India doing enough to be noticed
Cross-posted on Jan. 11, 2010 at http://tgs.nationalinterest.in/2010/01/11/doing-enough-to-be-noticed
Two days ago, I received this article via email from good friend Dr. Chandru Rajam, currently living in the US. This talks of industry clusters. Some key sentences from this article:
The best example I’ve seen of a region that has successfully pursued cluster development is the unlikely locale of the Thar Desert in Rajasthan, India. It wasn’t the government that made the magic happen, but the region’s ambitious entrepreneurs who prodded officials to follow their lead and team up with them. In a few short years, that group has turned the sun-blasted state once known for backwardness and poverty into an up-and-coming destination for top technology companies around the world.
It wasn’t just tech entrepreneurs and students who shared the dream. Many traditional industries are now employing modern IT practices in their operations. This has allowed them not only to compete globally, but to create innovative new business models. Consider Jaipur Rugs. In 2008, the company had annual revenues of $21 million and became one of the largest handmade rug fabrication companies in India. Jaipur Rugs comprises six business units serviced by a huge workforce of 40,000 independent contractors who weave rugs in their homes but tap into the company’s supply chain networks for wool, as well as quality-control methodologies. The company achieved compound annual growth rates in the mid-double digits over five years when it implemented ERP systems to manage all its complex operations.
These systems are equivalent to the best used by midsized Western companies. Jaipur Rug’s use of technology has not only meant more profits, but more work for contractors, many of whom are women or heads of families that previously languished in poverty. [More here]
I circulated it to my mailing list. One of my friends wrote back suggesting that I do a blog post on the article and also wondered when would FT post an article like this one. He did not have to wait long.
Tucking into my Muesli in cold and snowy Zurich this morning, I finished reading the full page article on innovations and R&D in Bangalore, written by Joe Leahy. It is in the European edition of FT today. Here is a sample from the article:
The research potential of India’s engineering talent pool first drew attention in 1985, when Texas Instruments opened a technology centre in Bangalore. Today, more than 200 multinationals have R&D centres in the country. The ventures aim to tap the country’s phalanxes of engineers – India’s better tertiary institutions churn out about 600,000 a year – as well as the enormous pool of expatriate PhDs working in the west who are keen to return home. Cost is also a factor. Partha Iyengar of Gartner India, a branch of the consultancy, says that in terms of “dollar spent per ounce of innovation”, India’s cheaper engineers mean the equation is “dramatically different” than elsewhere.
At first these R&D centres mostly supported their western counterparts. But in recent years increasing numbers have been entrusted with researching and developing entire products. In 2008, for instance, Intel launched the first commercial server chip wholly developed in its Bangalore design centre. The Xeon processor 7400 series marked a significant step forward for the US chipmaker, increasing the number of processing units built into each chip from four to six, enabling it to handle more intensive business enterprise applications.
Then, there was this news item about Bihar’s SDP registering a 11% rise in 2008-09. Although Bibek Debroy’s column in FE puts this in perspective, it is still a good story. It is worth reading Bibek’s piece. But, as one of my friends reminded me, it is important to visit Bihar to know more and better.
Then, came the story in FE with the following lines:
“Perhaps the most startling and indeed heartening conclusion of The Indian Express-Indicus study on how India will look in 2020, published in FE on Friday, was that India’s GDP can grow at an annual average rate of 9.6% in the next 10 years even if no reform were to happen.” Here is the link to the full article.
Laveesh Bhandari who runs Indicus has kindly sent me the full report and another study on trends in India’s small and big States. I hope to do a fuller post after reading the attachments he had sent.
While all of these stories are undoubtedly gratifying and confirm the case for a potential growth rate of the Indian economy in the region of 8% to 9% rather than 7% to 8%, it is important not to get carried away, for our potential is really much larger.
Just sample this great piece by Mr. Pradip Baijal (the former chairman of TRAI and the man who tried genuine privatisation in India under Dr. Arun Shourie).
Update:
The distance to be travelled is also captured in this article by Financial Times carried in the front page of its Asia edition on January 26, 2010:
China far outperformed every other nation, with a 64-fold increase in peer-reviewed scientific papers since 1981, with particular strength in chemistry and materials science.
“China is out on its own, far ahead of the pack,” said James Wilsdon, science policy director at the Royal Society in London. “If anything, China’s recent research performance has exceeded even the high expectations of four or five years ago, while India has not moved as fast as expected and may have missed an opportunity.”
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