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Three industrialists dissect India, find sprouts of a dark era

The golden era of liberalisation is over. Policy changes are too frequent. This is not a particularly good time. There is a lot of confusion. Where can one go from India? Such thoughts were freely expressed at a three-day international business conference in Madras, organised jointly by the United States's Montclair State University, Bangalore's Indian Institute of Management and Madras's Mohamed Sathak Trust.

A plenary session on 'promoting investment growth' was chaired by Mahindra Ford Managing Director John Parker while exporter and WS Group Chairman V Srinivasan, non-resident Indian and Dharani group Chairman Palani G Periasamy and Mangalore's Cogentrix Power Project Chief Executive Ron Sommers spoke.

The three speakers unanimously agreed on one aspect, that the brightest period in India's economic liberalisation is over and that one of the darkest periods has begun.

The world, they said, has become very cautious in its approach towards India after the Asian currency and stock market crisis. Developed markets have become unsympathetic after the Pokhran nuclear tests. They are wary of frequent changes in the central government and policy matters.

Multinational companies seemed to admire only two Indian politicians, P V Narasimha Rao and Manmohan Singh, seen as architects of liberalised Indian economy.

"We signed an MoU with the Karnataka government in 1992 to start the power project along India's western coastline. After that, we have seen five prime ministers and four chief ministers. It takes six months for each government to settle down. Thus, we have lost 30 months in the last six years," Sommers said wryly.

Srinivasan voiced concern about several things: falling customs tariff, pressure from the World Trade Organisation, rising local taxes and costs, excessive government intervention in business, new threats and unfair competition from MNCs and other competitors, the huge technology gap between the developed and the developing countries, lack of easy finance for Indian industrialists, consumer preference for foreign goods, lack of commitment to India in the MNCs (a charge Ron Sommers vehemently denied -- he said people will get Congentrix power for the next 60 years), setting up of screwdriver assembly units by MNCs (for instance, as in the telecom sector) and finally the lack of a level-playing field for the Indian industrialists.

Periasamy called himself an NRI -- non-required Indian! He began his business in 1986, in the time of Rajiv Gandhi who was ''dynamic'', though it was the pre-liberalisation era then. "The consolation is that if it took 90 days for us to send the dividend to the USA in 1989, now it takes only three days."

According to him, the problem with the Indian government is that it does not want to admit there is recession. One of the reasons for the downtrend is the frequent and inadequate policy changes of the government, Periasamy said.

He further said that the cost of the 1,000 MW Cogentrix project is Rs 1.3 billion. But India's requirement is 43,000 MW. Karnataka alone needs 6000 MW, but has only half of it. Cogentrix imports coal from the UK and South Africa as it is cheaper than transhipping from Orissa, West Bengal or Bihar! If the Indian bureaucracy has its way, it will take 10 years for the project to produce one unit of electricity, he observed.

Srinivasan also offered some futuristic perspectives. The 'big' Indian industrialist, he said, will become endangered. Only the fittest among the medium-scale entrepreneurs will survive. Small-scale units are in for tough times. The Indian consumers will buy a lot and pay later, he concluded.