Magazine article Management Today

My Return Passage to India

Magazine article Management Today

My Return Passage to India

Article excerpt

While Western economies founder, thriving India still offers endless possibilities for market expansion to eager British companies such as Diageo.

A new wealthy middle class has certainly developed a thirst for luxury, as Matthew Gwyther saw on his first visit for 20 years.

The first experience of India is always special. Mine occurred in 1988, when I was sent out from the UK to interview Professor Sergio Carvahlo of the Vigilant Goans' Army. The professor and his fellow warriors were fresh from an attack they'd launched on an incoming charter party of German package tourists at Dabolim airport in his beloved state. As they descended onto the tarmac, the holidaymakers discovered that their tour bus had been littered with rotting fish and its Wilkommen banner smeared with cow dung. 'We were very polite,' Carvahlo told me. 'We just handed out our leaflets to explain that a certain sort of imported lifestyle (wandering the beaches in a G-string or less and puffing vast quantities of Nepalese hash) is not acceptable in Goa. Goa should remain as beautiful as God made it.'

Before this summer, I hadn't been back to India since 1991, a full 20 years. A lot has changed, and not just in Goa, where the professor has lost his battle and the palm tree toddy-tappers of the Indian Ocean coastline who made palm wine have been replaced by large numbers of luxury hotels.

That 12 months in 1991 had a crucial impact on India's post-independence history. Not only was it the year of Rajiv Gandhi's assassination but there was also a major financial crisis in which the country was within three weeks of running out of foreign currency reserves (67 tons of India's gold had to be hocked to acquire an IMF loan). This humiliating upheaval led to the abolition of the notorious 'licence raj', which marked the beginning of India's modern business age.

The architect of this revolution was Manmohan Singh, then minister of finance and now an elderly beleaguered prime minister. The central thrust of his measures was to reverse the intensely bureaucratic socialist planning system instigated by Nehru as a result of which private companies had to get permission from as many as 80 government agencies to produce new goods or services. Singh wanted Indian consumers in the driving seat.

Before 1991, for example, the Indian motor industry suffered the strictures of a planned economy in which, until the birth in the 1980s of the little Maruti, two suppliers, Hindustan and Premiere, were licensed to produce no more than 50,000 cars each year. If you wanted a car, you waited seven years - or bribed someone to acquire one for you faster.

After 1991, the patriarch of Indian business Ratan Tata was able to get into the car game and now manufactures the dollars 2,500 Nano or 'people's car'. Tata's success has spread way beyond its home market - it now owns Jaguar Land Rover, plus Corus and Tetley - and it has over pounds 11bn of UK revenues, which makes it Britain's largest manufacturer. That things have moved on was apparent from the Rolls-Royce showroom in the grounds of my Delhi hotel. 'We've sold about 35 Ghosts for around half a million US dollars each in the past year,' confirmed the general manager for sales, Sanjeev Hazari.

Since 1991, India's economy has expanded by an average of about 6% annually, double the 'Hindu rate of growth' that had been experienced since independence in 1947. There is now a stratum of the super-rich. In 1990, there was one Indian billionaire on the Forbes rich list; now there are 49. One of them, mobile phone magnate Mukesh Ambani, is building a billion-dollar, 570ft skyscraper home in Mumbai that will be the world's most expensive residence.

This isn't to say that there hasn't been some trickle-down. The proportion of Indians living below the official poverty line fell from over four in 10 in the 1980s to less than 26% by 2001. India, as the travel ads promise, never fails to surprise: there are more phone subscribers in the country than taxpayers. …

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