India's energy attracts its misery repels

ON EXCELLENCE

March 28, 1994|By TOM PETERS

On Feb. 24 I awoke in New Delhi to these local newspaper headlines: "Kleenex-Huggies Set to Enter India," "India to Play Key Role in GE Growth," "Spanish Trade Delegation to Visit India." In my room at the Maurya Sheraton Hotel & Towers, the world was at my fingertips via AT&T's Definity Voice-Data System 75. Downstairs, a group of 100 very senior seminar participants were gathering and roaring to go; my experience two days before in Bombay suggested they'd be perkier than 600 U.S. execs I addressed in Orlando, Fla., the week before.

But what about the roadblocks on the drive in from the Bombay airport, a response to bombings a few months ago? And what about my walk the night before? Out of the Sheraton, then, one block later, down a dirt lane. Half-clothed children, squatting, defecating. A line of men standing along a wall, urinating. The smell? Use your imagination.

Such blatant contradictions notwithstanding, it's no wonder India is a priority for Kimberly-Clark, GE and the Spanish. The 250 million or so Indians in the middle and upper classes (about 40 million of whom make over $40,000 a year) add up to a well-off population equal in size to the United States; moreover, they "want quality and are ready to pay for it," according to the South Asia head of the ad agency Lintas.

What a change! In the summer of 1991 India almost defaulted on its international debt.

To the world's surprise, the colorless prime minister, P. V. Narasimha Rao, responded with unexpected vigor, and began to rip open the doors to a closed economy.

Many called India's economy the "license Raj," a vestige of British colonialism. New Delhi told companies what, when and how to produce; where to locate, what technologies to use, whom to partner with. India's state governments were worse. "Armies of inspectors," as one commentator put it, traversed the country making sure companies accurately attended to the elephantine load of paperwork, license renewals, etc. required by other armies of underemployed, form-making bureaucrats.

Has it all gone away? Hardly. State governments still get in the way; duties are still high; the planned sale of flabby state enterprises is going slowly; and Asea Brown Boveri, which has invested heavily in India, has been waiting for approval to produce a new high-tech locomotive since 1987. Nonetheless, most licenses at the federal level have been abolished, bank reform is progressing, the average tariff is heading down from almost 90 percent to 25 percent, access to technology is increasing, and foreign multinationals can set up R&D facilities in the country.

The proof, of course, is in the doing, of which there's plenty.

GDP growth is up from about 1 percent in 1991 to 5 percent, inflation is down sharply, and foreign exchange holdings have gone from pocket change to $11 billion.

Most important, foreign investment, a $200 million trickle in 1991, is now flooding in at the rate of more than $2 billion a year.

Approvals for Indian businesses to collaborate with big foreign firms jumped from one in 1990 and five in 1991 to 49 in the first six months of 1993.

Trade with China doubled in 1993, and U.S. exports to India rose 37 percent (imports jumped 22 percent). The government has recently issued licenses to Coca-Cola and McDonald's, and IBM, booted out of India in the '70s, is back, along with Walt Disney, Raytheon, AT&T and Sara Lee.

In Bangalore, heart of the entrepreneurial south, Singapore's Prime Minister Goh Chok Tong cut a ribbon in January for Information Technology Park, a wonderland that may soon employ 16,000 software and electronics engineers. Nearby, Motorola engineers are designing components for the hand-held satellite phone system, Iridium; the company's head of Central and South Asia calls opportunities in India "without parallel."

And yet: Thirty percent of the world's poor live in India, and at times I felt the fingers of each one scratching, in hopes of a tiny handout, at the windows of the cabs I rode in. One hundred million Indians are unemployed, several times that are underemployed, and the population grows by about a Canada a year, or more than 20 million people.

So which India is it? The one that ranked 123 out of 160 Third World nations on the United Nations' Human Development Index? Or the India that GE, ABB and Motorola are betting will become an economic power?

I am excited, repelled and confused in equal measures. And I think, in the end, that's about the right take on this most extraordinary country.

Tom Peters' column is distributed by the Tribune Media Services Inc., 720 N. Orange Ave., Orlando, Fla. 32801; (407) 420-6200.

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