The final article of a three part series connecting America and India in the context of the Indian Prime Minister's visit to America. The earlier pieces can be found here and here.
In the four months since taking over as Prime Minister of India, Narendra Modi has moved forward on at least five initiatives that would have been unlikely under any previous leader.
Go Lean
His cabinet is streamlined dramatically compared to the past. The ministries of power (energy) and coal are controlled by the same man, Piyush Goyal. The ministries of external affairs and that of overseas Indians Affairs are both managed by Sushma Swaraj; shipping is clubbed with transport and highways, steel and mines are clubbed as well.
While this might seem obvious in a corporate situation, it is quite a leap in a parliamentary democracy where cabinet positions are often awarded for loyalty rather than competency. In a culture that often values age over wisdom (or senility over sharpness), Modi did not assign cabinet positions to octogenarian stalwarts such as L.K. Advani and Murli Manohar Joshi. And finally he dismantled the Soviet style "Planning Commission" whose weighty tomes were studied by bureaucrats but seldom implemented in a timely manner. A number of high level committees were also dismantled.
This leanness will permit more rapid decision making if all goes well.
Be Bold
In his Independence Day speech, weeks before he went rah-rah on India's success with the Mars Orbiter Mission, the Prime Minister addressed unglamorous but previously ignored issues. He called for every school in the country to have a girl's toilet in one year and all Indians to have indoor toilets by 2019. Just four days later, Indian companies such as Tata Consultancy Services and Airtel responded with commitments of a billion rupees each to help with this initiative.
During that speech on August 15, he also lent his voice to the ugly issue of female infanticide and foeticide in India. "Have we seen our sex ratio? Who is creating this imbalance?" Modi challenged his countrymen. "Not God. I appeal to the doctors not to kill the girl child in the mother's womb. I request the parents not to kill daughters because they want a son... It is a blot on 21st century India."
If his thirteen years of running the state of Gujarat are any indication, this boldness should soon appear in decisions affecting commerce, industry and global trade. The first glimpses are captured in the "Make In India" later in this article.
Be Humble
Being the first Prime Minister since 1984 to be supported by an absolute majority in the lower house of parliament, it would have been easy for Modi to be arrogant. But he has repeatedly acknowledged since his election that all governments prior to him have done good work. He mocked himself, when newspapers reported that government officials starting coming to the office on time after he took office. "That should not be news," he said, adding that he was not happy that this was being reported as progress.
Modi's predecessors were often drawn from India's elite. Nehru was educated at Harrow, Manmohan Singh at Cambridge and Oxford. While Vajpayee had a middle-class upbringing in Gwalior and Kanpur (my home town), he did come from an upper caste Brahmin family. On the other hand, Narendra Modi's family were lower caste telis (oil pressers) and ran a small tea stall when he was a teenager; he wears his humble background on his sleeve.
Direct Diplomacy
As Prime Minister, Modi's first foreign trip was to the neighboring country of Bhutan, a tiny mountain kingdom with a population of about one million and he visited Nepal, another small mountain country between India and Tibet, becoming the first Indian PM to show up there in over twenty years.
Since Modi has run the state of Gujarat for the last 13 years, many wrongly consider him a novice at global affairs. But during his tenure in Gujarat, the state courted foreign investors and diplomats consistently and particularly at the biennial Vibrant Gujarat Summits since 2003 which attracted active participation from Canada, China, Israel, Italy, Japan, Korea, Russia, the United Kingdom and more recently the United States. In the 1990s Modi played a key role in the engaging overseas supporters of his political party and this included many extended trips to the United States.
For the first time since Independence, India invited the head of state of all its neighbors, in the South Asian Association for Regional Cooperation (SAARC) to the inauguration ceremony of the new government. Besides the subtle assertion of India's backyard, the move also showed the rest of the world that India was focused on its neighborhood above other distant considerations.
Prior to visiting the United States, the new Indian Prime Minister spent four days in Japan where he was promised $35 billion through public and private funding over the next 5 years for developmental projects.
This was quickly followed by Chinese President Xi Jinping's first visit to India. Xi promised to help bring India's aging railway system up-to-date with high-speed links and upgraded stations. He also said that China would set up industrial parks in Gujarat and Maharashtra and give more market access to Indian companies selling pharmaceuticals and farm products.
He now arrives in America prepared and ready to grapple with the world's largest economy with some commitments from China and Japan already in his pocket; this gives him ground to be more assertive and credible when faced with reasonable demands from American CEOs.
Make In India
Wieden+Kennedy is the American advertising agency that made Nike shoes famous with the "Just Do it" slogan and bold advertising that took the shoe brand from under 20 percent market share to over 40 percent in America. The New Delhi office of the same agency was hired to design and build the website for the Make in India campaign launched with much fanfare last week.
Domestic and international skeptics have been quick to react. I started my career in manufacturing in India and to me the critics speak from ignorance and shallowness. The Daily Mint mocked the initiative pointing out the very thumb drives used to distribute information about Make in India were actually produced in China. Clearly the writer is not familiar with the concept of a Global Supply Chain where not every country needs to specialize in making every product.
The Economist's Banyan whined that about no "mention made of sectors, such as retail, where more severe limits on foreign capital are kept in place; nor that in insurance." Neither retailing nor insurance constitute manufacturing, however. So the point while true is not relevant.
The Hindustan Times carried a satirical piece on the choice of a lion as the mascot for this initiative, arguing that the water buffalo would be better choice.
Yet, in Jamnagar Gujarat today, the twin Reliance Industries oil refineries are capable of processing a million barrels a day, more than any location on the planet. In Pune, Bharat Forge runs the world's single largest metal forging facility. Most generic drugs consumed by Americans are produced at FDA approved pharmaceutical factories in India. Hyundai and Ford are exporting cars manufactured in India. An Indian company, Larsen & Toubro, runs a 700,000 square foot heavy fabrication facility in Hazira, Mr. Modi's state that compares with any in the world.
Manufacturing in India will not become trouble-free anytime soon. Arcane labor laws, inadequate roads, and rampant electrical energy shortages will not vanish just because Wieden+Kennedy creates a nice website. However, any American executive who is looking to expand in the India market or is concerned about putting all their eggs for the American market in the China basket needs to look closely at India as a player.
What's Next?
It will take more than words and meetings in New York and Washington for Mr. Modi and his colleagues to open a floodgate of investment and employment across India. But his track record in opening up the state of Gujarat and the fact that he is the first Chief Minister (like an American Governor), to become Prime Minister bodes well for executives who have been waiting on the sidelines to make the next leap towards India's $2 trillion economy.