is a degree of innovation on the shop floor that is creating higher levels of productivity."

Contrary to popular belief, he said there is no difference in manufacturing costs between India and China.

"The two countries are not at odds and I believe the story that is emerging is convergence of China and India," said Mr. Mahindra. "I just bought a tractor factory in China and put 15 expats in charge there. They said Chinese workers are faster than Indian workers on simple tasks but find change, innovation or decision-making difficult."

Harvard Business Professor Krishna Pelapu said in a recent interview in Cambridge that the two will combine efforts to the benefit of both. He cited the case of a Taiwanese investor who found that to be profitable he had to outsource engineering, research and management to India even though his microchip plant in China was cost-competitive.

In order to encourage more manufacturing - needed to employ the less educated Indians - the country is on a tear to try and increase its Foreign Direct Investment. India last year received US$5 billion in FDI compared to China's, US$50 billion.

"We hope to get US$10 billion a year," said Mr. Mahindra, a double Harvard alumnus, both undergrad and MBA.

His company is like many in India which began as modest family businesses two generations ago but now has joint ventures with companies all over the world. But recent political shifts in Japan and Pakistan offer India even greater opportunities than before, he said.

"The protests last year in China emotionally affected the Japanese because they saw protesters tearing down Sony billboards in Beijing. Shortly after that the head of a Japanese company called me and said he had decided to pour money into India instead of China," he said.

Last year, Toyota chose India over China for a gigantic assembly plant which will eventually produce 250,000 units per year.

"They calculated that labor costs in China were lower but overall costs such as engineering, equipment design and maintenance made it much cheaper," he said.

Another development is the economic growth, reforms and entrepreneurship which is starting to blossom in arch-rival, Pakistan.

"Pakistan's economy grew by 8% compared to our 7% last year," he said. "There was a war dividend, in the form of U.S. aid regarding Afghanistan, but they have proceeded with their economic reforms faster than India. This will drive growth in India. We hate losing to them in cricket and that will translate into competition economically."