The opportunity is indeed the key why one should look at India - as the country to return to, as the country to start a business in. It is complicated and competitive, but India still has enormous underserved markets. My rough estimates - about 90% of India's population is still untouched by all the major commercial innovations made in last 20 years. It is not that all of them are poor; besides, the poor are also being lifted out of poverty gradually.
While it is still so, Indians are getting equated in terms of aspirations with the west. Television is spreading, and though it still has a long way to go to become an object of personal possession, some communities share television sets and satellite channels are coming in. Mobile phone has reached distant corners and diverse communities. Newspaper circulation, almost uniquely in the world, is growing. Education is growing too, though it is nowhere near where it should be in a modern democracy. Besides these drivers, most Indians are below 35 years of age, and more people are being added to the mix every year. Going by this combination, it is possibly the most exciting consumer market in the world.
This is what makes one hopeful about India lifting out of recession quite quickly. True, the recession has hit India hard and particularly the service industries are almost frozen. But, India has a diverse economy and an underserved markets. A large population means that there will be sustained demand. I think the current freeze is more about panic than an actual market problem in India, and soon everyone will wake up to the missed opportunities.
An interesting case in point is the launch of a new passenger car yesterday. Tata Nano, the famed Rs. 100,000 car, got launched despite the various roadblocks. It is indeed a hell of a time to launch a new car, when the worldwide production is falling. But the Tatas are looking at non-consuming market, and even if the markets are down, they are looking at a potential market size of 300 million people, or 60 million families, and even a very low demand will keep their factory running at full capacity for a number of years.
Of course, many businesses fail in India and most international companies do. But this has nothing to do with the opportunity. It is rather about the approach, and the arrogance that most companies come to table with. India is a completely different market dynamics which need to be understood and respected, but most Western companies [in particular] are too much in love with themselves to make an honest effort. In that way, the recession is indeed a good thing - it will tell the wheat from the chaff and we shall be left with the best products, services and companies in the end.
And, India indeed has its share of problems. To me, India is like a very powerful automobile, but without the tyres and the fuel. If I try to rationalize the imagery, I am obviously talking about the big engine of demand and the underserved markets, and the crumbling infrastructure - low capacity roads, frequent black outs, overcrowded railway stations and airports, underequipped hospitals and schools - as the missing tyres. As for fuel, I think India faces a serious manpower crunch despite its huge population, as the Indian education system has failed the country and could not produce the millions of high quality graduates that the country needed to move forward.
This is a significant problem. We have suffered, for many years, from Macaulay Syndrome. By this, I mean the brilliant plan that Charles Babington Macaulay conceived for Indian education in 1835 - to create an elite class of people, educated in English, who will be separate from the rest of the population and serve the English masters. Independent India followed the same plan, making significant investments in making the education system more elitist and creating two classes of people. Whereas the general education system was allowed to rot, we prided ourselves by building world class institutions. The problem is when India is coming to party today, those institutions produce too few graduates to keep us going. We are running out of fuel every now and then.
In a way, indeed, this is an opportunity. Indian education infrastructure has to grow manifold, and this is possibly the most exciting business in India today. I know that there has been more 1800 applications for accreditation for business schools submitted in last 12 months and I am sure there will be many more in the coming days. However, education in India is stiflingly bureaucratic and yet lack oversight. We have stopped innovation by putting in controls, but allowed a select few to profit out of the system, creating a sort of education mafia in every state. Interestingly, recession and the attendant surge in education business will create competition and possibly force a correction: However, in cases like education, correction by market forces is too painful and results in a lot of wasted lives.
However, in summary, India remains an excellent opportunity, by any measure. But, in India, one has to go beyond the obvious for this opportunity. We will need to take a quantum leap, in our attitudes and commitments, to realize its full potential, but hopefully, the hard times will make us readier. It surely seems that this recession will be a blessing in disguise for India, and help it emerge as a more powerful and dynamic nation.