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The 24th edition of India Economic Summit was held in New Delhi from November 16-18, 2008. Organised by Geneva-based World Economic Forum (WEF) in partnership with Confederation of Indian Industry (CII) the summit had ‘Securing India’s Future Growth’ as the principal theme.
Notwithstanding the shadow of the global financial crisis, the Summit succeeded in bringing together over 650 leaders from business, government and civil society from India and 35 other countries. They, along with the key stakeholders of the Indian economy, discussed a range of issues. Sharing stimulating thoughts on India’s growth trajectory, the summit became a platform to test the resilience of India’s financial system and economy. In four thematic pillars—Global Shifts; Managing Risks; Inclusive Growth; and Future Competitiveness, the discussions were spearheaded by the co-chairs of the Summit—Jeffrey Joerres, Chairman and Chief Executive Officer of Manpower Inc., USA; James H. Quigley, Global Chief Executive Officer, Deloitte, USA; B. Ramalinga Raju, Founder and Chairman, Satyam Computer Services, India, and Henri A. Termeer, Chairman, President and Chief Executive Officer, Genzyme Corporation, USA. K V Kamath, Managing Director and Chief Executive Officer, ICICI Bank, India and President of CII, was the ex-officio Co-Chair.
Competing with China
Among the sector-specific discussions, manufacturing and energy issues hogged much limelight. In terms of measuring up to China in manufacturing prowess, India’s Minister of State for Industry, Ashwani Kumar had some interesting observations to make. Speaking at the session on ‘Big Bets on Technology and Manufacturing’, the minister said the challenge for India’s manufacturing sector was to enhance the global competitiveness of its products by adopting technology. At the same time, India has to face the challenge of providing employment for millions of its citizens and ensure equity on the social and economic side.
“The government wants to catch up with China because we lag behind them in both volume-based and technology-based manufacturing, though we are ahead of them in skill-based manufacturing. India’s share in the world’s manufacturing is 1.8 percent, while China’s share is 12 percent. We need to have a growth rate of 12-15 percent on a sustained basis. Challenges like capital-intensive technology and intensive manufacturing needed to be overcome, keeping in mind the future of the labour-intensive sectors”.
Joerg Mueller, president and MD, Volkswagen Group India, found the outlook on India positive because disposable incomes are rising here and the government is investing in infrastructure. “India’s young population is an added advantage and a future asset, as they are the reservoirs of skilled talent that can be used to run lean manufacturing plants,” he said. He added, “We find the skills that we need amongst the people coming from the universities and their motivation levels are very high. There are gaps in the skill sets, which are met through training programmes conducted by the organisation”.
Shailesh Rao, managing director, Google India, said, “Technology drives production, which drives growth, which further creates jobs. India has the singular opportunity of becoming the laboratory of the world and developing intellectual capital. The concern for the country is to provide the technical talent, an environment to take risks and generate intellectual capital,” he said.
Steven J Veldhoen, managing director, Asia, Booz & Company, Japan, said, “India has created a centre of excellence in automobile manufacturing, both for domestic and global demand. India is going through a development phase, where manufacturing will follow.”
Allan Ma, president of British Telecom, Asia-Pacific, pointed out three factors — agility, branding and innovation — as key to the success of India’s manufacturing sector. According to Ma, virtual manufacturing would enable India to leverage the global innovation eco system, create innovative products and serve customers on a global basis.
Green and Nuclear Energy
To feed an economy growing at 7 percent, India needs to increase its electricity generation capacity by nearly six times in the next 20 years, industry chiefs asserted at the India Economic Summit. There is hope that the civilian nuclear deal between India and the US will boost India’s nuclear power generation. The target is to increase its capacity to 20,000 Mw by 2030 from the current 5,000 Mw. The industry captains wanted the rising power generation capacity to be in harmony with the environment.
The industry harbours fears that increasing generation capacity to around 800 gigawatts from the current 143 gigawatts will result in increased use of ‘dirty’ coal, which will increase risk to the environment.
Tulsi R Tanti, chairman and managing director, Suzlon Energy argued that if the pricing of energy factors in environmental damage, this would boost investment and use of renewable energy sources. Saying that 99 percent of the total power generated in the country is from conventional energy sources such as coal and fuels such as diesel, Tanti called for taxing emissions.
Tanti said innovation and technology are rapidly reducing development costs. There are major opportunities in renewable energy in India. “Two years ago, our company was producing power at Rs 5 per kilowatt hour (Kwh) now it has come down to Rs 3.5 per Kwh. In few years, we can easily come down to Rs 2.5 per Kwh”.
Adil Zainulbhai, Managing Director, India, McKinsey & Company said: “The options to this increased use of dirty coal are higher energy efficiency, increased nuclear and renewable energy”.
Outcome
The conclave served as a test on the preparedness of India for its fiscal and monetary assets to address challenges around liquidity, inflation and business confidence.
The take-home message was that India needed to tackle the daunting challenges of deficiencies in infrastructure, education, healthcare and productivity both in agriculture and manufacturing to sustain its long-term competitiveness. The third edition of the India@Risk report jointly produced by CII and WEF was released at the summit. The report examines global risks critical to the future of India in the following four areas:
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