Week of Nov 5th’s Fortune Magazine has a feature on India focusing on the changes in its dynamics, clout, innovation, and business world over the past ~15 years. Highly recommend you read this article and enjoy some of the pictures that precede it. India is in the middle of a marketing blitz around its 60th anniversary of independence. These efforts have been subdued in the press as most of India’s coverage this week surrounds their inability to pass nuclear accords with the US and details the Prime Ministers extensive efforts to convince the world that India continues to be "open for business" regardless of its political choices.
The author has a few messages sprinkled through out the piece but one that I believe must be brought to the surface is the economic and political structures in India and how they have done little to encourage growth inside the continent. One feature inside the piece details a Hyundai venture located in Chennai. The plant is highly successful but not without challenges--all of which surround infrastructure. Or rather the lack of it. Problems like difficulty in delivering products to nearby ports and no government support in its efforts to get water, electricity and other energy sources required to support its operations.
These are very important considerations that companies must understand as they enter the India market place. The complexities abound around getting the right infrastructure to make your strategy work. As the author states “China outspends India on infrastructure by a ratio of 7 to 1. The result: India’s manufactures pay twice as much for electric power as do their Chinese counterparts and three times as much for railway transport.” These numbers are staggering for groups interested in moving into India for manufacturing. Hyundai took on an Indian location based on a rejected application to China; their first choice. How will India solve these problems with a government that has a ‘dysfunctional political system---driven by caste, religion, party and faction?” As competiton heats between these two asian giants India must face its infrastructure woes and solve them. Its unclear how long it will take the government to wake up to this harsh reality--my prediction is that its going to take a while. India has grown too accustom to daily power outages and other infrastructure failures. And the way India has grown has not been like China, through its government. Rather it has been in spite of it.