To realize this vision, Nilekani says, universities must be stripped of ideological dogmas and produce more experts in health care and alternative energy; informal and non-unionized labor must be empowered as service distributors; and more states must follow the business-friendly model of the state of Andhra Pradesh, which features India’s best highway system and emphasizes competition instead of subsidies.
The recent electoral victory of the Congress Party–led alliance ought to mean greater support for and confidence in India’s ability to establish more such zones of innovation. The India of the past, where entrepreneurs were considered “devious capitalists” and computers referred to as “job-eating machines,” is beginning to look like the U.S. of the 1990s, whereas Nilekani’s India of electronic ID cards and e-governance is proving to be a progressive experiment worthy of investors’ attention. After the book’s publication, Nilekani left Infosys to become chairman of the Unique Identification Authority of India, a $6 billion smart-card project aimed at providing Indians with personal ID cards.
Where Nilekani champions India as a market destination, Nirmalya Kumar, Pradipta K. Mohapatra, and Suj Chandrasekhar focus on the nation’s growing status as a player in the global arena and the effect this will have on the next phase of globalization. Their book, India’s Global Powerhouses: How They Are Taking On the World, offers a deeper look at the way India’s major multinationals are pursuing globalization on their own terms. Kumar, a marketing professor at the London Business School, and his coauthors argue that these firms, which include the Birla and Tata groups, can leverage vast assets and tolerate high debt-to-equity ratios to complete international deals, such as Tata Steel’s 2006 acquisition of Anglo-Dutch steelmaker Corus and the 2007 merger that created ArcelorMittal, the world’s leading steelmaker.
Based on extensive interviews with deal makers in major Indian firms, the authors’ case for eventually seeing more Indian companies (as opposed to Chinese companies) among the top multinationals rests on arguments similar to those of Nilekani — namely that Indians’ command of the English language and comfort with diverse, multiethnic workforces result in relatively frictionless outbound acquisitions. The fact that outbound investment surpassed inbound investment for the first time in 2006, a major turning point for “Brand India,” lends credence to this reasoning. Further, they expect to see Indian companies competing globally in a greater variety of industries. Indeed, this well-selected set of cases, which includes Hindalco’s global aluminum empire and Suzlon’s international windpower supply chain, demonstrates that India has already branched out beyond IT and manufacturing, with biotech and other sectors certainly on the near horizon.
Both Imagining India and Global Powerhouses see India as a rival to China in the global arena, competitive thanks to its younger demographic profile, English proficiency, and higher-value finished goods. The fact that Indian companies have proven that they can pull off multibillion-dollar acquisitions overseas gives them an additional advantage. Many questions remain, however: Will India’s publicly traded companies be allowed to hold high levels of debt? What will happen when the country’s dominant family-owned model is confronted with international management practices — and scandals on the magnitude of Ramalinga Raju’s billion-dollar fraud at Satyam Computer Services? India has reached well beyond its borders, but a turbulent global economy means that there is no guarantee of smooth progress.
Risk and Reward in New Markets
Major Western firms, such as Coca-Cola and GM, have reported greater profits overseas than at home for almost a decade now, and global expansion into faster-growing economies seems essential to all First World companies that can afford it. But even though emerging and frontier markets, such as Sri Lanka and Romania, are undoubtedly the next major globalization story, they are volatile and unpredictable. Yet few companies take political risk seriously. Most either rely on experts and “insider advice” or simply ignore the subject as too complex and intangible to integrate with day-to-day strategy.