Lack Of Investments
From global competitiveness to productivity and demand generation, industry leaders hold forth on what ails Corporate India
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Every company in India has to look at being a global player, because if they think they can succeed by just being a domestic player, they need to remember that global players are going to come into their backyard. So one way or another, you have to face global competition. I think the best way for corporate India is to relocate their business models, look at their ambitions, and look at the competitiveness, innovation of what they are doing. And the last thing I would say is that all businesses are going to get disrupted by the digital revolution. Many existing businesses will die. You have seen that using Uber is going to kill all the companies that were doing car hires. So this is an opportunity for corporate India to look at how they can harness the digital revolution, rather than being at the receiving end of it.
I think it is really an issue of investment. That is the one issue that’s been depressed for many years now and that is a reflection of demand. And until there is enough growth in demand so all existing capacity gets used up, there won’t be any significant capacity. Things like demonetisation seriously affected demand for many months. And it’s only in the last six months that there has been a full recovery from the drop in demand that demonetisation had caused. If that sustains for another six months, I think it will start showing up in fresh investments.
The key issue seems to be demand generation, where the consumer confidence is important but that also has to be kicked off with major investments. Government investments in infrastructure are inadequate. Whatever growth is there in demand or whatever growth is there in the GDP, it is largely consumer demand driven, not investment driven. With the investment industry trading capacity, upgrading technology, there would be larger employment creation, thus there would be larger demand. Also, there is lack of a level-playing field with respect to imports, especially China, by different sort of rules.
Corporate india is ailing. I think productivity needs to improve. That is what we are trying to do. Start making productivity, capital productivity. Cost of capital is high. The world has become more protectionist which we need to fight.