India will Forge Ahead given the right Mindsets of the Younger Generation

We bring you conversations from ET CEO Roundtable, selected excerpts that identify the immediate challenges and concerns, but brimming with confidence that Corporate India is ready to face and overcome the potential headwinds. In this excerpt, though there were more voices, we feature expressions from N Chandrasekaran, chairman, TATA Sons; Rishad Premji, chairman, WIPRO, Uday Kotak, Kotak Mahindra Bank; Romal Shetty, CEO, Deloitte South Asia; Prabha Narasimhan, CEO, Colgate Palmolive India; Lakshmi Venu, MD, Sundaram Clayton and Kunal Shah, Founder, CRED.

The mood is very, very positive; we are at a solid base to take off!

N Chandrasekaran: In the last decade, I think we have got a lot of things solved. We have a very strong policy environment, and our banking system is very strong, very stable, well managed. Corporate balance sheets have been deleveraged, by and large. Even the mood in the country is very, very positive. Consumption is going up. So, all the data points indicate that you’ve got a very solid base from here to take off. To my mind, there are four trends.

The first one is, you call it digital or artificial intelligence. By far, India probably has the best digital public infrastructure, and we have leveraged this and done national programmes of mass scale, of which you cannot find too many examples around the globe. So, this backbone will play out in creating new business models. There will be more startups. And more delivery models, even in established companies. The second one on energy transition. On energy, today what we spend will quadruple in the next 25 years. That is the kind of demand. We are probably the only nation that will produce all renewable energy for additional growth and not for replacing coal energy… And I don’t think we’ll just stop with solar and, so on. There will be more technologies that will come. So, I think over the next 25 years, it’s going to be a very exciting energy story. Third on the supply chain transition. Whether it is a global crisis or not, the supply chain of global companies requires a very strong base in India, and we are seeing that. It will happen in batteries, in electronics, in semiconductors. It’ll happen in pharma, in materials, biosciences, food. So, I think this opportunity is enormous and this is happening now. And in fact, you’re having to let go of projects because you can’t do everything. I think funding is required. More money has to come in. For that, the execution has to be better. Investors have to see returns. Usually, the rupee returns don not translate to dollar returns, but currently it seems to be happening. So, this should be exciting for many of the international investors.

Some strategic transformations are happening in India, equally in the government

Romal Shetty: Take it at two fronts. I think everybody’s heard of FASTag, GST. But do you see the impact of what it has actually done? We used to move, in terms of road kilometres a day, we would travel about 250 to 300 kilometres… our truck, our freight. You take the United States, that’s 800. Post GST, that is in six years, we now travel about 600 kilometres. It’s quite phenomenal. Last year, the FASTag collection was about 80 crores a day. This year, it’s 200 crores. It doesn’t mean that, that many vehicles have actually come in. It’s also transparency… We save 17,000 crores on fuel because the waiting time has moved from 12 minutes to 47 seconds. So, you see some of the impact. Second, Mr Goenka is sitting here, so maybe I’ll take an example. Tech to automate, digitise is good. But when you start making business models out of it… what they looked at, for example, is to say that do I sell a tyre per kilometre? Now, this is a business model change. But how does tech enable this? Get all the IoT devices onto your tyre, look at the demographics of where the fleet owner is driving, and then build an AI model and a machine learning model to say, how do I actually drive per kilo- metre? How can I charge? So, if I drive in the Himalayas, if I drive in Southern India, if I drive in the deserts, the pricing has to be different. So, that is what India Inc is slowly starting to do. The third is the India stack. Look at Jio, the telco war: Using the India stack, the number of subscribers they were able to get wouldn’t have been possible without using that. So that integration into our business is something that we see a lot more happening. India is now running some of the really significant transformation. Even the government…. we are working with the government to digitise the parliament. There is no parliament in the world that is as much digitised as India’s. So, I think the progress is happening. If we can integrate a lot more (tech) into our business models, I think India will be more successful.

Our trade competitiveness needs to be upgraded, urgently

Uday Kotak: Which way is inflation going to go? Deep at night you feel inflation is coming down; you wake up in the morning and it feels like it’s going up. The second one in our industry is how fast are we disrupting ourselves? If we don’t, customers will make sure we are out of business. We better get our act together and as fast as we can. On the broader India scale, I think there are three important points. One, we have the heft on the global scene. We’ve reached scale and size. But for anyone to be a sustainable power, it has to be disproportionately powerful militarily, and (in) defence. And India is spending a hell of a lot of less money compared to what it needs to do on the defence side. True power comes first and foremost from military power. I think we need some ways to go. Second, the world’s pretty clear that planet Earth is in trouble. Therefore, sustainability is going to be the big agenda for business opportunity and finding ways of gap funding to save Earth.

And the third one is for India. We need to get our trade competitiveness up. At a hundred billion dollars negative trade deficit with China, we have our work cut out.

India could be the talent destination of the world!

Rishad Premji: I think the big opportunity India has, is to be the talent destination of the world. And if I just look at tech and tech-enabled services, today we employ about 5.4 million people across the country. If I look at that number ten years ago, it was half that. I think it’ll be double that in the next 10 years. And the profound change over the last 3 or 4 years, I would argue, is that people came to India historically for cost, and they stayed for quality. But people today are coming because that’s where the talent is and it also happens to be cheaper, right? So, how do we maintain this advantage? I think we’ve got to be very purposeful and obsessive about skilling and reskilling right and that requires a lot of partnership between academia, industry and government. Because, our play historically has been at the bottom of the value chain. But as the opportunity of new technologies emerge, how do we move up the value chain? So, we truly become a differentiator, from a talent perspective. So, I think there’s a huge, huge opportunity, which is asked for the sort of complete mass capturing, and we shouldn’t lose that. The good news is I think there’s a lot of collaboration that does happen between industry, academia, and the government is incredibly actively involved. And I think we should sort of sustain that. I think we can really own talent as we look out over the next decade.

In the digital world, innovations are happening fast; regulators are keeping a smart eye on fintech

Kunal Shah: In the physical world, businesses have their own natural constraints in terms of how things are done. When it comes to digital world, the lines get very blurred. For example, Tik Tok in China is a very large e-commerce company, but also an large lending company. And when it comes to internetcompanies, revenue and profit pools seem to follow wherever the users seem to be spending their time versus all these labels we give to them in terms of fintech, ecommerce, the short videos… all these labels are something that we are used to from the past. And now with AI coming in the lines blurry very, very quickly.

So, therefore the battle is of platforms versus what is fintech and things. So, I think from a regulatory perspective, even companies that operate with multiple regulators have a challenge because regulators seem to be operating from the departments that they have. But the fact that the internet companies are born based on what users prefer to do, is changing the way how it can be done. The users are evolving much faster. All of us have a chief technology officer at our house between the age group of 5 to 20, which is driving the house’s chief procurement behaviour. And they don’t seem to care about which tech you are from, as long as they like your app. And one of the common words that we deal with nowadays is that, ‘Oh, I don’t want to work in an uncle company’. Right? And it’s a very scary situation to deal with because how do we know that we are also not in that category very soon?

So, when we try to regulate something that can fundamentally evolve so fast, (it) is always going to be a challenge. But the good news is that… we have regulators that are innovating faster than most fintechs.

New expenses are cutting across sectors, premiumisation is the new name of the game

Prabha Narasimhan: Firstly, there is not a thing called one India, right? Obviously if you cut it by geography, cut it by demographics, by wealth, by anything and everything. There is an opportunity for India as long as you have a strong consumer underpinning or a consumer insight on which it sells. But if you take a look at what we are seeing currently, premiumisation continues unabated. It grows, it grows rapidly. There are enough consumers in this country who have the money and have the propensity to spend as well. And I think there are a lot of businesses chasing those consumers; and those consumers are responding. Equally at the other end of the spectrum, we are seeing stress in terms of consumers finding it tight, and also having a lot more outlays for their wallet. The entire betting/gaming industry didn’t exist; now that’s a large industry that’s taking up a lot. Everybody has a phone. You’ve to pay for data. So, there is a lot of expenditure. Education expenses have risen quite dramatically So, there’s a lot of expenditure that wasn’t there earlier that’s now fighting for a share of the wallet and putting pressure. We have also gone through a cycle of fairly high inflation, which has raised the price of a lot of FMCG products quite steeply. And the combination of these does make it that at the bottom of the pyramid, the growth is quite slow.

Innovation with multi-stake holder agreements are needed in the farm sector

Lakshmi Venu: The majority of our farms are still small or even marginal. And that’s why the need for innovation comes. Today, that group of farmers is facing the brunt of climate change. There is a water shortage. Soil health has become an issue. If we look at other inputs also, they may not be well suited for the needs of those farmers.

So, there are two areas where I think we need to tackle that. Two thirds of our country is still dependent on agriculture directly or indirectly and a vast majority… are small farms. So, the need for innovation is huge. And that has to be a multi-stake holder engagement.

The other is our farmers themselves. Because of increase in digital connectivity (they) are pushing for innovation quite aggressively creating their own innovation sometimes. We, I think, have the highest or one of the higher proportions of self-employed glob ally and a lot of that is in the rural segment.

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