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February 2, 1999


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The Rediff Business Interview/Rahul Bajaj

'We are not fools, we know there is no such thing as a perfect level playing field'

In the past, you have often mentioned the lack of a level playing field in India. How do you define a level playing field, especially keeping in mind your experiences like the Ashok Leyland episode where you lost out to the Hindujas who were pitted against you on their home turf, London?

We are not fools, we know there is no such thing as a perfect level playing field. Let's talks of America and Germany. If three things are better in America, then three other things may be better in Germany. They don't have to be identical, they are two different countries.

But in India's case, there is nothing from the industrialists' point of view that is better in India. The only thing one can quote, if at all, is lower wages. But that thing does not always get reflected in lower wage cost. Productivity is so low, lack of quality consciousness is so much. And we are all to blame from chairman downwards. But barring lower wages, what do we have?

Level playing field means first give me good infrastructure. My transportation costs are so crazy, the turnaround time for ships in Bombay Port is seven days (whereas it is six to eight hours in Singapore). Obviously I am paying more freight.

Why should I be called incompetent because my government's support policy and the labour there doesn't work?

Why do I have to pay 14 to 16 per cent interest when others pay 2 to 3 per cent? Because banks instead of having a spread of two percentage points have six or eight. Otherwise they will have more NPAs, incur more losses. I don't want them to have losses. But because their staff won't work, and because banks are very strongly unionised, no one can touch them.

You as management, as the board, as the government, are inefficient, so don't call me inefficient. You give low-cost loans to farmers and then you don't even recover those loans from them. I am not against farmers, but for heaven's sake, you have to pay for everything. Baap ka maal nahin hai, woh desh ka paisa hai. (It's not their father's property. It's the people's money.) It belongs to 900 million Indians.

I do believe that there are handicaps under which an average Indian company is functioning. Then when you tell it to compete on equal terms with its counterparts abroad, there is some injustice in it, whether it is 2 per cent injustice or 80 per cent injustice depending on industry to industry.

In the current climate, where does the swadeshi chant fit in? How do you define swadeshi and where would you like swadeshi adopted?

Swadeshi means different things to different people. To me swadeshi meant what it meant to Mahatma Gandhi. I want to keep all the doors and windows of my house open. I want views coming from all over the world. I want to learn from them, and not remain isolated. But I want to remain strong myself so I don't get uprooted by those winds.

But don't you feel that the concept of swadeshi is somewhat outdated since we live in an inter-dependent world?

There are many swadeshi apostles with whom I do not agree. We don't want to rule the UK, but don't create a situation where the UK rules us. Swadeshi in the sense it is being talked about has to be stopped. But with 190 countries in the world, each is looking after its own interests. In wanting a more open economy, America is looking after its own interests. All I am saying is, I must look after my interest, which is not to say the industrialists' interest, the Indian industry's interest, but India's interest.

So what you are saying is that the slogan "Computer chips, not potato chips" is practical from the Indian point of view?

It's very fashionable today to say that's crap. But those guys, they were making a point. Taken literally, it's crap. If you can make potato chips worth $ 20 billion a year, and export 80 per cent of it, the process required would be highly advanced and automated. No one can object to that. But what they were saying is that it is a question of priority.

India is getting $ 3 billion FDI a year or less, not $ 40 billion. Those apostles who are crying for FDI, they will keep crying for FDI, and once they get us $ 40 billion a year, they will start saying 'Can we use it? Can we absorb it?' With the $ 4 billion of Resurgent India Bonds, people started getting worried and saying, 'Can I use it, will it cause inflation?' So with $ 3 billion coming in, somebody's saying, 'I would rather first get computer chips rather than the potato chips.'

We can eat our dirty potato chips that we make at home. Even the way we make it is not so crappy. But because we are tremendously under the influence of the McKinseys and Andersens and BCGs and AT Kearneys, the moment we say that Rahul Bajaj says there is even 5 per cent truth in that statement ("Computer chips, not potato chips"), Rahul Bajaj is finished.

So why can we then not regulate FDI and restrict import flows so that you give your industry a certain chance to catch up and manage the new economies?

That's one view and one way, but you can see that things get very complicated. You can say we did it for 40 years, we know what happened, where are we per capita wise? And the WTO [World Trade Organisation] won't allow you to do it anyway. So why break your head against a wall?

When negotiations take place in the WTO, 200 experts in various fields from bioengineering to biotech go from the US. What happens from India? [We send] three guys, maybe one commerce secretary. Bright people from the IAS or IFS, but are they experts in all those matters? Is it fair to throw them into the lions' dens? As it is, we are a weak country. In the developed world, led by the US, the 150 developing countries are either cajoled or bullied or persuaded to fall in line.

So what does that spell for India? Computer chips remain a mere slogan...?

I think we have to strengthen our ability to negotiate at the WTO. Send more people and the right kind of people, otherwise numbers don't mean a thing. I would rather spend more money there than on bank employees or the Udyog Bhavan people. Improve infrastructure, the labour policy, get rid of a lot of people in government. But this we cannot do. So forget it and continue to exist as you have continued to exist.

Where do you see the MNCs and the role of foreign investment in the Indian economy?

If you don't have MNCs coming in, you are going to be left behind. No one is saying that they should not come in. The question is, in what order? When we talk of a partnership world, a world of strategic alliance, how can we say [to them] that we are not going to allow you to come in? If we dictate terms which they don't like they won't come in. There are other destinations.

The point is, what we want is capital, technology, management and maybe export markets. What the MNCs need is the Indian market. So what can you negotiate? You cannot negotiate on a one-on-one basis, that would be discretionary and discriminatory, that causes corruption. I am talking policy-wise.

Out of the four things, no one in India, including the Swadeshi Jagran Manch, has problems in getting export markets, technology or management from them. No one opposes such imports.

The only problem comes in capital imports. And we are talking of FDI that is not even 2 per cent of our GDP. No one in today's world can say one doesn't need capital. One can say one needs capital for computer chips, not potato chips. What you have to do is keep in mind your interest, that they are developed, we are a developing country.

I want my government to create an environment through infrastructure, the labour policy and a regulatory framework that gives rise to 200 Indian MNCs by 2020. Today we have not a single global company in India. If you are going to make your presence felt in the world, it's not the boutiques that are going to do the trick.

Part II


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