Mai Chen

Public and employment law specialist Mai Chen on current events

Mai Chen: India: A force to be reckoned with

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Corruption and bureaucracy prove formidable challenges, but opportunity is ripe for those who dare to try.

Indian company Tata, ranked 45th among the top 500 global brands, is the inventor of the world's most economical car, the Nano. Photo / AP
Indian company Tata, ranked 45th among the top 500 global brands, is the inventor of the world's most economical car, the Nano. Photo / AP

The last time I was in India, I was a poor, 24-year-old Harvard Master of Laws graduate and United Nations intern returning to New Zealand the long way.

My husband and I were backpacking and we stayed in a hotel where a low partition separated the rickety, flea-infested bed from the squat toilet. The dangerously low-hanging ceiling fan only spread the smell from the toilet throughout the room, and we used to be woken by loud banging on our door from people trying to take us to their shops.

The contrast could not be more stark a quarter century on. Our accommodation this time is the Taj Mahal Palace Hotel, fully restored after the infamous terrorist attack in 2008.

The New Zealand British study tour I am on this week is led by the British High Commissioner to New Zealand, Vicki Treadell. As the previous Deputy British High Commissioner to Mumbai and an Asian woman herself, it is her impeccable contacts these 10 Kiwi and 14 British women on this delegation are leveraging off and the Mumbai companies and experts we visit clearly adore her.

Cesare Pavese says that life is not about days but about moments, so I have dropped everything to come and get some first-hand insight into what India is really capable of, and why business should be focusing on India as much as on China. I pick up the Economist and Time magazines at the airport and both have special reports on India. As if to underscore the need to get on and live your life, Bollywood's top filmmaker Yash Chopra who we were to meet on Monday passed away of Dengue Fever on Sunday and his studio was closed in mourning.

We visit and hear from top executives and experts at three of India's best companies - Mahindra and Mahindra, India's biggest car manufacturer; Tata, ranked 45th out of 500 top global brands with $100 billion revenue and half a million employees (and inventor of the Nano, which is the world's most economical car costing just $2500); and Piramal, one of the biggest R&D companies in India, focusing on natural products and molecules. Dr Swati Piramal, vice-chairperson of Piramal, who has just been elected on to the Harvard University Board, said that she measures her time against human impact in deciding the difference she can make.

Despite the ever present poverty and corruption, India is a vast market, and a democracy with a young population profile. In 2010, 64 per cent of India's population was aged between 15-64. India's birth rate is now declining due to increased literacy and skill levels. The economic choices they make mean opportunities for Kiwi exporters, but also New Zealand educational institutions, which is why the Hon Steven Joyce has just led a New Zealand delegation to India.

Because of the level of official corruption, business people in India have to be savvy about politics and government. But Indians are now increasingly demanding better and improved transparency.

While there are already lots of laws and rules to promote transparency - the Right to Information Act has recently been passed, India's equivalent of our Official Information Act - enforcement of those laws is the stumbling block.

The chief legal adviser for Mahindra and Mahindra told us that there are only 12 judges per million people. Arvind Jolly, the managing director of JollyBoard, told me that justice delayed was justice buried. His cases kept getting adjourned because of a lack of judges and his legal bills kept mounting for no outcome.

Other business people tell me there are industries to steer clear of due to corruption. For example, the construction industry has a poor reputation as the primary means of laundering "black money". All of this highlights the value of New Zealand's No1 ranking in the Transparency International index for those doing business. Another stumbling block for growth is as Deepak Parekh, the chairman of the Housing Development Finance Corporation, says: "The British introduced bureaucracy, but the Indians have perfected it."

India is the size of Europe and has to be approached as a collection of markets. Individual Indian states, such as Uttar Pradesh, have economies and populations comparable to major economic powers, such as Brazil. Population and economic growth between these states is also not uniform and differs widely. The first question to be asked when considering doing business in India is: which India?

Figures from Dr Veena Mishra, the chief economist at Mahindra, show a doubling of Indian incomes from 2001 to 2011. India still has high but slowing growth when compared with the rest of the world, but that growth is uneven. Mumbai has the most expensive house in the world where 4 people live with 200 servants, yet over 50 per cent of the population live in slums in illegally built accommodation, and Mumbai has no subway despite a population of around 20 million people. The caste system still predominantly dictates marriage partners and what occupation you can have, although it is being eroded by affirmative action programmes.

KN "Vaidy" Vaidynathan, group chief risk officer at Mahindra said that "we overestimate what India can do in the short-term and underestimate what India can do in the long term. Everything that is true of India, the opposite is equally true. Thus, you have to look at the macroeconomic story to really discern what is going on in India.

The challenges for India and for those doing business here are not for the faint-hearted, but there are some phenomenal success and innovation stories like the three companies we visited. They evidence that India is a force to be reckoned with.

Mai Chen, is a partner in Chen Palmer and author of Public Law Toolbox.

- NZ Herald

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