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TECH TALK: India Rising: Finally

January 16th, 2006 · No Comments

India has been the flavour of the year internationally in 2005 and that looks likely to continue in 2006. The past year has seen very favourable write-ups in many international publications. Outsourcing to Indian companies continues to grow rapidly in software and other areas. Many companies are expanding their presence in India. Indian companies themselves are looking to grow globally. The Indian stock market performed spectacularly.

The Economist summed up it up nicely as it looked ahead to 2006: In the coming year India will enjoy greater international prestige than at any time since independence in 1947. With an economy that could grow at more than 7% for the fourth year in succession, that prestige is based in part on sheer clout. Over the next half-century India will emerge as one of the worlds biggest economies and great powers. But Indias standing also reflects its greatest achievement: the almost uninterrupted preservation of democratic rule in a poor country of 1.1 billion people.

Yet, there are some areas of concern. Infrastructure both physical and digital continues to be a big bottleneck. The political tug-of-war between the Congress and the Communists continues to hold up key reforms. Rural areas still lag behind despite the myriad schemes and investments being announced. Energy prices are rising and there doesnt seem to be enough focus on alternatives.

Fortune captured this dual-faced reality in a story on India last October: This bipolar development model is reflected in the crazy-quilt of wealth and squalor in cities like Mumbai, where billboards touting Mallya’s Kingfisher beer and Standard Chartered Bank’s investment-planning experts tower above sprawling slums, and urchins approach cars at gridlocked intersections hawking copies of Harvard Business Review. In Bangalore, executives visiting the immaculate campuses of software firms like Infosys and Wipro marvel that while their data can travel to the other side of the earth at the speed of thought, they must crawl along in bumper-to-bumper traffic for more than an hour to get back to their hotels.

In this Tech Talk series, I will share my impressions as an Indian resident. There is visible change all around. But there is also frustration that things now should be moving a lot faster. Let me begin with the things that are going well in India.

India on Global Map

Almost every investor and senior executive has started to think about India. For some, it is about leveraging Indias cheaper skilled labor. For some others, it is about capitalising on Indias growing domestic consumption. And for investors, it is about Indias attractive returns on investments.

Whether it be the steady stream of investment announcements in India as companies grow their operations or the flow of visitors seeking to discover the new India, there is now little doubt that India is starting to get factored into the plans that companies are making.

The outsourcing and services story is well-known. But as incomes start to rise (and salaries are indeed rising rapidly in the white-collar sector), domestic consumption is starting to take off. (These two factors are the principal drivers behind the real estate boom in Indian cities.)

Tomorrow: Consumer Power

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