COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

'5 pc of GDP is being put into gold purchases. This is not productive for industry'

Indian businesses should divest themselves from unviable sectors and concentrate on their core strengths to confront international competition, speakers said on Monday at the India Economic Summit organised by the World Economic Forum and the Confederation of Indian Industry in New Delhi.

The government and the industry must work together to beat competition from multinational corporations, said G C Burman, managing director of Dabur India Limited.

''We must work together to remove impediments and pursue the goals of liberalisation process which started in 1991. The government can play a pro-active role in rationalising duty structures along the lines of World Trade Organisation recommendations.''

Burman said the Indian industry must increase efficiency and benchmark against the best quality standards to beat global competition. ''Already, several businesses have undergone complete ressurection following the entry of MNCs in Indian market.''

Burman was participating in a thematic session on ''Can Indian Industry Confront International Competition?''

Ranjit Pandit, managing director of McKinsey and Company, said Indian companies were not adding value to the investments made by shareholders.

''What we have witnessed after the liberalising process began is that few Indian companies are earning the cost of capital. There are also negative inflows from mutual funds and that is a disturbing trend.''

Pandit also went to the extent of saying that there was fundamental breakdown in the Indian industry structure following the entry of MNCs. He said the savings were not being put into productive uses and hence the industry was facing a financial crunch.

He said Indians spent $ 4.5 billion for gold purchases in first quarter of the current financial year. The figure is likely to reach $ 18 billion in the entire year. ''We have five per cent of the gross domesitc product going into gold purchases which is not productive for the industry.''

Rajendra Pawar, founder of NIIT Limited, said the Indian industry must adopt new technologies and new management techniques to avoid protectionism and beat competition from MNCs.

''Indian companies cannot become global players unless they become net creators of new technologies,'' he said.

Winding up the discussion, WEF managing director Claude Samdja said India has the ability to be a major knowledge creator. ''But any company, be it Indian or foreign, which adds value to corporate India should be encouraged.''

UNI

Business news