With both the United States and China competing with each other to woo India, it has the opportunity to choose the best that suits its interests, but a stronger cooperation with China could help India achieve faster growth, says a new book.
"Being the centre of attention for rivals provides India the opportunity of selecting what best is offered," says Stefano Pelle in his book, 'Understanding Emerging Markets: Building Business BRIC by Brick' talking about India's role as one of BRIC countries. BRIC comprises emerging countries Brazil, Russia, India and China.
India could be in the same position that China was in, during the Cold war when the latter was oscillating between the US and USSR which were trying to woo her. And China gained from this position.
According to Pelle, being wooed by the US and China, "India becomes the 'the swinging power,' the one that will succeed to get Delhi on its side may have the highest chance to become the dominant world superpower of tomorrow."
But at the same time the book predicts a fierce competition for resources like oil and steel between India and China by 2030. According to Pelle, both the countries would account for 40 per cent of the global demand for oil. Pelle is the VP and CEO, (business unit Russia and South Asia) Perfetti Van Melle, and its chairman in India.
The book also warns against looming environmental damage due to indiscriminate use of these resources in emerging countries like India, China and Brazil. "Consumption of oil is inefficient as well as more polluting than in the developed countries. There could be unpredictable consequences on the world's already challenged environmental balance," the book predicts.
Some of the most common mistakes and important decisions to make when entering the BRIC countries are analysed in the book.
"Market opportunities existing in the BRIC countries leave little choice to companies operating in the developed world and in need of growth to sustain their profitability but to conquer a significant share of them," says Pelle.
The BRIC countries would play an important role in the future because of cheap labour force for manufacturers, a 'hungry consumer' for the marketers and a long-term young population, the same could also act as hurdles especially for a foreign investor. Because of low incomes in bureaucracy, corruption and red-tapism could hinder the investor, the book says.
Advising potential investors to observe the laws scrupulously and make sure that no violation is detectable, but in case there is a problem in following the local laws literally, it advises measured risk and find "a wise way to operate with border line practices, which are not illegal, but might be interpreted as such, depending on how strictly the law is considered."
The book calls for Corporate Social Responsibility on behalf of companies investing the emerging markets of BRIC countries. "While acting as a good corporate citizen a company gains credibility and reinforces its image vis-à-vis the authorities and at the same time obtains mileage which could be spent at the appropriate time," the book states.
The book advises the local management of foreign companies to understand "the mechanism of functioning, the dominant culture, the hierarchy and importance of the officers, in order to acquire the appropriate skills to successfully deal with the bureaucrats and politicians."
The book also takes a look at the mergers and acquisitions by companies from BRIC countries. The book estimates that Indian companies may have invested around $3 billion in total acquisitions around the world in 2006.
Citing the example of companies like Infosys, Tata, Wipro and oil public sector companies, the book predicts that companies from BRIC countries, especially India and China could play an important role as global companies.
Though the BRIC countries are estimated to become four of the six largest economies of the world by 2050, some of the problems that could hinder their growth include, diseases like AIDS and other kinds of pandemics, like the bird flu which could temporarily halt the economic activities.
By 2010 the number of AIDS infected could be as high as 20-25 million in India, 10-15 million in China and 5-8 million in Russia. Terrorism is also cited as one of the major risks for investors in emerging countries.