1 00:00:05,920 --> 00:00:09,600 Speaker 1: Welcome to Kobe Time, a podcast series on Markets and 2 00:00:09,609 --> 00:00:12,699 Speaker 1: Economies from D BS Group Research. I'm Tambe, chief economist, 3 00:00:12,850 --> 00:00:16,100 Speaker 1: welcoming you to our 134th episode. 4 00:00:16,750 --> 00:00:19,969 Speaker 1: We had Vasuki Shastri on Kobe Time back in the 5 00:00:19,979 --> 00:00:23,968 Speaker 1: spring of 2021 on episode 51. At that time, we 6 00:00:23,979 --> 00:00:28,729 Speaker 1: talked about the challenges for developing Asia drawing from his 7 00:00:28,739 --> 00:00:33,180 Speaker 1: book has Asia lost its dynamic past turbulent future. Uh 8 00:00:33,189 --> 00:00:37,049 Speaker 1: But today's podcast is focused on India Basuki and a 9 00:00:37,060 --> 00:00:40,490 Speaker 1: number of other economists and analysts have lately been thinking 10 00:00:40,500 --> 00:00:42,720 Speaker 1: hard about India's potential 11 00:00:42,970 --> 00:00:47,490 Speaker 1: which can arguably only be realized through large scale manufacturing 12 00:00:47,500 --> 00:00:53,270 Speaker 1: and uh manufacturing, lead value addition and uh employment creation. 13 00:00:53,759 --> 00:00:55,990 Speaker 1: Uh I'm looking forward to this conversation because this issue 14 00:00:56,000 --> 00:00:58,500 Speaker 1: is also close to my heart and some of the 15 00:00:58,509 --> 00:01:01,509 Speaker 1: ideas that Basuki has put out in some of the 16 00:01:01,520 --> 00:01:05,819 Speaker 1: articles that he's published recently. They have resonated with me tremendously. 17 00:01:06,050 --> 00:01:10,220 Speaker 1: Uh Vasuki Shari is a senior advisor at Gatehouse advisory partners, 18 00:01:10,349 --> 00:01:14,919 Speaker 1: a Geostrategic consulting firm. He was formerly with the IMF 19 00:01:14,940 --> 00:01:18,050 Speaker 1: Standard Chartered Bank and the Boundary Authority of Singapore. 20 00:01:18,410 --> 00:01:21,519 Speaker 1: He serves on the advisory Council of Chatham House and 21 00:01:21,529 --> 00:01:24,419 Speaker 1: the Institute of Human Rights and Business. He's the author 22 00:01:24,430 --> 00:01:26,760 Speaker 1: of three books, I've already mentioned one of them as 23 00:01:26,769 --> 00:01:29,110 Speaker 1: Asia lost it. But also in 2018, he had published 24 00:01:29,120 --> 00:01:33,349 Speaker 1: resurgent Indonesia from crisis to confidence that that can be 25 00:01:33,360 --> 00:01:36,529 Speaker 1: another podcast another day. And also his book from last year, 26 00:01:36,540 --> 00:01:40,180 Speaker 1: The Notorious ESGV Shastri. Welcome back to COVID time. 27 00:01:41,150 --> 00:01:43,739 Speaker 2: I'm delighted to be here, Taimur, it's been, been a 28 00:01:43,750 --> 00:01:46,970 Speaker 2: long time. Uh But, you know, absolutely delighted that you've 29 00:01:46,980 --> 00:01:50,339 Speaker 2: kept uh the podcast going and I listened to many 30 00:01:50,349 --> 00:01:53,620 Speaker 2: of them. They're really, really interesting and living far away 31 00:01:53,629 --> 00:01:57,730 Speaker 2: from Asia. It's a fascinating window for me on developments 32 00:01:57,739 --> 00:01:58,370 Speaker 2: on the ground. 33 00:01:59,050 --> 00:02:01,739 Speaker 1: Uh Thanks for your kind words, Vasuki. It's people like 34 00:02:01,750 --> 00:02:03,309 Speaker 1: you who make it happen. So I'm grateful that you're 35 00:02:03,319 --> 00:02:06,739 Speaker 1: back on the podcast. Um Vasuki, let's get right to 36 00:02:06,750 --> 00:02:09,470 Speaker 1: the heart of the matter. Um We are approaching the 37 00:02:09,479 --> 00:02:14,130 Speaker 1: 10th anniversary of make in India, help us take stock, 38 00:02:14,139 --> 00:02:17,389 Speaker 1: uh what is making India and how has it evolved? 39 00:02:18,250 --> 00:02:21,149 Speaker 2: Yeah, I think there's a historic backdrop as to why 40 00:02:21,160 --> 00:02:26,309 Speaker 2: Prime Minister Modi within three months of assuming office in 2014, 41 00:02:26,649 --> 00:02:32,520 Speaker 2: uh decided essentially to reconfigure the Indian economy, which still 42 00:02:32,529 --> 00:02:36,538 Speaker 2: is and still was at that time, heavily dependent on 43 00:02:36,550 --> 00:02:41,119 Speaker 2: consumption and services. There was a deeply held belief in 44 00:02:41,130 --> 00:02:44,050 Speaker 2: the policy community in India and this dates back many 45 00:02:44,059 --> 00:02:46,100 Speaker 2: decades that, 46 00:02:46,639 --> 00:02:49,660 Speaker 2: you know, we wouldn't, probably wouldn't be having this conversation 47 00:02:49,669 --> 00:02:55,910 Speaker 2: if India's state owned enterprises had delivered value, had captured 48 00:02:55,919 --> 00:02:59,500 Speaker 2: a greater share of GDP over a period of time, 49 00:02:59,508 --> 00:03:01,339 Speaker 2: you know, they were placed in the commanding heights of 50 00:03:01,350 --> 00:03:05,350 Speaker 2: the economy for many decades. Uh they faltered, many of 51 00:03:05,360 --> 00:03:08,580 Speaker 2: them failed. So there was a sense of a need 52 00:03:08,589 --> 00:03:12,899 Speaker 2: for renewal even in the early 19 nineties when India 53 00:03:12,910 --> 00:03:15,139 Speaker 2: embarked on its reform journey, 54 00:03:15,679 --> 00:03:18,350 Speaker 2: but I think it all came into place uh in 55 00:03:18,360 --> 00:03:21,910 Speaker 2: a way in 2014, uh there was a sense that, 56 00:03:21,919 --> 00:03:25,190 Speaker 2: you know Indian growth had been and particularly in the 57 00:03:25,199 --> 00:03:29,198 Speaker 2: 19 nineties, 8% GDP. On average, there was a sense 58 00:03:29,210 --> 00:03:33,259 Speaker 2: that this growth journey would end at some stage and 59 00:03:33,270 --> 00:03:38,559 Speaker 2: you certainly needed to revive manufacturing, incentivized manufacturing. So in 60 00:03:38,570 --> 00:03:41,860 Speaker 2: a very simple way, there were two concepts, uh two 61 00:03:41,869 --> 00:03:43,190 Speaker 2: defining beliefs 62 00:03:43,610 --> 00:03:46,990 Speaker 2: when making India was launched in September 2014 1st is 63 00:03:47,000 --> 00:03:53,149 Speaker 2: of course, man drive manufacturing, increase its share of uh GDP. 64 00:03:53,160 --> 00:03:56,259 Speaker 2: You know, it's in the low teens. Uh it's increased 65 00:03:56,270 --> 00:03:59,679 Speaker 2: marginally over the past uh uh decade, we can talk 66 00:03:59,690 --> 00:04:00,910 Speaker 2: about uh why 67 00:04:01,580 --> 00:04:06,360 Speaker 2: and, and, and when uh of this concept and the 68 00:04:06,369 --> 00:04:09,050 Speaker 2: second thing really is India's, you know, on one hand, 69 00:04:09,059 --> 00:04:14,600 Speaker 2: demographic speed spot a billion people under the age of 30. 70 00:04:14,960 --> 00:04:17,988 Speaker 2: But at the same time, you need to create those 71 00:04:18,000 --> 00:04:21,929 Speaker 2: quality jobs for the estimated 8 to 10 million young 72 00:04:21,940 --> 00:04:25,058 Speaker 2: people coming into the job market every year. And you know, 73 00:04:25,070 --> 00:04:27,899 Speaker 2: at the outset that has been a failure and, and 74 00:04:27,910 --> 00:04:30,279 Speaker 2: you know, the India's underemployment problem 75 00:04:30,910 --> 00:04:34,429 Speaker 2: really poses social and political risks. And the fact that 76 00:04:34,440 --> 00:04:37,279 Speaker 2: it has not happened is always a puzzle for me. 77 00:04:37,488 --> 00:04:40,820 Speaker 2: So bringing it all together uh uh and, and to make, 78 00:04:40,829 --> 00:04:42,969 Speaker 2: making India really, really attractive, 79 00:04:43,670 --> 00:04:45,450 Speaker 2: the government really had to junk 80 00:04:46,428 --> 00:04:51,969 Speaker 2: 5 to 6 decades of philosophy that you don't incentivize 81 00:04:51,980 --> 00:04:55,239 Speaker 2: foreign investors. But you know that any incentives that are 82 00:04:55,250 --> 00:04:59,260 Speaker 2: given at the margin, give it to the domestic private sector. 83 00:04:59,390 --> 00:05:04,299 Speaker 2: But absolutely hold all of those incentives for the state. And, 84 00:05:04,309 --> 00:05:09,730 Speaker 2: and so, you know, really unshackling uh that thinking 85 00:05:10,230 --> 00:05:14,089 Speaker 2: and, and, and putting up the uh center that we're 86 00:05:14,100 --> 00:05:18,750 Speaker 2: going to provide production linked incentives for foreign investors to 87 00:05:18,760 --> 00:05:21,369 Speaker 2: come and make in India and to come and make 88 00:05:21,380 --> 00:05:24,459 Speaker 2: in India in 25 sectors. Many of these are core 89 00:05:24,470 --> 00:05:28,760 Speaker 2: what the government has identified as core industrial sectors, you know, 90 00:05:28,769 --> 00:05:37,160 Speaker 2: advanced manufacturing, semiconductors, uh uh tele telecommunications, automobiles. 91 00:05:37,488 --> 00:05:40,440 Speaker 2: So there was a great deal of ambition in these 92 00:05:40,450 --> 00:05:43,880 Speaker 2: in this uh make in India project great deal of 93 00:05:43,890 --> 00:05:46,469 Speaker 2: energy and enthusiasm on the part of the government to 94 00:05:46,480 --> 00:05:51,789 Speaker 2: promote this. They promoted this ceaselessly across global platforms. You know, 95 00:05:51,799 --> 00:05:56,019 Speaker 2: you saw Prime Minister Modi acting as salesperson in chief 96 00:05:56,529 --> 00:06:00,070 Speaker 2: uh at Davos uh for example, you know, rubbing shoulders 97 00:06:00,079 --> 00:06:03,868 Speaker 2: with the fortune 100 CEO S still. 98 00:06:04,799 --> 00:06:07,440 Speaker 2: And, and I think it's useful as we uh uh 99 00:06:07,450 --> 00:06:12,019 Speaker 2: uh take a deep dive to differentiate between the enthusiasm 100 00:06:12,309 --> 00:06:15,119 Speaker 2: and the performance of making India in the first term 101 00:06:15,130 --> 00:06:16,190 Speaker 2: of Mr Modi. 102 00:06:16,980 --> 00:06:21,290 Speaker 2: And I think there's a differentiated set of performance in 103 00:06:21,299 --> 00:06:24,500 Speaker 2: the second term. And the second term I think has 104 00:06:24,510 --> 00:06:25,919 Speaker 2: been more problematic 105 00:06:26,779 --> 00:06:32,190 Speaker 2: in terms of regulatory uh uh uh outcomes in terms 106 00:06:32,200 --> 00:06:35,980 Speaker 2: of the sense that many in India have, particularly in 107 00:06:35,988 --> 00:06:37,059 Speaker 2: the private sector, 108 00:06:38,100 --> 00:06:41,059 Speaker 2: that this is not a level playing field. But that 109 00:06:41,070 --> 00:06:44,040 Speaker 2: sense was not there in the first two or three years. 110 00:06:45,029 --> 00:06:47,479 Speaker 2: And you know, you've got to remember this happened 111 00:06:48,160 --> 00:06:53,229 Speaker 2: pre China us uh uh Cold War or trade tensions, 112 00:06:53,238 --> 00:06:56,239 Speaker 2: whatever you might. So this happened at the time. Uh 113 00:06:56,250 --> 00:07:00,700 Speaker 2: So this pre pre dated China's own uh make in 114 00:07:00,709 --> 00:07:05,250 Speaker 2: China 2025 which is really focused on advanced manufacturing and 115 00:07:05,260 --> 00:07:08,089 Speaker 2: really sent a scare in Europe and the us that 116 00:07:08,100 --> 00:07:11,320 Speaker 2: China was catching up fast. So India was in that 117 00:07:11,329 --> 00:07:12,420 Speaker 2: sweet spot 118 00:07:12,890 --> 00:07:15,420 Speaker 2: and you know, the headline that I'd like to give 119 00:07:15,429 --> 00:07:18,160 Speaker 2: before we discuss this in detail is it's been a 120 00:07:18,170 --> 00:07:21,739 Speaker 2: qualified failure. It's been a qualified failure for a variety 121 00:07:21,750 --> 00:07:24,670 Speaker 2: of reasons. There have been a number of high profile 122 00:07:24,679 --> 00:07:29,079 Speaker 2: foreign investors who've taken the dive, you know, micro, certainly 123 00:07:29,089 --> 00:07:33,790 Speaker 2: all the contract manufacturers of apple. So the iphone 124 00:07:34,450 --> 00:07:37,500 Speaker 2: uh 14 or 15 billion work are shipped out of 125 00:07:37,510 --> 00:07:42,079 Speaker 2: India these days. Uh This is a tiny, tiny proportion 126 00:07:42,089 --> 00:07:45,690 Speaker 2: of what is produced still in China. So bringing all 127 00:07:45,700 --> 00:07:47,410 Speaker 2: of this together, I think we've got to focus a 128 00:07:47,420 --> 00:07:51,899 Speaker 2: little bit on geopolitics. Uh The fact that a lot 129 00:07:51,910 --> 00:07:55,140 Speaker 2: of foreign investors are moving away from China. So there's 130 00:07:55,149 --> 00:07:59,070 Speaker 2: a fundamental question that make in India has faltered has 131 00:07:59,079 --> 00:08:00,950 Speaker 2: been a qualified failure. 132 00:08:01,399 --> 00:08:03,850 Speaker 2: Can this government in its third um pick up the 133 00:08:03,859 --> 00:08:10,619 Speaker 2: pieces and really uh benefit from this wave of investment 134 00:08:10,899 --> 00:08:14,829 Speaker 2: uh coming out of China in the supply chains, much 135 00:08:14,839 --> 00:08:17,660 Speaker 2: of it is going to Vietnam. Uh but can India 136 00:08:17,670 --> 00:08:21,190 Speaker 2: capture this? I think that's the big philosophical question for 137 00:08:21,200 --> 00:08:23,540 Speaker 2: the next three years. Let me pause here. 138 00:08:23,959 --> 00:08:26,700 Speaker 1: No, that's a great way to set up this whole conversation. 139 00:08:26,709 --> 00:08:29,690 Speaker 1: But I want to uh work with you in terms 140 00:08:29,700 --> 00:08:32,219 Speaker 1: of going through some data on a bunch of parameters 141 00:08:32,229 --> 00:08:35,819 Speaker 1: to establish that assertion which will be headline grabbing no 142 00:08:35,830 --> 00:08:39,710 Speaker 1: question about the unqualified failure of making India. But before 143 00:08:39,719 --> 00:08:40,700 Speaker 1: I do that, I just want to go back to 144 00:08:40,710 --> 00:08:45,409 Speaker 1: 2014 for a second. But at that time, I remember 145 00:08:45,669 --> 00:08:47,179 Speaker 1: Raghuram Rajan who was 146 00:08:47,679 --> 00:08:49,218 Speaker 1: the governor of RB A at that time and he 147 00:08:49,229 --> 00:08:52,608 Speaker 1: himself questioned the philosophical underpinning of making in India. And 148 00:08:52,619 --> 00:08:54,770 Speaker 1: I think he said something like we should focus on 149 00:08:54,780 --> 00:08:58,210 Speaker 1: make for India, which I interpreted that if we are 150 00:08:58,219 --> 00:09:02,260 Speaker 1: going to give some performance link in investments incentive, uh 151 00:09:02,270 --> 00:09:03,059 Speaker 1: we should 152 00:09:03,135 --> 00:09:06,834 Speaker 1: do it for import substitution, not necessarily for export orientation 153 00:09:06,844 --> 00:09:10,715 Speaker 1: because that's a hyper competitive landscape. Uh Do you think 154 00:09:10,734 --> 00:09:13,385 Speaker 1: that's my right read of what Rau was coming from and, 155 00:09:13,395 --> 00:09:15,835 Speaker 1: and what was your take at that time, this import 156 00:09:15,844 --> 00:09:17,965 Speaker 1: substitution versus export orientation around making 157 00:09:17,974 --> 00:09:18,434 Speaker 1: India, 158 00:09:19,289 --> 00:09:21,840 Speaker 2: right? So if you look at the value chain proposition 159 00:09:21,849 --> 00:09:24,929 Speaker 2: that India had, and unfortunately, I think if you go 160 00:09:24,940 --> 00:09:28,819 Speaker 2: low down, if you're looking at low value addition, labor 161 00:09:28,909 --> 00:09:34,590 Speaker 2: intensive industries like textiles and garments, the India has essentially 162 00:09:34,599 --> 00:09:38,329 Speaker 2: been outmaneuvered by Bangladesh, Cambodia and Sri Lanka. 163 00:09:39,030 --> 00:09:43,190 Speaker 2: Uh uh Indian wages are, are high compared to these 164 00:09:43,200 --> 00:09:48,358 Speaker 2: uh three countries. And there's complexity really in e even 165 00:09:48,369 --> 00:09:52,049 Speaker 2: in producing textiles and garments. And that's the, that's the 166 00:09:52,059 --> 00:09:56,289 Speaker 2: reason why India has consistently lost market share. But so 167 00:09:56,299 --> 00:10:00,669 Speaker 2: if you take the uh uh proposition that you can 168 00:10:00,679 --> 00:10:02,809 Speaker 2: make in India for India, 169 00:10:03,380 --> 00:10:07,369 Speaker 2: then because of the uh uh labor intensity and because 170 00:10:07,380 --> 00:10:09,580 Speaker 2: of the fact that, you know, you've got millions of 171 00:10:09,590 --> 00:10:14,549 Speaker 2: people uh uh knocking at uh uh literally looking for 172 00:10:14,559 --> 00:10:18,409 Speaker 2: a job every single year. So how can you match 173 00:10:18,419 --> 00:10:19,280 Speaker 2: those 174 00:10:20,500 --> 00:10:25,229 Speaker 2: low technical skills with low wage industries like textiles? And 175 00:10:25,239 --> 00:10:27,469 Speaker 2: India has kind of missed the bus in that. I 176 00:10:27,479 --> 00:10:31,349 Speaker 2: I don't know if the current problems in Bangladesh presents 177 00:10:31,359 --> 00:10:35,570 Speaker 2: a window of opportunity for India to reassert itself in, 178 00:10:35,580 --> 00:10:38,750 Speaker 2: in textiles and garments. So then if you go at 179 00:10:38,760 --> 00:10:39,390 Speaker 2: high 180 00:10:40,099 --> 00:10:44,239 Speaker 2: value addition, the problem is you can't make in India 181 00:10:44,250 --> 00:10:48,609 Speaker 2: for India, iphones are an example where it's part of 182 00:10:48,619 --> 00:10:53,400 Speaker 2: a complex regional supply chain components have to flow through 183 00:10:53,719 --> 00:10:57,359 Speaker 2: from Singapore, from Malaysia and other parts of East Asia 184 00:10:57,900 --> 00:11:02,400 Speaker 2: into the final assembly point be China or, or India 185 00:11:02,409 --> 00:11:05,479 Speaker 2: as it happens to be the case. But India has 186 00:11:05,489 --> 00:11:08,760 Speaker 2: got this very, very ambivalent approach 187 00:11:09,140 --> 00:11:15,250 Speaker 2: towards imports and has always had this strong sense that of, 188 00:11:15,260 --> 00:11:19,400 Speaker 2: of self reliance which Prime Minister Modi kind of renewed 189 00:11:19,820 --> 00:11:23,809 Speaker 2: uh in his first term. And, and that's a problem. 190 00:11:23,960 --> 00:11:26,159 Speaker 2: I mean, it's a problem if you're going to say 191 00:11:26,169 --> 00:11:29,000 Speaker 2: that you're going to make in India for India, then 192 00:11:29,010 --> 00:11:32,030 Speaker 2: you kind of have to be like the Chinese manufacturing 193 00:11:32,039 --> 00:11:36,419 Speaker 2: majors who are world beating, who are producing in China 194 00:11:36,429 --> 00:11:38,559 Speaker 2: for China, you know, the by DS 195 00:11:39,119 --> 00:11:42,770 Speaker 2: and the Catls of the world and then have resumed 196 00:11:42,780 --> 00:11:43,859 Speaker 2: global market share. 197 00:11:44,919 --> 00:11:48,539 Speaker 2: That seems to be a very, very difficult hurdle, I 198 00:11:48,549 --> 00:11:51,020 Speaker 2: think for India, there are a couple of industries in 199 00:11:51,030 --> 00:11:52,419 Speaker 2: India which are world beating, 200 00:11:53,250 --> 00:11:56,119 Speaker 2: right? So you bring it all together and then you 201 00:11:56,130 --> 00:12:00,359 Speaker 2: want to increase value addition, you want to absolutely increase 202 00:12:00,369 --> 00:12:04,960 Speaker 2: manufacturing employment and you want to increase GDP share. And 203 00:12:04,969 --> 00:12:08,479 Speaker 2: the only way you can do it in today's globalized world. 204 00:12:08,489 --> 00:12:10,349 Speaker 2: I know, I know there's a lot of debate on 205 00:12:10,669 --> 00:12:13,640 Speaker 2: whether de de globalization is a reality or not. 206 00:12:14,630 --> 00:12:17,890 Speaker 2: But in that reality, you've got to do it 207 00:12:19,239 --> 00:12:21,659 Speaker 2: for India to be part of a regional supply chain, 208 00:12:21,669 --> 00:12:25,739 Speaker 2: which is, which traditionally and historically it has stayed away from. 209 00:12:26,320 --> 00:12:29,020 Speaker 2: And I think when we review performance, we make in India, 210 00:12:29,030 --> 00:12:31,020 Speaker 2: I think that's one of the biggest hurdles. I think 211 00:12:31,030 --> 00:12:34,728 Speaker 2: it's a mindset challenge both on part of the policy 212 00:12:34,739 --> 00:12:38,440 Speaker 2: makers and on part of the private sector. And you know, 213 00:12:38,599 --> 00:12:41,840 Speaker 2: uh uh to your point on Rur Rajan Raghu has 214 00:12:41,849 --> 00:12:43,199 Speaker 2: come out more recently 215 00:12:44,190 --> 00:12:49,090 Speaker 2: arguing that the absolute amount uh given out, for example, 216 00:12:49,099 --> 00:12:53,179 Speaker 2: for the micro facility in India, where the, you know, 217 00:12:53,190 --> 00:12:58,750 Speaker 2: the uh uh uh subsidy runs in excess of 1.81 218 00:12:58,760 --> 00:13:03,030 Speaker 2: 0.9 billion on part of the government, federal and state 219 00:13:03,419 --> 00:13:06,530 Speaker 2: that this exceeds in many ways uh the budget for 220 00:13:06,539 --> 00:13:09,599 Speaker 2: higher education, right? So I is India making a calculated 221 00:13:09,609 --> 00:13:13,760 Speaker 2: choice of putting all of its uh uh eggs 222 00:13:14,390 --> 00:13:18,409 Speaker 2: in, in the micron basket or the apple basket. And 223 00:13:18,419 --> 00:13:21,059 Speaker 2: what kind of long term value addition is there gonna be? 224 00:13:21,070 --> 00:13:23,450 Speaker 2: And then I think that's a, that's the right question 225 00:13:23,979 --> 00:13:27,409 Speaker 2: uh uh uh to ask of a policymaker. But if 226 00:13:27,419 --> 00:13:29,609 Speaker 2: you ask, you know, le let's be fair 227 00:13:30,270 --> 00:13:33,229 Speaker 2: uh with the government. And I think the government's proposition 228 00:13:33,239 --> 00:13:36,348 Speaker 2: has always been, they want to make this work. They 229 00:13:36,359 --> 00:13:42,369 Speaker 2: don't believe there's a single approach of plis for everybody 230 00:13:42,750 --> 00:13:45,968 Speaker 2: in order to uh uh uh you know, make, making 231 00:13:45,979 --> 00:13:48,650 Speaker 2: India successful. There's also a sense that we've got to 232 00:13:48,659 --> 00:13:53,090 Speaker 2: improve the business environment and the regulatory environment for everyone 233 00:13:53,099 --> 00:13:56,479 Speaker 2: else to do. Well. And I think that is where 234 00:13:56,489 --> 00:13:58,409 Speaker 2: the bottleneck is at the moment, 235 00:13:59,229 --> 00:14:04,789 Speaker 1: right? OK. Let's do uh performance evaluation of making India FD. I, 236 00:14:04,799 --> 00:14:07,848 Speaker 1: how has it been over the decades since the program began? 237 00:14:08,539 --> 00:14:11,609 Speaker 2: Right. So you've got two sets of statistics. Uh ta right, 238 00:14:11,619 --> 00:14:15,280 Speaker 2: let's be fair. Uh, the Indian government to make an 239 00:14:15,289 --> 00:14:16,320 Speaker 2: India secretariat, 240 00:14:16,989 --> 00:14:20,520 Speaker 2: uh, has made the assertion that in the last 10 241 00:14:20,530 --> 00:14:24,919 Speaker 2: years you kind of have attracted uh between 600 to 242 00:14:24,929 --> 00:14:30,179 Speaker 2: 900 billion in, in foreign direct investment. And I've actually 243 00:14:30,190 --> 00:14:33,750 Speaker 2: gone and checked through the numbers. Uh uh it seems 244 00:14:33,760 --> 00:14:37,739 Speaker 2: to be a consolidated gross number that they're quoting because 245 00:14:37,750 --> 00:14:40,080 Speaker 2: there's lots of and, and I still have an open 246 00:14:40,090 --> 00:14:43,409 Speaker 2: question mark of whether that includes portfolio flows 247 00:14:43,840 --> 00:14:47,049 Speaker 2: uh right. So there's a lot of noise in that data, right? 248 00:14:47,059 --> 00:14:51,739 Speaker 2: So then you look at an outside credible source like 249 00:14:51,750 --> 00:14:54,580 Speaker 2: uh T AD which is over the over a long 250 00:14:54,590 --> 00:14:56,929 Speaker 2: period of time has put out FT I data 251 00:14:57,570 --> 00:15:00,739 Speaker 2: and the A N A data, for example, between 2019 252 00:15:01,280 --> 00:15:08,210 Speaker 2: and 2024 suggests 200 plus billion has come in Greenfield 253 00:15:08,219 --> 00:15:12,789 Speaker 2: investment commitments which are future commitments for which foreign investment 254 00:15:13,210 --> 00:15:17,190 Speaker 2: uh flows have not yet come in. They again of 255 00:15:17,200 --> 00:15:20,969 Speaker 2: the order of 200 billion or so. But so it's 256 00:15:20,979 --> 00:15:24,150 Speaker 2: a mixed picture and I think uh uh when we, 257 00:15:24,159 --> 00:15:27,030 Speaker 2: when we say making India has been a qualified failure, 258 00:15:27,609 --> 00:15:30,169 Speaker 2: there was this sense that there would be this absolute 259 00:15:30,179 --> 00:15:36,270 Speaker 2: mad rush on the part of multinational corporations looking to 260 00:15:36,280 --> 00:15:40,710 Speaker 2: reso looking to relocate uh manufacturing in India, you know, 261 00:15:40,719 --> 00:15:44,309 Speaker 2: mainly because of the India growth story, you had the 262 00:15:44,320 --> 00:15:48,969 Speaker 2: ability to cater to the domestic market in India. Geography 263 00:15:48,979 --> 00:15:52,409 Speaker 2: is very favorable. So it could also be used as 264 00:15:52,419 --> 00:15:53,669 Speaker 2: an export destination. 265 00:15:54,349 --> 00:15:57,369 Speaker 2: But the FD I data, right. So if you if 266 00:15:57,380 --> 00:15:59,090 Speaker 2: you try and link 267 00:16:00,159 --> 00:16:05,320 Speaker 2: the high numbers quoted by the American India secretariat and 268 00:16:05,330 --> 00:16:06,659 Speaker 2: then you go down and see 269 00:16:07,380 --> 00:16:11,669 Speaker 2: has this actually moved the needle on ma manufacturing share 270 00:16:11,950 --> 00:16:16,010 Speaker 2: of GDP. So even if you assume uh uh the 271 00:16:16,020 --> 00:16:18,679 Speaker 2: Indian government statistics suggest 28% 272 00:16:19,369 --> 00:16:23,770 Speaker 2: is the number of manufacturing share of GDP, private sector 273 00:16:23,780 --> 00:16:26,919 Speaker 2: estimates are significantly low. They're in the high teens at 274 00:16:26,929 --> 00:16:28,900 Speaker 2: the moment, right? So, 275 00:16:30,210 --> 00:16:32,349 Speaker 2: so you've got to have a great deal of faith 276 00:16:32,359 --> 00:16:36,590 Speaker 2: in the official data to say it's been a unqualified success. 277 00:16:36,880 --> 00:16:39,429 Speaker 2: But if you look at the noise in the data, 278 00:16:39,690 --> 00:16:42,030 Speaker 2: it would, it would suggest that there's been a much 279 00:16:42,039 --> 00:16:46,349 Speaker 2: more modest success in making India. And there are lots 280 00:16:46,359 --> 00:16:48,869 Speaker 2: of big question marks at the moment on, you know, 281 00:16:48,880 --> 00:16:52,690 Speaker 2: level playing field, regulatory enforcement. And this is not just 282 00:16:52,700 --> 00:16:56,570 Speaker 2: a question, I think for foreign investors as concerned, it 283 00:16:56,580 --> 00:16:58,630 Speaker 2: is increasingly a question for 284 00:16:59,299 --> 00:17:02,929 Speaker 2: India's large business houses. Who again, if you look at 285 00:17:02,940 --> 00:17:06,079 Speaker 2: the data coming out of uh sources like CMIE 286 00:17:07,229 --> 00:17:10,050 Speaker 2: have have essentially over the last 10 years, 287 00:17:10,859 --> 00:17:15,468 Speaker 2: pocketed all the profits uh uh after tax profits that 288 00:17:15,479 --> 00:17:19,010 Speaker 2: they have generated, they're also benefiting from a lower corporate 289 00:17:19,020 --> 00:17:23,719 Speaker 2: tax rate uh uh over the last seven years, but 290 00:17:23,729 --> 00:17:26,670 Speaker 2: at the same time, they seem to be reluctant. And, 291 00:17:26,680 --> 00:17:29,930 Speaker 2: you know, the statistic that one looks at is gross 292 00:17:29,939 --> 00:17:34,739 Speaker 2: uh capital formation, uh which again does not match with 293 00:17:34,750 --> 00:17:38,560 Speaker 2: this over enthusiasm in the making India story as, as 294 00:17:38,569 --> 00:17:40,349 Speaker 2: suggested by the government. 295 00:17:41,329 --> 00:17:44,000 Speaker 1: Right. Uh I think, you know, data is certainly an issue. 296 00:17:44,010 --> 00:17:46,270 Speaker 1: Uh We've had also issues with the GDP data. So 297 00:17:46,280 --> 00:17:48,909 Speaker 1: when we talk about manufacturing share of GDP, both the 298 00:17:48,920 --> 00:17:51,839 Speaker 1: numerator and the denominator, you know, there are question marks 299 00:17:51,849 --> 00:17:57,629 Speaker 1: around that. Uh Unfortunately, uh Vasuki, notwithstanding data issue. Uh 300 00:17:57,640 --> 00:18:01,150 Speaker 1: what's your sense of job creation around making India over 301 00:18:01,160 --> 00:18:01,829 Speaker 1: the last decade? 302 00:18:02,790 --> 00:18:05,530 Speaker 2: Right. So you can, you, you, you've got to probably 303 00:18:05,540 --> 00:18:09,989 Speaker 2: divide this up into three buckets, right? So you've got 304 00:18:10,000 --> 00:18:15,209 Speaker 2: elite foreign investors, right? So you've got Apple, you, you, 305 00:18:15,219 --> 00:18:18,760 Speaker 2: you now have uh micro but micros facility is still 306 00:18:18,770 --> 00:18:20,770 Speaker 2: under uh construction. 307 00:18:23,780 --> 00:18:28,199 Speaker 2: 11 can say that the three Apple contract manufacturers uh 308 00:18:28,880 --> 00:18:33,599 Speaker 2: probably have the ability to create between 50,000 to 100,000 309 00:18:33,609 --> 00:18:34,198 Speaker 2: jobs 310 00:18:35,219 --> 00:18:39,449 Speaker 2: if the Apple production facility has been able to scale up. 311 00:18:39,859 --> 00:18:44,869 Speaker 2: If increasingly you're finding that in Shenzhen and other parts 312 00:18:44,880 --> 00:18:49,849 Speaker 2: of uh southern China, there's a relocation actually taking place 313 00:18:49,859 --> 00:18:50,718 Speaker 2: in the Apple 314 00:18:51,660 --> 00:18:57,219 Speaker 2: iphone production away from China into Vietnam uh into India, right? 315 00:18:57,229 --> 00:19:02,239 Speaker 2: So that's that story. So that number of 50,000 to 316 00:19:02,270 --> 00:19:06,250 Speaker 2: 100,000 clearly is unimpressive, right? So if you're looking at, 317 00:19:06,260 --> 00:19:08,319 Speaker 2: you know, the uh the ambition 318 00:19:08,989 --> 00:19:11,180 Speaker 2: at the start of making India was we are going 319 00:19:11,189 --> 00:19:16,630 Speaker 2: to create 100 million jobs between 2014 and 2022. And 320 00:19:16,640 --> 00:19:20,448 Speaker 2: one can safely say that number has not been matched, right? 321 00:19:20,459 --> 00:19:22,619 Speaker 2: So if you look at again, there's a problem with 322 00:19:22,630 --> 00:19:23,109 Speaker 2: data 323 00:19:23,750 --> 00:19:29,329 Speaker 2: if you put together manufacturing employment in the last decade. 324 00:19:29,819 --> 00:19:32,479 Speaker 2: Uh and this extends to beyond Lake in India, you 325 00:19:32,489 --> 00:19:34,160 Speaker 2: come up with a number of probably 326 00:19:35,050 --> 00:19:36,939 Speaker 2: 55 60 million. 327 00:19:38,079 --> 00:19:38,619 Speaker 2: Uh 328 00:19:39,569 --> 00:19:43,540 Speaker 2: Then you've got the issue of how many young people 329 00:19:43,550 --> 00:19:45,229 Speaker 2: are entering the job market 330 00:19:45,959 --> 00:19:49,150 Speaker 2: every year. And that really is a surge. I mean, 331 00:19:49,160 --> 00:19:52,530 Speaker 2: it's like a, it's like a tsunami uh mainly because 332 00:19:52,540 --> 00:19:55,099 Speaker 2: of India's rich demographics, 333 00:19:55,969 --> 00:19:58,930 Speaker 2: it's a r tsunami which you know, in theory should 334 00:19:58,939 --> 00:20:01,780 Speaker 2: uh uh uh should help India grow on a sustained 335 00:20:01,790 --> 00:20:05,069 Speaker 2: basis for the next 2 to 3 decades, at least. 336 00:20:05,329 --> 00:20:09,810 Speaker 2: But then there's a big question mark surrounding quality of education, right. 337 00:20:09,819 --> 00:20:11,379 Speaker 2: So if you're able to match 338 00:20:12,229 --> 00:20:17,180 Speaker 2: these young educated and they could be the graduate engineers, 339 00:20:17,189 --> 00:20:21,369 Speaker 2: they could be coming out of the vocational technical training institute. 340 00:20:21,910 --> 00:20:25,329 Speaker 2: Uh Right. So there's no supply problem in theory, 341 00:20:26,239 --> 00:20:29,780 Speaker 2: but on the demand side, what the employers are saying 342 00:20:30,130 --> 00:20:33,359 Speaker 2: is there's a skills deficit, there's a skills deficit of 343 00:20:33,369 --> 00:20:34,339 Speaker 2: a magnitude 344 00:20:35,050 --> 00:20:38,469 Speaker 2: which the private sector alone cannot resolve. 345 00:20:39,209 --> 00:20:43,750 Speaker 2: Therefore, there needs to be some kind of public private intervention. 346 00:20:43,880 --> 00:20:45,869 Speaker 2: You've got to figure out whether you can, you know, 347 00:20:45,880 --> 00:20:49,208 Speaker 2: take people in as apprentices and train them. And this 348 00:20:49,219 --> 00:20:51,659 Speaker 2: is a long term journey and it's never going to 349 00:20:51,670 --> 00:20:55,719 Speaker 2: happen overnight. That is why you still see these eye 350 00:20:55,729 --> 00:20:59,989 Speaker 2: popping headlines in Indian media about this vast 351 00:21:00,770 --> 00:21:03,030 Speaker 2: reservoir of young people, you know, 352 00:21:03,780 --> 00:21:06,359 Speaker 2: probably stayed out of college, right. So in the 19 353 00:21:06,729 --> 00:21:09,560 Speaker 2: to 30 age group, I mean, this is the group that, 354 00:21:09,569 --> 00:21:14,679 Speaker 2: you know, any aging society like Japan and Korea really, 355 00:21:14,689 --> 00:21:18,589 Speaker 2: really uh be desperate uh to have at this point 356 00:21:18,599 --> 00:21:23,119 Speaker 2: of their own growth story, but India's ability and the 357 00:21:23,130 --> 00:21:25,859 Speaker 2: India is of course, not alone, I think in this 358 00:21:25,869 --> 00:21:28,800 Speaker 2: uh but in terms of volume, certainly a big problem 359 00:21:29,079 --> 00:21:30,520 Speaker 2: if you look at Indonesia 360 00:21:31,229 --> 00:21:33,949 Speaker 2: and certainly look at Sub Saharan Africa, I mean, they're 361 00:21:33,959 --> 00:21:39,160 Speaker 2: likely to face similar challenges down the line. So and again, 362 00:21:39,170 --> 00:21:43,379 Speaker 2: the contradiction here is, I mean, the economy is chugging along, right, 363 00:21:43,390 --> 00:21:47,969 Speaker 2: chugging along at 6 to 7%. Notwithstanding challenges with uh 364 00:21:48,420 --> 00:21:51,810 Speaker 2: the GDP numbers. But one can kind of feel at 365 00:21:52,300 --> 00:21:55,359 Speaker 2: least in the urban centers, one can kind of feel 366 00:21:55,369 --> 00:21:56,530 Speaker 2: there's a growth momentum 367 00:21:57,670 --> 00:22:00,438 Speaker 2: under way. But at the same time, one can see 368 00:22:00,449 --> 00:22:03,660 Speaker 2: that there are a number of people who are unemployed, right? 369 00:22:03,670 --> 00:22:08,859 Speaker 2: So manufacturing, I would argue would be the solution at 370 00:22:08,869 --> 00:22:12,449 Speaker 2: all levels starting with textiles, garments, low value addition. 371 00:22:13,390 --> 00:22:18,069 Speaker 2: And there hasn't been unfortunately a cohesive plan, right. So 372 00:22:18,079 --> 00:22:24,010 Speaker 2: making India is almost functioning like an elite island for 373 00:22:24,400 --> 00:22:29,270 Speaker 2: really top notch uh uh foreign investors and Indian investors 374 00:22:29,680 --> 00:22:32,359 Speaker 2: who are in that same league. And then you've got 375 00:22:32,369 --> 00:22:34,129 Speaker 2: this vast category below 376 00:22:35,099 --> 00:22:39,150 Speaker 2: of mid size business, uh uh who really feel that, 377 00:22:39,160 --> 00:22:42,859 Speaker 2: you know, they face all the depredations of, you know, 378 00:22:42,869 --> 00:22:47,739 Speaker 2: tough labor legislation. You've got the tax person knocking at 379 00:22:47,750 --> 00:22:50,938 Speaker 2: the door of these uh uh mid size businesses. So 380 00:22:50,949 --> 00:22:55,920 Speaker 2: there's regulatory harassment. So that explains, I think the gap 381 00:22:55,930 --> 00:22:57,469 Speaker 2: of the fact that they have not been able to 382 00:22:57,479 --> 00:23:00,790 Speaker 2: meet this 100 million number and they're well short of 383 00:23:00,800 --> 00:23:03,510 Speaker 2: it and they're likely to be well short of this 384 00:23:03,849 --> 00:23:08,669 Speaker 2: if making India is kind of not reconfigured and make 385 00:23:08,680 --> 00:23:11,829 Speaker 2: it easier. I would say 11 easy fix would make 386 00:23:11,839 --> 00:23:15,270 Speaker 2: it easy for domestic business to invest. Once again. 387 00:23:16,569 --> 00:23:18,300 Speaker 1: I want to stay on the job creation issue a 388 00:23:18,310 --> 00:23:23,489 Speaker 1: little longer. Um What about regional heterogeneity in Indonesia in India? 389 00:23:23,500 --> 00:23:26,849 Speaker 1: I mean, are the northern part of India States creating 390 00:23:26,859 --> 00:23:29,020 Speaker 1: more jobs in the southern part of India? Do we 391 00:23:29,030 --> 00:23:32,530 Speaker 1: see more youth unemployment in up versus we see in Karnataka? 392 00:23:32,540 --> 00:23:34,250 Speaker 1: Give us a little sense of, you know, because India 393 00:23:34,260 --> 00:23:37,150 Speaker 1: is a big country, there are a lot of interregional 394 00:23:37,160 --> 00:23:38,290 Speaker 1: heterogeneity there. 395 00:23:39,369 --> 00:23:44,449 Speaker 2: Yeah. So the mobility story is, is an interesting one, right? 396 00:23:44,459 --> 00:23:47,010 Speaker 2: If you go to go to the southern states, uh 397 00:23:47,020 --> 00:23:50,189 Speaker 2: and southern states almost and the typology 398 00:23:50,979 --> 00:23:52,680 Speaker 2: is almost like a 399 00:23:53,229 --> 00:23:57,060 Speaker 2: East European country, a middle income, East European country with 400 00:23:57,069 --> 00:24:01,329 Speaker 2: an aging population and with lots of imported labor, right? 401 00:24:01,339 --> 00:24:04,520 Speaker 2: And these, these tend to come from the north and 402 00:24:04,530 --> 00:24:05,169 Speaker 2: the east 403 00:24:06,060 --> 00:24:09,890 Speaker 2: and, and for those, and for this vast army of 404 00:24:09,900 --> 00:24:14,530 Speaker 2: construction labor of, of labor working in uh uh low 405 00:24:14,579 --> 00:24:16,160 Speaker 2: value manufacturing. 406 00:24:17,020 --> 00:24:21,479 Speaker 2: For them, it's their upward mobility ticket of, of moving 407 00:24:21,489 --> 00:24:23,880 Speaker 2: to richer parts of India 408 00:24:24,750 --> 00:24:28,439 Speaker 2: and, and of, of course India, unlike China does not 409 00:24:28,449 --> 00:24:32,280 Speaker 2: place any restrictions on inward mobility, 410 00:24:32,939 --> 00:24:36,390 Speaker 2: right? So you, you find that uh uh there's already 411 00:24:36,400 --> 00:24:41,219 Speaker 2: some signs of domestic pressure, I mean, local pressure, people 412 00:24:41,229 --> 00:24:44,790 Speaker 2: feel that all of these outsiders have come over and, 413 00:24:44,800 --> 00:24:47,938 Speaker 2: and taken all of these uh and they don't necessarily spend, 414 00:24:47,949 --> 00:24:50,640 Speaker 2: you know, in their language, linguistic complexity 415 00:24:51,239 --> 00:24:55,579 Speaker 2: makes it all the more difficult to build this cohesiveness, right? 416 00:24:55,589 --> 00:24:55,899 Speaker 2: But 417 00:24:56,650 --> 00:24:59,550 Speaker 2: one can argue that if you're building in Tamil Nadu, 418 00:24:59,920 --> 00:25:04,670 Speaker 2: an automobile component uh manufacturing facility, 419 00:25:05,810 --> 00:25:09,188 Speaker 2: you tend to hire either from the West or from 420 00:25:09,199 --> 00:25:13,380 Speaker 2: the South, that's where most of the qualified graduate engineers 421 00:25:13,390 --> 00:25:17,530 Speaker 2: and technicians and even, you know, welders and plumbers happen 422 00:25:17,540 --> 00:25:20,708 Speaker 2: to be. But if you're looking to clear land and, 423 00:25:20,719 --> 00:25:25,939 Speaker 2: and build a massive uh residential or commercial complex, uh 424 00:25:25,949 --> 00:25:30,280 Speaker 2: then you import labor from Uttar Pradesh or Bihar 425 00:25:30,939 --> 00:25:34,969 Speaker 2: and, and, and this labor by the way has mobility opportunities, 426 00:25:34,979 --> 00:25:37,119 Speaker 2: not just within India, you know, they can, they can 427 00:25:37,130 --> 00:25:39,899 Speaker 2: go to Saudi Arabia, they can go, they can go 428 00:25:39,910 --> 00:25:42,959 Speaker 2: to the Middle East and that's been a traditional route 429 00:25:43,310 --> 00:25:45,188 Speaker 2: uh uh for many of them, and many of them 430 00:25:45,199 --> 00:25:50,468 Speaker 2: actually come back with better skills uh particularly in construction. 431 00:25:50,479 --> 00:25:53,920 Speaker 2: And I would argue that quality of Indian construction 432 00:25:54,569 --> 00:25:58,530 Speaker 2: office buildings has probably improved dramatically in the last two 433 00:25:58,540 --> 00:26:02,109 Speaker 2: decades because many of the returned have come back with 434 00:26:02,119 --> 00:26:03,189 Speaker 2: better skills. 435 00:26:04,000 --> 00:26:07,040 Speaker 2: But the, but the problem uh once again is if 436 00:26:07,050 --> 00:26:08,889 Speaker 2: you're an apple and you're, you know, 437 00:26:09,660 --> 00:26:11,400 Speaker 2: you're trying to recruit 10,000, 438 00:26:12,229 --> 00:26:16,609 Speaker 2: I mean, the Foxconn facilities in China, for example, employ 439 00:26:16,619 --> 00:26:17,849 Speaker 2: 500,000 people, 440 00:26:18,550 --> 00:26:22,290 Speaker 2: right. So try to imagine replicating 500,000 441 00:26:23,010 --> 00:26:24,589 Speaker 2: in a Foxconn Apple 442 00:26:25,599 --> 00:26:29,130 Speaker 2: network in Southern India or Western India. And that would 443 00:26:29,140 --> 00:26:31,459 Speaker 2: be a challenge I think because there is a real 444 00:26:31,469 --> 00:26:35,290 Speaker 2: skills deficit this fil where, you know, if you're a 445 00:26:35,300 --> 00:26:38,900 Speaker 2: qualified engineer, you don't necessarily have to stay in India, 446 00:26:39,400 --> 00:26:42,160 Speaker 2: a qualified professional as you know, I mean, India uh 447 00:26:42,170 --> 00:26:43,819 Speaker 2: is is an exporter 448 00:26:44,449 --> 00:26:45,839 Speaker 2: of high value talent. 449 00:26:46,640 --> 00:26:50,099 Speaker 2: So I think there will be that absolute hurdle uh 450 00:26:50,109 --> 00:26:53,660 Speaker 2: uh when it comes to Apple ever making a decision, 451 00:26:54,310 --> 00:26:55,780 Speaker 2: OK, we are now ready to move, 452 00:26:56,699 --> 00:26:59,479 Speaker 2: right. So India will always, I think be in that 453 00:26:59,839 --> 00:27:01,599 Speaker 2: sub optimal space 454 00:27:02,260 --> 00:27:07,760 Speaker 2: of being able to create uh employment of technical employment 455 00:27:07,770 --> 00:27:11,119 Speaker 2: of the kind that a multinational firm like Apple will need. 456 00:27:12,180 --> 00:27:13,369 Speaker 1: Right. Right. 457 00:27:13,439 --> 00:27:16,948 Speaker 1: Um Just one final question on the employment side, Basuki, 458 00:27:17,280 --> 00:27:20,589 Speaker 1: whenever we talk about youth unemployment in India, the picture 459 00:27:20,599 --> 00:27:22,599 Speaker 1: that is typically drawn for us is this 460 00:27:23,300 --> 00:27:27,339 Speaker 1: young, likely northern Indian male who can get a job. 461 00:27:27,349 --> 00:27:30,069 Speaker 1: And there are social implications for that. I, I feel that, 462 00:27:30,079 --> 00:27:32,280 Speaker 1: you know, the young women are sort of, you know, 463 00:27:32,599 --> 00:27:36,959 Speaker 1: devoid in that discussion. And India has been surprisingly um 464 00:27:37,250 --> 00:27:40,680 Speaker 1: under performing in terms of female participation in the labor force. 465 00:27:40,689 --> 00:27:43,670 Speaker 1: Uh you had mentioned earlier, the garment industry in Bangladesh 466 00:27:43,819 --> 00:27:45,900 Speaker 1: there we have seen in the last 23 decades, a 467 00:27:45,910 --> 00:27:49,239 Speaker 1: huge change in terms of the fact that it's largely 468 00:27:49,250 --> 00:27:52,750 Speaker 1: women who work on those factories. So 469 00:27:53,310 --> 00:27:54,958 Speaker 1: I I'm sure even without looking at the data, we 470 00:27:54,969 --> 00:27:58,189 Speaker 1: can say that unemployment among women to those who are 471 00:27:58,199 --> 00:28:00,530 Speaker 1: actually looking for, it is a more challenging phenomenon in 472 00:28:00,540 --> 00:28:04,680 Speaker 1: India than it is for male and within the Making 473 00:28:04,689 --> 00:28:06,810 Speaker 1: India construct. Was there ever any sort of, you know, 474 00:28:07,660 --> 00:28:12,869 Speaker 1: policy toward helping uh increasing the ratio of women's labor 475 00:28:12,880 --> 00:28:13,709 Speaker 1: participation 476 00:28:14,790 --> 00:28:17,250 Speaker 2: not within making India? Right. So ma making India is 477 00:28:17,260 --> 00:28:20,469 Speaker 2: a very high level that they're going to introduce new processes, 478 00:28:20,739 --> 00:28:25,729 Speaker 2: new infrastructure and new investment into manufacturing. So it is very, 479 00:28:25,739 --> 00:28:29,520 Speaker 2: very high purpose. But certainly, you know, uh the government 480 00:28:29,530 --> 00:28:32,760 Speaker 2: has tried over the last 10 years, it has recognized 481 00:28:32,770 --> 00:28:37,169 Speaker 2: that they need to increase female labor force participation, which 482 00:28:37,180 --> 00:28:41,209 Speaker 2: uh for a country like India, it's appallingly low, 483 00:28:41,650 --> 00:28:44,430 Speaker 2: right? And, and you know, there've been all kinds of 484 00:28:44,439 --> 00:28:44,859 Speaker 2: uh 485 00:28:45,949 --> 00:28:49,239 Speaker 2: right. So you've got two kinds of challenges in doing that. 486 00:28:49,250 --> 00:28:52,459 Speaker 2: I don't think the education challenge is one of them. Surprisingly, 487 00:28:52,469 --> 00:28:54,189 Speaker 2: I think you, you even if you go down to 488 00:28:54,199 --> 00:28:55,390 Speaker 2: a technical institute 489 00:28:56,060 --> 00:28:59,359 Speaker 2: in any part of India, uh the num number of 490 00:28:59,369 --> 00:29:01,319 Speaker 2: women now studying 491 00:29:01,969 --> 00:29:06,939 Speaker 2: engineering or even undertaking technical training, that number is high. 492 00:29:07,750 --> 00:29:11,939 Speaker 2: But you've got these social barriers which really prevent this 493 00:29:11,949 --> 00:29:18,030 Speaker 2: translation of those skills from the classroom into the manufacturing facility. 494 00:29:18,250 --> 00:29:20,810 Speaker 2: I think Indian employers have, 495 00:29:21,790 --> 00:29:24,569 Speaker 2: I mean, again, one has to differentiate but in, in 496 00:29:24,579 --> 00:29:28,439 Speaker 2: certainly in manufacturing, I've not done a very good job 497 00:29:28,449 --> 00:29:31,920 Speaker 2: and I've seen that myself in other work that I do, 498 00:29:32,329 --> 00:29:35,410 Speaker 2: they not not done a very good job in creating 499 00:29:35,420 --> 00:29:37,729 Speaker 2: that welcoming environment and culture. 500 00:29:38,410 --> 00:29:39,479 Speaker 2: The men and women 501 00:29:40,459 --> 00:29:44,050 Speaker 2: can work in the same manufacturing place. I think it's 502 00:29:44,060 --> 00:29:47,930 Speaker 2: probably improved in, in offices in white collar jobs and 503 00:29:47,939 --> 00:29:51,290 Speaker 2: that's probably always been the case. But in manufacturing, you've 504 00:29:51,300 --> 00:29:53,719 Speaker 2: got simple things like distance, 505 00:29:54,680 --> 00:29:58,380 Speaker 2: right? So how do you overcome distance in terms of, 506 00:29:58,390 --> 00:30:02,739 Speaker 2: you know, providing transport for female workers and, and doing 507 00:30:02,750 --> 00:30:04,420 Speaker 2: so in a safe and secure manner? 508 00:30:05,410 --> 00:30:07,910 Speaker 2: How do you make sure that uh they work that 509 00:30:07,920 --> 00:30:11,439 Speaker 2: they have the ability to work multiple shifts? I think 510 00:30:11,449 --> 00:30:13,819 Speaker 2: working night shifts is still a stigma 511 00:30:14,489 --> 00:30:18,180 Speaker 2: and and these are really structural barriers on a micro 512 00:30:18,199 --> 00:30:18,709 Speaker 2: level 513 00:30:19,599 --> 00:30:22,729 Speaker 2: that no federal government in Delhi can sit. I mean, 514 00:30:22,739 --> 00:30:27,020 Speaker 2: federal government in Delhi can create the enabling environment, but ultimately, 515 00:30:27,030 --> 00:30:30,579 Speaker 2: it comes down to local government and the states and 516 00:30:30,589 --> 00:30:33,329 Speaker 2: the states which have done, which are doing a better 517 00:30:33,339 --> 00:30:37,130 Speaker 2: job compared with the national average, again, tend to be 518 00:30:37,140 --> 00:30:39,479 Speaker 2: in the south and the west. Uh but again, it's 519 00:30:39,489 --> 00:30:41,599 Speaker 2: a very, very mixed picture and, and, you know, 520 00:30:42,280 --> 00:30:43,170 Speaker 2: uh uh 521 00:30:44,900 --> 00:30:47,609 Speaker 2: 10 years I think is a long time to take stock. And, 522 00:30:47,619 --> 00:30:49,410 Speaker 2: you know, one can argue that, you know, making India 523 00:30:49,420 --> 00:30:53,270 Speaker 2: probably premature for me to say only 10 years, why, 524 00:30:53,280 --> 00:30:56,709 Speaker 2: why am I staying qualified failure? But I think in 525 00:30:56,719 --> 00:31:00,750 Speaker 2: terms of female labor force participation, I mean, this predates 526 00:31:00,760 --> 00:31:04,829 Speaker 2: the modi government and no, no government has been able 527 00:31:04,839 --> 00:31:08,790 Speaker 2: to fix this and and right and, and they can 528 00:31:08,800 --> 00:31:11,290 Speaker 2: be a powerful growth driver. And the fact that, you know, 529 00:31:11,300 --> 00:31:12,550 Speaker 2: India probably can learn 530 00:31:13,199 --> 00:31:16,119 Speaker 2: from the late Japanese Prime Minister Shinzo Abe 531 00:31:17,199 --> 00:31:21,130 Speaker 2: uh who under international pressure and domestic pressure and the 532 00:31:21,140 --> 00:31:24,520 Speaker 2: fact that Japan is aging so rapidly, Italy has made 533 00:31:24,530 --> 00:31:29,060 Speaker 2: a concerted policy push uh in in this area. And 534 00:31:29,069 --> 00:31:32,630 Speaker 2: India probably needs something similar to that in parallel with 535 00:31:32,640 --> 00:31:35,420 Speaker 2: anything that they do would make in India in the future. 536 00:31:35,969 --> 00:31:38,939 Speaker 1: Correct, correct. Uh So 10 years is a long time. 537 00:31:38,949 --> 00:31:41,189 Speaker 1: So I think we should be able to make some evaluation. 538 00:31:41,199 --> 00:31:43,410 Speaker 1: I think that's fair. Uh And the one that I 539 00:31:43,420 --> 00:31:46,510 Speaker 1: want to talk about now is tech transfer. Uh we 540 00:31:46,520 --> 00:31:50,239 Speaker 1: have seen even before making India, you know, global consumer 541 00:31:50,250 --> 00:31:55,040 Speaker 1: goods companies from Unilever to Starbucks to Domino's, you know, 542 00:31:55,050 --> 00:31:58,479 Speaker 1: they've come to India over the decades. Uh Did we 543 00:31:58,489 --> 00:31:58,949 Speaker 1: see some, 544 00:31:59,060 --> 00:32:02,719 Speaker 1: their supply chain management spill over into domestic Indian F 545 00:32:02,729 --> 00:32:06,989 Speaker 1: and B supply chain and then the over the last decade, 546 00:32:07,000 --> 00:32:10,719 Speaker 1: the push to bringing global manufacturers like Foxconn and others in, 547 00:32:10,729 --> 00:32:14,760 Speaker 1: are we seeing some positive spillover out of that with 548 00:32:14,770 --> 00:32:17,979 Speaker 1: respect to tech transfer or, you know, skilled labor or 549 00:32:17,989 --> 00:32:21,180 Speaker 1: skilled entrepreneurs getting experience in those companies and building something 550 00:32:21,189 --> 00:32:22,040 Speaker 1: on their own in India. 551 00:32:23,130 --> 00:32:25,050 Speaker 2: Right? So you've got to look at this and you 552 00:32:25,060 --> 00:32:28,829 Speaker 2: can't divorce. I think when we discuss this from the 553 00:32:28,839 --> 00:32:31,640 Speaker 2: technology sector and, and the fact that, you know, uh 554 00:32:31,729 --> 00:32:34,250 Speaker 2: and you know, India has got well beating 555 00:32:35,150 --> 00:32:38,369 Speaker 2: public goods like the India stack. Uh the fact that 556 00:32:38,380 --> 00:32:42,130 Speaker 2: you've got uh many of the America's big tech majors 557 00:32:42,140 --> 00:32:47,560 Speaker 2: who've got significant uh uh you know, research facilities in India, 558 00:32:47,689 --> 00:32:50,500 Speaker 2: including the likes of IBM. And I think the IBM 559 00:32:50,510 --> 00:32:53,650 Speaker 2: facility in India is still one of the largest uh 560 00:32:53,660 --> 00:32:59,170 Speaker 2: single uh location for employment, right. So you've got this 561 00:32:59,180 --> 00:33:02,369 Speaker 2: again and got these islands of excellence. 562 00:33:03,989 --> 00:33:07,869 Speaker 2: And India more recently in the last two decades, has seen, 563 00:33:07,880 --> 00:33:10,010 Speaker 2: you know, the Starbucks and the Tim Hortons 564 00:33:10,719 --> 00:33:14,000 Speaker 2: setting up franchise operations all over the country. You've got 565 00:33:14,010 --> 00:33:21,619 Speaker 2: the entry of many hotel chains, consumer goods manufacturers. There's definitely, 566 00:33:21,780 --> 00:33:25,060 Speaker 2: you know, a, a skills transfer taking place. 567 00:33:25,770 --> 00:33:29,430 Speaker 2: But I guess the question is, and again, not to, 568 00:33:29,750 --> 00:33:35,290 Speaker 2: not to speak poorly of uh fast food franchise chain ski, 569 00:33:36,130 --> 00:33:39,709 Speaker 2: the skills transfer that takes place. It's probably essential, I 570 00:33:39,719 --> 00:33:41,770 Speaker 2: think in a country like India where you've got so 571 00:33:41,780 --> 00:33:42,550 Speaker 2: many people 572 00:33:43,219 --> 00:33:46,599 Speaker 2: looking for jobs in the 20 to 30 age group 573 00:33:47,239 --> 00:33:50,250 Speaker 2: that, you know, I used to two decades ago, uh, 574 00:33:50,270 --> 00:33:52,920 Speaker 2: really be amused at the fact that you've got these 575 00:33:52,930 --> 00:33:57,020 Speaker 2: master's degrees proliferating in India and events management 576 00:33:57,699 --> 00:34:00,859 Speaker 2: and, you know, so, you know, every, every second university 577 00:34:00,869 --> 00:34:04,400 Speaker 2: had an events management undergrad and a and, and, and 578 00:34:04,410 --> 00:34:07,479 Speaker 2: a graduate degree. And I al I was always thinking, 579 00:34:07,489 --> 00:34:09,080 Speaker 2: you know, what possible value 580 00:34:09,709 --> 00:34:12,459 Speaker 2: does this create? And I was probably wrong because India 581 00:34:12,469 --> 00:34:16,439 Speaker 2: now does have a vibrant events management space. They're learning 582 00:34:16,449 --> 00:34:20,580 Speaker 2: a lot in putting up events from concert promoters from 583 00:34:20,590 --> 00:34:24,540 Speaker 2: other parts of the world. So you've got these pockets 584 00:34:24,550 --> 00:34:27,489 Speaker 2: uh where there are skills transfer taking place, people are 585 00:34:27,500 --> 00:34:32,009 Speaker 2: upgrading their skills and for those who want to access 586 00:34:33,270 --> 00:34:35,540 Speaker 2: online education tool 587 00:34:36,659 --> 00:34:39,389 Speaker 2: that is available in India today. But, but you've got 588 00:34:39,399 --> 00:34:41,709 Speaker 2: to be proficient, you've got to, you've got to be 589 00:34:41,719 --> 00:34:45,339 Speaker 2: at a certain educational level in order to tap into 590 00:34:45,350 --> 00:34:49,639 Speaker 2: those uh uh online courses and upgrade your own skills. 591 00:34:49,649 --> 00:34:55,290 Speaker 2: Because ultimately, you know, learning is, is also an individual journey, 592 00:34:55,300 --> 00:34:58,158 Speaker 2: not just the responsibility of the state, 593 00:34:59,449 --> 00:35:03,250 Speaker 2: but when you come to actual manufacturing and advanced technologies, right? 594 00:35:03,260 --> 00:35:06,229 Speaker 2: So there was this this talk of semiconductors and I 595 00:35:06,239 --> 00:35:09,830 Speaker 2: think Prime Minister Modi was in Singapore last week. This 596 00:35:09,840 --> 00:35:15,729 Speaker 2: collaboration on semiconductor testing, India is probably way way behind that. 597 00:35:15,739 --> 00:35:18,830 Speaker 2: And that explains this controversy over what Myron 598 00:35:19,790 --> 00:35:25,409 Speaker 2: is attempting to do in Gujarat where the technology on 599 00:35:25,419 --> 00:35:29,050 Speaker 2: offer is seen as being slightly behind the curve. 600 00:35:30,209 --> 00:35:32,489 Speaker 2: So there's a lot of hope and expectation on a 601 00:35:32,500 --> 00:35:36,899 Speaker 2: single company like Apple because I think people have seen 602 00:35:37,639 --> 00:35:41,899 Speaker 2: the Apple journey in China and the absolutely transformative power 603 00:35:42,350 --> 00:35:45,799 Speaker 2: that it had in really upgrading skills. Really, you know, 604 00:35:45,939 --> 00:35:47,819 Speaker 2: I don't think Apple could have succeeded 605 00:35:48,520 --> 00:35:52,540 Speaker 2: without the presence of Foxconn and the tremendous investment it 606 00:35:52,550 --> 00:35:55,339 Speaker 2: put in, in in human skills development. 607 00:35:56,090 --> 00:36:00,270 Speaker 2: And and so you need, you need that scale and Vietnam, 608 00:36:01,659 --> 00:36:03,549 Speaker 2: although much smaller country 609 00:36:04,179 --> 00:36:06,770 Speaker 2: is doing that because it's had the benefit of Korean 610 00:36:06,780 --> 00:36:10,569 Speaker 2: investment in the last two decades. So India in many 611 00:36:10,580 --> 00:36:13,520 Speaker 2: ways is starting off behind the curve and and that 612 00:36:13,530 --> 00:36:14,760 Speaker 2: skills transfer 613 00:36:15,979 --> 00:36:17,080 Speaker 2: has to happen 614 00:36:17,840 --> 00:36:21,689 Speaker 2: with these manufacturing companies being able to say that they're 615 00:36:21,699 --> 00:36:24,100 Speaker 2: going to take people on board and actually train them 616 00:36:24,110 --> 00:36:24,820 Speaker 2: on the shop floor, 617 00:36:25,959 --> 00:36:26,459 Speaker 1: right? 618 00:36:26,889 --> 00:36:30,100 Speaker 1: Um Mau OK, let's put aside the low end of 619 00:36:30,110 --> 00:36:32,979 Speaker 1: the scale spectrum and the top end, let's focus on 620 00:36:32,989 --> 00:36:33,820 Speaker 1: the middle end 621 00:36:34,239 --> 00:36:37,399 Speaker 1: like are we going to see Indian entrepreneurs or even 622 00:36:37,409 --> 00:36:42,799 Speaker 1: the large conglomerates creating Indian made in India TV brands 623 00:36:42,939 --> 00:36:46,479 Speaker 1: or drones? So not like you know, the three nanometer chip, 624 00:36:46,489 --> 00:36:49,100 Speaker 1: super fancy smartphone, but you know what we call, I 625 00:36:49,110 --> 00:36:52,360 Speaker 1: guess lagging edge technology in which there are you know, 626 00:36:52,370 --> 00:36:54,969 Speaker 1: hundreds of billions of dollars worth of potential investment and 627 00:36:54,979 --> 00:36:56,159 Speaker 1: job creation and so on. 628 00:36:56,429 --> 00:36:59,739 Speaker 1: Um But are we still seeing basically, you know, Chinese manufacturers, 629 00:36:59,750 --> 00:37:03,040 Speaker 1: assembling cell phones in India or even like for a TV, 630 00:37:03,050 --> 00:37:05,139 Speaker 1: it's really made in China TV, that is coming into India. 631 00:37:05,149 --> 00:37:08,609 Speaker 1: We don't have that much of a homegrown technology stack 632 00:37:08,620 --> 00:37:10,169 Speaker 1: to replicate that yet. 633 00:37:11,280 --> 00:37:13,979 Speaker 2: Right. So, you know, there's a lot of talk here 634 00:37:13,989 --> 00:37:17,979 Speaker 2: in Washington DC on how the US in, particularly since 635 00:37:17,989 --> 00:37:23,100 Speaker 2: the early 19 nineties, when both China entered the WTO 636 00:37:23,320 --> 00:37:27,299 Speaker 2: in uh 2000 and predating that of course, was NAFTA 637 00:37:27,969 --> 00:37:33,290 Speaker 2: that you have this in exodus of manufacturing away from 638 00:37:33,300 --> 00:37:37,080 Speaker 2: the US and, and, and which led to this overdependence 639 00:37:37,090 --> 00:37:41,459 Speaker 2: on China or for almost everything from toys uh to 640 00:37:41,469 --> 00:37:45,340 Speaker 2: light bulbs and everything else similar thing has happened, I 641 00:37:45,350 --> 00:37:48,729 Speaker 2: think in India and, and, and you know, India is 642 00:37:48,739 --> 00:37:51,069 Speaker 2: at this very interesting policy juncture now 643 00:37:51,889 --> 00:37:57,459 Speaker 2: where I think the national security community is deeply concerned 644 00:37:57,959 --> 00:38:03,709 Speaker 2: of Indian business over reliance on China, particularly in key 645 00:38:03,719 --> 00:38:08,339 Speaker 2: sectors like pharmaceuticals in in and you mentioned mobile phones. 646 00:38:08,350 --> 00:38:10,830 Speaker 2: Uh and and there are any number of other industries 647 00:38:11,080 --> 00:38:14,110 Speaker 2: and I think the China India trade numbers really reflect 648 00:38:14,120 --> 00:38:19,360 Speaker 2: the fact that India is exporting very little beyond commodities and, 649 00:38:19,370 --> 00:38:21,179 Speaker 2: and perhaps metals, 650 00:38:21,520 --> 00:38:26,000 Speaker 2: but it's importing vast quantities of stuff that it should 651 00:38:26,010 --> 00:38:28,219 Speaker 2: be in a position to produce itself, 652 00:38:29,050 --> 00:38:33,030 Speaker 2: right? So India has kind of ceded that ground. And 653 00:38:33,040 --> 00:38:35,520 Speaker 2: I think where there's a very late realization 654 00:38:36,439 --> 00:38:40,750 Speaker 2: that you can't have a national security and a border 655 00:38:40,760 --> 00:38:43,219 Speaker 2: dispute with your giant neighbor. 656 00:38:43,899 --> 00:38:47,759 Speaker 2: And at the same time, be so reliant on imports. 657 00:38:47,770 --> 00:38:50,199 Speaker 2: And there's already pressure now building up from Indian business 658 00:38:50,209 --> 00:38:54,479 Speaker 2: groups that there, there's got to be a pathway where 659 00:38:54,489 --> 00:38:59,120 Speaker 2: the national security issues are discussed at a separate level 660 00:38:59,639 --> 00:39:01,639 Speaker 2: and it should be business as usual. 661 00:39:02,370 --> 00:39:05,159 Speaker 2: And so perhaps this should provide some kind of an 662 00:39:05,169 --> 00:39:08,229 Speaker 2: incentive I think for India to be I I hate 663 00:39:08,239 --> 00:39:11,620 Speaker 2: to use the word self reliant but in areas like 664 00:39:11,629 --> 00:39:16,899 Speaker 2: advanced pharmaceutical ingredients, api si mean, India is a world 665 00:39:16,909 --> 00:39:21,370 Speaker 2: beater in the pharma industry, you know, producing vaccines, producing 666 00:39:21,379 --> 00:39:25,389 Speaker 2: basic drugs and it's pretty astonishing that you're still relying 667 00:39:25,399 --> 00:39:28,229 Speaker 2: on imports from China. And and this is not a 668 00:39:28,239 --> 00:39:30,560 Speaker 2: new story by any means. 669 00:39:31,310 --> 00:39:35,290 Speaker 2: Then if you look at uh products like cement, 670 00:39:36,169 --> 00:39:39,070 Speaker 2: if you look at products like uh right, if you're 671 00:39:39,080 --> 00:39:43,229 Speaker 2: looking at basic chemicals, if you're looking at automobiles, I 672 00:39:43,239 --> 00:39:48,199 Speaker 2: think India has got probably more resilient industrial capacity to 673 00:39:48,209 --> 00:39:51,120 Speaker 2: produce stuff for the domestic market. But the wide open 674 00:39:51,129 --> 00:39:54,729 Speaker 2: question mark is why can't you use uh all of 675 00:39:54,739 --> 00:39:59,179 Speaker 2: that excellence in local manufacturing to be world beating? And 676 00:39:59,189 --> 00:40:02,429 Speaker 2: you know, there's a tension here, there's tension here with 677 00:40:02,979 --> 00:40:05,229 Speaker 2: the Indian government feeling very nervous 678 00:40:05,899 --> 00:40:10,259 Speaker 2: when Indian companies invest overseas. Uh There's a sense that 679 00:40:10,270 --> 00:40:13,020 Speaker 2: you're kind of betraying your country and you know, Finance 680 00:40:13,030 --> 00:40:14,080 Speaker 2: Minister Sitar Rahman 681 00:40:14,719 --> 00:40:18,600 Speaker 2: actually chastised uh Indian Business uh two or three years 682 00:40:18,610 --> 00:40:21,889 Speaker 2: ago that they were not that they were inadequately investing 683 00:40:21,899 --> 00:40:24,080 Speaker 2: in India, right. So if you want to be world 684 00:40:24,090 --> 00:40:28,100 Speaker 2: beating large Indian Business House, you kind of have to 685 00:40:28,110 --> 00:40:30,260 Speaker 2: step out of your comfort zone. 686 00:40:31,260 --> 00:40:34,109 Speaker 2: But they feel, you know, there is a barrier in 687 00:40:34,120 --> 00:40:38,840 Speaker 2: doing that. But at the same time, the absolute proliferation 688 00:40:39,520 --> 00:40:42,169 Speaker 2: of well beating companies coming out of China. 689 00:40:43,199 --> 00:40:46,310 Speaker 2: Uh I think there's a sense within the Indian business 690 00:40:46,320 --> 00:40:47,129 Speaker 2: community 691 00:40:47,770 --> 00:40:51,149 Speaker 2: that that train has left the station, right? So India 692 00:40:51,159 --> 00:40:55,100 Speaker 2: has kind of lost that wave that it could have 693 00:40:55,110 --> 00:40:58,110 Speaker 2: capitalized on. And the speed dates make in India 694 00:40:58,850 --> 00:41:03,040 Speaker 2: right now, you're stuck with large manufacturers, kind of saying, OK, 695 00:41:03,050 --> 00:41:05,069 Speaker 2: we're going to tap into the domestic market, 696 00:41:06,060 --> 00:41:09,319 Speaker 2: then you're going to see these foreign investors come into 697 00:41:09,330 --> 00:41:12,389 Speaker 2: advanced manufacturing. So there's, there's going to be that sense 698 00:41:12,399 --> 00:41:14,159 Speaker 2: of grievance 699 00:41:14,949 --> 00:41:18,580 Speaker 2: and, and I don't think, I mean, un unless there's 700 00:41:18,590 --> 00:41:19,969 Speaker 2: an emboldened leadership 701 00:41:20,620 --> 00:41:26,709 Speaker 2: trying to shift dramatically the current policy path, it's very 702 00:41:26,719 --> 00:41:28,379 Speaker 2: hard to see how India is going to get out 703 00:41:28,389 --> 00:41:30,719 Speaker 2: of this. Uh I, I don't know to call this 704 00:41:30,729 --> 00:41:35,080 Speaker 2: rut but certainly this challenge situation of not being able 705 00:41:35,090 --> 00:41:37,199 Speaker 2: to increase manufacturing share of GDP. 706 00:41:38,770 --> 00:41:39,679 Speaker 1: So you, you 707 00:41:39,689 --> 00:41:44,570 Speaker 1: touched upon uh local business houses and their grievances and 708 00:41:44,580 --> 00:41:46,669 Speaker 1: et cetera. So let's talk about them for a second, 709 00:41:46,949 --> 00:41:50,820 Speaker 1: have the um incentives and the investments brought in through 710 00:41:50,830 --> 00:41:54,310 Speaker 1: making India made India more competitive. 711 00:41:58,330 --> 00:42:00,879 Speaker 2: Right. Again, you've got to, you've got to do this 712 00:42:00,889 --> 00:42:03,510 Speaker 2: at the product level, right? Is the Apple iphone, 713 00:42:04,350 --> 00:42:09,229 Speaker 2: uh price competitive and manufacturing competitive when it comes out 714 00:42:09,239 --> 00:42:11,050 Speaker 2: of its facilities in Southern India. 715 00:42:11,729 --> 00:42:13,620 Speaker 2: Apple seems to suggest. Yes. 716 00:42:14,300 --> 00:42:17,139 Speaker 2: And, and I think, uh uh if you're, if you're 717 00:42:17,149 --> 00:42:22,229 Speaker 2: comparing wages with Shenzhen and Southern India, there's obviously a 718 00:42:22,239 --> 00:42:24,959 Speaker 2: huge gap because Chinese wages have really gone up 719 00:42:25,590 --> 00:42:30,510 Speaker 2: uh more significantly than, than India's have. But this is 720 00:42:30,520 --> 00:42:33,020 Speaker 2: not just a be competitive, this game, this is a, 721 00:42:33,030 --> 00:42:36,859 Speaker 2: this is a game of being able to upgrade technological 722 00:42:36,870 --> 00:42:41,300 Speaker 2: skills and be ready. You know, Apple, the iphone 16 723 00:42:41,310 --> 00:42:44,590 Speaker 2: is going to be launched in two weeks time. Can 724 00:42:44,600 --> 00:42:50,250 Speaker 2: that be produced in India? Uh immediately answer is probably not. 725 00:42:51,070 --> 00:42:51,570 Speaker 2: And 726 00:42:52,360 --> 00:42:55,149 Speaker 2: a lot of other foreign investors I think are looking 727 00:42:55,159 --> 00:42:57,779 Speaker 2: at uh the Apple experience 728 00:42:58,489 --> 00:43:01,330 Speaker 2: to figure out they'll be able to replicate it. And 729 00:43:01,340 --> 00:43:04,330 Speaker 2: this is happening really because a lot of multinational companies, 730 00:43:04,419 --> 00:43:08,110 Speaker 2: you're a European company or an American company, you're hearing 731 00:43:08,120 --> 00:43:11,989 Speaker 2: from your policymakers probably every single day that you've got 732 00:43:12,000 --> 00:43:15,399 Speaker 2: to build away from China. You've got to look at 733 00:43:15,739 --> 00:43:18,989 Speaker 2: other place. You've got to reso if you can, first 734 00:43:19,000 --> 00:43:20,709 Speaker 2: of all, why not create jobs at home? 735 00:43:21,610 --> 00:43:24,449 Speaker 2: If your argument is you're not able to reso immediately, 736 00:43:24,459 --> 00:43:26,909 Speaker 2: then you know, try to look for alternative destinations. 737 00:43:27,540 --> 00:43:34,060 Speaker 2: So India always looms large in these conversations and and 738 00:43:34,070 --> 00:43:37,679 Speaker 2: so you need a critical mass of investors who are 739 00:43:37,689 --> 00:43:40,320 Speaker 2: able to make the kind of technological leap and the 740 00:43:40,330 --> 00:43:44,179 Speaker 2: skills leap that you're talking about, right? So you're using 741 00:43:44,189 --> 00:43:47,959 Speaker 2: see 14 billion of iphone products, that number has to 742 00:43:47,969 --> 00:43:49,479 Speaker 2: be 100 and 40 billion. 743 00:43:50,280 --> 00:43:52,989 Speaker 2: In order to say you've created this critical mass of 744 00:43:53,000 --> 00:43:57,389 Speaker 2: skilled workforce who are fungible, right? Who can literally work 745 00:43:57,850 --> 00:44:00,750 Speaker 2: not only in India but anywhere else in the world. 746 00:44:01,399 --> 00:44:04,840 Speaker 2: And at the same time, kind of marrying the kind 747 00:44:04,850 --> 00:44:08,129 Speaker 2: of advanced research that the IB MS of the world 748 00:44:08,139 --> 00:44:12,699 Speaker 2: are carrying out and translating that into manufacturing within India 749 00:44:12,959 --> 00:44:17,709 Speaker 2: because most of that research and development knowledge currently is 750 00:44:17,719 --> 00:44:18,620 Speaker 2: exported away. 751 00:44:19,330 --> 00:44:19,629 Speaker 1: Yes. 752 00:44:20,300 --> 00:44:22,719 Speaker 1: Yeah. Uh And what about, 753 00:44:23,669 --> 00:44:27,169 Speaker 1: you know, when you have not the apples of the 754 00:44:27,179 --> 00:44:29,300 Speaker 1: world is impossible to sort of, you know, create an 755 00:44:29,310 --> 00:44:31,889 Speaker 1: Indian entity that can be competitive vis a vis apple, 756 00:44:32,000 --> 00:44:34,629 Speaker 1: but again, in the middle end of the technology spectrum. 757 00:44:34,639 --> 00:44:36,610 Speaker 1: And I'm thinking really on, you know, sort of the 758 00:44:36,620 --> 00:44:39,110 Speaker 1: not the highest end smartphones, but the mid end, like 759 00:44:39,120 --> 00:44:41,790 Speaker 1: the stuff that, you know, Shami and Oppo are producing 760 00:44:41,800 --> 00:44:44,290 Speaker 1: and Indians seem to be very happy buying that made 761 00:44:44,300 --> 00:44:47,969 Speaker 1: in China phone. Um in that area, are we beginning 762 00:44:47,979 --> 00:44:49,610 Speaker 1: to see any sign of 763 00:44:50,090 --> 00:44:53,229 Speaker 1: local grown technology or local grown companies becoming a bit 764 00:44:53,239 --> 00:44:57,830 Speaker 1: more competitive? Uh and, and trying to give the imported 765 00:44:57,840 --> 00:44:59,069 Speaker 1: brands that run for their money, 766 00:45:00,419 --> 00:45:02,520 Speaker 2: right? So let's let's talk a little bit. Um, I'll, 767 00:45:02,530 --> 00:45:05,310 Speaker 2: I'll come back to uh mobile phones. 768 00:45:07,290 --> 00:45:09,669 Speaker 2: If you look at two wheelers and three wheelers. 769 00:45:10,770 --> 00:45:13,699 Speaker 2: India is huge competitive advantage. In fact, India is still 770 00:45:13,709 --> 00:45:15,229 Speaker 2: the world's largest manufacturer 771 00:45:15,949 --> 00:45:19,459 Speaker 2: of, of two wheelers. And many of those two wheelers 772 00:45:19,469 --> 00:45:22,129 Speaker 2: manufacturers are beginning to electrify 773 00:45:23,270 --> 00:45:27,169 Speaker 2: and they're creating this uniquely, you know, the, the Hindi 774 00:45:27,179 --> 00:45:32,110 Speaker 2: word called Juga, which really is homegrown innovation at a 775 00:45:32,120 --> 00:45:34,850 Speaker 2: very low price. That probably is the best translation that 776 00:45:34,860 --> 00:45:38,030 Speaker 2: I can think of. Good one, not bad at all. And, 777 00:45:38,040 --> 00:45:40,850 Speaker 2: and so you've got an auto shop line, the streets 778 00:45:40,860 --> 00:45:41,949 Speaker 2: of Mumbai, 779 00:45:42,719 --> 00:45:45,379 Speaker 2: many of them at the moment are on CNG. 780 00:45:46,250 --> 00:45:50,889 Speaker 2: Uh but I think they see the value in electrifying 781 00:45:50,899 --> 00:45:53,979 Speaker 2: and the, and we're not talking Tesla supercharges 782 00:45:54,750 --> 00:45:58,229 Speaker 2: in terms of how these two wheelers and three wheelers 783 00:45:58,239 --> 00:46:01,750 Speaker 2: uh uh go into a charging station, charging station is 784 00:46:01,760 --> 00:46:05,909 Speaker 2: probably uh the local tobacconist, right? It's a local pawn 785 00:46:06,040 --> 00:46:09,319 Speaker 2: shop which happens to have an electric charger where the 786 00:46:09,330 --> 00:46:11,949 Speaker 2: rickshaw guy can charge his vehicle. 787 00:46:12,679 --> 00:46:16,040 Speaker 2: And so there is innovation taking place, right? So let's 788 00:46:16,050 --> 00:46:16,979 Speaker 2: not forget that. 789 00:46:17,879 --> 00:46:19,929 Speaker 2: And in the start up space 790 00:46:20,810 --> 00:46:25,090 Speaker 2: again, it's pretty vibrant, but they tend to go into 791 00:46:25,100 --> 00:46:30,370 Speaker 2: uh uh social media, e-commerce services type of solution services 792 00:46:30,699 --> 00:46:34,739 Speaker 2: rather than the kind of uh mobile manufacturing that you're 793 00:46:34,750 --> 00:46:35,629 Speaker 2: talking about. 794 00:46:36,290 --> 00:46:40,629 Speaker 2: And I think there's this big question on whether you're 795 00:46:40,639 --> 00:46:42,669 Speaker 2: able to produce everything at home 796 00:46:43,590 --> 00:46:46,689 Speaker 2: or you still need to rely on China or Vietnam 797 00:46:47,540 --> 00:46:53,479 Speaker 2: even to produce a low cost, you know, ₹500 phone. 798 00:46:54,389 --> 00:46:57,409 Speaker 2: And I think there's vulnerability there for India, not everything 799 00:46:57,419 --> 00:47:02,969 Speaker 2: is available or manufactured in India from scratch there. I 800 00:47:02,979 --> 00:47:07,229 Speaker 2: think India can lead is not in trying to compete 801 00:47:07,239 --> 00:47:08,570 Speaker 2: with the Xiaomi 802 00:47:09,840 --> 00:47:16,000 Speaker 2: or Lenovo or or any other Chinese manufacturer. But for 803 00:47:16,010 --> 00:47:19,319 Speaker 2: domestic entrepreneurs. And again, moving away from the large business 804 00:47:19,330 --> 00:47:20,049 Speaker 2: houses 805 00:47:20,800 --> 00:47:23,139 Speaker 2: to innovate on a smaller scale 806 00:47:23,800 --> 00:47:27,649 Speaker 2: to find and and you know, again, move away from 807 00:47:27,659 --> 00:47:29,850 Speaker 2: trying to cater to the urban elite, 808 00:47:30,489 --> 00:47:34,229 Speaker 2: but try to find solutions for your three wheeler driver 809 00:47:34,800 --> 00:47:38,120 Speaker 2: to say that you know, by operating an electric uh 810 00:47:38,129 --> 00:47:38,929 Speaker 2: three Wheler, 811 00:47:39,770 --> 00:47:43,399 Speaker 2: uh you're not only benefiting from lower costs, but there's 812 00:47:43,409 --> 00:47:46,909 Speaker 2: a social value attached to that anything you need to, 813 00:47:46,969 --> 00:47:50,280 Speaker 2: you got to happen on that scale and you need 814 00:47:50,469 --> 00:47:53,479 Speaker 2: obviously uh uh a widespread 815 00:47:54,129 --> 00:47:59,669 Speaker 2: success all over the country across a number of sectors 816 00:48:00,050 --> 00:48:02,909 Speaker 2: which will really break this logjam where where India can 817 00:48:02,919 --> 00:48:05,709 Speaker 2: really send these skills. You know, two wheeler three wheeler 818 00:48:06,399 --> 00:48:10,620 Speaker 2: are translatable where India can really help sub Saharan Africa, 819 00:48:10,629 --> 00:48:15,000 Speaker 2: for example, which face similar infrastructure challenges. There is probably 820 00:48:15,090 --> 00:48:19,030 Speaker 2: slightly more advanced. The China offering for many parts of 821 00:48:19,040 --> 00:48:23,580 Speaker 2: Africa in this field is probably too high tech and 822 00:48:23,590 --> 00:48:24,620 Speaker 2: and too expensive. 823 00:48:25,260 --> 00:48:29,439 Speaker 2: And I think Indian innovation can really excel at this level. 824 00:48:30,899 --> 00:48:33,080 Speaker 1: Fascinating. I I want to talk to you in greater 825 00:48:33,090 --> 00:48:36,959 Speaker 1: detail about the green transition story in a moment. But 826 00:48:36,969 --> 00:48:39,860 Speaker 1: uh Maui, in the conversation that we've had so far, 827 00:48:39,870 --> 00:48:44,020 Speaker 1: you have mentioned Vietnam a bunch of times. So let's 828 00:48:44,030 --> 00:48:47,320 Speaker 1: do a little compare contrast. I don't think Vietnam had 829 00:48:47,699 --> 00:48:51,379 Speaker 1: uh flashy making Vietnam campaign. They probably did it a 830 00:48:51,389 --> 00:48:53,959 Speaker 1: little more organically and they probably, you know, sort of 831 00:48:53,969 --> 00:48:57,069 Speaker 1: got the Chinese to get embedded in a far friendlier 832 00:48:57,080 --> 00:48:59,360 Speaker 1: manner in their economy, both with FD I as well 833 00:48:59,370 --> 00:48:59,959 Speaker 1: as tech. 834 00:49:00,229 --> 00:49:04,089 Speaker 1: Um but nonetheless, are there lessons for India from Vietnam's experience? 835 00:49:05,000 --> 00:49:08,739 Speaker 2: Absolutely. Right. So you mentioned China, actually the Vietnam uh 836 00:49:08,750 --> 00:49:10,779 Speaker 2: uh manufacturing experience 837 00:49:11,530 --> 00:49:15,620 Speaker 2: is entirely, you know, it's a, you know, appeal to 838 00:49:15,629 --> 00:49:19,840 Speaker 2: Samsung to come make in Vietnam. And I think Samsung 839 00:49:19,850 --> 00:49:25,550 Speaker 2: was the absolute original big investor in, in Vietnam. Uh 840 00:49:25,560 --> 00:49:28,859 Speaker 2: there was a period of time when uh Samsung had 841 00:49:28,870 --> 00:49:30,110 Speaker 2: so many engineers 842 00:49:30,959 --> 00:49:33,770 Speaker 2: working for its facility in Vietnam. A lot of other 843 00:49:33,780 --> 00:49:36,989 Speaker 2: foreign investors started to complain that there was some kind 844 00:49:37,000 --> 00:49:39,529 Speaker 2: of hoarding taking place. 845 00:49:40,370 --> 00:49:44,760 Speaker 2: And I think the Vietnam lesson uh uh for, for 846 00:49:44,770 --> 00:49:46,909 Speaker 2: India is and again, 847 00:49:47,639 --> 00:49:51,689 Speaker 2: uh many Vietnamese uh uh uh businesses would say they're 848 00:49:51,699 --> 00:49:55,520 Speaker 2: too small a country, right? They can't be compared possibly 849 00:49:55,830 --> 00:49:58,109 Speaker 2: with India. But I think Vietnam 850 00:49:58,709 --> 00:50:04,010 Speaker 2: focused on and did not give up the low value 851 00:50:04,020 --> 00:50:09,649 Speaker 2: edition that easily and eventually all of that migrated to Cambodia. 852 00:50:09,659 --> 00:50:11,260 Speaker 2: But at the start of the journey, right, if you 853 00:50:11,270 --> 00:50:14,679 Speaker 2: really look at uh the early 19 nineties after the 854 00:50:14,689 --> 00:50:20,050 Speaker 2: Paris agreement which essentially normalized Vietnam's uh integration with the 855 00:50:20,060 --> 00:50:24,050 Speaker 2: rest of the world. Also normalized Cambodia's integration. 856 00:50:24,729 --> 00:50:28,639 Speaker 2: Vietnam took a calculated bet at manufacturing. They looked at 857 00:50:28,649 --> 00:50:31,049 Speaker 2: China and said this is exactly what we want to do, 858 00:50:31,229 --> 00:50:34,350 Speaker 2: but we are not in China's place at this point 859 00:50:34,360 --> 00:50:37,389 Speaker 2: in time. So we're going to focus on, first of all, 860 00:50:38,300 --> 00:50:42,639 Speaker 2: taking away all the shoe manufacturing that existed in Indonesia 861 00:50:43,120 --> 00:50:46,759 Speaker 2: in the 1919 eighties and 19 nineties, all of them 862 00:50:46,770 --> 00:50:49,129 Speaker 2: moved and many of them were Korean investors, all of 863 00:50:49,139 --> 00:50:53,639 Speaker 2: them even sneakers, sneakers. That's right. All the sneakers that 864 00:50:53,649 --> 00:50:56,239 Speaker 2: when I was, lived in Jakarta in the 19 nineties, 865 00:50:56,550 --> 00:51:00,199 Speaker 2: they were all produced in, in Indonesia and they moved 866 00:51:00,209 --> 00:51:03,179 Speaker 2: the following decade all to Vietnam, right? So that was 867 00:51:03,189 --> 00:51:05,069 Speaker 2: kind of. So they really learned 868 00:51:05,530 --> 00:51:08,870 Speaker 2: with textiles, they learned with shoe wear, they learned with toys. 869 00:51:09,370 --> 00:51:13,520 Speaker 2: And then when Samsung made the offer that they were looking. 870 00:51:13,530 --> 00:51:15,070 Speaker 2: And at that time, Samsung's 871 00:51:16,209 --> 00:51:20,080 Speaker 2: really wanted to manufacture television sets and, and other low 872 00:51:20,090 --> 00:51:22,388 Speaker 2: end consumer electronics 873 00:51:23,110 --> 00:51:27,009 Speaker 2: in Vietnam because Korea was getting too expensive and like 874 00:51:27,020 --> 00:51:30,510 Speaker 2: Korean Che balls, you know, the LGS and the others followed. 875 00:51:31,419 --> 00:51:35,109 Speaker 2: And it was that success, which laid the foundation for 876 00:51:35,120 --> 00:51:37,560 Speaker 2: Vietnam to be able to stay. Now, we can, we 877 00:51:37,570 --> 00:51:38,399 Speaker 2: can embrace 878 00:51:39,050 --> 00:51:42,919 Speaker 2: uh uh mass scale manufacturing, we can bring in a 879 00:51:42,929 --> 00:51:48,428 Speaker 2: greater number of, of uh uh multinational companies to come 880 00:51:48,439 --> 00:51:52,279 Speaker 2: and make in Vietnam. And that I I know Vietnam 881 00:51:52,290 --> 00:51:56,340 Speaker 2: is going through its own unique structural and political challenges 882 00:51:57,149 --> 00:51:59,770 Speaker 2: at this point in time. But if you ask any 883 00:51:59,780 --> 00:52:03,750 Speaker 2: foreign investor today that if you cannot make in China, 884 00:52:04,379 --> 00:52:07,560 Speaker 2: what would be a logical next destination 885 00:52:08,439 --> 00:52:13,300 Speaker 2: without batting an eyelid, they'll say Vietnam, they probably pause 886 00:52:13,489 --> 00:52:16,649 Speaker 2: for about 10 seconds and mention India. 887 00:52:19,159 --> 00:52:22,620 Speaker 1: Yeah, so India is still up there but not quite there. 888 00:52:22,629 --> 00:52:26,909 Speaker 1: Uh And, and you're right that the supply chain with 889 00:52:26,919 --> 00:52:30,979 Speaker 1: which um Vietnam has sort of prospered, has a wide 890 00:52:30,989 --> 00:52:33,669 Speaker 1: range of lessons for any country that wants to embrace 891 00:52:33,679 --> 00:52:38,520 Speaker 1: manufacturing the warehouses, the logistics, the port, the tax system, 892 00:52:38,530 --> 00:52:41,399 Speaker 1: I mean, for a country that is sensibly a communist country, 893 00:52:41,489 --> 00:52:45,379 Speaker 1: they're remarkably capitalistic when it comes to accommodating foreign investors. 894 00:52:46,929 --> 00:52:49,469 Speaker 2: Yeah, absolutely. You know, there's a story told to me 895 00:52:49,479 --> 00:52:50,669 Speaker 2: over a decade ago. 896 00:52:51,780 --> 00:52:55,020 Speaker 2: Uh and, and this probably is a caricature, right? So 897 00:52:55,030 --> 00:52:57,939 Speaker 2: your foreign investor who lands in Delhi and says I 898 00:52:57,949 --> 00:53:00,949 Speaker 2: want to build 100 million manufacturing facility 899 00:53:01,959 --> 00:53:07,239 Speaker 2: and, and he runs up immediately against the obstacles. Uh saying, 900 00:53:07,250 --> 00:53:10,649 Speaker 2: you know, you need not only permits and clearances from Delhi, 901 00:53:10,699 --> 00:53:12,739 Speaker 2: you've got to figure out which state you're going to 902 00:53:12,750 --> 00:53:17,909 Speaker 2: operate in, you need permits and clearances and the state 903 00:53:17,919 --> 00:53:21,530 Speaker 2: and the federal government are not necessarily working in concert. 904 00:53:21,540 --> 00:53:22,590 Speaker 2: There's no coordinations, 905 00:53:23,310 --> 00:53:26,610 Speaker 2: we try to do the same in Vietnam. And uh 906 00:53:26,620 --> 00:53:30,969 Speaker 2: uh the, the guy in Hanoi, uh the state official 907 00:53:31,250 --> 00:53:35,750 Speaker 2: has the ability to call up the provincial official and 908 00:53:35,760 --> 00:53:40,479 Speaker 2: coordinate and make that investment happen in an at a really, 909 00:53:40,489 --> 00:53:44,879 Speaker 2: really amazing space including providing electricity connections. If the road 910 00:53:44,889 --> 00:53:46,009 Speaker 2: needs to be built, 911 00:53:46,760 --> 00:53:50,699 Speaker 2: that's the challenge, that's the gap that India needs to overcome. And, 912 00:53:50,709 --> 00:53:53,540 Speaker 2: and there isn't, I mean, India is uniquely 913 00:53:54,250 --> 00:53:58,040 Speaker 2: uh political system and the way the economy is arranged 914 00:53:58,050 --> 00:54:01,350 Speaker 2: does not allow for that kind of co ordination, 915 00:54:02,889 --> 00:54:03,389 Speaker 1: right? 916 00:54:04,100 --> 00:54:07,169 Speaker 1: OK. A little bit of crystal ball gazing. We've had 917 00:54:07,179 --> 00:54:10,279 Speaker 1: a decade of making India, it promised a lot. It 918 00:54:10,290 --> 00:54:13,379 Speaker 1: has delivered somewhat but nothing compared to what the original 919 00:54:13,389 --> 00:54:18,280 Speaker 1: promises were. But again, looking forward, uh both, what do 920 00:54:18,290 --> 00:54:20,859 Speaker 1: you see happening and what should be 921 00:54:20,870 --> 00:54:21,319 Speaker 1: happening, 922 00:54:22,580 --> 00:54:25,840 Speaker 2: right. So this is India's moment, I think and and 923 00:54:25,850 --> 00:54:29,560 Speaker 2: has been India's moment uh for the last three decades. 924 00:54:30,250 --> 00:54:33,060 Speaker 2: Uh I think any policy maker looking back could say, 925 00:54:33,070 --> 00:54:35,989 Speaker 2: you know, India has done reasonably well, it has accelerated 926 00:54:36,000 --> 00:54:40,669 Speaker 2: economic growth, it has removed some of the shackles uh that, 927 00:54:40,679 --> 00:54:44,149 Speaker 2: you know, led to the infamous Hindu rate of growth 928 00:54:44,250 --> 00:54:48,350 Speaker 2: since the 19 fifties. Uh You have a more affluent 929 00:54:48,399 --> 00:54:53,790 Speaker 2: middle class, uh you've created an economy which provides opportunity 930 00:54:54,100 --> 00:54:57,250 Speaker 2: for those who wish to stay back home and, and 931 00:54:57,260 --> 00:54:58,909 Speaker 2: they certainly, you know, visibly 932 00:54:59,629 --> 00:55:03,409 Speaker 2: you've got this class of billionaires and millionaires. 933 00:55:04,100 --> 00:55:06,569 Speaker 2: But I think the big question mark for India is 934 00:55:06,750 --> 00:55:09,820 Speaker 2: how do you sustain this India group story? Right? Can 935 00:55:09,830 --> 00:55:12,638 Speaker 2: you continue to be the fastest growing economy 936 00:55:13,389 --> 00:55:14,449 Speaker 2: in the G 20 937 00:55:15,179 --> 00:55:19,899 Speaker 2: uh for the next 20 years without uh providing that 938 00:55:19,909 --> 00:55:25,080 Speaker 2: manufacturing story. And I would argue at some stage, India 939 00:55:25,090 --> 00:55:28,989 Speaker 2: will come up against the obstacle that, you know, and, 940 00:55:29,000 --> 00:55:32,790 Speaker 2: and maybe hopefully that stage is today rather than 10 941 00:55:32,800 --> 00:55:35,509 Speaker 2: years from now when it be, when it may be 942 00:55:35,520 --> 00:55:38,120 Speaker 2: too late. Uh for India to catch up, 943 00:55:38,929 --> 00:55:43,010 Speaker 2: there's an absolute sweet geopolitical spot where India can play 944 00:55:43,020 --> 00:55:48,030 Speaker 2: in at the moment. Uh India obviously is aligned perfectly 945 00:55:48,040 --> 00:55:52,459 Speaker 2: with the US on, on security issues. And India is 946 00:55:52,469 --> 00:55:55,629 Speaker 2: a member of a quad, it's a member of IP 947 00:55:55,689 --> 00:55:58,839 Speaker 2: F even though it's not part of the trade chapter 948 00:55:59,729 --> 00:56:03,030 Speaker 2: of the Indo Pacific economic framework. And there's a greater 949 00:56:03,750 --> 00:56:09,149 Speaker 2: exchange of ideas, greater exchange of uh uh policy dialogue 950 00:56:09,729 --> 00:56:10,840 Speaker 2: that happens 951 00:56:11,889 --> 00:56:15,129 Speaker 2: in, in the democratic world including India today 952 00:56:15,850 --> 00:56:18,709 Speaker 2: uh than at any time in the past, right? So that, 953 00:56:18,719 --> 00:56:23,620 Speaker 2: that should provide an enabling environment for foreign investors and 954 00:56:23,629 --> 00:56:28,429 Speaker 2: local investors to make more in India policy obstacles by 955 00:56:28,439 --> 00:56:29,149 Speaker 2: the three 956 00:56:29,750 --> 00:56:34,689 Speaker 2: barriers which which, which really uh the government should address 957 00:56:34,979 --> 00:56:37,819 Speaker 2: uh in the next year or so. First, in the sense, 958 00:56:37,830 --> 00:56:39,969 Speaker 2: it's not a level playing field, 959 00:56:40,899 --> 00:56:44,719 Speaker 2: the fact that you've got favored groups who seem to 960 00:56:44,729 --> 00:56:48,879 Speaker 2: be getting all of the benefits in terms of contracts, 961 00:56:48,889 --> 00:56:52,520 Speaker 2: in terms of being able to produce that scale uh 962 00:56:52,530 --> 00:56:56,229 Speaker 2: with very little barriers. And at the same time, you've 963 00:56:56,239 --> 00:56:58,179 Speaker 2: got a lot of others who feel that they don't, 964 00:56:58,189 --> 00:57:02,770 Speaker 2: you know that these favored groups are disproportionately benefit. So 965 00:57:02,780 --> 00:57:06,719 Speaker 2: India needs to level the playing field really to enable 966 00:57:07,429 --> 00:57:11,009 Speaker 2: other large scale business houses who have the ability, who 967 00:57:11,020 --> 00:57:14,370 Speaker 2: have the skills and the knowledge to also invest in 968 00:57:14,379 --> 00:57:15,810 Speaker 2: this Indian growth story. 969 00:57:16,729 --> 00:57:20,399 Speaker 2: Second is, and this has been a prob problem. Predating 970 00:57:20,409 --> 00:57:24,659 Speaker 2: make in India is lack of predictability on regulatory enforcement 971 00:57:24,669 --> 00:57:29,110 Speaker 2: or on tax claims. I mean, the GST is and 972 00:57:29,120 --> 00:57:32,280 Speaker 2: has become a very blunt instrument. I mean, the Indian 973 00:57:32,290 --> 00:57:33,510 Speaker 2: company enforces 974 00:57:34,300 --> 00:57:37,340 Speaker 2: which as you know, is an it services company was 975 00:57:37,350 --> 00:57:39,350 Speaker 2: today was recently placed with a 976 00:57:40,010 --> 00:57:44,320 Speaker 2: absolute staggering GST came uh which seems to have come 977 00:57:44,330 --> 00:57:47,719 Speaker 2: out of nowhere. So there's a lack of predictability and 978 00:57:47,729 --> 00:57:52,570 Speaker 2: regulation on enforcement and on taxation that is due from 979 00:57:52,580 --> 00:57:57,570 Speaker 2: companies either to state or, or, or the center. And 980 00:57:57,580 --> 00:58:01,840 Speaker 2: that absolutely plays a chilling role, I think in uh in, in, 981 00:58:01,850 --> 00:58:04,469 Speaker 2: in businesses not being able to plan 982 00:58:05,209 --> 00:58:08,149 Speaker 2: and, and they're absolutely scared that there's going to be 983 00:58:08,159 --> 00:58:09,110 Speaker 2: a knock on the door 984 00:58:09,739 --> 00:58:12,750 Speaker 2: which is going to take away management time and attention. 985 00:58:13,199 --> 00:58:14,439 Speaker 2: I would say the third 986 00:58:15,489 --> 00:58:16,169 Speaker 2: problem 987 00:58:17,000 --> 00:58:19,689 Speaker 2: and, and, and this has got a lot to do 988 00:58:19,699 --> 00:58:23,219 Speaker 2: with politics which has kind of been, I think uh 989 00:58:23,229 --> 00:58:23,250 Speaker 2: uh 990 00:58:24,540 --> 00:58:28,060 Speaker 2: has been a feature much more dramatic in the last 991 00:58:28,070 --> 00:58:28,760 Speaker 2: 10 years 992 00:58:29,899 --> 00:58:34,360 Speaker 2: than in previous governments. There's a real sense of polarization 993 00:58:34,370 --> 00:58:39,989 Speaker 2: and I don't mean societal polarization alone, there's political polarization 994 00:58:40,429 --> 00:58:44,080 Speaker 2: that if you're a non ruling party 995 00:58:45,500 --> 00:58:47,449 Speaker 2: government running a state. 996 00:58:48,239 --> 00:58:51,469 Speaker 2: There is the co ordination that was possible in the 997 00:58:51,479 --> 00:58:55,659 Speaker 2: past with the ruling party in power in New Delhi. 998 00:58:56,919 --> 00:58:59,840 Speaker 2: That is a challenge and that absolutely is a problem 999 00:58:59,850 --> 00:59:03,899 Speaker 2: for investors. Uh Because you, if you're a foreign investor, 1000 00:59:04,219 --> 00:59:07,429 Speaker 2: putting a significant amount of money, you are either come 1001 00:59:07,439 --> 00:59:11,300 Speaker 2: through the fast track, right, where everything is made easy 1002 00:59:11,310 --> 00:59:14,919 Speaker 2: for you. It's arguable whether that the number of those 1003 00:59:14,929 --> 00:59:18,540 Speaker 2: investors will be 1020 30 it certainly can't be 300 1004 00:59:18,790 --> 00:59:23,260 Speaker 2: because that will absolutely overwhelm uh uh the government's capacity 1005 00:59:23,750 --> 00:59:27,189 Speaker 2: to deliver, right. So you need to create the fast 1006 00:59:27,199 --> 00:59:31,500 Speaker 2: track should be available for everyone to participate in. And 1007 00:59:31,510 --> 00:59:34,129 Speaker 2: there's got to be that greater level of co ordination 1008 00:59:34,139 --> 00:59:39,090 Speaker 2: and sense of national purpose and cohesion. Uh The political 1009 00:59:39,100 --> 00:59:43,448 Speaker 2: environment is charged, it's very difficult. I know, but 1010 00:59:44,110 --> 00:59:48,949 Speaker 2: from a foreign investor perspective, uh that's an absolute challenge. And, 1011 00:59:48,959 --> 00:59:52,250 Speaker 2: and if India is not able to overcome this, you're 1012 00:59:52,260 --> 00:59:54,689 Speaker 2: always going to find successes. I don't mean to say 1013 00:59:54,699 --> 00:59:56,629 Speaker 2: that all foreign investors are going to turn away. I 1014 00:59:56,639 --> 01:00:00,389 Speaker 2: think the share size and attractiveness of Indian market uh 1015 01:00:00,399 --> 01:00:01,570 Speaker 2: will remain, 1016 01:00:02,449 --> 01:00:05,639 Speaker 2: will keep India in the trail for a long period 1017 01:00:05,649 --> 01:00:08,030 Speaker 2: of time. Uh But you know, 1018 01:00:09,270 --> 01:00:12,139 Speaker 2: time is money and businesses will, I mean, there are 1019 01:00:12,149 --> 01:00:15,699 Speaker 2: other destinations which are knocking on the door and businesses 1020 01:00:16,040 --> 01:00:17,209 Speaker 2: will simply turn away 1021 01:00:17,969 --> 01:00:22,040 Speaker 1: right from Mexico to Hungary. There's quite a few out 1022 01:00:22,050 --> 01:00:25,320 Speaker 1: there asking for the same investment dollar. But finally, you, 1023 01:00:25,330 --> 01:00:28,439 Speaker 1: you talked about the sort of the view from the 1024 01:00:28,449 --> 01:00:30,939 Speaker 1: inside that's sitting in India, what India needs to do 1025 01:00:30,949 --> 01:00:34,719 Speaker 1: to attract foreign investment. But let's say you encounter a 1026 01:00:34,729 --> 01:00:37,219 Speaker 1: foreign investor tomorrow in Washington DC and New York who 1027 01:00:37,229 --> 01:00:39,800 Speaker 1: are looking at India as a possible destination for their 1028 01:00:39,810 --> 01:00:42,030 Speaker 1: investment dollars. How would you guide them? 1029 01:00:43,489 --> 01:00:47,550 Speaker 2: Right. So the two challenges uh so 22 challenges and 1030 01:00:47,560 --> 01:00:48,429 Speaker 2: two questions, 1031 01:00:49,750 --> 01:00:52,929 Speaker 2: I don't think foreign investors need to be persuaded a lot. 1032 01:00:53,340 --> 01:00:56,570 Speaker 2: If you're making breakfast cereals, if you're making 1033 01:00:57,300 --> 01:01:01,830 Speaker 2: consumer products, they don't need a great deal of persuasion 1034 01:01:02,000 --> 01:01:03,350 Speaker 2: that they've got to make in India. 1035 01:01:04,520 --> 01:01:08,300 Speaker 2: And they increasingly feel that in order to make in 1036 01:01:08,310 --> 01:01:12,550 Speaker 2: India successfully and and in order to do it quickly, 1037 01:01:12,889 --> 01:01:15,260 Speaker 2: you need to partner with someone locally 1038 01:01:15,889 --> 01:01:20,070 Speaker 2: that seems to be the model for non make in India, 1039 01:01:20,080 --> 01:01:24,090 Speaker 2: advanced manufacturing kind of, right. So you, you get a 1040 01:01:24,100 --> 01:01:28,060 Speaker 2: joint venture partner and, and you know, you, you outsource 1041 01:01:28,070 --> 01:01:32,899 Speaker 2: the regulatory tax issues to your joint venture partner, you 1042 01:01:32,909 --> 01:01:36,919 Speaker 2: take a smaller stake and India is now allowing majority 1043 01:01:36,929 --> 01:01:40,669 Speaker 2: stake in many sectors so they can still retain some 1044 01:01:40,679 --> 01:01:42,590 Speaker 2: level of uh majority control. 1045 01:01:43,219 --> 01:01:45,840 Speaker 2: That's an easy proposition. And that has happened, I think 1046 01:01:45,850 --> 01:01:49,510 Speaker 2: since the India opened up 30 years ago. But you know, 1047 01:01:49,840 --> 01:01:52,040 Speaker 2: the central part of our conversation today 1048 01:01:53,020 --> 01:01:56,020 Speaker 2: that is still not delivering the kind of employment levels 1049 01:01:56,300 --> 01:02:01,120 Speaker 2: and value added. Uh uh compared with the others. The 1050 01:02:01,129 --> 01:02:02,560 Speaker 2: second set of questions 1051 01:02:03,250 --> 01:02:07,520 Speaker 2: that the manufacturer of semiconductors uh right. Can I create 1052 01:02:07,530 --> 01:02:09,629 Speaker 2: a fab? Can I build a fab fab lab 1053 01:02:10,800 --> 01:02:16,510 Speaker 2: in India using NVIDIA GP us? Can I can I 1054 01:02:16,520 --> 01:02:20,139 Speaker 2: build a network of data centers? 1055 01:02:20,840 --> 01:02:23,409 Speaker 2: Uh because I want to train, I want to train 1056 01:02:23,419 --> 01:02:25,060 Speaker 2: my large language models 1057 01:02:25,770 --> 01:02:30,810 Speaker 2: in India because of uh uh availability of land availability 1058 01:02:30,820 --> 01:02:34,689 Speaker 2: of technical skills, at least at that high level. That 1059 01:02:34,699 --> 01:02:38,040 Speaker 2: is where the complexity is, that is the problem that 1060 01:02:38,050 --> 01:02:40,629 Speaker 2: make in India has been attempting to solve 1061 01:02:41,350 --> 01:02:44,850 Speaker 2: in creating this fast track. But the fact that for me, 1062 01:02:44,860 --> 01:02:46,979 Speaker 2: the worrying thing is the take up rate. 1063 01:02:47,689 --> 01:02:50,189 Speaker 2: But it's one thing to say that you've put $28 1064 01:02:50,199 --> 01:02:55,629 Speaker 2: billion on the table in plis production incentives. But the 1065 01:02:55,639 --> 01:02:59,139 Speaker 2: take up rate on the part of foreign investors has 1066 01:02:59,149 --> 01:03:01,949 Speaker 2: been very, very low and 10 years is a long 1067 01:03:01,959 --> 01:03:05,350 Speaker 2: time to say that you've barely touched 2 billion or 1068 01:03:05,360 --> 01:03:08,070 Speaker 2: 3 billion, which happens to be the number, 1069 01:03:08,750 --> 01:03:12,570 Speaker 2: right. So the advice to the foreign investor in the 1070 01:03:12,580 --> 01:03:16,739 Speaker 2: second category is how compelling is your business model at 1071 01:03:16,750 --> 01:03:20,889 Speaker 2: the moment that you do need to move from China 1072 01:03:21,620 --> 01:03:25,600 Speaker 2: perhaps at a slower trajectory than what one reads in 1073 01:03:25,610 --> 01:03:28,919 Speaker 2: the newspapers where you know the feeling in Washington DC 1074 01:03:28,929 --> 01:03:31,360 Speaker 2: is you simply click off the switch 1075 01:03:32,199 --> 01:03:35,659 Speaker 2: exit China and there beckons India and Vietnam that's not 1076 01:03:35,669 --> 01:03:37,360 Speaker 2: going to happen that way. I think China is going 1077 01:03:37,370 --> 01:03:41,719 Speaker 2: to be a significant manufacturing destination for a long period 1078 01:03:41,729 --> 01:03:44,459 Speaker 2: of time, much longer than what political leaders seem to 1079 01:03:44,800 --> 01:03:45,580 Speaker 2: seem to believe. 1080 01:03:46,820 --> 01:03:49,600 Speaker 2: But if you place India on that slower track, so 1081 01:03:49,610 --> 01:03:52,860 Speaker 2: India is able to sort out its regulatory problems, the 1082 01:03:52,870 --> 01:03:56,340 Speaker 2: co ordination problem that I pointed out, 1083 01:03:57,139 --> 01:04:00,860 Speaker 2: but it's more drip that gradually India is going to 1084 01:04:00,870 --> 01:04:05,050 Speaker 2: scale up, then it's probably an attractive destination. But as 1085 01:04:05,060 --> 01:04:05,949 Speaker 2: you well know, 1086 01:04:06,810 --> 01:04:08,429 Speaker 2: foreign investors are impatient 1087 01:04:09,439 --> 01:04:12,770 Speaker 2: if we were talking. For example, I think uh 20 1088 01:04:12,780 --> 01:04:13,379 Speaker 2: years ago, 1089 01:04:14,189 --> 01:04:16,739 Speaker 2: I, I think 20 years ago, we have fixated too 1090 01:04:16,750 --> 01:04:19,550 Speaker 2: much on growth in India growth at all costs. 1091 01:04:20,449 --> 01:04:24,149 Speaker 2: And I think the conversation is appropriately now turned to 1092 01:04:24,260 --> 01:04:26,580 Speaker 2: what is the quality of that growth? What are the 1093 01:04:26,590 --> 01:04:30,469 Speaker 2: growth drivers? Are we are, should we be satisfied with 1094 01:04:30,479 --> 01:04:34,389 Speaker 2: consumption and services and the fact that the the greater 1095 01:04:34,399 --> 01:04:38,469 Speaker 2: sense of urgency, those questions are being asked within India? 1096 01:04:38,949 --> 01:04:41,060 Speaker 2: I think lends me to believe that there'll be some 1097 01:04:41,070 --> 01:04:43,580 Speaker 2: change uh whether the change is going to be to 1098 01:04:43,590 --> 01:04:47,159 Speaker 2: everyone's satisfaction, of course, remains to be seen. But I 1099 01:04:47,169 --> 01:04:51,120 Speaker 2: think making India is an honorable aspiration uh for the 1100 01:04:51,129 --> 01:04:53,409 Speaker 2: country's policymakers to regain. 1101 01:04:54,610 --> 01:04:57,020 Speaker 1: Right. Vasuki, I had earlier promised that we're going to 1102 01:04:57,030 --> 01:04:59,530 Speaker 1: talk about the potential of green transition. We're gonna leave 1103 01:04:59,540 --> 01:05:01,159 Speaker 1: it for another day. And also I want to talk 1104 01:05:01,169 --> 01:05:03,719 Speaker 1: about Indonesia with you another day as well. But for today, Vasuki, 1105 01:05:04,080 --> 01:05:06,389 Speaker 1: thanks so much. For your time and insights. 1106 01:05:07,409 --> 01:05:09,510 Speaker 2: Thank you ta It's always a pleasure to chat with 1107 01:05:09,520 --> 01:05:12,570 Speaker 2: you and I will continue to be a fan of 1108 01:05:12,580 --> 01:05:16,820 Speaker 2: copy tm. May copy TM thrive and prosper for the 1109 01:05:16,830 --> 01:05:18,149 Speaker 2: next few decades. 1110 01:05:18,449 --> 01:05:21,149 Speaker 1: Ok. It is copy time. I'm not a coffee shop, 1111 01:05:21,810 --> 01:05:24,399 Speaker 1: but yes, I, I will try to keep the lights 1112 01:05:24,409 --> 01:05:26,550 Speaker 1: on in the studio as long as I can. Uh 1113 01:05:26,560 --> 01:05:30,389 Speaker 1: Thank you Vasuki and thanks to our listeners and viewers. 1114 01:05:30,409 --> 01:05:33,229 Speaker 1: Copy time was produced by Ken Delbridge at Sky Studios, 1115 01:05:33,239 --> 01:05:35,649 Speaker 1: Violet Lee and Daisy Sharma provided additional 1116 01:05:35,745 --> 01:05:38,524 Speaker 1: system. It is for information only and does not represent 1117 01:05:38,534 --> 01:05:42,344 Speaker 1: any trade recommendations. All 134 episodes of the podcast are 1118 01:05:42,354 --> 01:05:46,205 Speaker 1: available on youtube and on all major podcast platforms. As 1119 01:05:46,215 --> 01:05:49,044 Speaker 1: for our research publications, webinars and live streams, you can 1120 01:05:49,054 --> 01:05:52,145 Speaker 1: find them all by Googling D BS Research Library. Have 1121 01:05:52,155 --> 01:05:52,925 Speaker 1: a great day.