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'Indian companies are, by and large, stronger than Chinese companies and are better run'

September 13, 2007

It is very interesting -- the contrast between China and India. In that regard China has been focused in drawing resources in. It has a huge amount of foreign direct investment, more than $60 billion a year. It has attracted a lot of foreign companies to China and to enter into partnerships with Chinese companies or to open factories in China. But India has been more outward focused. So when everything in China is inward-focused, India is going out.

Indian companies are, by and large, stronger than Chinese companies and are better run. So they can compete in the world economy. And those that have the money to expand are doing so. You will see this fiscal year for the first time more of outbound, foreign direct investment from Indian companies than inbound foreign direct investment. That is partly because India has not been able attract many foreign companies looking to build factories in India. But it is also because many Indian companies -- like Tatas -- are so strong in terms of both management and finances, and they are capable of competing around the world.

I think if a company can make it in the very tough business environment in India, it can make it anywhere in the world.

By the way, India and China are becoming such important players in the global economy, and for the success of most businesses, that a basic understanding of what is happening in India and China is now considered as essential as a basic grasp of accounting. For the average multinational company, more and more customers and more and more employees are located in India and China every year.

Some observers of India's political and economic scene believe that never mind who is (in the Indian government), the days of a State-fuelled economy (such as the one we had seen in the 1950s through 1980s) won't come back.

I think it will be very difficult politically to find support for, the same way it is still difficult to find support for capitalism without any strings.

What is very interesting to me as an outsider listening in is to see that for decades there were ineffective economic policies that had failed to better most people in India, even though the very intent of those policies was to protect the poor. Far too many Indians are still poor, and this is a travesty in a nation that ought to do better. But you are starting to see certain regions compete with each other to attract new factories, and thus jobs.

Hyderabad, for instance, has had quite a bit of development and it has had many successes; You see one new road after another there, one new factory after another by the side of these roads, along with a thriving technology industry. People there then begin to think: These roads helped to bring new jobs. Yes, we had to plow down a neighbourhood to build this factory but there are now many jobs for the entire region.

My point is that these small-scale economic successes do build on themselves. And once new jobs come to a certain region, people will demand more of them. It is a very healthy development for India.

While India is forging ahead creating new jobs, in America there is the constant fear of job loss. And that fear also affects nearly two million people of Indian origin in America. What are your thoughts on predicting which jobs will find favor in the future?

The most stable job in the West may be that of a fortune-teller. America has lost more than 1.1 million jobs because of offshoring in the past five years. On the other hand, about 1.7 million new jobs have been created in America in the health care industry along with more than 900,000 new housing industry jobs in the last six years. Anyone can try to guess where the jobs of tomorrow will be found.

Photograph: Ratan Tata, Chairman, Tata Sons, rings the opening bell at the New York Stock Exchange, September 27, 2004, as Tata Motors became the first company in the Indian engineering sector to list its securities on the New York Stock Exchange. Photograph: Timothy A Clary/AFP/Getty Images

Also read: Why US companies love China
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