In 2014, Mr Ratan Tata, Chairman – Emeritus, Tata Sons Ltd , received the MMA Amalgamations Business Leadership Award He later joined in an interactive session on the theme: “How does India get back to high and sustainable growth rate quickly? What is the role of Corporate India in achieving this?” The session was anchored by Mr R Raghuttama Rao, Past President, MMA & Managing Director, ICRA Management Consulting Services Ltd , Here’s an excerpt from the session
Before I respond to the questions, I would just like to take this opportunity for thanking Mr Krishnamoorthy, Mrs Mallika Srinivasan and Mr R Seshasayee for all the nice things that they have said and to say how deeply grateful I am and deeply honoured I am today to receive this award this evening and yet how humble I feel amidst the legendary list of people commencing with JRD Tata who preceded me in being recognised Whatever I was able to do, I did because I had a very powerful framework of values and ethics that is left behind by my predecessors and, of course, there was a terrific spirit of 400000 people in the Tata Group who carried the spirit of what I wanted to do into an executed reality It is because of them that I am here today and receive this kind of award On their behalf, let me say, thank you, and accept this reward with great happiness and at the same time with great humility.
How should government and business partner for accelerating economic growth and equity in India? You could confine yourself to as many thought, but please give us the three most principal areas where Business and government can collaborate as we move ahead towards new India?
I think government and corporates have a combined task in moving the country ahead Moving a country ahead means creating a nation that moves towards equality, gives equal opportunity, and increases the prosperity for all levels of the people and stands out as a country in today’s world as a democratic nation
Therefore, government has the role of improving the infrastructure, creating an environment for its people that gives them security, safety and gives them the opportunity for growth based on merit Corporates, on the other hand, have the role that their name implies: Entrepreneurship. They are the entrepreneurs, they have to generate the speed
It has been difficult to get 20 business leaders in a room to move away from talking about their own companies to taking acquisition on India as a whole and what they could provide to the new India.
that drives the country; the corporate world has to exist side by side, complementing each other’s role, not conflicting, not in fact diffusing each other but in fact moving together the country to rise Whenever this has ceased to happen, the nations had so tumbled economically or moved to the directions of being dictators, creating chronic capitalism. I don’t think I have spelt out three specific areas but I think the government’s role is to govern the infrastructure and govern the ambience of the country and the entrepreneur’s role is to create values and to give the country and people a chance for jobs, a chance for advancement and to help the growth take place. I think the government alone can never make growth take place. It can only provide an infrastructure to happen.
As you have led the charge from Indian Corporates and business world towards world’s acquisitions, what are the steps that Indian business and corporate should take to make “Made in India” brand as powerful a brand as a brand “Made in Japan” or “Made in Switzerland”? What do we do from Corporate India to make this happen?
Part of this answer may be little controversial. The Indian business world seems to thrive, unlike the spectrum of business people elsewhere in the world, to envy or frown on success. The net result is that we tend to pull each other down needlessly whereas in other countries, you see, business is pulling together It has been difficult to get 20 business leaders in a room to move away from talking about their own companies to taking acquisition on India as a whole and what they could provide to the new India. It could never be that, only “I” or “He” or “She” can make India successful Together we can do much more How much collaboration between Indian companies do you see in India against elsewhere in the world? How many research activities do you see together between business leaders in India as against the world? So, industry in India has to be more compatible with each other, more trusting and more collaborative than they are today In that way, I think the Indian business could be proud of what they have achieved and that the achievement may be better recognised than it is today and would move much further in the success path. There should be no shame on leadership; there should be no shame on great success but pride and happiness that takes place in India Then when you go beyond the shores of India, there is no reason to feel incapable of leading an enterprise outside India provided you do the right thing and operate in the right value system. So I think we have all the ingredients to do what you said. It is the attitude of not giving due recognition to success and not heralding it, holds a lot of companies back
It is said that “Manufacturing is the next mantra” that we should focus on as a country for economic growth and getting more people employed and so on. When we look at Chinese manufacturing and Indian manufacturing, they are 10 to 15 times our size There is a fear that Chinese manufacturing or their products will swarm Indian products
in the long run. That’s a fear coming up time and again. What do you think, Indian manufacturing or Indian corporate world should do to strengthen itself and get more competitive, not only against Chinese but against anyone else?
Once again let me be provocative! China and India are of the same size of population If a Chinese industry can scale itself up to a particular size, what stands in the way of Indian company doing exactly the same thing? We don’t have licensing anymore that puts the ceiling on how many units of produce that we can produce. Why do more mega companies not exist in India as they do in China? Why do small companies grow to the size of Chinese companies do? I think that avenue is open to us and the opening up of India in the early 90’s enabled us to. I don’t see any reasons why should we be fearful of Chinese goods. We should be willing to confirm and compete with them. Again the government should provide an environment that makes us competitive and remove the disadvantages and constraints that come in the way of growth Growth should be the by-word of what we are looking at the India tomorrow.
What should be the vision for the Indian auto industry over the next 10 to 15 years? We are already known as the hub for small car manufacturing. Is that all that is possible or are there other dimensions that India could take its legitimate claim in this segment?
Being in Southern part of India, being in Tamil Nadu, brings to my mind the fact that here in this state, there has been establishment of some of the famous industries and they go back on a long time. It has been an industrial community built on values, built on ethics and built on technology, quite often generation to generation and as you said earlier, living with the tradition that they had and continue to change with the times Why has that not happened to the same extent in other parts of India? Why have the user industries not grown to the extent that these engineering enterprises? Technology-based human sector are all issues where we again unfortunately fragmented ourselves and our country into different states and constituencies that have demands that do not make us “One India” and one lot of Indian people with fragmented stance
What do we need now? Look at the auto industries The auto industry has grown today mainly with the growth with international companies in India Yet the Indian car industries and Indian component industries survive. We should be bolder, we should think bigger
The India that we love to see is an India, where, as I said earlier, the corporate and the Government sector working together on a convergent path to growth and prosperity Most importantly, I would like to see an India where all Indians have an equal opportunity
than we are and have the confidence of knowing that we can grow because the potential in this country is enormous. It is for us to grasp and grow and it is for us to grow with pride not within the shores of India but in the international market place where we can compete We should not be in a position to over-promise which we tend to do and be ethical in what we offer in the market place We have all these ingredients in us We have to exploit them
In term of corporate governance, ability to manage, manage risks, manage tough times, what are the lessons that the Indian corporate can learn from successful MNCs that you have seen in close quarters?
Something that comes to my mind is from the 70’s A small company started in a garage, Apple Computers, started with an idea, an idea that had not been tried A country that reacted to these ideas and accepted them created the first Apple computer The second generation was the Macintosh who brought the main frame computers to a desk and enabled an individual to have a personal computer The founder of the company was sacked and the company owners failed The founder came back to head the company and entered the smart phone business, created a tablet computer and became one of the most valued companies in the world. What can one learn from that? From one apple, to two apples and more! It is a question of how the company perceived its good luck, creativity etc We should not be always trying to follow We should really try to lead and never follow As a nation also, we should be trying to lead and not to follow because as a nation, something has been successful here! We are in the threshold of retailing which is the next new big business in India It is terrific It is in Indian base but it may be following the footsteps of Amazon There are many more areas like this and India could possibly teach some of the countries as to how to get to be a successful business enterprise We don’t have to learn from the Western world only.
If I may say, the disturbing part of our economy is that 90% of our economy is said to be in the informal sector. Employment is largely 10 times in the informal sector. This has huge consequence for sustainable economic growth, productivity and so on. Is it only the government’s responsibility to set this right? Or is there anything that corporate India could also do on its own or jointly to correct this imbalance between formality and informality?
I cannot answer that knowledgeably I can only say that there is a reason for the existence of informal sector in some industries of the corporate sectors This is to protect the small manufacturer from the large manufacturer The differences were created in scales, obligations even in requirements for the large companies that were supposed to protect the small companies from the large companies eating them up The differences were created by government policies to protect the small person The small companies became bigger and eventually became more competitive than the larger companies Rather than asking the government to do something to remove the disparity; as the disparity was created by polices The best thing that could be done by the government is to remove the differences in doing business in small size versus the big size and make it universally compete on the basis of the product and on the basis of proficiency
We measure success in terms of GDP and like similar economic measures. Should we not, instead, be looking at quality of life or happiness index? In fact the World Bank came up with Happiness Index last year and India does not score well in that parameter. There is a corporate philosophy of profit maximization. Does it conflict with maximizing happiness?
I hold a view which may be correct or incorrect that the quality of life follows the foot step of having a robust growth in the country, the creation of jobs, and the creation of opportunities We don’t have the term ‘quality of life’ It comes from a socialistic state where the government provides that comfort of quality of life If it comes from a democratic open society it comes from growth rates of the country that provides jobs and opportunities, reduces unemployment, encourages creativity and in my view therefore, in a country of a billion plus people, how can any government focus only on the creation of the enhancement
of the quality of life without having behind that an engine of prosperity for the nation that drives the growth? The enhancement of life comes then from the distribution of that wealth So you first have to create that wealth and then distribute it. We don’t have the wealth in the first place and where does the prosperity come from?
What is your vision for the India over the next 15 or 20 years in terms of what we can achieve as a nation? Where does Corporate India fit into this vision?
I am not an astrologer! The India that we love to see is an India, where, as I said earlier, the corporate and the Government sector working together on a convergent path to growth and prosperity. Most importantly, I would like to see an India where all Indians have an equal opportunity – not that a small percent of people can get into college and a vast number of people stand by and lose that opportunity, an India where people can find jobs based on merit and based on capability I really believe that our country is a tremendous country with a great potential. You see in the bright eyes of young little kids who are going to spend the rest of their lives scrounging for a way to live day-to-day when they have an opportunity to have an education and go to work and they could make a contribution How many people around us have made success of their lives, who had never gone to school, who had never had a chance to do unlike some of us who are privileged to do? Do we have enough of them? Or should our country be able to say, we have created leaders from every quarter of life and it does not make any difference in what their name is, what their inheritance is, what the amount of wealth they have, still all of them have an equal opportunity That is the India that I would like to see.
