 Hello, everyone, and welcome to the NDTV WEF debate coming to you live from Davos. There's a lot of change that is taking place, a lot of turmoil these days. India, according to the IMF, perhaps one of the fastest-growing economies over the next two, three years, and also making considerable efforts to push ahead with innovation and a startup culture and trying to move the country along on the fourth industrial revolution, which is, of course, the big theme here at Davos this year. What is it that India needs to do? What is it that India is already doing? And where are some of the possible problem areas? Those are some of the themes that we are going to be exploring today. We have an audience filled with some of the top industrialists from India and around the world. I will be taking questions and comments from them as well. But we have an esteemed panel starting off with the Finance Minister, Mr. Arun Jaitly. Great to have you with us here, sir. Professor Nural Rubini are arguably one of the top economic thinkers in the world, so it's always a privilege to have you with us. Professor, of course, at the New York University. Mr. Sunil Bharti Mittal, the Chairman of Bharti Enterprises. And finally, we have John Chambers with us, the Executive Chairman of Cisco, somebody who's been rather optimistic and bullish on India and will be hearing from him as to why he feels that is the case. Mr. Jaitly, if I could just start off with you. Today perhaps is not the best of the days to be having these things. It's a big stock market crash back in India, although the markets don't normally dictate what's happening in an economy. But it does underline that these are times of great global turmoil, global strife. There are others who would say that India perhaps better position than others to to ride out whatever the storms are. I want you to get your sense of the short term and then the medium term picture. Well, certainly the world is facing a difficult and a challenging situation. I don't think we are going into an extreme critical situation. But then there are unpredictabilities. Earlier the world lived in a situation where after a couple of years, you could see a challenge or a crisis. But today volatility seems to be the norm and therefore we have to live in that. And no country, including India, can say we are immune from it. For instance, the global slowdown today has impacted us in terms of our export shrinkage. The shrinkage is substantially in terms of volumes. It's substantially in terms of values, partly in terms of volumes, because the buyers have less money to buy. The currencies are impacted because of this. The stock markets are impacted. But despite that, it's a challenge for each economy considering its own constraints, that how it faces up to this situation. And I think notwithstanding that, we are trying to prepare ourselves for that kind of a situation. The reality is that even if we are the fastest growing amongst the major economies, we all feel we can do much better. That fastest is still not good enough for India. I think our real potential is one-one-and-a-half percent over and above that. And given a better climate plus a global environment and some domestic factors, we perhaps have even then, notwithstanding the global situation, a potential to improve upon that. So you're saying 9% growth rate is what the potential of India is? I think in a friendly global environment, today we can do it. For instance, if you grow 7, 7-and-a-half percent when the world is moving slowly, when you have had two bad monsoons and therefore the purchasing power of 55% of Indians is adversely impacted. When you have the slowdown impacting and domestic and global issues impacting on several industries. Steel, for example, infrastructure, power, and therefore you are struggling to resolve those issues. That itself getting impacted on banks. Now, if in these circumstances we can afford a 7, 7-and-a-half percent growth rate, and these are all areas which can partly be rectified and partly depend on circumstances which are not exactly in our control. And therefore in a more favorable environment, getting that extra one-one-and-a-half percent is not very difficult in a friendlier environment. Professor Rubini, if I could just get a sense from you as to how bad the global situation really is, there has been a lot of concern, especially on issues like oil price, that's been crashing. What's exactly happening in China? What's your take on how bad and how precarious the global situation is? Well, many here are asking the question, are we back to 2008 to the risk of a global recession and a global financial crisis? My answer is no, that's the good news. But it's true that we are going through a period of significant economic and financial volatility, driven by many factors. China is slowing down and investors now worry there's gonna be a hard landing rather than a soft landing or a bumpy landing. And if that were to occur, there will be a crash of the stock market, a sharp devaluation of the currency that that will have a significant impact on emerging market, most of which, with the exception of India facing major now global headwinds, slow down on China, end of the commodity supercycle exit by the Fed from zero policy rates and so on and so on. We have the US economy right now looks like a mixed bag. Growth is weakening, the manufacturing sector is weak, the fall in all energy prices hurting production, the capex and employment in the energy sector. And the Fed might have made a mistake by starting to raise rates right before we had this global financial turmoil, right before we've had another leg down in commodity and energy prices gonna push inflation lower. And right before there is a slowdown of the manufacturing sector of the United States, there is geopolitical risk starting with the Middle East that is burning and this rising conflict between Sunni, Saudi Arabia and Asia, Iran might become a 30 year war, proxy wars from Iraq to Syria to Yemen to Libya to name it. Unfortunately the Middle East is burning and there's no global agreement how to stabilize. The fall in all prices should be a positive for the global economy because you're redistributing income from those who are savers to those who are actually spenders and some of their net all-importance includes some of the major economies of the world, US, Europe, Japan, India, Korea, but the reality is actually these fall in all prices is leading to a sharp actually nervousness in financial market for two reasons. One, all export has become more fragile and some of them might go belly up, including some of the fragile ones in the Middle East. Secondly, even a country like US is a net all-importer, producers of oil are hurting and in the short term the impact on production is bigger than the stimulus on consumption. That's why the US stock market is heavily weighted with energy companies going down. And three, these fall in all prices might be driven not by a positive supply shock but increasingly by lack of aggregate demand as global economic growth is slowing down in China and emerging markets in the US. And now in many emerging markets, again with exception maybe of India. On top of it you have troubles in Europe and the Eurozone, the risk of Brexit, of Brexit, terrorism and migration crisis. People are starting to talk about the risk of a disintegration of the Eurozone of the European Union. You have stresses in credit markets as highly leveraged firms in all energy and others bought too much and now are going through a painful correction. And even earnings growth or top line revenues are slowing down in advanced economies as the economy is weakening. So it's a perfect storm of many factors that are leading to these financial economic weakness. As I said, I don't expect them to lead to a perfect storm of a global financial crisis but there are serious challenges ahead of us. Serious challenges but you're saying it's not as bad as 2008 was. So, Srinivasan, when you heard and I think Professor Rubini as he always does has summed up the global situation almost perfectly as to what the challenges and the problems are. One of the things that I guess we in India can take some heart from is that a lot of those items on that list don't necessarily affect India quite as much as it affects other countries in the world. And therefore, there is a lot that we could be doing internally to perhaps be in a sense the last man standing. Yeah, I would say some of this perfect storm as Professor Rubini describes it is actually a big benefit for countries like India. If the oil would have been today in a similar circumstance that over $100, I think the rupee would have crossed 100 rupees to a dollar. At $32 coming down to $28, I think we get a lot of headroom in our economy and a lot of surplus cash to do many other things that the government would want to do. Equally, the commodity prices coming down ensures that the final product in the country can be cheaper, whether it is motorcycles or other steel products, they all benefit from a lower price points and therefore higher consumption in the marketplace. Yet India cannot be an island of isolated economic progress. There is bound to be some impact and I think the government is clearly aware of that. If you look at the prime minister, the finance minister, I think there is a very clear direction in terms of accelerating India's entrepreneurial activity, which will bring that extra momentum that we need. Go back to 2002, the big difficulty we had as a global economy, 2008, India came out reasonably well. And I would say today again at 7.2, 7.3% wherever we end up this year, India would clearly be a shining star and as was mentioned by the finance minister in London, in the BRICS constellation, I is really giving that hope to the rest of the world that India can still continue to consume, be a continent of consumers and ensure that we don't fall into the same trap the world is falling in terms of low growth. I remain optimist about what's going to come into India in the next two or three years, principally led by the entrepreneurial energy that is being unleashed. In 1992, when we went through the major unleashing of entrepreneurial energy, it was out of compulsion. Today it is by design, it's being programmed. Entrepreneurs are being encouraged to take advantages of the global shifts into the Indian economy. FDI is on an all-time high, it's rising. In the last day and a half, I met people who are waiting for some of the FIPP clearances. Even before March, you could see a significant upswing in FDI coming into India. And how that innovation and that talent and that startup culture is going to encourage growth is a theme that we would like to spend some time on. But John Chambers, let me get your overall sense, though of India, because talking to you frequently, you've been sounding really optimistic about the prospects of the country. Why? Well, I have the chance and the honor to meet most of the government leaders around the world. We've been focused on this digitization of countries for eight years. And we originally said the total market was going to be $19 trillion in profits and cost savings over a decade. Everybody said that's too high. Now a lot of the experts are saying that's too low. That translates into one to three points of GDP growth for every major country in the world. When you talk to Prime Minister Cameron in the UK, he looks at it as an innovation agenda. Chancellor Merkel in Germany looks at it for industry 4.0. President Hollande in France really gets it. It's a digital France, a million jobs, GDP growth of one to three points on top of it. Inclusion of every person within the entire country. Renzi in Italy gets it. So you will see a digital Europe. But if there's one country I would bet on in the world right now, it is India. And if you watch the bricks, if I would have told you three years ago that India would be leading in terms of GDP opportunity and they could grow it one to three points even faster, then a given people would have said not going to happen. We all got excited in 2005. The market didn't develop as much as we thought. Now if you want to start a business, there's an entrepreneurial spirit in India that is not anywhere else. So if you look at over the next decade, $510, $525 billion incremental opportunity for the first time, the inclusion of all the people in India, it really is about how you bring this capability to every citizen within the country. You're going to have to re-skill India, think about it in terms of preparing skills for where the jobs will be in the future. A million new employees per month is very doable. A digital India where perhaps India can become the manufacturing hub for Asia. And really a willingness to change that around this market transition. There will be a new generation of startups which Sunil we did not see after 2005. Everybody got excited and then it died off. You can feel it start again. Cisco is doubling down on India. We did that two years ago. We're doubling down again venture capital and investment. If I were betting on a brick country to beat the rest of the groups, I think India is by itself. In terms of the ups and downs, my parents were doctors. I never lose track of the underlying opportunities or issues. If we would have said three months ago, the pessimism you've heard here at Davos, everybody would have said, what are the issues? No chance the US is going to slow down, et cetera. So I think you focus on what you can control and influence. I think the leadership in India, starting with the Prime Minister Modi, gets it. I do not underestimate how important it is to change. We cannot miss this opportunity a second time, but India should lead this digital revolution. It should be the example of the rest of the world. And I think the point that you just made is something again that I would like to dwell on because you're right here sitting in Davos, same panel 2005, 2006, extreme amount of optimism and bullishness on India, which to some extent people felt that we missed the bus shortly after that. So we would like to emerge over the next 45 minutes with perhaps a list of all the specific points that India should and should not be keeping in mind from you and from everyone else in this room. So the opportunity very clearly there, and I think everyone gets it and everyone understands it and the headwinds don't affect India that much. One is all the new things that has been pushed away, talk spoken about the startup, the entrepreneurship, the innovation, the digital ideas, but the rest of it, the bedrock of the economy, infrastructure, lots and lots of companies still remaining very heavily indebted. Is spending really coming in? Is investment coming in? What are your thoughts on that? And from the point of view of government and government spending, has that drop that we have seen in oil prices given you the fiscal space now to be able to do a bit more? I mean, you don't have that as big an oil subsidy as you may have feared. No, it obviously has. And it has helped us to re-plan the governmental expenditure. For instance, today, one of the biggest reforms which has taken place in the last one to two years in India, and that's an unsung reform, I think is the rationalization of the subsidies. Now, it's been spoken about ever since 1991. It's effectively never happened. It increased with every budget. And therefore, the more it increased, the developmental expenditure which leads to growth itself came down. This was at the cost of the development the planned expenditure itself. Now, today you have at least in the area of fuel using the lower price regime of oil, petroleum linked to the market, diesel linked to the market. LPG, various kinds of cooking gas reforms which have taken place, including using the digital platform of 140 million people getting it directly into their bank accounts. A lot of people who are wealthier, giving it up now by policy, sections are being excluded out of that. If you can now use the digital platforms for other forms of subsidies, which is the pilot projects are on, you can actually end up saving a lot of money. And this money that you save, where does it go to? I can clearly see three areas of expenditure that the government of India has to increase. Sunil just now mentioned FDI increase. So if you have a 40% increase in FDI, to some extent that covers up for the little absence of private sector investment because private sector as you mentioned is a little stressed. Then you have this saving resulting in public expenditure going up by 30%. And therefore, if in an adverse situation you are maintaining 77.5% growth, there are some engines which are driving it. Ideally, private sector leads the government follows. But when you are in a stressful situation, obviously the private sector is looking at its own balance sheets and therefore the government has an additional role to play. So these two things have actually contributed. Secondly, if you've seen the way India has planned this economy after the fall of oil prices, who's got the benefit of it? I see a lot of ill-informed comments coming in this regard. Now, one small share went to the oil companies because when the oil companies, the prices were falling, they were also losing money because they had done future purchases, et cetera. So they had to be covered up. They are publicly listed companies. The rest has been equally divided, A, between the consumer, because he must benefit. And B, the consumer, and I would advise the commentators even on your channel to take note of it, those who use petrol and diesel also drive vehicles. So they need roads. They need rural roads. So it's not government pocketing the money. That entire expenditure, the saving goes into infrastructure creation. So that's also for the benefit of the consumer itself because they use the roads, they use the rural roads. So the entire saving that we've made has gone either to the consumer or covered up the losses of the oil companies, made them healthier. And a very large part has gone into this enhanced infrastructure expenditure. Now, if you remember one and a half years ago, the first 17 tenders for the national highways, and this was a booming sector at one stage, didn't get a single response. Those who build highways were commercially, virtually dead. And therefore you needed to put in public investment into it. And that's how the government of India got the highway sector going. It's moving again now. So government spending will go up, but Srinivasa, would you like, what is it that needs to be done to give the private sector a little bit more, a comfort and be ability to spend and invest a little bit more? Because it is an area of concern that you still are seeing in, even some of the new startups that are coming up being domiciled in other countries, you know, Singapore and others. And when will that private sector investment take off to your mind? What needs to be done? It's very clear that there are some significant Indian business houses which are currently stretched. But it's not that by and large, the Indian industry's capability or capacity to invest has gone away. There is a sense of some concern, because coming in from global headwinds, and people are holding back. And the finance minister is right when he says that we are currently compensating by more FDI coming into the country. But it's my own belief, and I've spoken about this before, Indian business needs to invest and invest with complete confidence that this is an economy that will grow and grow fast. Now, I think the government has a role. I mean, what can government do towards that? And I think they have been nudging, making very promising support behind lowering of interest rates, for example. I mean, we haven't seen that much of an action, and a little bit of a reduction has taken place. More should come through. The finance minister has articulated that in the past, but the Reserve Bank of India has to finally take that call. The second is, I think- It's your job, also, we can maybe raise the subject with him as well. And secondly, I think my own view is, Prime Minister has a magical influence on business community in India. People believe in him. I would personally say he needs to get 100 of the top businessmen into a room and tell them I'm behind you. Come invest in this country. Your problems, your issues will be looked at. Like we are opening up special windows for foreign investment. There's a Japan desk in the Prime Minister's office. I think we need a little bit of encouragement for the business community to open up. And what are their major concerns? You said you should address the major concerns. What are- I mean, concerns generally are monetary availability from the banks. Some of the banks are actually holding back because they feel that they are stressed in certain industries. Steel is one of them. There are a few others I would like to name here. But clearly, I think the bank needs to take a more generous view in lending more money to the industry. Interest rates need to come down. Ease of doing business is a major agenda of the government. There are still some few pending points which need to be taken up. Hopefully in the upcoming budget and possibly some of the changes in the company's act which are pending need to be done. So this is the time when we try and get the finance minister to tell us what he's putting in the budget. Okay, that was a mysterious smile from him on that note. Mr. Rabini, looking at those headwinds that you were saying, what's happening in the global market, their impact on India, which of them do you think potentially has the most serious negative impact on India? Would it be if China goes down and starts devaluing the yuan and continues to do that? And does that set up a certain bigger, my neighbor dynamic which could have an impact? What else? I mean, oil may well be a net positive as we were just discussing. Yeah, I mean, on one side as was pointed out, there is an internal dynamic of India that is robust and to India has been so far a slightly less open economy, both on the trade side and on the financial side than other ones, even if it's opening up to the world on both dimension and therefore some of those global factors have less of an impact. I would say certainly in this financial turmoil, even the stock market of India has gone sharply down, is back to levels of a couple of years ago. You've had a sharp fall at the value of the currency. Again, it's back level to close to the bottom of a couple of years ago. So the channels of transmission that affect negatively India. First is that if global growth is gonna slow down as the minister was pointed out, that there's an impact on export growth of India. The fall in commodity prices overall is net positive as all energy are being net imported, but if the fall in all prices is a signal that global growth is weak, then on net it is a transmission to global growth that makes it weaker for India. Whenever there is a risk of episode, you have stock market correction as occurred in India. It has wealth effects and it can affect business, consumer and investors confidence. These concerns about the emerging market might imply that capital is gonna start to fly emerging market, the correct of the stock market. There is less influence in the bond market, but again India has some financing needs. So that's another channel of transmission. As I said, all these factors are relatively mild. I would say on the positive side, of course the overall macro outlook compared to two years ago when India was lumped among the fragile five has improved in part is good luck. Falling all in prices, commodity prices improves the trade balance, improves the fiscal balance. In part of it is that with the new government has been fiscal adjustment with the new central bank governor, there's been a commitment to stabilize inflation and reduce it over time. I think the biggest channel for India, challenge for India from my point of view is accelerating the kind of important supply sites that actually are needed to increase potential growth. I would say the first derivative of this reform is positive, the speed at which they've been occurring could be accelerated. Some of them require legislation and there is stalling by some of the opposition parties, some of them don't require that. But whether it's a GST reform, whether it's land reform, whether it's fixing some of the banks that have a lot of MPLs and cleaning up the financial system, whether it's financial and operational restructuring of firms, whether it's in the power sector or steel and others that have problems, whether it's the issue of dealing with volatility coming from the weather and having better irrigation, investment in human capital is key. Yes, India is at the forefront of having lots of computer scientists, engineers and programmers, but a small fraction of the country, there are still hundreds of millions of people who don't get the kind of education and skills they need to compete in the global economy. So there is a long list of things that needs to be done. The good news is that on all of these dimensions, progress is being made. The less good news and the half of the glass is more empties that maybe these things could occur slightly faster. And the other piece of good news is that a lot of that list which you gave are all internal. It's a far more problematic situation if there is a big, if you're an oil exporter, small oil exporter and suddenly that's your mainstay and global oil prices are done, what are you gonna do about it? All of those items are theoretically things that India can potentially take care of. I am seeing Mr. Kamal not sitting here in the audience as well. So perhaps right time to ask you about that question of reform that he was talking about and any hope at all of getting the GST bill through. I wonder if I should ask you or ask him or both perhaps. Well, last time I said that some people of Kamal's party also feel very strongly for the GST. This was officially contradicted by his party, but I still maintain what I had said. The point really is that the GST is not a bill that I conceived of. Almost in 2003 or 2004, the two major political parties, Congress and BJP started talking about it, put it in their manifesto. 2006, Mr. Chidambaram mentioned it for the first time. 2011, Mr. Pranab Mukherjee introduced the bill. 2013, with the amendments which are now there, Mr. Chidambaram accepted the Standing Committee recommendations. So in one sense it was more a Congress party bill because they'd done all this paid work. And now that that bill is coming, some three new propositions are raised, including a preposterous one that tariffs must be mentioned in the Constitution of India. Now, if they can tell me that anywhere else in the world, this happens, the tariffs are mentioned in the Constitution of India. So every time there is a drought or a flood and you need to increase the tax rates, you first have to go to all the states in India to say, can we change the tax rates itself? Now this is something which is just not possible. I guess that Davos is perhaps not the right forum to broker peace between the BJP and the Congress party, but seeing as Mr. Kamal Nath is here, if you can get him a mic, we can see whether he's about to signal his acceptance of GSD. Can we get him a mic? Yeah. You know, if I'm going to jump in here. Yeah, but I'd be getting some mic, yeah. I've seen this movie before. This is 1995 in the US. President Clinton got up, outlined an information error opportunity. He said it's going to create jobs, GDP growth. The parties went back and forth until they realized this is the right thing for our country. And then it wasn't a Republican issue or a Democratic issue. The economy grew 18% in the next seven years. We created 22 and a half million jobs. Real per capita income of an average American citizen grew 17%. He faced this around the information error. I was on stage with him when he announced it. You're now talking about a digital error, which will be five to 10 times bigger than before. This is where the parties have to put apart their differences. This is where the business community has to come together. Prime Minister has to reach out to that business community, pull them together. Mistakes made in 2005. We lost focus. We didn't keep the speed going. We didn't bring the parties together. This is an opportunity very rarely comes around twice. This is the second opportunity for India. We should not miss this. It's ours to control. All right, can we get that mic? Yeah, can we just give Mr. Kamalat the mic and get a response to this? Let's then move on to innovation and talent and those issues. Well, I'm glad Arun has given us the credit for the GST bill that we were the ones who designed it. We were the ones who wanted it. And that's true. That's true. He's only narrating history. But the three points which are referred to as preposterous. And I want this house to know what are those three points. Are they preposterous? The first point is the 1%, the interstate 1%. The concept of GST is denied, is defied, if you're going to have this. So that's the first point we have. We've come out publicly on it. It's a logical point that if you're going to have movement from one state to another, why should you have a 1% levy from state to state? The second point is the cap. He says it should not be in the Constitution. I hope they do say that we accept the cap, but let's not have it in the Constitution. That means the only issue is how should it be framed? For us, these are not political points. We've come out publicly. The third point is dispute resolution. If there is a dispute between the states, I see the chief minister of Andhra Pradesh, who understands this very well here. If there's a dispute between Andhra Pradesh, his state, and my state, you're not going to have the same council of states. So I mean, at the risk of getting this debate completely derailed by solving the truth. I'm not joking. But seeing as that put a 2% or 3% point to Indians growth, you might as well pass the microphone to him as well. And now that you've brought him into it, pass. So the last point is dispute resolution. We must have a satisfactory dispute resolution mechanism. That's all. These are three points. I don't see what's wrong with these. If we've got to have a bill, let's have a good bill. OK, I promise this is the last comment in GST, which I'm going to get from Mr. Naidu, and then give Mr. Jetli a right to reply. And then we'll move on to other things. As rightly mentioned, Kamala Nanji, this is one bill. The world is watching India now. Everybody is watching. Every businessman is asking. If GST is calm, then there will be excellent advantage for India. Small problems between opposition and ruling, you have to sort it out. By any circumstance, you should not create problems for this bill. That is my personal view. You have to clear our deadliest. If we are having forward today itself, you have to clear. So there we have it. The GST is coming. All right, fine. Eddie, I want to move on to innovation unless I want to quickly respond to what? Well, are you hoping that the GST is going to come now? Should we forget about that and move on with the rest of the agenda? You see, the GST is certainly going to come. And I think what Kamala has just now said, I have also conveyed my reaction to the leaders of his party that I am willing to go back to the manufacturing states on the 1%. There is some substance in what he said on that issue. And therefore, this is what I've already conveyed privately to his leaders. I have no hesitation in publicly conveying it. The R&R, which the government, the revenue neutral race, suggested, is in the range of 16, 16 and 1 half percent. No tariff can ever be perpetual. If the volumes increase, it comes down. If there's a crisis, it may go up. And therefore, the concept of cap didn't strike either of your two finance ministers or the Standing Committee or the entire government when you were in power during those 10 years. And as far as the dispute resolution is concerned, please go back to your party. What Mr. Chidambaram said on the file is what I have proposed. Now, if you are wiser just because you are in opposition, the situation has changed. Therefore, what you have proposed on the file, I am quite willing to accept that. All right. OK. But let's just move on to the other things. We'll come back and get a further thing. I really don't want to spend this. Spend hours sitting and sorting out GST, although maybe the gap isn't as much as it was. Let me, therefore, move to something which on which perhaps it'll be less disagreement and conflict. The entire question of innovation, there are people who would say that first in the Second Industrial Revolution, such as there were, may not necessarily have been areas where India would have done the best, big, large manufacturing hubs and all of that. But now what we are talking about with innovation and digital and startups and bright young people coming together and doing things, that might actually be just the right place for India to shine. And that's what's happening. If you look at Silicon Valley, a large number of those countries actually are set up by Indians or have large Indian presence. What, Mr. Chambers, is it that India needs to do to get its act right? Because as you've been saying, and all of us have been saying, we have missed the bus frequently in the past. We shouldn't do it again. Well, I think you learned from our lessons of the past. In 2005, we did not articulate as good a vision and how we were going to fill in the pieces on how we're going to move forward. Many of the venture capital world, Sanil, you saw this happen, went to India saying, this is going to be the next generation of startups. And kindly, they did not do very well. What has to be done differently this time? I think you have to articulate the vision from the top. The political parties do have to come together and say, because I have both friends here, say, how do we do what's right for our country long term? We've seen the startups in India really start to regenerate in the last year and a half. And if I were doing a startup in the world, I would probably either do it in Silicon Valley or in India. Now, what do you have to do differently? You've got to re-skill the workforce, because the skills are not there to do the digital manufacturing. You've got to do regulation, which really allows blow away the roadblocks for the skills to go with it. The venture money will come right back in remarkably quickly. When you build out this infrastructure for a digital country, you will have a whole new generation of startups, just like the internet revolution in the 90s, that will feed off of this in terms of health care and education and manufacturing and the social media that goes with it. So I think the pieces are there. I think the country just has to put the puzzle together. Well, obviously, Srinivita, you've been betting very heavily on a digital future. And for you and your company, that would be great if it happens. What are some of the roadblocks that need to be crossed? Well, first of all, I think this fourth industrial revolution that you talk about, the digital revolution, the digital transformation, naturally belongs to India. I mean, this is really a sweet spot that we are operating in. In the absence of physical infrastructure or something that will take tens of years, we have an opportunity like never before. Technology is helping us. The price of the technology coming down every month is helping us. Now, putting out very low-cost smartphones in the hands of citizens of India is not no more a dream. It's a reality. It's happening very fast. Last quarter saw 28 million smartphones being shipped. This is going to go to 30, 40 million a quarter, which means over 100 million smartphones are going to get into Indian hands every year. And perhaps this will accelerate going forward. This creates a tremendous amount of power in the hands of citizens equally, ease of doing things for the government in terms of direct benefit transfers, subsidies being given through that, financial inclusions, healthcare, education, and of course, e-commerce. Today, e-commerce on mobile phones is over $200 billion. By 2020, this will cross $650 billion globally. Over 48 countries now have webpages on mobile being more than the regular computers. Things are dramatically altering, and this really belongs to us. What are the obstacles? First of all, let's see the innovation piece. We just had the startup India conference where the finance minister and the prime minister brought in lots of young, energetic people to be given the encouragement to do more. I think that piece is moving extremely well. And I have great hope that we'll not only bring in billions of dollars of investment into those startups, but they will definitely make changes in the way we do business in many, many different industries. They will be disruptive. We are seeing the Olas and Ubers on one side, and more importantly, people coming to test blood through a drop over a phone being transmitted to the labs and the results coming through. So there's a variety of stuff happening. With the payment banks and small banks, you're going to have financial inclusion which was sorely missing for a long period of time. Government needs to ensure that we have robust highways. The broadband highways are critical for this. And I think the digital India theme is being talked about. We need more spectrum. We need more investment in telecommunications. We need consolidation. And some of the stuff this government has done, trading, sharing, I think some more needs to be done. Right. Mr. Rubini, what would you be suggesting to the finance minister, to the prime minister of India? When it comes to really being able to leverage, India has the talent. India has the capacity, India has the capability. We can get the innovation right. It could be a major force for growth. What is it that they need to do? Well, in some sense, I would say India's in a sweet spot because traditionally say China had a comparative advantage in manufacturing while in India has been comparative advantage in services and especially information services. As everybody pointed out, we're becoming a global economy is becoming more digital whether the variety of information technologies and innovation are occurring are going to completely change the world, how we produce, how we live, how we work, how we study and so on. So that's an advantage of India because the world is going to become more services and less manufacturing. India has also developed manufacturing but even manufacturing is becoming increasingly digital in many ways, robotic automation, artificial intelligence. I think the bottleneck that have to be faced is that there is a lack of infrastructures in India has to be done and not just traditional infrastructure. I think building the digital infrastructure is going to be key and it doesn't have to be just private or public, could be a combination of the two. Secondly, as I pointed out, investing in human capital is key. It's great to having thousands of programmers but there are hundreds of millions of Indians who don't have access yet to even basic good education and therefore that's going to be a challenge. There's an issue of regulations that have been excessive in India and have to be streamlined to make sure that innovation does occur. So I think those are some of the key issues that have to be addressed to make sure that then the private sector is going to be growing the way it has to grow and innovation does occur. Access to finance probably is also an issue that's going to be important, of course, for startup and for innovative firms as well. So Mr. Jaitley, before I throw that to you, so obviously taking up on some of the points, physical infrastructure, I'm sure the government and many private sector companies will try to put up. You've been talking a lot about skill development but also it's one thing to say that we should have a startup culture and all these new startups would come from but if you were to talk to some of the people, I guess one of their major concerns would be when the issue is raised out there, regulation, hassle, that ease of doing business at the local bureaucracy level. You might want there to be an easier way of doing things. Prime Minister may want that. As far as conventional industry is concerned, the old economy, I think these were very serious issues and therefore in the entire effort over the last few years to ease in the process of doing business and it's showing results, our rankings are going up, et cetera. I think we are concentrating on that but this really has never been a problem as far as IT and the digital economy is concerned. I personally feel one of the reasons why India in a natural course accepted through the late 80s and the 90s and we grew well and in the Silicon Valley it was Indian entrepreneurs who went there and some of our centers also became very prominent that we never had a law regulating this. This was one area where no permissions were required. You didn't need the government and therefore as I see it and this is what was stated in this startup campaign conference, I think we underestimated the kind of activity which is on. For instance, one example is that we planned the inauguration in the Vigyan Bhavan and we thought about 2,000 people would attend and 1,50,000 people put up applications saying, well, I am a startup, I want to be there and therefore you didn't have physically the space to accommodate so many people. And when I went to this conference, my first reaction was barring four or five people in the audience. I wouldn't recognize a single person. So these are not the conventional people who come for business meetings, et cetera, they're completely new India altogether. Some of them have already found solutions to some very complicated issues. A very large number of them who made presentations came from small towns and then went to some engineering college and then have emerged as entrepreneurs. And I think there's a huge potential for India. And in innovation, I said it there, so I don't mind repeating it. I said one of the first conditions they require is freedom from the state. So you don't require an interference of the state, the state governments of the municipalities or the central government at any stage. We need to create an environment in terms of making capital available to them. We need to have a, whenever strengthening is required, a good IPR regime. Now these are the roles which a state will have to perform. We must keep one fact in mind that we have a very large population and therefore conventional economy in India, the old economy cannot absorb all these people, whether in government or in the private sector. And therefore you'll have to find innovative methodologies of creating economic activity from them. So your startup campaign is one campaign. The other campaign we've decided which is actually going to be implemented now in the next few months is people belonging to the schedule cast, schedule tribe and women. So every branch of every bank has been told that in both the categories, you have to adopt one person each and create an entrepreneur out of them and a certain amount of loan facility has to be extended to them. One of the great schemes creating new small traders, businessmen, entrepreneurs, the Mudra scheme has so far had a good success in the last four to five months. So you are eventually when the scheme gets rolled over to year after year over the next three, four years, you'll have crowds of people making use of that bank finance in order to become self-employed small entrepreneurs. They have small amounts, shopkeepers, traders, some small units, et cetera. So India will have to now create these alternative mechanisms along with the conventional economy because the world is seeing the limitations of that conventional economy. But Mr. Chemas, if India is to become one of the innovation hubs of the world, if India is going to become the area where the next Apple, the next Google, the next Facebook, the next one of these companies, Microsoft, Cisco, one of these companies is to now come out of India and it should, it's long overdue. Companies that should be coming out of India, preparing products that do it well elsewhere. We have many, India has many global companies providing services and other things, but products like that, which can then resonate with everyone all over the world, what do your mind would be required in addition to what the finance minister said? I think Sunil probably understands this better than almost anyone in the audience. I would ask him next. If you put in place a true broadband infrastructure to 1.3 billion people and make it inclusive, startups will occur in every segment of the industry from healthcare to manufacturing to education. And you begin to create an environment where it feeds on itself. I think the world wants to bet on India. I've been surprised by, I think at times, my colleagues here are your own toughest critics. I think it's much like France when Alain outlined a plan for digital France, his toughest issue was to capture the imagination of the French people and the political leadership to say, we must make this happen. So I think if you create an environment where your political parties work reasonably closely together, if you truly build out a broadband infrastructure, which will be the highways for all these new startups, regardless of which industry it is in, and you create a regulatory environment that makes it relatively easy to do business in India, I think you'll see the funds come in in a major way. We've already bet 100 million, probably my next trip to India will bet another 100 million. And we have $50 billion overseas that isn't getting invested. So I think you all control your destiny. Sunil, you understand this and maybe you articulate a better idea because this is the entrepreneur highway for every industry that you're building out. You have a democracy, you protect intellectual property, and you have 1.3 billion people you could empower. That's a market that is unequal to anywhere else. How would you articulate it? Well, I think Vikram's raised a very important point. For nearly a decade and a half, two decades, we've seen some fantastic IT companies emerging from India, TCS, Infosys, Vipro, but by and large, they have produced a lot of programmers, population of programmers. By 2020, India will have 5.2 million programmers, which will be more than the US now. I mean, currently we are just shot by I think half a million less than US. So that industry, that piece, that will serve the whole world in terms of its requirement of IT programming is settled and done. I think the point he's raising is, which has also been a question on my mind and many others, why India has not been able to produce an Apple or a Google or a Facebook? Or a Cisco. Or a Cisco. Yes, yes, or a Cisco. Whereas China has been able to do so. I think the answer is very clear. China blocked all foreign companies, not Cisco, but many Facebook, Google, et cetera, have blocked for a long period of time before Chinese local champions emerged, WeChat, Tencent, Alibaba. And now they are sort of loosening a little bit, but they are solid Chinese companies there. India didn't get that benefit so far. But what India has done very well is it very quickly got onto the bandwagon of being copycats. So you have Oyo Rooms, which is mirroring now Airbnb and very successful. You have Ola Caps, which is fighting Uber in the home country, which is good. It's not bad to be copycats in the digital world. You quickly bring solutions to the market, get them out there and be very, very successful. But the next wave that is going to come now is going to be building new products. It's going to come in the area of design. We may not end up manufacturing chipsets for the next five, seven, eight, 10 years because that's the long lead time. We may not have another Cisco, but the parts of Cisco, the heart of Cisco, design, the architecture, the engineering may well happen in India. The software. Much more than ever before. The software piece, the good news is most of the electronics Vikram that we are seeing now, 60, 70% of the value of an Apple iPhone is in software, not in hardware. And on hardware, there will be a fight across the world. Yesterday, Donald Trump said, I love Apple, but I love it more if it is manufactured in the US. I think that battle will keep on going. Every country will want to manufacture more and more in their own home base. That fight is out there to be fought. But I think within that, there's a space for India, which is in the area of software, development, not necessarily body shopping or providing programmers, but beyond that. All right, let me quickly get a couple of comments from the audience. Chandakochak, you got a comment? Okay. In kissing, yeah. Well, one of the things that the finance minister could have taken credit for, if we do a flashback on what was a dominant investor concern last year. And as everybody's mind and lips was the issue of taxation. Fortunately, nobody this year has talked of taxation to be an important irritant. And that has been a very major mindset change. My question is addressed to Cisco and to Sunil. And you could choose whoever you wish to respond to. Sunil, you mentioned that one of the serious impediments is the absence of broadband connectivity. But we are sitting on a pile of money. The Universal Service Obligation Fund has undisperse money of roughly 90,000 crores. Why hasn't broadband connectivity implementation taken place at a speed far faster than what resources are there? And is it because the private sector has not been efficiently and effectively involved in this process? All right, one comment there. I think Mr. Kapoor, yeah. Thank you, Vikram. This has been a very motivational program. I call it DICE, Design, Innovation, Creativity, and Entrepreneurship. I think this is the cusp over what the finance minister said, what John Chambers said. Everybody said on this whole panel, Sunil of course elaborated on that, how to create a DICE community in India. But the fact of the matter is that there are certain long-term measures and I'm a very strong believer in what needs to be done in the short term. Short term, India's real interest rates need to come down. We have to get the de-stressing out of the banking system. And number three, we really have to make a strong commitment to correcting the overall fiscal which is happening, which is happening very, very well, in terms of the fiscal governance, right? So we must address also short to medium term issues, which are going to catapult the country into a seven and a half to nine percent growth. And thank you very much for some comments here. Right, sir, before I come to you on that point, the point here about some of the stress that there is in the system, the banking system in particular, are you concerned all those years of, many Indian industry are stretched with the sort of debts they have. And that potentially has its own impact in public sector banks in particular. I think this problem remained unattended for a very long time. And the problem mounted up. Now, this was also contributed by the fact at times domestic and in some cases, even external factors. For instance, steel was substantially external, which contributed to it. Now, there are three things which are being done. And something in the pipeline, which I may not be able to speak just now. One, the government has already announced a program for recapitalization of the banks. They need more capital. They'll need more capital from the budget. They'll need more capital from the, by divesting some of their, by issuing additional shares. And I think both the processes are on track. We've announced a program, we may probably have to add to that program. Secondly, the RBI has taken a very strong position and rightly so, that the banks must now chase some of the debtors. And they must come out with a program of liquidating some of the debts. I think, as Sunil rightly mentioned, this problem is not widespread across the industry. It's confined to some sectors. In some sectors, you see an improvement. For instance, sugar, there's an improvement. High risk, there's an improvement. So you still have problem in power. You have problems in steel. You have problem in some infrastructural areas. And those individual cases, I know it for a fact that each one of the banks, both in the government sector and the private sector, are in close touch with those concerned group of industries. We don't want a crisis situation, but at the same time, they're working for a resolution. The third important point, which was again untouched so far, are we going to deal with those stress sectors also? Because the root of the problem is the stress sectors. So if there is the external factors in steel, how do we deal with it? Some steps have been announced, some are in the pipeline. If power is the second important component, the Uday scheme, which has already been announced, where the state governments have been asked to take over the debt of some of the state discombs, because the problem is really of the state discombs not charging the market rate. And I think that problem is being adequately addressed. Now, coupled with all these three factors, the de-stressing of the banks can't come about overnight. It'll take some time, but I think the process is now starting. All right. Professor Nareem, the stressed sectors, as he was saying it, again, those external factors, do you see them continuing for a long time? Steel prices, for example, other metal prices, those are some of the areas where there are possibly big debts, which banks may have to deal with issues with. Yeah, I mean, unfortunately, I was recently in China, I met with senior policymaker who said we have excess capacity in steel, in cement, in aluminum, glass plates, even in auto, other manufacturing. And unfortunately, China instead of dealing with excess capacity by shutting down some of these SOE and firms is gonna dump some of that stuff in global markets. So the deflationary impact of China is not just through commodities, but also through dumping, you know, either finished products or even industrial metals of one sort or another. So unfortunately, in this commodity super cycle is over for India, that's importing some of these raw material that's as positive, but certainly in sectors like steel where there is global overcapacity that becomes a bit of an issue and operational and financial restructuring of this firm will have to occur. You know, my principal advice will be that India in many dimensions, like many other parts of the world needs more capital. It's human capital, it's infrastructural capital, it's physical capital, it's financial capital, it's institutional capital, it's regulatory capital. Those are the things that eventually to greater economic growth, all of these things can be done. And actually, history suggests that countries that don't have a lot of natural resources can do very well. I mean, some of the success story around the world have been kind of like Korea, Israel, you know, Hong Kong, Singapore, others that have net imports of raw material, what they do, they invest in their human capital and their physical capital. So the fact that India has to import raw material doesn't matter and the price of this material is falling and that's a positive. You have to invest into your people and through your institutions and your physical capital. We are almost out of time so some last, last comment. So the point on broadband, if there's one thing which you have to look at in the year 2016, will this be the year that we do actually see those broadband highways rolling out all across India? Yeah, I think this is an important year for that particular program and possibly next two or three years. To Mr. Singh's point on the Universal Access Fund, let me mention that 32% of the 90,000 crores that you mentioned have been contributed by my company. So I'll be very happy for that to be redirected back into telecom and I think that question will go to the Finance Minister as to how and when they can release the 90,000 crores on that. My own view is that should be applied towards putting out national fiber, the NOFN, which is called Bharat Net now. I think it has been delayed. The government is trying to accelerate that program. Every village, every panchayat must be connected through fiber. The difficulty is not just investment, it's right of way. We have Mr. Chandrababu Naidu here. The Chief Minister has to clear the right of way. He's been very progressive but many of the states don't give right of way. The other part is putting up, I would say 100,000 towers in the most remotest villages use that money to do that because there is technology available. I remain very hopeful at 2016 onwards. You will start seeing very, very heavy work going on in the broadband area. Let me just close by saying other than videos or long movie watching, I think the networks are ready. By 2016, end of 2016, 17, this country, India will have hopefully true broadband with some help from the Finance Minister in terms of more release of spectrum. Right, sir. On the question, see you, Mr. Chandrababu Naidu were perhaps one of the first Chief Ministers to really push for this. So quick word for you, I think we'll be out of time. So just a quick word from you on this. Just one minute, Tehvila. This is possible 2016. As you rightly mentioned, Finance Minister is here. If you accept that money for national digitalization program, it is immediately we can do it. Recently, telecommunication department gave a proposal in Andhra Pradesh to reach 15, 20 Mbps for a village. I said it is not enough. For every home, you have to give minimum 15, 20 Mbps. Demanding basis, we can go for gigabit capacity. Then they revised the project. It is costing for Andhra Pradesh 5000 crores. It is spending now. Meanwhile, I got an idea through existing electrical poles. I wanted to take one fiber to the lost mine. Already tenders were called. 320 crores, we are completing this project. By June, project will be completed. Every home, I can give 15, 20 Mbps. All institutions, I can give gigabit capacity. Second one, even towers. Everybody's having, there is a problem. There is no sharing. Now we are forming one corporation. We will create tower corporation. We will go and direct all towers within two years time. So that private public partnership, I am totally confident within two years. Last mile, we will give connectivity, minimum 20 Mbps for every family at a cost effective price. Ultimately, you can go for gigabit capacity. This, what is saying broadband, it is not at all a problem. Only if you can give us some consensus within one year or two years, we can do it. All right, we are far out of time. So just one word from each, good year for India, bad year for India, 2016. Final word from you. I think it's a near of opportunity. It's challenging and provided we are able to utilize that opportunity which comes our way. Okay, year of opportunity. Your sense? I think 2016 is India's year. It doesn't matter which way the economy goes. You actually gain share in position during the tough times, even better than during the good times. I think it's all about speed of innovation. It's making it basic. The couple regulations in each industry you need to get rid of, it is business and the political parties coming together. 2016 will be a year India breaks away. 2016 will be a year India breaks away, Sunil. I would tend to agree with that. A lot of effort has gone in the last 18 months. I think a bit of un-leashigum entrepreneurial energy will have a great year. Professor Rubini, final word on the show from you. I would say this is a year of global headwinds but if India continues to structure reforms and macro-justment this can be a good year in the beginning of even better years ahead. All right, thank you so much from that note. Lots to be done but could be a really exciting year. Thank you all so much for joining us. Thanks a lot.