Indian managers are heading multinationals in large numbers. Well-educated and brilliant, you can find them as expatriates leading multinationals in several countries. The Expat Insider 2018 survey released by Inter Nations provides some interesting data on expats. Look at the highlights:
Indians who move abroad have an average age of 36 years, 8 years younger than the global average. At a headcount of Indian expats in the Philippines, I noticed at least 8 of these heading MNCs.
The survey ranked 68 countries. Bahrain, Taiwan and Ecuador held the top three ranks, terming these countries as great for working abroad and for ease of settling in, job security and high quality of life.
India was ranked 66 with just Saudi Arabia and Kuwait behind. Expats in India enjoy a low cost of living but face long working hours and a lack of work-life balance. They are also unhappy with the quality of the environment. Low cost of living is still seen as a significant benefit.
With the vast expansion of corporate activity, there has been a corresponding expansion in the availability of quality managers in India. With the stock increasing, there has been a move away from engaging expats even by large multinationals.
The higher cost involved in hiring them is complemented by the low satisfaction levels of expats to work in India. A double whammy!
Aggressive Amazon…
Walmart and Amazon are on the warpath. In IE July issue, I pointed to Walmart, the brick and mortar global retail giant and the largest company in the world with a turnover of $ 500 billion, entering e-commerce buying Flipkart for $ 16 billion. The phenomenal growth of Amazon in recent years, massively expanding e-commerce across the globe, should have been the trigger for thus.
IE also pointed to the war between the two giants hotting up with the plans of Jeff Bezos of Amazon to beat Walmart, though its revenues in 2017 at $ 177.87 billion is a just little over a third of those of Walmart’s.
Even while Walmart was keen to enter Amazon’s e-commerce territory, Jeff Bezos has been busy taking the battle to Walmart’s brick and mortar strengths. Amazon acquired the Whole Foods retail business of 400 retail stores in the US. It has been gaining experience in marrying its e-commerce strength with the infrastructure of Whole Foods in delivering efficiently perishable goods like milk, vegetables, fruits, meat… This experience should have encouraged him to look at the vast market for groceries and other consumer products in India. This should explain Amazon buying Birla’s extensive retail network of More stores.
With the acquisition of More, Amazon is bound to further consolidate its market share. There are exciting impacts of this development: the preparedness of Reliance Retail to meet competition by the aggressive Amazon and by Walmart waiting at the wings. The success of the protest of the small traders and the mom and pop stores that try to win political support for keeping these multinationals at bay.
Interestingly, Kumar Mangalam Birla, like Ratan Tata did in the 1990s, seems to focus on businesses with proven success and profits. Only recently his Idea Cellular joined hands with Vodafone to create India’s No.1 telecom company. Can we look for more such efforts to stick to knitting?
Rajeev Ranjan shifts to Delhi
Rajeev Ranjan, IAS, a chief secretary rank officer of the Tamil Nadu cadre, is shifting to Delhi as Special Secretary, at the GST Council Secretariat. In his service spread over 33 years, Ranjan has had a vast range of experience – from district administration to administering industry, commerce, energy, finance, highways…
In recent years he held the High ways & Minor Ports portfolio and contributed richly to the infrastructure strengths of the state. In my recent meeting with him, Ranjan referred to the Sagarmala project with its beneficial fall out on Tamil Nadu which has a long coastline of 1000 km. Tamil Nadu is pre-eminent in its vast, high-quality network of highways and rural roads. The construction of multi-lane outer ring roads has been de-congesting the city by keeping heavy goods traffic away from the metro.
Ranjan has rich academic qualifications. The school topper had a B.Sc (Hons) degree in Physics and MBA from IIM-A, masters from London School of Economics and a doctorate. I asked him why he didn’t aspire for a corporate job with much higher pay packs. In characteristic frankness, he replied: “in Bihar (from where he hailed), there is respect and awe for a government officer and not so much for the corporate executive! IAS was better known than MBA!”
Public service has been in the family vein: his father was a public sector employee. He did not mention the other prized reason: his spouse is the daughter of B P Singh, former Union Home Secretary, past executive director-World Bank and ex-Governor of Sikkim. Surely, an IAS officer had much better prospects for winning such a bride!
Ranjan had two critical stints with the Union government. During 2000-05 he served as Director in the Ministry of Industry & Commerce and was deeply involved in framing the laws on intellectual property rights and patent laws. I remember the passion with which CSIR’s R A Mashelkar and Rajeev Ranjan worked on formulating the patents regime and focused on a codification of traditional knowledge, for example in Siddha medicine.
Another significant tenure of Ranjan was with the National Manufacturing Competitiveness Council (NMCC) headed by
V Krishnamurthy. The NMCC worked on improving competitiveness and increasing the share of manufacturing in total economic value addition.
In 2009, as Secretary -Industry, Ranjan lent his support to IE’s efforts in the south getting a fair share of natural gas produced in the country. He participated in the seminar organised by IE in December 2009.
Though initially Tamil Nadu had reservations on the introduction of the GST, it has made valuable suggestions to formulate a policy that would be fair for all states.
Ranjan, as Special Secretary of the GST Council Secretariat, can help protect the interests of states with a large manufacturing base.
US-China Trade war – India should look for new opportunities
Trade war between China and the US is hotting up. The increase in import duties imposed by the US on a variety of products, including aluminum and steel and also the demand for favoured treatment for exports of agro products, will severely impact India’s foreign trade. However, India should look at the opportunities unfolding.
US President Trump has reasons to feel concerned. His country’s foreign trade has been suffering huge deficits in trade with most countries including China, several European countries, Canada, Mexico and India.
For decades, General Motors, Ford and Chrysler were the leaders in global automobile manufacture. Till the 1970s almost the entire demand for aircraft from across the globe was mostly met by the US. The ascent of the European countries and later Japan, South Korea and Taiwan, combined with the consumerism of the US, resulted in the US vacating sector after sector. The threat became much more severe after several new Asian countries, now including India and China, making further deep inroads into the US economy.
Low wages and slack labour laws of developing countries and their ability to export to the US products and services at low cost severely affect the US. Trump became President promising to protect jobs and support indigenous production. Hence there is extensive support for his policy of protection.
India has two invaluable lessons: 1. using tariffs intelligently to avoid imports of goods and services which can be made in India. Look at India’s own adverse trade balance with China; 2. move closer to the US to benefit from the vast space for exports that is to be lost by China. Remember, bulk of the Chinese exports are goods like textiles or a vast range of low-tech manufactured products like office furniture electronic and other consumer goods that can be produced by India at competitive rates. A bilateral, favoured trade agreement with not just US but with several other developed countries on a sort of barter basis could be pursued.
To succeed, there are two essential requirements, both of which are somewhat difficult to pursue:
1. Changing the divisive nature of our polity; every policy of the government sharply criticised and opposed by parties in opposition thwart such attempts. Just relate Rahul Gandhi’s promise of dismantling GST on returning to power!
2. The absence of a policy framework and strong support for scaling up production to large volumes with proper incentives. Look at the advantage derived by China by such large scales of production.
Welcome initiatives in the insurance sector
IE has been pointing to a large number of two-wheelers, cars and commercial vehicles’ plying without the mandatory third party insurance. In the system of issuing annual policies for motor vehicles and in the absence of effective enforcement, most buyers of new vehicles do not routinely opt for renewal after the lapse of the policy a year after.
IE has been suggesting IRDA to take recourse to information technology to first record the data of the insured and then provide this data to road transport authorities of the different states for follow up. This had been slow in taking shape.
A welcome measure is a recent mandate to increase the period of insurance for third-party damages from the present 12 months to three years for two-wheelers. With strong oversight by the RTAs and the police department, a large number of uninsured vehicles could be detected and made to comply with the law. This can substantially increase revenues that could help reduce the premium.
There has been much talk on the low level of life insurance. Shriram’s R Thyagarajan, with his rich experience in insurance spread over five decades, suggested focus on the Unit-linked insurance plans that ensured a decent return on investment plus the offer of security. This was quite popular and, unfortunately, mutual funds and other competing financial institutions opposed this, he pointed.
The second and more important reason is the lack of appreciation of the need for security cover through life insurance. Admittedly, the returns on a life insurance policy are not very attractive. But then it’s prime purpose is risk cover in the event of death. There is need for emphasising the importance of taking cover for such a risk, feels Thyagarajan.
TAFE app for fuller use of farm machinery
Winds of successful international practices are blowing favourably on Indian companies. Concepts like Time Share or Airbnb are incredibly profitable leveraging idle capacity. The most visible of the success of such efforts is provided by Uber. The largest ride-sharing service does not own even a single taxi across the globe!
The brilliant expert on mobility, Dr V Sumantran and his co-authors in the book Faster, Smarter, Greener- the Future of the Car and Urban Mobility, point to the average use of a car run for own use at just 4 per cent; for the balance 96 percent it is parked, besides costing a bundle in terms of space occupied!
This applies even more for tractors and other farm equipment. In my own experience at the Agriculture Consultancy Management Foundation (ACMF), I found very sparse use of farm equipment. Tractors, for instance, are used mostly for the initial tilling of land and are idle for most of the time. Sadly, we do not have the facility for hiring equipment at modest cost from local communes as in vogue in Japan.
Tractors & Farm Equipment Ltd (TAFE), the flagship company of the southern industrial conglomerate Amalgamations Ltd., recently announced a new service through an impressive mobile app, Jfarm Services. This leverages the sizeable idle capacity of tractors lying with farmers. The new app facilitates the hiring of tractors and modern farm machinery available with owner-farmers. Farmers looking to rent out or hire these can do so through the TAFE app. The company offers this service for free. “With this launch, we aim to touch millions of farmers who have no access to farm mechanisation and modern technology,” said Mallika Srinivasan, Chairman & CEO.
The pilot scheme experimented by TAFE in four states provided gratifying results: 60,000 farmers using the apps, had placed over 100,000 orders for hiring.
There is a flipside to this: fuller utilisation of existing tractors by renting these at modest cost, can affect sale of new tractors!
With Mallika on the board of Tata Steel and husband Venu on Tata Sons,’ it should be easy to access TCS for even more rapid digitalisation.
