BREAK IN INDIA

June 18, 2020

 

                                                               Picture credit - link

 

With the lockdown restrictions eased across the country the focus has shifted towards rebuilding India’s economy with foreign investments. The aim being to woo multinational corporations to shift their production facilities from China to India. While on paper it does make sense considering how both China and India have cheap labour and a large domestic consumption base. However, one should not discount the fact that as things stand, China does have better infrastructure and a much deeper supply chain than us.

 

Other countries like Japan, Vietnam and South Korea are also in the running to take advantage of this opportunity. The government has over the recent years given an impetus to the ‘Make In India’ program and has publicised it massively to drive in foreign investments. There is nothing inherently wrong for corporations of all sizes to dream big and hopefully achieve them. However, in case you do wish to break your dreams, might as well do it out here than anywhere else.

 

 A few years back India’s financial capital, Mumbai hosted its first Make In India event with eminent dignitaries from the business community, Bollywood, politics etc. Midway during the performance the stage itself caught fire and mind you this debacle was not really part of the show itinerary. Hopefully, an enterprising event manager did not upsell this proposition.

 

“Sir, I would strongly suggest you go to for our platinum pack - 150 dancers, 80 acrobats, 20 clowns, 5 Bollywood stars and one mega stage fire.”

 

India being India, someone might have negotiated over it too.

 

“I want the acrobat to be precariously hanging above the stage fire on a thin rope clinging on to his life. This is simply non-negotiable. After spending a bomb on your event fees, the least I can expect is a good front page picture in the newspapers.”

 

I don’t know but maybe the fire was just prophetic of the times to come.

You see running a business in India is nothing short of a rollercoaster ride in the literal sense.

 Various states are doling out many acres of land in the hope that MNC top bosses take note of it and pump in money. Luring with land at dirt cheap rates is a good strategy mainly if you happen to be a part of the real estate lobby and are seeking protection from the underworld. Corporations however are looking for an entire ecosystem conductive to business to thrive and not just cheap land parcels.

 

So just when you start your factory, you might not get an electricity connection to begin with if you have been particularly stingy in giving out bribes to your local government babu. You might be a global corporation having dozens of proprietary global patents and sophisticated technology etc, but all that bravado of yours will flat while dealing with the local bureaucracy. Say if you are one of the lucky few that even manages getting an electricity connection smoothly, would suggest you to not really take it for granted. One small tiff with the local MLA or his distant cousin is all it will take to take you to leave you without electricity all of a sudden. The same story can repeat over and over again in securing crucial regulatory licences too.

 

Say over the coming few years you have gained good local expertise and have figured out the market well enough, the last thing you want is for the government to take interest in your sector. Erratic changes in regulatory policies are nothing new in India. So, in a way even if you don’t seek to disrupt your business model, we will ensure it gets disrupted overnight without your consent. From that perspective we are far visionary compared to other nations.

 

Say over the coming decade or two, you have established your firm and it is flourishing, all of a sudden you could just be thrown under the bus. Actually, the officers at the Income Tax department worked a little extra hard to meet their targets, and now you are slapped with a retrospective tax notice. You know just a few hundred million here and there. Basically, just enough to turn all your future expansion plans into thin air. You can spend the coming years hiring expensive lawyers battling it out in the court. Doing business in India is more about just perpetually living on the edge and praying it doesn’t fall apart.

 

God forbid, if your business falls into some financial hurdle due to global matters beyond your control. The government at the slightest hint and sometimes even due to political pressure will deploy the Enforcement Directorate and CBI behind you to investigate. Before you know it, your offices will get sealed and employees interrogated and possibly jailed, thus ensuring the slight hope you have of recovering goes down the drain. Many foreign investors have burnt their fingers after investing in India in a variety of sectors eg telecom, real estate, aviation etc thereby raising serious concerns on India Inc.

 

All the flak is not attributed to the government only. Competitors might play dirty tactics too. In many cities where local Wi-Fi providers exist, they may simply cut out wires of their competitors or even if they don’t, the rodents present in the wire rooms in buildings may nibble away and do the needful.

 

There is an emerging start-up called Bounce which is based in Bangalore which provides two wheelers on rent and operates as a ride sharing model where users can book a vehicle, use it and leave it at a designated drop off point. Seems like a fairly viable model which has tasted success in other economies too except that it’s slightly different out here in India.

 

Pictures emerged of their vehicles carelessly thrown around the city by users after stealing an assorted variety of parts. In some vehicles the tires were stolen, in few the headlights were removed while for some the main battery itself was taken away. I don’t think the start-up ever advertised itself as a self-help vehicle parts service offering a collection of two-wheeler parts to choose from.

 

How does any business school really prepare you for all these hurdles?

 

If you run a business, the underlying assumption is that you are out there to cheat people. Good luck trying to prove your innocence. I do agree some business may have mala fide intentions and its completely right to prosecute but having this general mindset of mistrust for the whole business community at large is really not the right way forward. Thanks to Bollywood, we middle class folks have a deep ingrained belief that all businessmen are conniving and work hands in glove with politicians. A section of business community might most definitely fall into this bracket but again it does not true hold for everyone at large.

 

For many companies, its mainly about the struggle to survive the onslaught of this grand chaos. Therefore, unlike the western world it’s not unusual in India that astrologers are treated with the same reverence as management consultants. You know maybe wearing a ring or changing the angle of your ugly office sofa might just change your organization’s fortunes.

 

Maybe this lockdown is an opportunity for us to introspect and dig deeper into ourselves and our systems and bring about changes that were long due.

 

 

As Oscar Wilde puts it “We are all in the gutter, but some of us are looking at the stars.”

 

 

 

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