|The ring to the India story|
|Saturday, 01 January 2011 00:00|
In the early 1990s, despite having founded Bharti in 1976 (at the age of 18, his bio tells us), Sunil Mittal was still pretty much a nobody from Ludhiana. Grit, perseverance, and a lot more, is what kept the businessman going, moving from making bicycle crankshafts with Rs 20,000 from his father, to importing Suzuki gensets before graduating to push-button phones. He struck it lucky in 1993 when the telecom minister Sukh Ram gave out mobile licences in metros without charging anything upfront (Mittal got Delhi in a ‘beauty parade’), moved on to greater heights when the government decided to replace the fixed licence-fee regime with a revenue-share one in 1999; he never got fazed when Ram Vilas Paswan did a big favour to the fixed-line licence players by allowing them to offer what was called Wireless in Local Loop (WLL) mobile services in 2001—this lowered the attractiveness of mobile licences and a canny Mittal snapped up several in an auction; in 2003, when Arun Shourie legalised the abuse of WLL and converted it into full-blown mobility, Mittal used the opportunity to get the government to implement Calling Party Pays, which removed a very big advantage the WLL-players had. In the middle, there were unsavory stories of influence peddling, but Mittal survived it all, moved from being a nobody with no money to getting around 14 foreign partners to bankroll his ventures—he grew the business so much, not one left unhappy.
Today, as he’s humbled all rivals, and battled A Raja’s blatant favouritism, the question being asked as he headed out to Africa: did he leave because regulatory favouritism killed the business or did he leave because, after a certain size, Indian firms just have to go looking for new markets overseas? Naturally, it’s a combination of the two. In any case, Mittal continues to invest a lot here (he just spent Rs 13,000 crore on buying thirteen 3G licences) and is reinventing Bharti to become an entertainment company, a money transfer agent, a debit card, a bank…
All of which is really India’s story, of humble beginnings, of grit, of attracting foreign investors, of controversies, of political patronage, of superb managerial and technological talent so high class the developed world is vying for it. All of which ties in with the ingredients we’ve lined up for you on this opinion page spread today. Shobhana points to the role of stock markets and foreign investors, the same ones that continue to bankroll Mittal, in India’s growth story. India’s so hot, she says, that if equity funds just moved gear to neutral, this would result in a lot more billions pouring in.
Investors, needless to say, aren’t here to eat, pray, love. Shailesh explains the move from the early 1990s when FDI was restricted to the Perfettis and Kelloggs coming in with $50-odd mn to 2010 when Bharti alone spent $10.7 bn to buy Zain. Though India continues to have abysmal education standards on the whole (see the oped page package today), Shailesh points to enough graduates coming out of colleges, and enough R&D in select pockets, for India’s patents to shoot up. As a result of India Inc pulling itself by its bootstraps—21 firms have Deming prizes and 153 the TPM award from the Japan Institute of Plant Maintenance (JIPM)—we’ve reached a stage where around 40% of what India Inc produces is exported.
The impact of all of this, as Arvind tells us, is the sharp surge in consumer spending ($700 bn more by 2020); NCAER-CMCR talks of how 37% of Indians will be middle-class by 2025 and McKinsey sketches the impact of India’s huge urbanisation that will see the equivalent of a Chicago being constructed each year from now to 2030. Combine this huge surge in demand—for licences, for land, for clearances—and you understand the surge in corruption that the political class is so ham-handedly trying to cover up. You could worry about this or you could keep in mind that, as the middle class becomes dominant, it demands a different value system, a different type of politician, more focused on clean, more focused on delivery—Poonam Gupta and Arvind Panagariya’s study on the oped page traces some of this.
As in business, so in politics. Barring the top 3 or 4, the list of India’s 10 richest businessmen has changed each decade, and even the top 3 or 4 are constantly reinventing themselves—newcomer DoCoMo forced Sunil Mittal to lower tariffs and its 3G tariffs will determine his. There’s a lesson in there for our political class to read, to understand, to emulate. As FE’s tagline puts it, Read to Lead. Have a great year ahead!
|Last Updated ( Friday, 25 November 2011 12:33 )|