India has been transformed. The country I go back to is not the same country I left – by Indra Nooyi

Last month Indra K Nooyi, PepsioCo’s first lady Chairman and CEO, became the first lady chairman of the United States India Business Council, a forum that has worked tirelessly to improve the India-US business relationship for more than 30 years. This is the speech the Chennai-born Nooyi delivered at the USIBC’s annual meeting:

Today, we will talk about India, about what India might one day become. You see, in my lifetime, India has been transformed. The country I go back to is not the same country I left. Like a photograph of yourself as a young person, it is somehow the same and yet changed beyond all recognition.

India at 60 had traveled a long way from India at 50, let alone India at Independence. But a question that has been asked and that we will discuss today is: Where will India be by the time she is 75? I think she will be helping to shape the destiny of the world in the 21st century. I think India could be the most competitive of nations and I want to open today’s agenda with some thoughts about the things that need to happen to make that possible.

That’s also where we come in, those of us here in the United States-India Business Council. I have recently spoken about my idea of the good company, which I know is an idea shared by many business leaders. The central idea is that what is good for business and what is good for the world must go hand in hand.

Indra Nooyi

Indra Nooyi

The relationships that the USIBC are trying to foster are a very good example of what I mean. The USIBC understands that what is good for India is good for US and Indian businesses alike. This is not an organisation based on competition, but rather one based on partnership.

These are two countries tied by trade and tied by values. The fact that a new economic power is emerging which is based on the rule of law, governed by a durable economy and held to account by a free press, is a cause for great optimism about the future of the world.

In 1978 I left one of these great democracies to make my professional life in the other. In the 30 years since then, both have thrived. But while the United States of America was, by then, already established as a great capitalist power, India was a long way from being in the same league.

Indeed, even to have aspired to be in the same league with the US would have seemed antithetical to everything India stood for at the time. Nehruvian socialism helped to keep India intact through a difficult birth and, against the odds, democracy survived and flourished.

But its economic legacy was much less benign. The industrial policy resolutions of 1948 and 1956 were well-drafted and, in theory, permitted complete flexibility to encourage economic growth without unnecessary controls. In practice, their interpretation got lost in a bureaucratic maze.

And so, though it held together as a political unit, as an economic competitor India fell behind. The great talent of its people went untapped and an exodus of bright professionals began.

‘India’s aviation industry is growing at greater than 20% annually’

If you stop and think about the circumstances 33 years ago, when the US-India Business Council was conceived, it’s a wonder we’re standing here today. Indira Gandhi was (the Indian) prime minister. The Emergency was declared soon after. A year before, India had tested its first nuclear device at Pokhran. In the United States, Richard Nixon was deep in the quicksand of Watergate.

I’m not sure the idea of the USIBC would have been well received in Washington, DC at that time; nor in Delhi for that matter.

And it is a great testament to Dr Henry Kissinger that, at such a time in our history, he had the foresight to think about the future relations of the United States and India. I would also, at this point, like to pay tribute to one of my predecessors at PepsiCo, Don Kendall. As one of the early leaders of the USIBC, Don showed the ability to think ahead and think big. PepsiCo recognised the enormous opportunity and made the leap of faith to enter India before liberalization seemed at all likely. It required great foresight and vision to see so clearly. It’s only one of the many attributes that have made me both proud and lucky to count Henry and Don as friends and as mentors.

The organisation they helped establish has been through many twists of fate since then. But I think they can be divided into two distinct periods. The first 16 years, from 1975 to the Indian liberalization of 1991, was a time in the shadows. Business relationships were not well developed and government relations were frosty.

This was a time when visitors to India frequently found themselves marooned at the airport, waiting for hours for a government carrier to take off. It was a time when a call from India to the US had to be specially booked. Hours after the appointed moment, a faint connection might be established. You would speak at the speed of light for fear of being cut off. By comparison, the 17 years since 1991 have been marked by extraordinary progress. The shackles were removed, and now, how different it looks!

Domestic consumption has grown; so has investment. Employment has expanded and both capital and labor productivity have increased. Abject poverty, while certainly not eliminated, has been greatly reduced.

Today, India’s emerging civilian aviation industry is growing at greater than 20 percent annually. People move through its airports swiftly. Today, India’s is the fastest growing telecommunications market in the world with 10 million cell phones registered each month. Communication is instant.

The last 17 years have also seen a distinct warming of US-India relations. Gradually, India opened up and gradually the relationship with the United States developed. To see, as we will today, two members of the US cabinet meeting a Union minister, witnessed by business leaders from both sides, is no longer unprecedented and is a cause for great optimism.

So, the second phase took the partnership between the US and India out of the shadows and towards the light.

‘A successful India will have grown without mortgaging the success of future generations’

Now, we are at the dawn of the third age in the history of the USIBC. There is a great opportunity here and we need to think hard about how we embrace it. That is what I want to concentrate on in the rest of my remarks today.

First, I want to describe the India I can see on the horizon. And then I want to discuss three obstacles that block the way. With our members from both the US and India, and our spirit of constructive engagement, I think we, the USIBC, can help to remove each one.

Growth

Growth

Let us reflect for a moment about what the future holds for India over the next 15 years.

I am picturing an India which is hugely prosperous and in which the rewards of growth have been evenly and justly spread. That India is still in the far distance.

It would be an India where the 380 million citizens who currently live on less than $1 a day would no longer go to bed hungry. The 35 percent of Indians who are illiterate would be able to read. And the gap between men and women would close. At the moment a quarter of men can’t read but almost half of women can’t.

India is a young country and her people are young too. More than half the population is under 25. India is the only country in the world where the size of the working population will grow and will exceed the number of dependent children and old people until at least 2025. So I see an India that has equipped its people for the future. Give the people the skills and income will grow, savings will grow, investment will grow.

I foresee an India, 15 years on, in which economic reforms have been accelerated and all come to understand that open markets are the best hope for Indians, rich and poor alike. A successful India, 15 years from now, will have grown without mortgaging the success of future generations. It will have grown without severe stress to its ecosystems. It will have improved its sewage systems, slowed the spread of diseases such as malaria, controlled deforestation, and grown more food per acre of land. In short it will have used the bounty of the earth in a more efficient way.

The road to the future is full of possibilities. And they all come so much closer if we can arrange the right partnership between those two great democracies, India and the United States. I can see, 15 years from now, an India which has taken its relationship with the US to a whole new level, which has created something special and enduring, to the great advantage of both nations.

It will be a relationship that is not buffeted by the ill winds of change, one that is not vulnerable to changes of government, that is a still point as other alliances and partnerships turn around. A partnership based on business links, on education and on a shared future.

‘The people of India are its greatest strength’

So I can see the contours of the future we all hope for. But we are not there yet. The road is currently strewn with some large obstacles. I want to concentrate on just three of them, but perhaps the three that are most critical.

One: I cannot imagine a successful India which is not spreading its wealth and which is not educating a far greater portion of its population than it is today.

Two: I cannot imagine a successful India which has not developed its infrastructure, from roads and ports to energy supply and distribution.

And three: I cannot imagine a successful India unless its agricultural practices have improved markedly with the application of new technologies and techniques.

The first issue is that India must ensure that a greater share of its growing wealth reaches the broader population. That will require policies which encourage investment in rural areas, which provide vocational skill-building and training and greater market access for local industries.

While investment in education has been doubled in the Eleventh Plan, it needs to be radically stepped up. I am talking about increasing the capacity of the entire system, from primary schools to colleges and postgraduate institutions. I am a product of the outstanding educational system that existed in India in the 1960s and 1970s. But demand for this education is far outstripping supply ? and diluting the quality of that supply.

The National Knowledge Commission, appointed by Prime Minister (Manmohan) Singh, has made very valuable recommendations for reforms in education. Urgent, urgent action is needed now to implement those reforms.

The people of India are its greatest strength. India could have the largest pool of skilled labour in the world. But we need to start a great campaign for universal literacy.

From that base, India can become an economic superstar. But it cannot without it.

‘Without pipes, wires, connectivity, transport, education, healthcare, India will struggle’

The second issue is that India’s infrastructure, including its ability to meet its energy needs, must improve. Without the pipes, the wires, the connectivity, the transport, the educational institutions, and the healthcare, India will struggle to achieve the next stage of development.

Infrastructure

Infrastructure

None of this will be cheap or easy. For India to enjoy truly sustainable growth and prosperity, and to successfully compete for global capital, very substantial investment in the national infrastructure is essential. Funding this investment may require new kinds of public-private partnerships, but urgent action is needed here too.

Development, of course, has costs measured in energy usage. Climate change is a reality and many of its consequences will be visited on India and its neighbors.

Therefore, the challenge will be to put in motion a transition to lower-carbon energy systems without undermining economic and social development.

Expectations for per-capita energy and water use, as well as waste generation, are not sustainable. If India continues on its current path, then energy demand will double by 2030. The shortage of water in urban India is already a major problem and it is likely to get worse. The cost of energy is already very high and supply is erratic and unreliable.

Most critically, India’s energy needs will be mostly met by imports. This raises serious questions about the security of the energy supply. It also lends support to the rationale for India to end its nuclear isolation and engage the world in civilian nuclear cooperation. By 2030 India will have overtaken Japan as the world’s third largest net importer of oil, after the US and China.

The cost is not trivial. It is likely to be in the region of $1.25 trillion in energy infrastructure between today and 2030. Building a robust nuclear energy programme in India — provided India joins with the other 45 nations of the Nuclear Suppliers Group to access technology and fuel — will address global warming. It will also allow some of these costs to be transferred to areas of the Indian economy where investment is so badly needed, such as clean water and public health.

‘India needs a second green revolution’

The third barrier to development is agricultural production. For all the importance of the high-tech revolution, India will not advance by new technology alone. We need to recognise that the future of large segments of the Indian population will rest, for years to come, on improvements in agricultural processes.

India has gone from being unable to feed itself to being the world’s largest producer of milk and second largest producer of fruits and vegetables. Yet the average size of a farm is just 4 acres and an unbelievable 40 percent of its harvest is lost to spoilage.

India needs a second green revolution. It needs to improve the quality of its irrigation, its harvest and its farm-to-market cold chain distribution systems. The quality of water, its availability and access, the usage mix between agriculture, industry and family use — all of these things require our attention.

Indian Farmer

Indian Farmer

Internationally, we need to continue the progress towards open markets. Agricultural subsidies have affected developing country farmers, both by denying them access to rich markets, and by allowing farmers from developed countries to sell to developing nations at suppressed prices. For a nation such as India, in which agriculture accounts for nearly 20 percent of exports, this is especially important.

These sound like daunting challenges. The sums of money involved sound enormous. I don’t want to stand here and issue proclamations that India must do this and India must do that. India is a thriving nation which will chart its own course. India is, as de Tocqueville said of the democratic spirit in America, a ‘land made in broad daylight’. India made a conscious choice to join the democracies of the world and that great and noble idea binds these two countries together.

‘I believe India’s hour is at hand’

It’s for this reason that I am greatly optimistic about the possibilities for partnership and I want to think about what we, the US-India Business Council, can do to help.

The first task we have is to continue our advocacy for deeper trade and commercial ties between the two nations. The door for relationships in business is now ajar. We need to keep pushing it open. We need to ensure that US companies are aware of the opportunities from infrastructure investment in India. We must then support a bilateral investment treaty with India, on which I understand that discussions are going well. We must also accelerate technology transfer and collaboration in many fields including agriculture.

Bombay Stock Exchange

Bombay Stock Exchange

And while I hope that my comments today will stir action, I am not laying responsibility solely at the door of government. I think companies can and must take the lead. I am very proud of PepsiCo’s clear commitment to sustainability in India. Through major agri-initiatives in Punjab, Maharashtra, Uttar Pradesh and West Bengal, PepsiCo is helping to lay the groundwork for the long term economic and social prosperity for farmers.

Our conservation and reclamation efforts in our plants reflect our commitment to protect and preserve India’s most precious resource, water. We have also established plastic bottle recycling supply chains to further reduce solid waste. And of course PepsiCo is not alone. USIBC members across a range of industries are investing and building in India, and contributing to the well-being of communities.

There is so much we can do. Great progress has been made since 1991 but we have done a fraction of what we might. Two nations which share a common-law legal tradition and a language ought to be much more deeply bound than they are. Trade between the US and India is still one tenth of US-China trade. I am not sure that business in the US has yet fully grasped the scale of the opportunity in India. As the UISBC, we must arrange the meetings that will change their minds.

I have one final way of trying to encapsulate what the new India might hold in store.

One morning in Madras in 1978 a young woman set out for the United States. For that generation it seemed the most obvious journey to make, for those who could. It was rarely easy, especially in the beginning. But perhaps that journey today does not seem so obvious or so necessary. Has India already grown to the point where the bigger opportunities lie at home, not in the promise from overseas? Is that day coming soon? Perhaps that callow young woman who left Madras all those years ago will have few successors.

I believe that India’s hour is at hand. There is great promise to be fulfilled, great potential to be realised. As in years past, the USIBC finds itself right at the leading edge. So my call to you this morning, as your new chairman and as a devoted servant to the betterment of US-India relations, is that we continue to do our part to bring these two great democracies together.

If we do our work well, then I dream that all those extraordinary Indians residing all over the world will find their next generation back at home, in the amazing, abundant, talented land of India.

Courtesy :- Rediff

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8 Comments »

  1. 1

    Excellent Blog. I’ve been reading along and just wanted to say hi. I will be reading more of your posts in the future.

    – Jason.

  2. 2

    Great post. I will read your posts frequently. Added you to the RSS reader.

  3. 3
    battakiran Says:

    Thanks guys, You are welcome.

  4. 4

    this progress is just surface progress. it does not represent the actual condition.in India the formers are stile suiciding themselves due to loan because of bad condition or low cost of crops.The rising of SENSEX is just like a bubble which may be blast anytime.

  5. 5
    battakiran Says:

    What you wrote is some what correct but India is a country where whatever you say is correct and opposite is also correct.

  6. 6
    Save America Says:

    I really hate this kind of people who fully utilized the opportunities provided by America and now after getting everything in life, now telling all the nonsense. Can Indra Nooyi or other members of USIBS can leave their US citizen ship and go back to India. Instead of sitting in USA and getting all benefits and talking, why don’t these people go to India and do all the talking? Are all these people can be so big if they are in India??

    AS LONG AS RESERVATIONS PREVAIL IN INDIA, AS LONG AS THERE IS NO GREED TO INDIANS (POLITICIANS, GOVT. ETC) – IT IS THE WORST COUNTRY IN THE WORLD. ALL INDIANS ARE WANT TO GET MORE THAN WHAT THEY DESERVE. VERY FEW PEOPLE ARE REALISTIC. 95% SO CALLED SOFTWARE PROFESSIONALS IN USA ARE CHEATERS WITH FAKE RESUMES, EDUCATION, EXPERIENCE.

  7. 7
    minnesotameetskarnataka Says:

    Great post!

    Next spring my husband and I will visit India..he for the first time in 8 years and me the first time ever.

    He has many friends and family back in India and it seems like for them they had the option of staying in India and having a secure career and great education or trying their luck abroad. Most stayed.

    The stastic that “More than half the population is under 25. India is the only country in the world where the size of the working population will grow and will exceed the number of dependent children and old people until at least 2025.” is amazing. That is an incredible amount of potential!

  8. 8
    battakiran Says:

    @minnesotameetskarnataka :- Welcome to India mam.

    @Save America :- America is a land of outsiders. Most of these successful outsiders work as ambassadors between two contries to get business for America, Thier mother country and for them. You can find every major country has lobbies in America which actually helps in two way. American govt is well aware of this fact. Try to digest.


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