The Minnesota India Chamber of Commerce hosted an Innovation / Financial / B2B event that opened with a keynote from Mr. Ashishkumar Chauhan, Managing Director & CEO of the Bombay Stock Exchange (BSE), Mumbai, India. The theme of the event was to drive partnership and B2B development between the countries and government collaboration. This event was scheduled on the momentum created by the Prime Minister of India, Shri Narendra Modi’s, visit to the United States earlier this year.
The Chamber opened the event and level set the audience by challenging stale perceptions of India in light of the progress and momentum that is happening within the country. Mr. Ashishkumar’s keynote shared insights into India’s politics, economics, and culture which provided a great foundation for the panel discussions that followed in the day. Below I will highlight many of the insights that were shared with the audience, which was composed of government, corporate, academic, and business representatives.
India’s population has climbed to over 1.2B and is accelerating with projections to surpass China’s population as near as the year 2022 around the 1.5B mark. To gauge that number it is like the population of the USA + Canada + Europe combined. That growth is complicated today by the fact that India is only 2% of the global land mass but today represents over 17% of the world’s population. That results in a population density double that of China today. What is compelling to consider is over 650M of the current population is under the age of 25. These generations are growing up in a dramatically changing world that will create new needs and possibilities for the country. Today the country has enormous initiatives in flight. This includes the development of over 100 smart cities and 100 Gigawatt energy projects. They are focused on best practices in regulation, financial services, and education. Overall they feel the perceptions of India are stuck in the past and don’t see the internal progress. They are also clouded by the lifestyle afforded by the warmer climate. Their populations live comfortably in the climate and have drastically different needs of infrastructure equivalent of harsher northern regions of the world. Given the population density, they also have different needs and culture expectations about travel. They are using communications technologies in ways to reduce travel and are not trying to replicate commuter patterns of other countries. This makes their cities appear different and not as advanced.
India became independent in 1947 and was literally given democracy as a governmental model in a culture that had existed for thousands of years based on feudalism. This was not an organic process but more of an immediate transformation into a model they didn’t understand or could foresee the outcomes. Many parts of the overall model were not optimized. It gave too much power to the on the bureaucrats and focused on too much process and not enough on execution and accountability. This has grown in size and complexity over time but not in efficiency and it is hard to change the government of any country. Corruption has also hurt the systems and they are working very hard to institute best practices in regulation. One method was the use of transparent auctions for resources. An example is the auctioning of public FM radio bands to corporations for time-bound contracts. This transparent process allowed for fair practice removing many of the past government methods to assign rights behind the scenes.
There was an interesting discussion about India’s national memory and how it views its own past. In the 1700th century, Europe marveled at the riches and goods from India and China was a secondary market. Extensive trade and partnerships were formed with Europe, but by 1657 was subjected as a colonial possession. This is a very bitter memory and lesson from their history that still affects the culture today. It is these beliefs which make India a less willing partner when it comes to working with the World Trade Organization (WTO) for example. India appears difficult, but they have learned the dangers of this type of collaboration. India was someone closed in the 20th century to trade, but by 1991 they had to trade externally for oil and gas to support their infrastructure. This effectively “broke” their financial model and forced them into capitalism and participation in the global economy. They feel western powers prefer to deal with dictatorships because you can make a deal at the top and that country will fall in line. India is a democracy, so that makes deals much more difficult because of the process and the fact that many people and officials will ask questions at each level of the process.
The Bombay Stock Exchange (BSE) is one of the largest trading exchanges in the world. Its technology is cutting edge with .6 microseconds response times in electronic trading and still improving. They are building and funding innovation centers and incubating new companies. India is #2 globally in the amount of Venture Capital being invested in new companies. The speed at which technology is changing the world is changing their economy as well. It took over 200 years for the steam engine to become Global, 60 years for the typewriter, and 5 years for mobile. Given India choose to focus on the IT industry when China chose to focus on manufacturing, their industries are tied to the pace of technology directly. Today India is comprised of 30 states with a large GDP growing at over 7.5% a year. While the GDP of the USA still exceeds India, it bears closer investigation. They provided an example of going to the dentist in the USA and paying $400 for the service, where in India you may have paid 20 cents. This provides some feeling of the scale of the amount of good and services that would need to be produced in India to create such a large GDP.
One of the great challenges of India’s economy is in the population growth. With over 650M under the age of 25 and being on track to hit 1.5B in less than 10 years, India has to create over 50M new jobs for the next 50 years. On top of that, 70% of those new jobs are not defined yet that will be defined by emerging fields like:
- 3D printing
- Nano Technology
- Artificial Intelligence
- Virtual Reality
- Space ( $70M for India to go to Mars / $200M for the USA )
- Driverless Cars
- Robots / Drones
India is a hard culture to quantify because it is so large, diverse with a broad distribution of wealth. So you can find contrary examples of values and behaviors throughout India:
India is both:
- Fast & Slow
- Communal & Secular
- Socialists & Feudalists
For businesses looking to operate in the Indian culture, you have to understand the people. India is a 5000-year-old culture and has figured out many social norms. This results in little violence because social norms are stabilized. People are focused on enjoying life and relationships, not material things. There is little motivation for material things. People do what they want, they are not climbing a career ladder. The Hindu religion has no book, very progressive adapts with the times – move forward, not trying to live the past. Focused on solutions and not philosophy. India won’t lead in solving the Grand Challenges due to culture, but their need for solutions will be great. Foreign companies need to understand the values and motivations. Many western companies bring fantastic services to India but fail financially because of the disparity in the financial models. People in India are not used to paying hardly anything for services. They also like to haggle, not having fixed pricing structures, they also expect service at a 99% discount. All of these factors result in business models that are built around fee for service models.
The event continued with other speakers from the Minnesota government and Federal SBA discussing doing international business. The afternoon followed with panel discussions with the audience.