5/1/2004 - Leading experts debated India’s business climate and future entrepreneurial opportunities at the 11th Annual India Business Conference
at the Kellogg School on May 15. They also discussed poverty and other concerns that need to be addressed in India.
India’s position in the global marketplace was discussed by entrepreneurs before about 300 conference attendees, including many Kellogg School faculty and students who filled the Tribune Auditorium in the James L. Allen Center on the Evanston campus.
"Great entrepreneurs are not created from clichés,’” said Ajit Balakrishnan, chairman and CEO of Rediff.com India Ltd. Connecting 22 million users worldwide, Rediff.com is a source of news, information, communication, entertainment and online shopping for Indians.
Balakrishnan, who founded the Web site in 1996, spoke about the role entrepreneurs currently play in India.
Forces that impact entrepreneurs today were contrasted against those influencing them 30 years ago, such as stately Indian families who monopolized the marketplace in the 1970s. Today’s entrepreneurs, Balakrishnan said, are swayed by a host of economic and technological discontinuities.
“International discontinuity leads to Indian policy reaction,” said Balakrishnan, one of 50 Indian CEOs featured by Business Today’s “Annual of Visionary CEOs” for 2002. “This action creates entrepreneurial opportunity.”
Large deficits that prevent the government from writing subsidies and a drastic decline in interest rates, which led to the exploding growth in residential real estate, have impacted today’s entrepreneurs. Technological factors influencing entrepreneurs include the shift from IT to biotech as the productivity driver, and the increase in cheap bandwidth.
“One of the forces holding entrepreneurship back is India’s unimaginative venture capital industry,” Balakrishnan said.
India’s mentality toward venture capital concentrates on funding experienced entrepreneurs and US-based projects that dip into the entrepreneur’s personal capital.
“Out of 10 entrepreneurs who start, nine will fail,” Balakrishnan said. “But India has to start recognizing the potential in younger entrepreneurs — even those with no capital.”
Dr. Arvind Subramanian, IMF division chief of the research department, also advocated the need for young entrepreneurs, during a conference debate assessing what economic forces are needed to propel entrepreneurial opportunity in India.
“India needs a shift in demography, from young to old. There is a young dynamic force that should be taken advantage of,” Subramanian said.
Boosting productivity, which is generated by a combination of “men and machines,” and improving the quality of public institutions were also forces cited by Subramanian.
“India needs to clean up its public finances,” Subramanian said. “There is an unbalanced distribution between urban and rural populations.”
Subramanian’s challenger, Neeraj Bhargava, group CEO of WNS, spoke about this disproportion and the largerdisparity between states in India.
“The disparity between states is causing some problems,” Bhargava said. “But it is also fueling competition — a race to the top — between states that entrepreneurs can take advantage of.”
Some US-born entrepreneurs of Indian descent are capitalizing on this dynamic by returning to India and establishing start-up firms. Bhargava recommended that budding entrepreneurs “ease” themselves into the environment by starting with a large multinational company that has offices abroad. He also stated the importance of having a source of capital lined up and the ability to build relationships within the United States.
“Taking more risks is most important,” Bhargava said. “I have one regret — that I did not become an entrepreneur 10 years ago.”
Taking risks was a sentiment echoed by Sam Pitroda, chairman and CEO of WorldTel, in his dynamic speech about where entrepreneurs should concentrate their efforts in India.
“Future entrepreneurs need to take risks and think ‘outside the box,’” said Pitroda, who holds more than 50 worldwide patents and owns several high-tech companies. Pitroda earned his master’s degree in electrical engineering from Northwestern University in 1966.
Instead of concentrating on areas including software, IT and biotechnology, entrepreneurs should channel their energy to more pressing issues affecting “the heart” of India, Pitroda advised.
“Water, sanitization, health, education, homes, infrastructure and jobs are where the real growth opportunities are,” said Pitroda, who has spent more 40 years in the telecom industry. These fields easily create more than 10 million jobs for unemployed Indians, he said, compared to industries such as IT and software, which create about three or four million jobs annually.
“India shines for those designing five-star hotels,” Pitroda said. “India doesn’t shine for millions and millions of poor.”
He added that entrepreneurs must not look at India with a “Western mindset” when trying to grow industries and create employment opportunities for millions. The opportunity at the “bottom of India’s pyramid” is large, but it requires entrepreneurs to target a low-level labor supply.
“When entrepreneurs create opportunities in industries such as water, sanitization, health, education, homes, infrastructure and jobs, they are creating dignity for a low-level labor supply,” Pitroda said.
Entrepreneurs who want to create opportunities abroad need “new thinking” and “courage.” Paying attention to local talents and customs and maintaining accessibility and connectivity were among the recommendations Pitroda offered.
“New models need to be created in India,” Pitroda said. “It’s not about taking a U.S. model and implanting it in India. To succeed, entrepreneurs must look for new models to address concerns — like clean water and streets — in India.”
After Pitroda concluded, other speakers, including Jai Pathak, partner of Jones Day, and NR Narayana Murthy, chairman of Infosys, shared their insights about additional entrepreneurial activity.
Narayana Murthy, often described as a "visionary with a social conscience,” told conference attendees and budding entrepreneurs to remain aware of the value system and culture that they create for their companies. He said it was imperative to be concerned about employee satisfaction. "Infosys employees feel like a family in a highly informal campus atmosphere," he noted about his own firm.
He stated that India afforded a great future for entrepreneurs, adding that the "only hope for India in the long run was to produce more than 100,000 companies better than Infosys.”
Said conference attendee Nada El-Zein of Akzo-Nobel, a chemical and pharmaceutical company: “I learned a lot about what’s happening in India today. I’m thinking of starting a small venture capital firm there with my husband.”