 Welcome to the GATT, the podcast for enterprise leaders delivering timely insights for today's global economy and tomorrow's competitive advantage. I'm your host, Chris Kane, president of the Center for Global Enterprise. And today we sit down with two global business leaders to discuss India and what the strengthening of economic and geopolitical ties between the US and India will mean for CEOs as they make business decisions and investments regarding growth in supply chains. Vikram Singhania, managing director of JK Fenner and JK Agra Genetics. And Shaker Anizwami, former managing director of IBM India and former chief executive officer for GE Medical Systems, South Asia, join us today. Because of the significance of this subject to business leaders around the world, we have created two parts to this episode. We encourage our listeners to tune into part two. Vikram and Shankar, welcome and thank you for being with us. You're both experienced and highly regarded business leaders located in India. The recent visit by Prime Minister Modi to the United States was a major milestone in India-US relations. The visit's goal was for the two countries to strengthen their economic and geopolitical alignment and sign agreements covering trade, technology and defense. As the world's most populous country and the fifth largest economy in the world, India's economic reforms have made the country a potential US supply chain partner for companies trying to reduce their reliance on China. Meanwhile, India, who is also trying to reduce its dependency on China wants to attract investments from US technology companies to expand local manufacturing operations and emerge as a global innovation powerhouse. Today, we want to explore the economic and geopolitical implications for a stronger US-India partnership and discuss the key aspects that CEOs should consider in harnessing the benefits of India-US cooperation. We are keen to get your insights on the potential economic opportunities and pitfalls ahead for both Indian and American business as the drive to deepen economic integration advances. Thank you. Thank you, an absolute pleasure. Thank you for hosting us. Vikram, perhaps we can start with you. How was the recent visit by Prime Minister Modi to the United States received by business and societal leaders in India? Thank you, Chris. I think overall it was a well-received visit on the Indian side at least from Indian business leaders. What I understand that Mr. Modi has had the opportunity of visiting the US during President Obama's and President Trump's time this is the third visit. But this is the first time this was a state visit which was different than the past. Also, this is the second time that he's had a chance to speak at the US Congress which I am told is unprecedented. Now, these two things which is that during his third visit, this is a state visit. Number two, him addressing the US Congress for the second time, his self lays the foundation of what the expectations and the expected relationships on both sides are. So from an India context, I think it has been seen positively, especially at a time when Indian businesses have been looking at going global increasingly. Also, from an Indian perspective, this collaboration on defense and semiconductors and a whole bunch of other security and lead issues is a great goal for India's next generation of reforms and growth. I know the US, there was some murmurings about questions around democracy and stuff like that, but I think those are questions when you see it from an outside lens. But overall, in my perspective and as a business leader, I see it positively with an opportunity in an unprecedented new chapter and a more new chapter in the India-US relationships. Shankar, any thoughts? Thank you, Chris. And I think I completely agree with Vikram and I would not repeat what Vikram has said, but when you look at this visit, in summary, the visit has gone on very well. I would say it's a grand success. I think while we can say the relationship between US and India started going on well since year 2000, but in the last three to four years, if you look at, they've been a tremendous improvement. Particularly this visit, both sides have understood to look at the larger canvas of cooperation. There will be areas of where the stance could be different, there could be difference of opinion because of some circumstances, but they clearly both the government and administration must be given the credit for recognizing this and focusing on the major areas of relationship. I would say the topics of agreements and that got signed off, particularly in diverse areas of cooperation relating to technology, defense cooperation, semiconductor, clean energy, MSME, MSME means micro, small, medium enterprises, skill development is such an important thing for the country to go forward. And I also think the technology partnership, the way it was structured in my opinion was very good, particularly came up in the bilateral meetings with a focus on core development and co-production opportunity. This has not been done before and I think it's an excellent thing. Having done myself involved in a technology transparency, healthcare several years ago in the late 80s, this would be a tremendous thing. And then the focus of India on the initiative of critical and emerging technologies will widen in my opinion, collaboration across sectors, including defense, industrial cooperation, space, telecom, quantum computing, artificial intelligence, biotech and so on. So this is new dimensions of partnership focusing on the strengths of each country, understanding very clearly there will be differences and there will be areas of each country will have its own focus. That's a great sign to see it. So I see overall a great visit as a citizen of India as well as a business leader. I feel very great, Chris. Great, thank you. So since the beginning of your business career, how has India's economy changed and what are the characteristics that exist today that foreign investors and CEOs may not be aware of or appreciate? Perhaps Shankar, we can begin with you. Yeah, I think you're taking me way back in years and I don't want to disclose my age, but obviously it'll come up in the late 80s. Before G, Chris, I don't know whether you know I used to work for Phillips healthcare, Phillips medical systems for almost 12 years. And I had gone on technology transfer assignment to Orange County. That was my first visit to US in the 80s. And you would not believe those days we did not have credit cards. I have to carry a bunch of cash and also a travel check. And interesting story, I wanted to go to Disneyland and I wanted to drive. And I went to the Elvis car dealer and I told him my license. He said, the license is okay. Then he said, give me a credit card. I said, I don't have a credit card. He said, I can't give you a car. I pleaded with him and then I had to pledge my ticket, return ticket. Those days the ticket used to come in a bunch form, right? I had to pledge. And luckily I returned the car in good shape and got my ticket back. And if you look at the industry as such in India, for importing any medical equipment at the time, for worth about US dollar, $15,000 or more, you have to apply for a license. That license will take number of months, sometimes even years. And imagine in healthcare industry where the doctor and patient is waiting for such an acupuncturist. Ridiculous and also very tough. So the license, Raj, was really a bottleneck for economic development of India. Luckily in 1991, it changed and over appeared a step by step, the magic improvements took place. And I always tell ULNG and in IBM when I used to make presentation like this, showing how much of consumer transactions, how much of gold is being sold, how much of two wheelers, they always tell me, this is all great Shankar, but when is it going to come? Really the economy has come back. If you look at the time period between 2003 and 2019, 17 years of consistent growth of 7.5% and fastest in the world in democracy. And you look at 2007, we were 12th largest economy. You mentioned now we are the fifth largest. There are stories and written articles going on about how India will become third. I will not go into that. But one thing I want to leave before on this topic is that more than the physical infrastructure, which is a challenge in this country, you have visited Chris, you know it, and it is improving dramatically, it is improving. But the digital infrastructure, digital transformation of this country is unbelievable. If you recall 2009 was the unique identity program which was launched. And my job as the MD of that company at the time, you were involved, 100 million unique ideas had to be created by the digital methodology. And experts and pundits across the world said it's a joke, it will never happen. Today we have more than 1.37 billion unique identity. And on top of it, cash transactions are being done away with from 4.12 billion transactions in summary 2021. Today they have been 10.08 billion. So the digital public infrastructure along with digital public goods is going to transform the credit logistics and the way Indian country is going to come. And also another thing I forgot to tell you is the transformation of startups. Today there are more than 100,000 plus startups which are registered and then more than 500 billion US dollar value created. And it's a tremendous thing going on. So I have great bits on this digitization journey and it is being adapted in the innermost rural areas of the country. Phenomenal. So combined with the economic transformation and then the digital transformation, I have great hopes, Chris. And that is a transformation. Some of the people may not know it, but it is happening. Vikram, your thoughts on what exists today that didn't exist a number of years ago for the Indian infrastructure and economy? Now like Shankar, I'll give you a story when I started my career, late 80s, early 90s. I was sent off to one of our paper mills that the family owns, which is in the middle of nowhere in the state called RISA. Two examples from there, at that time, the only way I could go there was to fly from Delhi to WISAC, which also was a hopping flight. And from there, I had to drive about five hours from the closest airport to the paper plant. Now I was sent there to live there for about a year in the middle of nowhere. And I still remember the gentleman I was reporting into, who was the head of the business. He was my first guru, my first teacher in the business. He said, you're the son of the family. We've made special arrangements for you. So I said, thank you very much. What are the special arrangements? And he said, you can talk to Delhi once a week for three minutes. And for that, Mr. Shankar might remember, used to be called a lightning call. So you tell us, we'll call the local exchange operator who will connect you between here and Delhi, but because we can speak a maximum of three minutes once a week. Plus, this drive, which was this artist drive, which is take us five hours from the airport to the plant. Today, in this time, you know that India is the largest market for cell phones and now smartphones in India. We're the largest consumers of work. I mean, if you leave China aside, the largest consumers of data per capita now, which I'm not sure. This whole transformation of, I don't think my whole telephone, I pick up anymore. We're all gone to our cell phones and the kids have moved even further and stuff like that. So this generation in India is born digital. It's a completely different mindset than the era when we started our businesses and we caught into our careers. Number two, look at infrastructure. At that time, we had this one flight that was a hopping slide that used to go to WISAC. Today, WISAC, if I'm not wrong, is now connected from everywhere in the country by 30 flights a day, 25s a day from different parts of the country into the same place and that drive, which was a five hour drive where you to be conscious of where you're driving is down to under two hours between that point to the plant. Infrastructure has completely changed, whether it be physical infrastructure. And I've told about 75,000 kilometers of roads that have been built in the last five, seven years. We're doing, if I'm not wrong, I'm not very good at stats, but the aim is to do about 25, 30 or 40 kilometers per day of new roads that India is building out. And these are the same sort of highways that I drove when I was in the US when I was studying there. And in fact, today, I'm sorry to say they're better than lots of US highways and the technicalities that they have. So there's been a massive transformation. At that time, India was known for exporting textiles and jewelry and stuff like that. Today, we're exporting technology of software, we're exporting chemicals, we're exporting auto comp, we're exporting R&D services. So the whole complexion of how India and what India has to offer to the world has completely changed. At least it's interesting to now see that India has now joined the club of eight givers to different parts of the world. We've been very proud to be part of the vaccine giving program also, right? India became the hub of vaccine production for the world in some ways. I know there were some contentious issues and everybody was trying to protect that too. But during the pandemic, India produced for the rest of the world in some ways. So there's a massive shift in what India was and what India is today. And I think what is being laid down today will see a completely different India five, seven, eight years out, like Ms. Shankar said about what's happening with digital, what's happening with payments, what's happening with transparency, you know, et cetera, et cetera. So the only thing I think global leaders need to be conscious of that it is an unprecedented market, but it's a combination of markets. So it's not, it's one large market, but because just the way our system operates, our languages, our food, our cultures, it's a congregation of a whole bunch of markets. And this is a country where leaders need to be local. If ever, I mean, Ms. Shankar knows this from his GEDs, right? The global concept, right? And so this is a country that classically needs global local presence. So you cannot run this country sitting in St. Louis. You cannot run this country sitting in Bentonville, you know, so on. So you need to be here to take advantage of this country. The appetite is massive. We are a growing economy. If you're able to come on this over the next five, seven years, I think the unprecedented opportunity for all kinds of companies from the high end luxury to the bottom of the pyramid, dollar store kind of stuff, there is an opportunity for everything in this wonderful country of ours. So I'm hearing a lot of optimism from both of you. And I'm also hearing that in your opinion, the infrastructure, be it digital and physical, are coming together in India, advancing rapidly, and that the gap between the two is evaporating, which is important, I think, as a message for CEOs to understand, given the nature of business and a changing world. The first thing they talk about when CEOs discuss India is the physical infrastructure, how lacking it is for them to be able to plan accordingly for their investments and capital expenditures. This change that you've identified will be a tremendous help for India's image as a destination for foreign investment. Perhaps we could shift now and focus on supply chains because that's a topic of immediate and long-term interest for both countries. Vikram, perhaps we could start with you. What are the factors you see that are strengths for India to emerge as a supply chain part of the companies wanting to reduce their dependency on China and what might be their weaknesses? An interesting question, in a way some of our companies are going through exactly this transition. I think it's an interesting place that we are it from a global supply chain perspective, from a globally economies perspective. One of the biggest advantages that India has is English. Business is transacted in English. Everybody understands English. Accounting systems are clean. Our judicial process is reasonably strong and the number of judgments I've proven this. It may take a little time, but they're reasonably strong. On the other side, India has 1.4 billion people. It's the youngest country amongst the youngest countries in the world. There is hands-on deck that are available to be able to build the next India out. India has the capacity to build and scale up as we go forward. India understands global quality. We're now interestingly part of global supply chains in chemicals, both agrochemicals, pharma, and so on and so forth. We are part of global supply chains in automotive. We are part of now global supply chains on even just simple delivery services on IT and software. So India has that strength to be able to provide and meet global quality standards and be able to be able to provide at the levels that the rest of the world expects. The challenge, however, is we're still a country under construction. So we're transiting from a yesterday to a tomorrow. So there is this mid-path that is under construction. Some parts of the supply chain, for example, our end-to-end infrastructure on, let's say, freight and transport is building out a cost of freight is still higher than what it should be in some parts of the world. It will get sorted out over the next two, three years with both modernization happening, railways happening, doors being built out. The other side is, while I think the other challenge I feel is sometimes where we can get better than our neighbor is our ability to speed to scale up. So if you look from a physical manufacturing perspective, India generally runs on high capacity utilizations. So for us, we don't sit on generally free capacity in most of our plants to be able to suddenly fill a $100 million order or $200 million order. You need to add additional capacity to be able to do so. So the time taken to set up that CAPEX is slightly behind what some of our competing neighbors have at this point of time. The other thing is, I think our strength is our people, but something that we have to be careful of is we have 1.4 billion people, which means that we've got to be able to provide them jobs as we go forward. So these are some things that we will have to keep balancing as we build this capacity and capability out. Great, thank you. Shraikar, your thoughts? Yeah, it's an important question at this stage and we talked about companies where I've worked for. In fact, if you look at GE, GE Healthcare set up its facilities in India and did also a fantastic joint venture with Bharat Electronics, which is the kind of a jewel of public sector units way back in the 2000s. What happened because of that is that the ecosystem for medical systems manufacturing and then the GE bill joint venture today supplies very critical components for the CT scanner for the entire world out of it. So when you look at it as Vikram said, it is a country under construction. However much we can say that we are improving, but we got to move a little bit faster depending upon what the world expects us to do. If you look at the logistics sector itself, it's supposed to be 200 billion market in 2020 growing to about 320 billion in 2025. So the focus is very clear. We have the government has set up eco-friendly waterways, 40 air cargo terminals to facilitate exports, 30 airports with cold storage facilities and then 35 multimodal logistic facilities. But some of the industries as Vikram said, which are attractive in my opinion, we must start with those industries in efforts to modernize the supply chain. One is clearly pharmaceutical sector. The world's third largest sector, telecommunication and smartphone manufacturing, which ranks second, automotive sector, which ranks fourth largest and chemicals is the sixth largest. Probably India can major on these industries and build the supply chain in my opinion. And then also knowing that it's a very important thing, India is also entering into FTA agreements with the neighbors. And that will be a very critical component of taking the supply chain challenges forward. In terms of challenges in my opinion, clearly sustainable infrastructure, it is being built, but it has to come to a certain quality so that it meets the global standards. Stronger investment in logistics networks. I think when I look at the industries like the ones I talked about, the MSME industry's involvement in being the ecosystem was very important. So we got to develop them in terms of from the digitization side of it to the respective industries, we got to train them. Workforce upskilling. Vikram talked about very large population, 1.4. If we don't skill this workforce appropriately, then it may become a problem for India. So workforce skilling becomes very important. Policy making very quickly, we must make that. And to build a resilient supply chain. I would say it's a great opportunity. Government is aware of it. It is building up and the ecosystem is there, but work to do it. You have been listening to The Gap, sponsored by the Center for Global Enterprise, celebrating 10 years of convening global enterprise leaders around the most important business transformation issues. We encourage our listeners to tune into part two.