Can India sustain its high growth rate in the next decade? Does its bureaucracy discourage foreign investors? Is China a better investment destination than India?
At the annual TiE (The Indus Entrepreneurs) tri-state conference in New York recently, questions like these flowed from 200-odd professionals, including investors, bankers and entrepreneurs who gathered for the daylong event christened 'US/India Corridor: Breaking Barriers, Building Bridges.'
Not that the keynoters and speakers at every panel had ready answers to various questions posed by the audience, but at the end of the day they managed to point out the broad directions in which India is heading and the problems and prospects of the country's economy, which has attracted worldwide attention in recent years.
Two issues on which there was near unanimity were the ability of the economy to continue with its growth rate despite poverty and infrastructural hurdles and the potential opportunities for investors and entrepreneurs in an apparent climate of adversity.
"I am astonished by even where we have gotten today," said Ramesh Shah, chairman of WNS, a business process outsourcing firm traded on the New York Stock Exchange, in his opening keynote address.
"If someone told me we would have 9 or 10 per cent GDP [gross domestic product] growth rate 10 years ago, I do not think I would have believed that. I do not think anybody in this hall would have believed that. But it is happening today despite some of the problems in the country thanks to the drive and talent of Indians and will continue," he added.
Many speakers -- including David Goldfarb, managing director and global head of strategic partnerships, principal investing risk of Lehman Brothers, who also keynoted the conference -- seemed to be in agreement.
In his address and subsequent chat with fellow panelists including Raj Rajaratnam, founder and managing partner of the Gallon Group, and Luis Miranda, president and chief executive officer of IDFC Private Equity, Goldfarb said his company was upbeat about India.
"When you talk about growth in any conversation, people these days talk about China and India," he said. "Certainly we have looked at both China and India but India's growth is 'realer' growth. What I mean is it is not a growth that is stimulated by the government's infrastructure spending. It is basically on real commerce. It is really non-government sponsored infrastructure and therefore it is sustainable.
"The pocket that we have picked for our most accelerating concentrated growth is India," he continued. "We think it is pretty obvious why. The US is relatively mature [although] we are still growing at a small pace. In Europe, the economies are lagging in growth. We believe that the real substance, the real driven, bottoms-up commerce is in India. We think India has pretty steady growth," he added.
But can that growth rate be sustained? Both Shah and Goldfarb felt the future looked bright.
"Tremendous growth will be coming out from India," said Shah, pointing to the country's burgeoning middle class, its talent pool and the availability of a broad class of goods, loans and credits.
"Looking at the capital markets, at the economy and global interest in the markets, it is hard not to be unbelievably enthusiastic about the opportunities in India," said Goldfarb.
But both of them and other speakers agreed there are problems -- like bureaucracy, lack of infrastructure -- that may hinder the Indian growth story at some point if not addressed early.
Shah felt that there is a vast pool of underemployed and unemployed people in India as well as lack of infrastructure -- which does not augur well for future growth. "I think how as a country we are going to deal with the issues is going to be a significant challenge for our growth," he said.
Others, like Miranda, said that from the investing standpoint, there are lots of bureaucratic hurdles in India and it is very difficult for international investors.
"I think the bureaucracy does not see the need for capital to come into the country and because of that they have been stonewalling," said Miranda.
On the challenge of soft infrastructure development in India, people like Rajiv Tandon, CEO of Technosoft Corp -- who addressed a panel on 'Managing IT Business; Is lack of infrastructure a challenge or opportunity' -- said that may be a blessing in disguise.
He said last year 10.4 million people enrolled for higher education in India, but only a quarter of them were actually employable by multinational companies.
"I do not think that is a downside," he said. "I think there is an opportunity there. Nasscom [the National Association of Software and Service Companies] and others have started doing what they call finishing schools, to prepare people from college for the market. Some smart companies have started doing that actually and they are proliferating. So, here is an opportunity to create that layer," he said.
Despite the fact that they spoke on different issues ranging from real estate opportunities to the emerging biotechnology market, most speakers agreed at the end of the day that India remains a challenging investment opportunity for US and other countries.
Mira Kamdar, author of Planet India, who was a panelist in one of the sessions on soft skills, noted it is important for US businesses seeking to do business with India to pay attention to the unique environment of the country. "It is a place where things happen through personal relationships to a large degree and that becomes the key to business success," she said. "If you have the understanding of these kinds of dimensions the challenges, the social divides, and you show that you are responsible corporate citizen, it can go a long way [in helping in your business]," she said.
