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M. Venkatesh on Rediff on Root of Globalisation

2008-10-20T01:37:00.000-07:00

Nevertheless, it was this mindless consumption that acted as an engine of global growth for the past several years. In the process it ushered in great amount of prosperity at the macro level, never mind the imbalance associated with it.
Consequently, anyone who questioned the intrinsic instability of this model was branded insane. That explains why globalisation remained mostly un-critiqued.

This was succinctly put forth by my teacher who brilliantly explained the extant Western economic model as hereunder:

Atomised individuals;
Which in turn meant socialised women;
That in turn caused the collapse of the institution of families;
Consequently, reckless individualism leading to gargantuan consumption;

Finally that lead to nationalisation of responsibilities of families.
This in turn had the following inevitable consequence:
A pauperised State that was unable to carry on the responsibility of family;
This, in turn, lead to privatisation of the functions of government;
Naturally, that demanded a corporatised approach to economy; and
Finally, that necessitated a globalised market for the survival of these corporates.

Understanding Economic Cycles

2008-10-02T23:28:00.000-07:00

Taken from
http://www.globalresearch.ca/index.php?context=va&aid=8473

"The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." Thomas Jefferson (1743-1826), 3rd U.S. President
"I have learned to hold popular opinion of no value. "Alexander Hamilton (1755-1804)
"Those who cannot remember the past are condemned to repeating it." George Santayana (1863-1952)
[N.B.: This article is drawn from a conference to be pronounced by Dr. Tremblay before the Florida Renaissance Academy, Marco Island Yacht Club, on April 4, 2008. Those wishing to attend can call: 239-394-3089 or 239-434-4737]
PART I
I have been a student of cycles, both of economic cycles and of political trends, for a very long time. To try to understand the economy or politics for that matter without having a knowledge of cycles and trends is like sailing without a compass, a weather report or a GPS (Global Positioning System).
There are four main types of cycles in economics, some relatively short, such as the slightly less than four year long inventory cycle, or the standard 10-year technology cycle, and some longer, such as the 18-year long real estate cycle (N.B.: We are presently in the downward part of this cycle, which should last until 2010-11), and some called long waves, such as the 54- to 60-year long Kondratieff cycle of a debt and price inflation-then disinflation-followed by a debt and price deflation (N.B.: We are presently in the deflation phase of this long cycle, a good example being the debt deflation of heavily levered banks and hedged funds and of price deflation in housing) such a deflation phase expecting to last also until 2010-11.
As I mentioned, the shorter cycle is the inventory cycle (Kitchin), which lasts slightly less than four years. This cycle has become very much less pronounced in recent years for two reasons. 1) First, the service sector as a percentage of the entire economy is much larger than it was 100 or even 50 years ago. In the United States, the service sector accounts for approximately three quarters of GDP. Today, four out of every five private sector non-farm jobs (80 percent) are in the economy's service sector (federal, state and local government, wholesale trade, retail trade, transportation, public utilities, construction, finance, insurance, real estate, telecommunications, computer and related services, energy services, distribution, express delivery and audio-visual services, etc.). —50 years ago, the service sector accounted for about 60 percent of U.S. output and employment. Today, the information age has generated new forces that have driven the shift to a more services-oriented economy.
For the U.S., services exports represent approximately 30 percent of the total value of America’s exports, and it is in surplus. This sector of the economy is much less volatile than manufacturing, agriculture or mining.
2) Second, over the years, businesses have embraced the use of the computer and the digital revolution to manage inventories. This has lead to the "Just-in-time" inventory management method, which has considerably reduced fluctuations in the inventory stocks of distributors, thus smoothing the production cycle of producers.
During the entire twentieth century, as the economy moved from agriculture and industry and more and more toward service industries, the volatility of the US economy became less and less pronounced. As a consequence, recessions have been shallower and of shorter duration. And, of course, there has not been another economic depression, like the 10-year Great Depression that lasted from 1929 to 1939.
—There was another structural development on the inflation side. Indeed, the internationalization of national economies has acted as a damper on price increases, as new low cost producers, such as China and other emerging economies, have entered the markets. For instance, exports and imports used to represent 20 percent of the U. S. economy; nowadays, it is 30 percent.
Sometimes we measure these cycles from bottom to bottom, and sometimes from top to top. For the 10-year cycle (the Juglar cycle), it often coincides with normal recurring recessions. In the U.S., there were recessions, for example, in 1969, in 1973-75, in 1980 and 1981-82, in 1990-91 and in 2001, most of them within about a 9-10 year interval. According to this cycle, there could be a somewhat severe recession in 2010-11, possibly following the slowdown or recession expected to occur this year.
What is of interest is that the real estate cycle or housing cycle (the Kuznets cycle) is also scheduled to bottom in this period. This is a cycle of about 12 years of price increase and of 5 or 6 years of price decline. The previous cycle, from top to top went from 1987 to the spring of 2005. A bottom would therefore be normal in 2010-11 and a future top around 2023.
But the multi-generation Kondratieff cycle is perhaps even more ominous in its influence on the economy. From bottom to bottom, this very long cycle began in 1949, when wartime prices were unfrozen, reached a top in inflation in 1980 at 13-14 percent levels, and is expected to bottom between 2003 and 2010. The current financial crisis and the credit crunch that accompanies it are the main players in this long cycle.
As you see, the table is set for an important economic bottom in the next two years. That is why I recommend being careful and alert financially during this turbulent period.
There are also cycles and trends in politics, and they sometimes coincide with economic cycles. For example, it would surprise no one to know that during the early inflationary phase of the Kondratieff cycle, a philosophy of government social spending would tend to prevail. In the U.S., this would be a period where the Democrats would be expected to be in power. When there is a need to fight inflation, a conservative philosophy of government would tend to prevail, and this would favor the Republicans. The Kennedy-Johnson administration of the 1960s is a case in point, while the Reagan-Bush Sr. administration is the other.
Rodrigue Tremblay is a frequent contributor to Global Research. Global Research Articles by Rodrigue Tremblay

Learning from Tata's Nano

2008-03-25T00:18:00.000-07:00

http://www.businessweek.com/innovate/content/feb2008/id20080227_377233.htm
The announcement last month by Tata Motors of its newest car, the Nano, was revealing on many levels. The announcement generated extensive coverage and commentary, but just about everyone missed the Nano's real significance, which goes far beyond the car itself.
But, O.K., let's start with the car itself—particularly the price. At about $2,500 retail, the Nano is the most inexpensive car in the world. Its closest competitor, the Maruti 800, made in India by Maruti Udyog, sells for roughly twice as much. To put this in perspective, the price of the entire Nano car is roughly equivalent to the price of a DVD player option in a luxury Western car. The low price point has left other auto companies scrambling to catch up.
Thinking Outside the Patent Box
How could Tata Motors make a car so inexpensively? It started by looking at everything from scratch, applying what some analysts have described as "Gandhian engineering" principles—deep frugality with a willingness to challenge conventional wisdom. A lot of features that Western consumers take for granted—air conditioning, power brakes, radios, etc.—are missing from the entry-level model.
More fundamentally, the engineers worked to do more with less. The car is smaller in overall dimensions than the Maruti, but it offers about 20% more seating capacity as a result of design choices such as putting the wheels at the extreme edges of the car. The Nano is also much lighter than comparable models as a result of efforts to reduce the amount of steel in the car (including the use of an aluminum engine) and the use of lightweight steel where possible. The car currently meets all Indian emission, pollution, and safety standards, though it only attains a maximum speed of about 65 mph. The fuel efficiency is attractive—50 miles to the gallon.
Hearing all this, many Western executives doubt that this new car represents real innovation. Too often, when they think of innovation, they focus on product innovation using breakthrough technologies; often, specifically, on patents. Tata Motors has filed for 34 patents associated with the design of the Nano, which contrasts with the roughly 280 patents awarded to General Motors (GM) every year. Admittedly that figure tallies all of GM's research efforts, but if innovation is measured only in terms of patents, no wonder the Nano is not of much interest to Western executives. Measuring progress solely by patent creation misses a key dimension of innovation: Some of the most valuable innovations take existing, patented components and remix them in ways that more effectively serve the needs of large numbers of customers.
A Modular Design Revolution
But even this broader perspective fails to capture other significant dimensions of innovation. In fact, Tata Motors itself did not draw a lot of attention to what is perhaps the most innovative aspect of the Nano: its modular design. The Nano is constructed of components that can be built and shipped separately to be assembled in a variety of locations. In effect, the Nano is being sold in kits that are distributed, assembled, and serviced by local entrepreneurs.
As Ratan Tata, chairman of the Tata group of companies, observed in an interview with The Times of London: "A bunch of entrepreneurs could establish an assembly operation and Tata Motors would train their people, would oversee their quality assurance and they would become satellite assembly operations for us. So we would create entrepreneurs across the country that would produce the car. We would produce the mass items and ship it to them as kits. That is my idea of dispersing wealth. The service person would be like an insurance agent who would be trained, have a cell phone and scooter and would be assigned to a set of customers."
In fact, Tata envisions going even further, providing the tools for local mechanics to assemble the car in existing auto shops or even in new garages created to cater to remote rural customers. With the exception of Manjeet Kripalani, BusinessWeek's India bureau chief, few have focused on this breakthrough element of the Nano innovation (BusinessWeek.com, 1/10/08).
This is part of a broader pattern of innovation emerging in India in a variety of markets, ranging from diesel engines and agricultural products to financial services. While most of the companies pursuing this type of innovation are Indian, the U.S. engineering firm, Cummins (CMI) demonstrates that Western companies can also harness this approach and apply it effectively. In 2000 Cummins designed innovative "gensets" (generation sets) to enter the lower end of the power generator market in India. These modular sets were explicitly designed to lower distribution costs and make it easy for distributors and customers to tailor the product for highly variable customer environments. Using this approach, Cummins captured a leading position in the Indian market and now actively exports these new products to Africa, Latin America, and the Middle East.
"Open Distribution" Innovation
We have called this "open distribution" innovation because it mobilizes large numbers of third parties to reach remote rural consumers, tailor the products and services to more effectively serve their needs, and add value to the core product or service through ancillary services. Three innovations in products and processes come together to support "open distribution:"
• increased modularity (both in products and processes)
• aggressive leveraging of existing third-party, often noncommercial, institutions in rural areas to more effectively reach target customers
• creative use of information technology, carefully integrated with social institutions, to encourage use and deliver even greater value.
Modular designs combined with creative leverage of local third-party institutions help participants to get better faster. Companies such as Tata and Cummins are going far beyond "customer co-creation" in the narrow sense of soliciting isolated ideas from customers. Instead, they are building long-term personal relationships with customers, enriched by the specialized capabilities of broad networks of third parties that generate much deeper insight into customer needs and afford opportunities to tailor value.
Such innovations are quite different from those in the retail distribution systems pioneered by companies such as Dell (DELL) and the leading big-box retailers. These U.S. companies developed completely self-contained and highly standardized facilities and services for customers. But the open-architecture approach pioneered by Indian companies may offer much greater opportunity to deliver more tailored value to customers than the closed-architecture U.S. approach. The techniques initially developed to reach poor and rural customers may have even greater potential when used to reach highly demanding, affluent, urban customers in Western economies.
Welcoming Users Back into the Design Loop
The Tata Motors/Nano approach contrasts with the strategy of most other manufacturers. For more established automakers each new model represents an advance in tight integration, with more and more of the functionality deeply embedded in electronics that truly represent a "black box" to the customer. The days of customizing cars to personalize them and push their performance limits are rapidly receding into distant memory for the average customer. Yet, as Kathleen Franz, makes clear in her wonderful book, Tinkering: Consumers Reinvent the Early Automobile, it was the open design of early automobile models that blurred the lines between consumption and invention and led to a wave of innovations that were later embraced by the auto industry.
What are the broader lessons that Western executives should learn from this innovation story?
Emerging markets are a fertile ground for innovation. The challenge of reaching dispersed, low-income consumers in emerging markets often spurs significant innovation. Western executives should be careful about compartmentalizing the impact of these innovations on the edge of the global economy. As we suggested in Innovation Blowback, these innovations will become the basis for "attacker" strategies that can be used to challenge incumbents in more developed economies. What's initially on the edge soon comes to the core.
• Find ways to help customers and others on the edge to tinker with your products. Modular and open product designs help engage large numbers of motivated users in tailoring and pushing the performance boundaries of your products, leading to significant insight into unmet customer needs and creative approaches to addressing those needs.
• Pay attention to institutional innovation. Western executives often become too narrowly focused on product or process innovation. Far higher returns may come from investing in institutional innovation—redefining the roles and relationships that bring together independent entities to deliver more value to the market. Tata is innovating in all three dimensions simultaneously.
• Rethink distribution models. In our relentless quest for operating efficiency, we have gone for more standardization and fewer business partners in our efforts to reach customers. As customers gain more power, they will demand more tailoring and value-added service to meet their needs. Companies that innovate on this dimension are likely to be richly rewarded.
John Hagel and John Seely Brown are co-chairman and independent co-chairman, respectively, of the Center for Edge Innovation, a part of Deloitte & Touche USA LLP. John Hagel writes a blog at Edge Perspectives .

Furniture of an apartment in a box- great design

2008-03-23T05:15:00.000-07:00

http://www.treehugger.com/files/2008/02/casulo_an_entir.php

Kudos to the designers. Great idea. great appeal.

Custom-made mobile phones to suit your choices

2008-03-04T23:01:00.000-08:00

NEW DELHI: This is one made-to-order device that everyone will love to have: the cellphone. If you are a music lover, why not have a phone which can hold more songs rather than heavy graphics.

Alternatively, if you want a better camera on a handset, why settle for just a 2-megapixel one? Soon, you will be able to order a mobile phone built to your specifications, much like you can assemble a computer or order a custom-made one from Dell or any other PC vendor.

It will carry a premium, but will definitely set you apart from the people who use the mass market product. A mobile phone is a combination of various parts - memory, processor, camera, MP3 music player, other applications, number of SIM card slots et al. Now, you’ll be able to dial up a vendor and buy parts off the shelf and put together your own cellphone.

This will completely overhaul the mobile phone business, which is currently dependent on selling whatever the cellphone maker wants to market rather than what you want to buy.

Also, when mobile phone makers like to call their devices as computers why can’t they custom-build them? That’s the problem the Chinese company, zzzPhone, is planning to solve. Their factory in China will custom-build a phone to your specifications - like the number of SIM card slots, applications accessibility, memory capacity etc.

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It will look like any other regular handset. The difference will be inside: you can choose to have (or not have) GPS, 7-megapixel camera, 4GB internal memory, stereo speakers and Windows Mobile (or equivalent) operating system, processor upgrade or anything else. It even has two SIM card slots so you can keep your work and play in the same phone.
Right now, prices are variable, starting at $149 for a 3-megapixel version with Windows Mobile and a 3-inch VGA display. The company claims to deliver orders within six weeks.

Technical and marketing experts in India argue that while this is practical, the miniature mobile parts do pose a challenge in terms of how far you can go. Says Nokia India marketing director Devinder Kishore: “Custom-building can be incorporated. But Nokia already offers 40 new models each year, catering to the needs of a whole spectrum of users.”
While a range of models in the market ensures that people have a choice, it does not satiate the desires of consumers who are looking for top-end exclusivity and here’s where the custom-built phone will score.

Explains Hewlett-Packard India (personal systems group), president, Ravi Swaminathan: “Technically, it is possible. If you are willing to pay the price, anything can be custom-built, much like top-end cars. But I believe that a wide range is available in the market and meets the needs of over 90% of the market.”

The miniature mobile components pose a challenge to custom-make the gadget. But for people willing to shell out a premium, it won’t be a problem to choose between having, say, a global positioning system on the phone or a 10-megapixel camera.

ARM (a chipmaker for cell phones) managing director Anil Gupta adds: “It’s possible to get to a point where we can buy a phone with more, or less memory. Also, in future, most mobiles will have USB ports to allow connecting to a ‘sister’ device. Even the idea of a ‘single-use’ mobile phone is not far-fetched (similar to the use-and-throw cameras).

Such phones could be useful when you are travelling to a new destination: you keep your regular phone, but use the single-use unit while at the new location, throwing it away when you are ready to leave.” Whatever the technical challenges, a made-to-order phone is pretty much feasible and soon, you will be able to ask for one with your own specifications.

http://economictimes.indiatimes.com/News/News_By_Industry/Telecom/Custom-made_mobile_phones_to_suit_your_choices/rssarticleshow/2786945.cms

Made in India

2008-02-03T03:23:00.000-08:00

http://timesofindia.indiatimes.com/Opinion/Sunday_Specials/Special_Report/Made_in_India/articleshow/2751757.cms

3 Feb 2008, 0000 hrs IST,Sujata Dutta Sachdeva,TNN

Sabeer Bhatia’s hotmail revolutionised communication. Bhatia’s baby was reportedly sold to Bill Gates for $400 million (TOI Photo)
Driving through the American countryside, an Indian visitor was taking in the sights when something caught his eye. Amid the vast, rolling fields was a farmer riding a Mahindra tractor. Conceptualised and designed at Mahindra and Mahindra’s R&D centre in Mumbai, this made-in-India farm vehicle has managed to grab 6% of US market share in its segment. And now it’s making inroads into mark-ets as diverse as Europe and Sri Lanka. Surprised? Not when you consider India’s steady emergence as an engineering and design hub. Tata’s Rs-1 lakh Nano has already made a global splash. Then there is HCL’s homegrown Mileaptop. Weighing less than a kilogram and priced below Rs 15,000, the entry-level laptop is touted as the cheapest in the market. "The idea is to increase PC penetration in India and improve Net accessibility," says Rajendra Kumar, executive VP, HCL. And let’s not forget Maruti’s first concept car. Saurabh Singh and Rajesh Gogu created waves at the recent Delhi Auto Expo. The duo designed the A-Star at Maruti Udyog’s Manesar plant. Soon, the car will be seen on European motorways. Maruti engineers have worked with Suzuki Motors to design Swift and Zen Estilo as well. "We hope to design and produce our own car model from India by 2011," says C V Raman, chief general manager (engineering), Maruti Udyog. From cars to tractors, refrigerators to laptops, made-and-designed-in-India is becoming a sought after label. One that also means serious business. According to some studies, India’s contract industrial engineering revenue is expected to grow from around $500 million to $10 billion in the next five years. Worldwide, the market is growing exponentially. International market research firm IDC expects the product engineering services industry to double, hitting $53 billion annually by 2009. Closer home, Nasscom in its study ‘Engineering Service Outsourcing (ESO)’, pegs global spending on engineering services at $750 billion per year - almost equal to India’s GDP. By 2020, this amount is expected to increase to more than $1 trillion. Of the $750 billion being spent today, only $10-15 billion is being offshored. India has about 12% market share. By 2020, the ESO market would be worth $150-$225 billion. India’s share will be 25-30%, or $50 billion annually. In fact, much like software design, the volume of sophisticated engineering design work being done out of India is growing rapidly. While many IT majors have already set up captive centres for design development here, local firms too are getting good business from global customers. Harita TVS in Bangalore does engineering design services for customers across US and Europe. It’s the preferred partner for many OEM and Tier-1 customers. Similarly, Plexion Technologies has worked on interior design and windows for a top European car brand. Other car makers like Toyota Motors, Ford, Ferrari, and Honda have all boosted Indian outsourcing. Realising the potential, Indian companies are now focusing a lot more on innovation and design. Sona Group, the well-known auto accessories maker, is now working on an electric power steering for non-highway vehicles in the US. "We are trying to create a mindset for innovation. To keep ahead of the competition, innovation in design is a must; we are creating tools and developing skills so that people are able to think out of the box," says Kiran Deshmukh, COO, Sona Kyo Steering Systems. The company was involved in the making of the Nano’s steering wheel. "A lot of product design is already happening in Indian industry. The final products will be as impressive as the Nano," assures Sarita Nagpal, deputy director general, CII. Take, for instance, Godrej’s latest fridge-in-the-works. The folks who gave us our first indigenous locks, vegetable-oil soaps and colour fridges have come up with the low-cost Hedge. "It’s a refrigerator with convection floors that allow uniform cooling and is competitively priced," says G Sundarman, president, product strategy, Godrej Appliances. Competitive pricing is also the USP of HCL’s rural PCs that run on car batteries. Last year, Mahindra created Shaan, a multiutility farm vehicle which won an award from the American Society for Agricultural and Biological Engineers for design. "We have a patent for it. The tractor is aimed at people who use it in their farms, as a family vehicle and for transporting goods," says Manrao, senior VP, M&M. They also created India’s first bio-diesel tractor in 2004. Likewise, the Tata Group has been in the forefront of design engineering in India. Their Indica was touted as the ‘first truly Indian car’. Now the Nano’s become a global talking point. As Sunil Sinha, CEO, Tata Quality Management Services explains, "As a group, we started looking at innovation seriously in the ’90s. Internally, we have amplified the message of innovation, strengthened our R&D and increased our budget spend." And it’s showing. While Tata Tetley designed an iced tea dispenser that’s become a rage in the US, Tata Technologies, which operates in 12 countries, is designing cars and vans for top foreign carmakers. However, Sinha feels a lot still needs to be done. "In 2006, India had filed only 400-odd IPRs while companies like Microsoft and Intel alone filed more than 2,000. We need to change the mindset and make innovation happen here." The problem is that over the years we have focused more on excelling in production engineering rather than on creating our own designs. "It’s time to think beyond and recognize the importance of product design and innovation. Only then can we remain competitive," says Deshmukh. Else, we may only end up creating the occasional ripple with a Nano or a Shaan - hardly adequate for the long drive to design stardom. sujata.sachdeva@timesgroup.com

Gartner's 10 predictions for IT industry for 2008 and beyond

2008-01-31T00:47:00.000-08:00

http://www.rediff.com/money/2008/jan/31infotech.htm

Leading IT industry analyst firm Gartner Inc has highlighted 10 key predictions of events and developments that will affect IT and business in 2008 and beyond.
The predictions highlight areas where executives and IT professionals need to take action in 2008. The full impact of these trends may not appear this year, but executives need to act now so that they can exploit the trends for their competitive advantage.
"Selected from across our research areas as the most compelling and critical predictions, the trends and topics they address this year indicate a strong focus on individuals, the environment, and alternative ways of buying and selling IT services and technologies," said Daryl Plummer, managing vice president and Gartner Fellow, in a media release on Thursday.
The predictions that Gartner has made for the year 2008 focus on general technology areas rather than on specific industries or roles. These include:
1. By 2011, Apple will double its American and western European market share in computers: Apple's gains in computer market share reflect as much on the failures of the rest of the industry as on Apple's success. Apple is challenging its competitors with software integration that provides ease of use and flexibility; continuous and more frequent innovation in hardware and software; and an ecosystem that focuses on interoperability across multiple devices (such as iPod and iMac cross-selling).
2. By 2012, 50 per cent of traveling workers will leave their notebooks at home in favour of other devices: Even though notebooks continue to shrink in size and weight, travelling workers lament the weight and inconvenience of carrying them on their trips. Vendors are developing solutions to address these concerns: new classes of Internet-centric pocketable devices at the sub-$400 level; and server and Web-based applications that can be accessed from anywhere. There is also a new class of applications: portable personality that encapsulates a user's preferred work environment, enabling the user to recreate that environment across multiple locations or systems.
3. By 2012, 80 per cent of all commercial software will include elements of open-source technology: Many open-source technologies are mature, stable and well supported. They provide significant opportunities for vendors and users to lower their total cost of ownership and increase returns on investment. Ignoring this will put companies at a serious competitive disadvantage.
Embedded open source strategies will become the minimal level of investment that most large software vendors will find necessary to maintain competitive advantages during the next five years.
4. By 2012, at least one-third of business application software spending will be as service subscription instead of as product license: With software as service (SaaS), the user organisation pays for software services in proportion to use. This is fundamentally different from the fixed-price perpetual license of the traditional on-premises technology. Endorsed and promoted by all leading business applications vendors (Oracle, SAP, Microsoft) and many Web technology leaders (Google, Amazon), the SaaS model of deployment and distribution of software services will enjoy steady growth in mainstream use during the next five years.
5. By 2011, early technology adopters will forgo capital expenditures and instead purchase 40 per cent of their IT infrastructure as a service: Increased high-speed bandwidth makes it practical to locate infrastructure at other sites and still receive the same response times. Enterprises believe that as service oriented architecture (SOA) becomes common 'cloud computing' will take off, thus untying applications from specific infrastructure.
This trend to accepting commodity infrastructure could end the traditional 'lock-in' with a single supplier and lower the costs of switching suppliers. It means that IT buyers should strengthen their purchasing and sourcing departments to evaluate offerings. They will have to develop and use new criteria for evaluation and selection and phase out traditional criteria.
6. By 2009, more than one-third of IT organisations will have one or more environmental criteria in their top six buying criteria for IT-related goods: Initially, the motivation will come from the wish to contain costs. Enterprise data centres are struggling to keep pace with the increasing power requirements of their infrastructures. And there is substantial potential to improve the environmental footprint, throughout the life cycle, of all IT products and services without any significant trade-offs in price or performance.
In future, IT organisations will shift their focus from the power efficiency of products to asking service providers about their measures to improve energy efficiency.
7. By 2010, 75 per cent of organisations will use full life cycle energy and CO2 footprint as mandatory PC hardware buying criteria: Most technology providers have little or no knowledge of the full life cycle energy and CO2 footprint of their products. Some technology providers have started the process of life cycle assessments, or at least were asking key suppliers about carbon and energy use in 2007 and will continue in 2008.
Most others using such information to differentiate their products will start in 2009 and by 2010 enterprises will be able to start using the information as a basis for purchasing decisions. Most others will stat some level of more detailed life cycle assessment in 2008.
8. By 2011, suppliers to large global enterprises will need to prove their green credentials via an audited process to retain preferred supplier status: Those organisations with strong brands are helping to forge the first wave of green sourcing policies and initiatives. These policies go well beyond minimising direct carbon emissions or requiring suppliers to comply with local environmental regulations.
For example, Timberland has launched a 'Green Index' environmental rating for its shoes and boots. Home Depot is working on evaluation and audit criteria for assessing supplier submissions for its new EcoOptions product line.
9. By 2010, end-user preferences will decide as much as half of all software, hardware and services acquisitions made by IT: The rise of the Internet and the ubiquity of the browser interface have made computing approachable and individuals are now making decisions about technology for personal and business use.
Because of this, IT organisations are addressing user concerns through planning for a global class of computing that incorporates user decisions in risk analysis and innovation of business strategy.
10. Through 2011, the number of 3-D printers in homes and businesses will grow 100-fold over 2006 levels: The technology lets users send a file of a 3-D design to a printer-like device that will carve the design out of a block of resin. A manufacturer can make scale models of new product designs without the expense of model makers. Or consumers can have models of the avatars they use online.
Ultimately, manufacturers can consider making some components on demand without having an inventory of replacement parts. Printers priced less than $10,000 have been announced for 2008, opening up the personal and hobbyist markets.

Marketing Fundae

2008-01-22T03:45:00.000-08:00

Professor at a marketing class was explaining marketing concepts: You see a gorgeous girl at a party। You go up to her and say, "I am very rich।Marry me!" That's Direct Marketing.
.You're at a party with a bunch of friends and see a gorgeous girl। One of your friends goes up to her and pointing at you says, "He's very rich।Marry him." That's Advertising.
You see a gorgeous girl at a party. You go up to her and get her telephone number. The next day you call and say "Hi,I'm very rich.Marry me." That's Telemarketing. You're at a party and see a gorgeous girl. You get up and straighten your tie, you walk up to her and pour her a drink. You open the door for her, pick up her bag after she drops it, offer her a ride, and then say, "By the way, I'm very rich.Will you marry me?" That's Public Relations.
You're at a party and see a gorgeous girl. She walks up to you and says, "You are very rich॥" That's Brand Recognition.
You see a gorgeous girl at a party. You go up to her and say, "I'm rich.Marry me" She gives you a nice hard slap on your face. That's Customer Feedback !!!!!
You see a gorgeous girl at a party. You go up to her and say, "I am very rich.Marry me!" And she introduces you to her husband That's demand and supply gap.
You see a gorgeous girl at a party. You go up to her and before you say, "I am very rich.Marry me!" she turns her face towards you.............and...........she is your wife ! That's competition eating into your market share.

Indian retailers, design firms scouting for talent from Europe

2008-01-03T06:20:00.000-08:00

http://www.thehindubusinessline.com/2008/01/03/stories/2008010352280500.htm

Indian retailers, design firms scouting for talent from Europe
Swetha Kannan
Bangalore, Jan. 2 Shortage of design talent in the country forces Indian retailers and design firms to look at talent from Europe. While the number of designers in India is woefully inadequate, the scene is the reverse in Europe – where there is a huge supply and very little work.
Design is no longer only about fashion designing. With the retail sector set to grow big time in India, the role of retail and product design has become vital. It involves the entire gamut of services from packaging, branding and product designing to visual merchandising. With heightened awareness and sensitivity to good design, adequate skilled manpower is the need of the hour.
Idiom Design and Consulting, the design company from the Future Group, had a few months ago, employed five-six designers on a “time period bound” “contract basis” from France and Poland to work on its various projects. It is open to employing European designers again in future too. Design firms such as JHP, Astound and Fitch have also worked on Indian retail projects. London-based JHP has designed the retail stores of some of Arvind Group’s brands, while British design firm Astound has worked on Reliance Fresh stores. This is only the tip – the reverse outsourcing story is set to grow if the demand-supply situation in India continues.
According to an Indo-Dutch market scan done by a Dutch delegation in August last year, India has about 3,000 practising designers, compared to one lakh designers in the EU. Says Mr Girsh Raj, Founder Member, Idiom Design and Consulting: “Idiom has in the past employed the services of designers from Europe… not for global involvement or understanding but because of lack of design talent in the country. There are just a handful of design schools.
In fact, Idiom alone can absorb all the designers from every reputed design school every year.” The talent crunch is both in terms of numbers and skill, he adds.
Ms Revathi Kant, Business Head – Design, Titan Industries, agrees that there is a serious shortage in India. “While around 1,000 people pass out of the top design institutes every year, the industry’s demand is eight-fold,” she says.
Contrast this to the scene in Europe, where there are more designers than there is work. A scenario that has prompted European designers to look at India for work.
Although there is no great advantage in employing European designers , it definitely makes sense to “try them out” since there is an obvious interest from Europe and also considering that there are not many in India to choose from, says Mr Raj. He says European designers “love the fact that there is so much work in India. Also, there is an emerging market here compared to saturated markets in Europe… besides like in every other industry, they think that sooner or later, there is money to be made for them in India.”Importance of design
The importance of aesthetics and design is growing in the Indian market today and retailers cannot afford to have a blinkered vision anymore. Ms Sujata Keshavan, Director, Ray + Keshavan, a brand and design consultancy firm, says, “For long we blithely ignored design. We merely copied products. But now involvement in design has become an absolute must for retailers. They can ignore design at their own peril.”
Since European designers have limitations of lack of understanding of the Indian cultural context, besides reluctance to work in the “chaotic” environment that India provides, Indian designers have a real edge. But for now, the numbers just don’t seem to add up!
More Stories on : Human Resources Retailing

Design Registration in India

2007-09-15T02:49:00.000-07:00

http://carden9428.blogspot.com/2007/09/industrial-design-registration-system.html

Industrial Design Registration System in India
Legislation

The Indian law of designs is enshrined in the Designs Act, 2000. The Act seeks to provide for the registration of designs in India. The rights granted under the Act are operative in the whole of india.

What is a Design

A DESIGN is defined as the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye, but does not include any mode or principle of construction or anything which is in substance a mere mechanical device and does not include any trademark or property mark or artistic work .

Design Act protects only designs that is aesthetic in nature. They may be decorative elements added to the article or they may be part of very shape or configuration. Novelty and originality are important criteria in a design for registration. In addition, only those designs that are applied to an article by an industrial process will be protected.

Classification*

Almost all jurisdictions including India follow Locarno Classification for registration of design comprising 32 classes, numbered 1 to 31 and an additional class 99 to include articles not falling under the aforesaid 31 classes. Most of the classes are further divided into sub classes. Design applications must be filed in a particular class depending upon the predominant material with which the article is made or is capable of being made.

Rights conferred by registration

The registration of a design confers the proprietor copyright in the design for the period of registration. Copyright means the exclusive right to apply the design in respect of the article for which it is registered.

Who Can Apply For A Design

An inventor or any other person/company assigned by the inventor can apply and obtain the registration for the design.

Filing and Prosecuting Design Applications

An application for design on Form-1 accompanied by four copies of representation of the design and prescribed fee of Rs. 1000/- is filed at one of the four office of the Patent Office located at, Kolkata, Mumbai, Delhi and Chennai. The Designs Office initially provides a filing number and filing date and issues a filing receipt, which is sent to the applicant or his attorney. Thereafter the application is formally examined by the Designs Office. Defects will be communicated to the applicant. Once the application is found to be in order it is accepted and the Designs Office issues the registration certificate.

Duration of registration

The term of a design registration is initially for a period of ten years. The renewal is possible for further period of 5 years.

Remedies For Infringement

It is the sole responsibility of the proprietor to see that his design is not being infringed upon by others. It is the proprietor's duty to file a suit of infringement against the infringer. The reliefs which may be usually awarded in such a suit are

Injunctons whether interim or final. Damages. Use of Design In Foreign Countries

Design rights are granted on a country-by-country basis. An Indian registration provides protection only in India and its territories. If the proprietor of a design wishes to protect a design in other countries, the owner must seek protection in each country separately under the relevant laws.

International design protection

There is no system as yet wherein a single design application is sufficient to protect the design right internationally. However, Paris convention * provides certain privileges to member countries in design registration. A party who files design application in a member state of the Convention, such as India, can within six months of that filing date file applications in other member countries claiming the priority of the first application. If such a design is accepted for registration it will be deemed to have registered from the same date on which the application is made in the home country.

* Paris Convention is the most basic and important multilateral convention relating to intellectual property, including trademarks, of which India is a member. It defined the meaning and scope of industrial property rights protection and established basic principles and rules.

* Classification for the Purposes of the Registration of Designs

According to the Locarno Classification system the Designs Register is divided into 32 classes. The application for design has to be filed in a particular class to obtain protection in that class. List of classes :

CLASS 1

Foodstuffs.

CLASS 2 Articles of clothing and haberdashery. CLASS 3

Travel goods, cases, parasols and personal belongings, not elsewhere specified.

CLASS 4

Brushware.

CLASS 5

Textile piecegoods, artificial and natural sheet material.

CLASS 6

Furnishing.

CLASS 7

Household goods, not elsewhere specified.

CLASS 8

Tools and hardware.

CLASS 9

Packages and containers for the transport or handling of goods.

CLASS 10

Clocks and watches and other measuring instruments, checking and signalling instruments.

CLASS 11

Articles of adornment.

CLASS 12

Means of transport or hoisting.

CLASS 13

Equipment for production, distribution or transformation of electricity.

CLASS 14

Recording, communication or information retrieval equipment.

CLASS 15

Machines, not elsewhere specified.

CLASS 16

Photographic, cinematographic and optical apparatus.

CLASS 17

Musical instruments.

CLASS 18

Printing and office machinery.

CLASS 19

Stationary and office equipment, artists and teaching materials.

CLASS 20

Sales and advertising equipment, signs.

CLASS 21

Games, toys, tents and sports goods.

CLASS 22

Arms, pyrotechnic articles, articles for hunting, fishing and pest killing.

CLASS 23

Fluid distribution equipment, sanitary, heating, ventilation and air-conditioning equipment, solid fuel.

CLASS 24

Medical and laboratory equipment.

CLASS 25

Building units and construction elements.

CLASS 26

Lighting apparatus.

CLASS 27

Tobacco and smokers supplies.

CLASS 28

Pharmaceutical and cosmetic products, toilet articles and apparatus.

CLASS 29

Devices and equipment against fire hazards, for accident prevention and for rescue.

CLASS 30

Articles for the care and handling of animals.

CLASS 31

Machines and appliances for preparing food or drink, not elsewhere specified.

CLASS 99

Miscellaneous.

--------------------------------------------------------------------------------

David Griffths's interview on Design

2006-11-28T04:25:00.000-08:00

http://www.cercledesignmarque.com/article.php?id=100&PHPSESSID=95a53ff4b574acbf48b49b3a1f3e10b5

BLUE OCEAN

2006-11-02T01:06:00.000-08:00

This I copied from Rajesh Jain's blog at Emergic....

TECH TALK: Blue Ocean Strategy: Cirque du Soleil?s Reinvention
Another example quoted in the book is the transformation of Cirque du Soleil. An excerpt from the book in Fast Company:
A one time accordion player, stilt-walker and fire-eater, Guy Laliberte is now CEO of one of Canada's largest cultural exports, Cirque du Soleil. Created in 1984 by a group of street performers, Cirque's productions have been seen by almost 40 million people in 90 cities around the world. In less than 20 years Cirque du Soleil has achieved a revenue level that took Ringling Brothers and Barnum & Bailey's Circus - the global champion of the circus industry - more than one hundred years to attain.
What makes this all the more remarkable is that this rapid growth was not achieved in an attractive industry. It was in a declining industry in which traditional strategic analysis pointed to limited potential for growth. Supplier power on the part of star performers was strong. So was buyer power? From the perspective of competition-based strategy, then, the circus industry appeared unattractive.
Another compelling aspect of Cirque du Soleil's success is that it did not win by taking customers from the already shrinking demand for the circus industry, which historically catered to children. Cirque du Soleil did not compete with Ringling Brothers and Barnum & Bailey's Circus to make this happen. Instead it created uncontested new market space that made the competition irrelevant. It appealed to a whole new group of customers - adults and corporate clients prepared to pay a price that is several times as expensive as traditional circuses for their unprecedented entertainment experience. Significantly, one of the first Cirque productions was titled "We Reinvent the Circus".
Cirque du Soleil succeeded because it realized that to win in the future, companies must stop competing with each other. The only way to beat the competition is to stop trying to beat the competition.In a brief article in Fast Company, Renee Mauborgne, the co-author of Blue Ocean Strategy, says companies can do what Cirque du Soleil did by following certain guidelines.
Water, water, everywhereYou don't have to compete in a red ocean of bloody competition. Even exhausted industries -- like the circus -- can be reinvented.
Don't swim with the school Quit benchmarking the competition or setting your strategic agenda in the context of theirs.
Find new ponds to fish Don't assume your current customers have the insights you need to rethink your strategy. Look to noncustomers instead.
Cut bait on costs Put as much emphasis on what you can eliminate as on what you can create.

Gains from Design: Design Council of UK perspective

2006-11-01T21:49:00.000-08:00

http://www.designfactfinder.co.uk/design-council/showPage.do?page=InternationalResearchCollaboration

Positivity in News

2006-11-01T21:47:00.000-08:00

I have been thining about it....why is there no positivity in news.....here it is ..somebody has done it...
http://goodnewsindia.com/index.php/gni

India's Furious economic pace is no accident

2006-10-11T08:14:00.000-07:00

Edward Luce makes two observations in his recently released book, In Spite of the Gods.
First, he says, Indians celebrate success too early, before anything really substantial has been achieved. And second, India's economic take-off is neither automatic nor guaranteed.
He is right, of course, and his book is full of good judgements like this, though he does add that it would take an incompetent pilot to crash this particular plane. These thoughts are relevant when the government has released figures that report 12.4 per cent industrial growth in July, the best in a decade.
Can it be said even now that we are celebrating too early, and does it not seem more and more plausible that India is now onto a sustainable 8 per cent growth path, one that will double GDP in nine years?
It is true, of course, that even 12.4 per cent industrial growth does not mean that the sun is shining on everyone in the land. The facts on that are well-known. But the point to focus on is not inherited poverty, which will be with us even after another two decades, but the delta factor: what is happening on the margin?
While Luce is right, the fact is that double-digit industrial growth does not happen by accident. Remember that this does not include either software services or business process outsourcing, both of which are counted in the services sector, not in industry.
Industry means capital goods (which is not just machinery but also cars and trucks), and things like steel and cement; it includes textiles and pharmaceuticals, sugar and soap, ice-cream and TV sets. What double-digit growth tells us is that all the experts who have told us to focus on services, and to let China continue to rule the roost in manufacturing, are wrong.
Because India's factories have begun to make music.
One test of that is exports. Textile exports grew 26 per cent last year, after the quota barriers got removed, and should continue to grow at that pace for some years to come.
The export of small cars is growing at the same speed as software, though admittedly from a smaller base; and the auto component exporters are no slouches, either. If the sugar market gets thrown open in Europe and subsidies are removed or slashed (only some steps have been taken so far), sugar exports could grow at a similar pace.
Talk to the country's manufacturers of paper and paperboard and they will tell you how their once uneconomic companies have become globally competitive; or to the leading maker of electric fans, who is selling his products to Wal-Mart at the same prices that the Chinese offer.
Tata Steel produces more than twice the steel that it used to, with a little over half the workers. We are not talking here of well-known success stories like Bharat Forge and Sundaram Fasteners, but of once seemingly loser companies like Videocon, which now wants to be the world's largest maker of TV sets and already has plants in many countries.
So this is no longer a story about half a dozen corporate stars in one or two sectors; and we no longer have to trot out Ranbaxy and Kiran Mazumdar-Shaw before every gathering of international businessmen.
It has become a much bigger story, and even careful observers sometimes don't fully realise how much has changed underfoot.
Could the plane crash, nevertheless? As they say, never say never. The world economy is slowing down, the commodity sector is headed for bleaker times, the downswing phase of the business cycle could see problems emerge that are hidden during the good times, protectionism could spread, and so on.
Then there are all the familiar problems with the physical infrastructure, the indefensible laws on labour and land, the delays at the ports. . .
But there is another way to look at that. If industry can log this rate of growth when weighed down by all these handicaps, think of what is possible when they are removed. If I had to bet, I would say that take-off has happened.

Courtesy Rediff.com Mr. Ninan

International design companies touch up retail story

2006-08-24T02:48:00.000-07:00

International design companies touch up retail story
The Economic Times August 4, 2006

New Delhi: Global firms specialising in multiplex and retail store design are flocking to be a part of the India story. As India Inc lays emphasis on providing a world-class look and feel in retail, specialist design firms from across the world are making a beeline and picking up projects from Indian clients.
Even though they are yet to set up shop in India, designers such as, Rasshied Din of Din Associates (UK), Blocher Blocher Partners of Germany, Jestico + Whiles (UK) and M2B Sweden amongst several others, have already made a debut in the country.
Select Citywalk, a mall that’s coming up in south Delhi has roped in several big names from the global design fraternity. These include, Rasshied Din of Din Associates, which is doing the French Connection store in the mall, while Jestico + Whiles is working on PVR.
“Several global design firms are increasingly doing retail projects in India,” says Pranay Sinha, CEO, Select Citywalk. “Most Indian retailers have started laying a lot of emphasis on differentiation, international look and feel and use of retail store design as a tool to increase traffic as well as improve their positioning,” he added.
Most of these firms are being drawn to India by specific Indian retailers. They then doing tend to stay on and do more work for repeat clients, or through referrals, for others.
M2B Sweden, is doing the Ecco Shoes International’s store in another luxury mall that’s coming up in south Delhi — Square One. Says Par Lennartson, CEO, M2B Sweden, “We have been doing the Ecco stores globally and India was another interesting destination to work. We do plan to set shop in the country in the next two-three years.”
Driving the trend is the fact that the premium brands entering India insist that there should be uniformity in their stores across the world and the same firms do it for them every time. “While the global firms get projects in India, they also get familiar with the local market and it leads to more opportunities here,” adds P Bhageria, CEO, Square One Mall.
While the premium foreign brands rope in foreign designers for their stores in India, their Indian counterparts don’t want to be left behind. Raymond for instance, unveiled it’s flagship store in Andheri, Mumbai, which has been designed by German firm, Blocher Blocher Partners.
What led the company to bring Blocher Blocher in was increasing competition from international brands and the need to address all the aspects of store designing. “To compete with international and premium brands, you need to provide the consumers what other international brands provide.
Foreign designers and visual merchandisers know that well,” Aniruddha Deshmukh, president, Raymond Retail told ET.

Some Laws of Lawlessness...

2006-07-30T09:41:00.000-07:00

Anthony's Law of the Workshop:Any tool, when dropped, will roll to the least accessible corner.Kovac's Conundrum:When you dial a wrong number,you never get an engaged one.Cannon's Karmic Law:If you tell the boss you were late for work because you had a flat tire,the next morning you will have a flat tire...( have ur next excuse ready!!!)O'brien's Variation Law:If you change queues, the one you have left will start to move fasterthan the one you are in now. ( trust me, this is it....!!! Any doubts, just stand in the q @ railway ticket counters... you'll never disagree..)BELL'S THEOREMWhen the body is immersed in water , the telephone rings.RUBY'S PRINCIPLE OF CLOSE ENCOUNTERSThe probability of meeting someone you know increases when you are withsomeone you don't want to be seen with.( Must have happened a zillion times, what say??? :D )WILLOUGHBY'S LAWWhen you try to prove to someone that a machine won't work, it will.ZADRA'S LAW OF BIOMECHANICSThe severity of the itch is inversely proportional to the reach.BREDA'S RULEAt any event, the people whose seats are furthest from the aisle arrive last. OWEN'S LAWAs soon as you sit down to a cup of hot coffee, your boss will ask youto do something which will last until the coffee is cold. (how often!!!!! )You have more to add??? Disagree?? your opinions - MSG or in RYZE LINGO - please sign my guestbook!!!

Arindam Banerjee's report on Indian Innovation scene-Rediff

2006-07-09T08:24:00.000-07:00

Home > Business > Columnists > Guest Column > Arindam BanerjiInnovation: Where has India succeeded and failedAugust 12, 2004
Part I: Can India produce billion-dollar innovations?Part II: How India can innovate like the US
In the third of this four-part series, Arindam Banerji discusses how can India start institutionalising innovation without resorting to large-scale changes that need huge political capital.
Before we get carried away, the key question here isn't one of trying to copy American practices into Indian circumstances. Nor it is a move to suggest that innovative ideas in India, must look like those in the United States.
The question is a much deeper one. Without resorting to large-scale changes that need huge political capital, how can we start institutionalising innovation in India?
What are the small steps that reachable people like Non-Resident Indians, Indian industrialists and some open-minded politicians can take on?
Where can we best focus our attention to get measurable forms of success in the short term, while relentlessly moving us forward towards the long term?
But first, we must understand what India is doing today towards institutionalising innovation.
Rural and Indigenous Innovations
One style of innovation that really works in a country as large and diverse as ours, is grassroots innovation: this includes inventions for a milieu that is quintessentially Indian.
These inventions are probably difficult to migrate from our culture, traditions and environment to that of other countries, but they are critical to how Indian ingenuity can be directly used to transform our circumstances, in ways that elite corporate research laboratories never can.
These rural and indigenous innovations come from two sources: first, farmers, semi-literates, illiterates, slum-dwellers who have managed to change things by marrying their own innate genius to their inherent understanding of ground conditions; and, second, innovations taken from more traditional sources such as universities and independent engineers that are then adapted back to suit Indian traditions and conditions.
Some key examples from the BBC and rediff.com include:
Balubhai Vasoya, from Ahmedabad in Gujarat has developed a stove that uses both kerosene and electricity. A six-volt electric coil heats the kerosene, converting it into gas which burns with a blue flame. It saves 70 per cent on fuel compared with conventional stoves running on LPG. 'One litre of kerosene lasts for eight hours; and in 20 hours, the stove uses one unit of electrical power. So running it for an hour costs one-and-a-half rupees in total. No smell, no smoke and it burns like LPG.'
Mansukhbhai of Gujarat could not afford to buy a tractor, so he created an Enfield diesel motorcycle with a difference: by removing the back wheel and replacing it with a spiked cylinder, his motorcycle now doubles as a tractor.
Anna Saheb Udgave, a 70-year-old farmer from the Sadalga village in Karnataka's Belgaum district, developed a low-cost drip irrigation system to fight water crisis in his village. He improved upon his innovation and turned it into a mega sprinkler, and called it Chandraprabhu Rain Gun. Other impressed farmers of the same village slowly started using Anna Saheb's rain gun in their farms. Now, the farmers of Tamil Nadu, Kerala and Karnataka are also using it successfully.
Deepasakhti Pooja Oil, a blend of five different oils in a ratio prescribed in the Indian shastras does not produce any soot but gives a bright flame. It lasts longer and the fumes produced repel disease-causing bacteria. It is now being commercially manufactured by KP Castor Oil Works in Coimbatore.
A banana stem injector developed by Manoharan, a lathe owner of Batlagundu in Tamil Nadu, is similar to a syringe which can be used to inject pesticides into the psuedo-stem of the banana that is diseased. 'It helps manage indiscriminate pesticide application in banana cultivation, leading to a 20 percent cost saving in farming operations'
A manual milking device -- J S Milker -- is another innovation that has found acceptance in the rural areas. J S Milker is manufactured and marketed by J Support Industries headed by Joy John of Pothanicad, Kerala. J S Milker is a simple vacuum driven portable machine, which can be used to milk cows effortlessly. J S Milker is so successful in South India that RIN (see below) is planning to market it in Gujarat, where there are several milk co-operatives.
A solar water harvester conceived by Deepak Rao of Chennai has received a grant of Rs 190,000 from the Techno entrepreneur Promotion Programme of the Department of Science and Technology, Government of India. It uses solar energy to convert non-potable water into potable water. The product is still going on, and we are yet to commercialize it. From a 1 square metre model, we can have 5 litres of pure water per day. We are looking at it from a domestic point of view, especially in Chennai, where water scarcity is a big problem.
But, who is making sure that these innovations see the light of the day and help these innovators shed their cloak of obscurity?
Two key organisations are doing yeoman work in this direction:
The National Innovation Foundation, set up initially under Dr Mashelkar, is 'building a national register of grassroots innovation and traditional knowledge; it has set up a micro-venture innovation fund for individuals who have no bank account and who cannot produce any balance sheet and yet have innovations that warrant investment of risk capital.' NIF has set up a national innovation competition, for which the winners have included an eighth standard dropout, who developed a complex robot, the farmer who developed a unique cardamom variety and 'an illiterate individual, who had developed a disease resistant pigeon pea variety.'
RIN, Rural Innovation Network, is the brainchild of Paul Basil from Moovattupuzha in Kerala. The organisation focuses on promoting rural innovation-based enterprises and is a business incubator that turns grassroots innovations into commercial enterprises. 'RIN uses multiple points like Chennai's engineering colleges, agricultural universities, research institutions, patent offices, local fairs, exhibitions and banks to identify innovations. Once identified, RIN does a market research of the product to find out whether the idea is commercially viable. Then, they refine the products by making the innovations market-friendly, which means a lot of engineering work and overhauling.' In most cases, the innovator passes on the technology to an entrepreneur or a company for a royalty. So what is the role of RIN in this? 'We are just enablers,' says Basil. "We basically provide consulting inputs to, both, innovators and entrepreneurs. Our job is to tie the loose ends. There are several private entrepreneurs out there who want new products. We also help the entrepreneurs develop markets.' RIN now has 11 innovations that it is working on and wants to increase the number to 20 in the next one of two years.
The most successful product marketed by RIN till date is the rain gun, created by Anna Saheb. When RIN found the marketability of the product, they brought in the Chennai-based Servals Automation Pvt Ltd and the company signed a technology transfer agreement with Anna Saheb. Anna Saheb got a fixed royalty for his innovation, and RIN filed for a design registration (and marketing rights) of the rain gun.
Mumbai-based Aavishkaar India Micro Venture Capital Fund made an investment of Rs 800,000 to pick up a 49 percent stake in Servals Automation. According to RIN, this is the first such micro venture investment of its kind in India, if not the world over. So far, 60 rain guns worth Rs 200,000 have been sold.
Academia-Industry alliances
A calculation by the Centre for Studies in Science Policy, Jawaharlal Nehru University, says 50 of India's 250-odd universities are active in academia-business liaisons. The interaction between academia and business can take many forms -- new start-up companies by academics, consultancies, joint ventures between commercial and academic organisations, and even 'blue-skies' projects that entail industry sponsorship of research in an area where the outcome is not clear.
Of these, institutional collaborations with industries are perhaps most common, such as:
Shantha Biotechniques funds research in academic centres as far apart as AIIMS, New Delhi, and the Centre for Cellular and Molecular Biology, Hyderabad.
IISC has about 400 collaborations, its partners ranging from Cadila (pharma) to HFCL (telecom).
The IIT-Delhi campus hosts labs for, among others, IBM, Tata Infotech, Motorola. Samsung India Electronics is working with IIT-Delhi for new designs of colour televisions, washing machines and air-conditioners to suit the Indian market. The company also plans to set up a consumer laboratory at IIT, where industrial designs students will work on projects sponsored by Samsung.
Scientists from the Amritsar-based Guru Nanak University provide quality control consultancy to textile and agro-based units, including food giant Nestle.
Minati Das of Dibrugarh University has set up a world-class research facility in petroleum technology -- along with the Oil and Natural Gas Corporation and Indian Oil Corporation -- which also provides technically qualified local manpower to ONGC and IOC.
FMC Corporation, a leading producer of chemicals for industry and agriculture, has established an R&D centre at the Indian Institute of Science campus in Bangalore, to drive research for its agriculture products business.
DuPont has had profitable alliances with national research laboratories under the CSIR, since 1994. DuPont Textiles and Interiors and the Pune-based National Chemical Laboratory have extended their research alliance for another five years. Dupont Polyester has entered into a strategic alliance with Reliance Industries to jointly develop advanced polyester process and product technologies in India.
Some of these alliances have re-written Indian scientific history. In Hyderabad, a contract between Shantha Biotechnique and CCMB led to India's first recombinant DNA-based vaccine, Shanvac, for Hepatitis B, transforming India's medical biotechnology industry. Midas Technologies, incubated by IIT Chennai's Tenet Group, proved that cheap rural connectivity could be married to a sound business plan. It made possible WLL, now adopted by many telecom companies. The returns are not limited to India. Software developed by the National Aeronautical Laboratory, Bangalore, determines aircraft landing frequency at British airports. -- India Today
Most big academic institutes now also have specific business development wings. IIT-Delhi's Foundation for Innovation and Technology Transfer, set up in 1992, was the first such wing at any IIT.
Seen as a prototype by other universities, it provides seed money and infrastructure support to a start-up for up to a year and such support for institutionalised innovation are beginning to yield results:
In 2001, four scientists from IISC -- Vijay Chandru, Swamy Manohar, Ramesh Hariharan and V Vijay -- proved they could successfully explore new frontiers beyond the realms of pure science. With an initial contract of Rs 1.5 crore, they launched Strand Genomics, India's first biotech company spun off from an academic institute. Today Strand Genomics has an office in San Francisco, investment of about Rs 22 crore and 100 employees. -- India Today
Five graduates and five professors at the computer sciences department in IIT-Delhi launched Kritical Solutions Private Limited a year ago with an initial seed funding of Rs 10 lakh. Their projects range from security solutions to sensor networks, many of them extensions of graduate theses. One project, looking at more effective, computerised screening of automobiles, could go a long way in preventing another attack like those in Mumbai recently. -- India Today
Other points of light
Finishing school for Innovation: 'NirmaLabs, an incubating initiative of Nirma Education and Research Foundation has established a fund of Rs 5 crore to support the incubation programmes. With a commitment of Rs 20 lakh per project as initial seed fund, the incubation programme enables participants to develop the concept further to a funding level. The programme is initially focusing on the IT, communication and entertainment sectors, with expansion in other sectors to soon follow. However, this is where this effort starts breaking off from other incubators.'
'NirmaLabs approach to incubation of high-technology, wealth-generating ventures is based on its ability to groom potential individuals to think differently with a global understanding of technology and markets and with sensitivity to challenges of high growth businesses. The three-staged programme commences with an eight-month grooming phase, during which the candidates will be groomed to identify an enterprising idea.'
'The incubation phase that follows soon will have mentors and venture capitalists acting as catalysts allowing the idea to be developed into a fundable enterprise. In the last phase, individuals will be allowed with opportunities for strategic networking.'
Co-ordinated research in strategic areas: Key strategic areas, where a national presence is required cannot be done in a handful of research labs or be looked into from a few angles only. One such area is the work on smart materials.
'Smart materials are the next frontier in engineering and manufacturing. What are they? Materials that respond to changes in temperature, moisture, pH, or electric and magnetic fields. Smart materials are poised to emerge from the lab in a wide range of medical, defense and industrial applications.'
'Understanding and using these advanced materials in your new product development efforts may make the difference between success and failure in today's intensely competitive markets.'
Nirupa Sen of JNU has put together an excellent article on the sum total of the work going on in India on smart materials, which gives us an idea of the spread of the research and the disparate angles from which this work is being carried out.
So, for example, design centres for smart materials include Indian Institute of Science, Bangalore, Solid State Physics Laboratory, Delhi, IIT-Kharagpur, IIT-Bombay and IIT-Madras.
Manufacturing centres, include 1. Semiconductor Complex Limited, Chandigarh (which has a national foundry for MEMS devices), and 2. Bharat Electronics Limited, Bangalore (which is also being augmented for such purposes).
National Programmes of research in the area, include:
1. National Programme on Smart Materials -- NPSM is a joint programme run by DRDO (Defence Research and Development Organisation), through the Aeronautical Development Agency, Department of Space, Department of Science and Technology, Ministry of Information Technology, and CSIR.
Aerospace has been identified as a major area of application of MEMS. The programme's aerospace division is concerned with R&D in devices used for sensing pressure, acceleration, rotational speed, temperature, strain, fibre-optic devices, actuators (piezo-ceramics, piezo-polymers, electro/magnetostrictive shape memory alloys, and the related chemicals and materials).
Currently, there are 30-odd research efforts funded across the nation under this program, in places like IITs, national labs and even smaller universities.
2. Development Initiative for Smart Aircraft Structures -- DISMAS: Executed by ADA, it is a five-year project sanctioned by DRDO in April 2001 at a cost of Rs 19.26 crore.
Areas of work are: Smart Health Monitoring; Vibration and Noise Control; Active Shape or flow control which is also known as Morphing; Conformal Antenna and Radome.
The Light Combat Aircraft has been identified as the platform of choice for developing and testing these concepts.
This is an example of how broad research areas must be attacked in a country like India -- the logistics of smart materials research in India is not a perfect example, but certainly a good one to start from.
It is not that we do not understand the need, but consider the meagre resources that we are putting into this:
The CSIR, under the leadership of 'CEO' R G Mashelkar, has now launched what he calls 'the largest post-Independence knowledge network,' the Rs 250-crore, five-year New Millennium Indian Technology Leadership Initiative. It aims at bringing together industry and academia to focus on innovation in 14 niche areas, including nanotechnology, climate modeling and fuel cell power. The idea is to make India a world leader in these areas. NMITLI is already working.
14 key areas and only 250 crore!
How do we expect to create an earth-shaking innovation every few years with this?
But, the broader question is where are the key gaps in our innovation infrastructure that India needs to fill in and how should we go about doing so?
More on this tomorrow.
Don't miss the final part of this series tomorrow: The path to Super-Innovation in India!
arindam_banerji@yahoo.com
Arindam Banerji is a scientist and entrepreneur in Silicon Valley. He took the usual route of going from the IITs, through a PhD in the US, to finally working in sundry research labs.

More Guest Columns

Reliance Retail: The Mega Retail Story

2006-06-28T05:08:00.001-07:00

Reliance Retail: The Mega Retail Story
RIL all set to redefine Indian retail and lead from the front
By G D Singh and Pravahan Mohanty, found at http://www.imagesretail.com/cover_story_april06.htm

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A targeted sales turnover of Rs 90,000 crore (US$ 20 billion) by 2010 with a planned investment of Rs 30,000 crore over the next five years – that's the retail vision of Mukesh Ambani and his RIL retail team. RIL's retail venture seems all set to achieve the status of being the flag-bearer of India Retail Inc, and that too in record time!

Culling information from all possible sources, Images F&R Research attempts to put the Reliance Retail jigsaw in order and see how the concept and strategy differentiates from the existing competition, how it impacts the intermediaries and consumers, and more interestingly, how will it stand up to the real competition from global retail powerhouses like Wal-Mart, Carrefour, Target, Metro, Sears and Tesco that are eager to enter the Indian retail arena once the FDI barrier is lifted. Read on for the full story…

It's been in the news for quite some time now. Earlier, about a year ago, it was only whispered in close industry circles. Slowly the whispers become louder, and the word gained ground that India's largest private sector company, Reliance Industries Limited (RIL), is entering the Indian retail sector in a real big way.

But with virtually nothing coming from anyone in the know inside RIL about their retail plans, this has to be one of the most closely guarded secrets of India's corporate story.

Blueprint for 800-odd Towns/Cities: Initial Investment Rs 3,350 Crore

Amidst all sorts of speculations in the media circles about RIL's intended retail foray, the word finally came out on January 23, 2006, when the Mukesh Ambani-controlled Reliance Industries Limited presented the mega retail initiative plans to its board of directors who subsequently gave their consent to pursue the retail business through a wholly-owned subsidiary of the company – likely to be christened Reliance Retail Limited.

The Reliance Retail blueprint envisages nation-wide chains of hypermarkets, supermarkets, discount stores, department stores, convenience stores and specialty stores, in about 800-odd cities and towns across the length and breadth of India. The RIL board of directors approved the initial phase of the retail foray at an estimated cost of Rs 3,350 crore (US$ 750 million).

That was big news for both the national and international media, which went all agog again with intense speculation. Giving full respect to the importance of this announcement, more than one leading international daily – chiefly, The Financial Times – gave this news a front-page treatment, speculating (like many others) that this investment could just be an initial tranche of a much larger commitment from Reliance Industries towards the retail project.

Just how big and grand this investment is for the Indian retail sector can be gauged by the simple fact that the entire Indian retail sector is estimated to be at Rs 1050,000 crore (US$ 233 billion) – growing at five per cent annually – and the estimated share of organised retail is only Rs 36,000 crore (US$ 8 billion), at present, albeit growing at over 30 per cent every year.

That makes Reliance Retail's proposed investments equivalent to about 10 per cent of India's organised retail market – such a level of investment in the Indian retail arena has been unprecedented in the country's most promising sunrise industry – retail.

So much so, projections by the Images-KSA India Retail Report 2005 of an organised retail market of Rs 100,000 crore (US$ 22 billion) by 2010 now appears conservative, likely to be achieved much earlier than 2010.

If Indian retail was lacking a whole-hearted and full-blooded thrust from a big and large corporate house (apart from the lukewarm investments made by the Tatas and ITC), it is now all set to change. Mukesh Ambani, who has been nourishing retail ambitions for quite some time now, has clearly positioned himself in to the role of redefining the entire landscape of Indian retail.

RIL Set To Become World's Largest Real Estate Property Owner

What is even more interesting is that Reliance Industries Limited will far out-surpass the Catholic Church in becoming the world's largest owner of real-estate property by virtue of its mega Retail and Satellite Township plans, in the next two to three years!

Now what exactly does this mega retail plan portend for the Indian retail sector? In fact, what exactly are RIL's plans, in terms of retail strategy? How will RIL differentiate its stores and concept from existing players who have already moved into the retail space earlier, and have already established a good foothold? How will this impact the existing retail majors – the likes of Pantaloon Retail, Trent India, Shoppers' Stop, RPG, etc? How will the consumer benefit from RIL's venture and how will intermediaries like traders, suppliers and farmers all along the supply chain network benefit? What will be the USP of Reliance Retail?

And, more significantly, how will this impact the major international retailers who plan to enter the Indian retail market? Reliance Retail is in fact giving India for the first time a real feel of the scale at which these global retail powerhouses actually operate, it is preparing India to stand up to the ensuing competition and in the process, allow consumers the full benefits of modern retail.

Retail Will Become Core Business of RIL

Reliance Industries Limited is the largest and one of the fastest growing private sector companies in India, with business activities encompassing almost all major growth sectors of the Indian economy. The company manufactures and markets a wide range of products with market leadership in almost all its businesses.

All of Reliance Group production and services ventures have one common feature – global scale operations employing state-of-the-art technology in all fields. The company is truly emerging as a well diversified conglomerate with global competence in technology, management and financial capabilities to meet the needs of a rapidly growing Indian market.

With domestic market shares ranging from 40-80 per cent, RIL is also ranked among the top 10 producers globally, for all its major product segments. It is one of India's largest business conglomerates with total revenues of Rs 1,00,650 crore (US$ 22.6 billion).

It is being speculated within the industry that the ROIs made by RIL in the retail space will far out-shadow its existing core flagship businesses – and very soon retail will become the core business for the Mukesh Ambani-controlled Reliance empire.

2006-06-28T05:08:00.000-07:00

All about India in Statistics and Facts

2006-06-25T06:32:00.000-07:00

http://www.nationmaster.com/country/in-india

A Summary of India's Economic March Ahead

2006-06-25T06:15:00.000-07:00

India: The Past in its FutureRemarks by Raghuram RajanEconomic Counselor and Director of Research Department, the International Monetary FundAt the Forum for Free EnterpriseMumbai, IndiaJanuary 20, 2006 taken from (with due credits) http://www.imf.org/external/np/speeches/2006/012006.htm

AD Shroff, who started the Forum for Free Enterprise in the 1950s, was an unofficial delegate to the Bretton Woods Conference that set up the International Monetary Fund—an interesting connection between this forum and my organization.1 His aim was, in part, to combat the tendencies towards excessive regulation that permeated the Indian economy. Among the others associated with this organization was Nani Palkhivala. These were important but lonely voices against the socialism practiced in India then, arguing as Palkhivala said, that it was a fraud—transferring wealth from the honest rich to the dishonest rich. Instead, people like Mr. Shroff and Mr. Palkhivala maintained a lonely but necessary vigil then, keeping alight the lamp of free enterprise. I am privileged to be speaking from the same forum as these stalwarts.
Since I am an international bureaucrat, what I say reflects my own opinions, and not necessarily those of my organization. But the Fund clearly welcomes free enterprise, and attempts to help create the conditions for it to flourish around the world. I therefore particularly welcome the opportunity to speak at this forum and thank the organizers for inviting me. What I want to focus on today is not just how far India has come from those lonely days, but also how far it has to go.
Let me start by asking you to go back just 25 years. Unlike today when you can walk across to a shop to get a working state-of-the-art mobile phone, then one had to wait for years to be allotted a phone, and when that miracle happened, it took a further act of God and the benevolence of the P&T man for the phone to work after that. We had black and white TV then. Urban youth like us had to watch Krishi Darshan for entertainment on the monopoly Doordarshan network, where farmers responded to penetrating questions like "Kya aap khet ko pani dete hain?" Of course, most of the intended audience, villagers, did not have access to a TV even in the few cases they had the electricity to power it with.
Starting around 1980, the Indian economy became a veritable dynamo, posting an average growth of nearly 6 percent per year over the last twenty five years. Despite the inevitable unfavorable comparisons with China, very few countries have grown so fast for such a prolonged period of time, or reduced poverty so sharply. We should indeed be proud of what India has achieved, and clearly, many of us are. There is a buzz today in India, a sense of limitless optimism. But is it justified?
To answer this question, let us start by asking how we got here. The best description of India's path is really "constrained adaptation". "Constrained" because of the numerous policies and regulations inflicted on us by an untrusting government and "adaptation" because Indians are by nature entrepreneurial. As a result, the law of unintended consequences was at work big time—what the policies produced was very different from what was intended.
Consider some. Barriers were erected against foreign competition to protect domestic enterprise—the idea was this would give a respite to our infant industries, allowing them a nurturing environment while they would grow up and became competitive. But the nurturing environment proved so comfortable that our infants adapted by never growing up. The canonical example was the Ambassador car—a version of the Oxford Morris which remained virtually unchanged over 40 years of production. We waited with baited breath for every new model to see what the shape of the headlights would look like—for it seemed that was all that changed.
A second objective was to use scarce capital resources in the most effective way possible. To do this, the so-called "commanding heights", such as steel, petrochemicals, and heavy electricals, were commandeered by the public sector. In yet other sectors, private entrepreneurs were allowed in, but heavily constrained by regulations on how much, and what they could do, and where. But because much of the economy was in the hands of those who did not care about profits, and in the rest the profitable could not grow, the outcome was that India used its scarce capital very inefficiently.
Because employment was so important for India, encouragement was given to small-scale industries by reserving specific areas of production for them. But because firms could not grow to efficient scale, production was unprofitable, so few jobs were actually created. Government sought to protect unskilled labor in large firms—for example, through laws against firing. But this again meant that large firms stayed away from labor intensive industries, so fewer jobs were created. Moreover, firms resorted to temporary workers or stayed small so that labor laws did not apply. In short, labor laws neither led to the creation of more jobs, nor to the protection of most workers.
I can go on, but will stop with one last example. An overarching principle was to prevent the concentration of wealth in a few hands. This was another rationale for licensing, as also the Monopolies and Restrictive Trade Practices Act. But again, in an attempt to use government rules to eliminate privilege, we created the opposite—the industrialist who magically got all the licenses as well as the requisite financing. No wonder business was a dirty word.
So what were the consequences of this jumble of policies for India's pattern of development circa 1980? First and foremost, these policies held India's growth to a low, but not disastrous, level, famously dubbed the Hindu rate of growth. Indian industry was inefficient, not innovative, and exported very little. Surprisingly, these policies did not mean that India produced less manufacturing goods as a whole for a country at its stage of development. It did mean, however, that the composition of its manufacturing activity was unusual: India produced more than its share of capital- and skill-intensive goods (think public sector petrochemical plant), while underutilizing what it had in plentiful supply—its abundant labor or even its innovative capacity.
That many engineering graduates like me left engineering or even the country was partly because the economic environment in the country at that time simply did not need the creativity and the innovation that we brought to the table.
To me, this message was forcefully reinforced when after doing a degree in management, I joined one of the country's foremost business groups as a management trainee. A CEO of one of the group companies berated the engineers in the group of management trainees he was taking around, arguing that we had wasted the nation's money by taking a precious engineering place and then departing to the ranks of management. While he was showing us around the factory, however, we noticed two elevators going up. We appeared to be waiting for the elevator on the left even though the elevator on the right was available. When asked why, he replied "We are waiting for the management elevator", this one is for the engineers and workers.
It was not just the middle class that did not benefit, our villages were still not electrified and our poor still had no access to safe clean drinking water. So despite all the rhetoric about socialism, government policies were of the few, by the few, and for the few. I have argued that this may have been unintended, but perhaps I am being charitable. Perhaps indeed the consequences were fully intended, but were cloaked in the rhetoric of social purpose, and the public confused with smoke and mirrors. Perhaps India's greatest enemy was not the proverbial foreign hand but the vested interests inside.
Be that as it may, there was a silver lining. The constraints caused India to be highly diversified in its manufacturing even back in 1980. And a portion of its labor force was highly skilled, a clear legacy of Pandit Nehru's emphasis on science, higher education, and also leading edge technologies for the public sector. How many countries, at India's then stage of development, could boast of having a space program? How many advanced countries even now can boast of schools of the caliber of the IIT's? Thus India had the capabilities provided the constraints were loosened and the right opportunities emerged. And that is indeed what happened.
In 1980, government attitudes towards the economy, and the private sector in particular, started to change. Under Mrs. Gandhi and then Rajiv, pro-business reforms were set in motion, with liberalized access for domestic firms to capital imports (including, presciently, to computers), technology, and foreign exchange, and the gradual relaxation of industrial licensing. Later, in the aftermath of the foreign exchange crisis in 1990, broader reforms that were more genuinely pro-competition were introduced—barriers to foreign trade were dismantled, inward foreign investment was liberalized, and important services such as telecommunications and finance were opened up.
Second, but no less important, India started becoming more decentralized politically. The decline of the Congress' power and the rise of regional parties conferred greater political autonomy on the states, translating to autonomy even in the economic sphere. States increasingly prospered, or not, based on what they did rather than because of actions at the center.
What did these changes accomplish? Many things. Above all, the economy responded with the vigor of an uncaged tiger as per capita growth surged from less than 1 percent a year to over 3 ½ percent, not so much by employing more workers and capital but by using them more efficiently. Surprisingly, though, neither the reforms nor the pick-up in growth have altered India's specialization in capital- and skill-intensive industries. In fact, the fastest growing services—finance, telecommunications, and business services—are also skill-intensive. In many ways, India is building on the capabilities created before the 1980s, with veterans from the state-owned Bharat Electronics, CMC, or ECIL seeding the companies that were in the vanguard of the software boom, and alumni from the State Bank of India permeating the financial sector to launch the boom in finance.
These developments are mirrored at the state level. With greater decentralization, better run states, such as Delhi, Gujarat, Karnataka, Maharashtra, and Tamil Nadu , have improved the quality of their infrastructure and business climate, attracted more investment, and surged ahead. The pattern of development in these states has been unusual: they seem to have skipped entirely a phase that most high-growth countries in East Asia, went through—of specializing in labor-intensive activities (for example, making clothes or leather goods, or assembling consumer electronics). Instead, these states are behaving more like the United States and Europe, exploiting their diversified skill base and emphasizing skill-based manufacturing (pharmaceuticals, petrochemicals, and auto parts) and especially services.
The auto industry offers a great case study of the effects of liberalization. To start with, the worst fears of the domestic producers were realized. The public virtually abandoned them for the new foreign models. The Ambassador turned almost instantaneously from mass production car to antique, and I understand it is finding a foreign market as such. But it simply did not make sense for the foreign manufacturers to continue sourcing their sub assemblies from outside India. Instead, they started developing local ancillary manufacturers, and gave them the technological assistance for them to become world-class. Soon India started exporting ancillary automotive products to the developed world.
The story does not end here. Telco, capitalizing on the existence of world-class suppliers of ancillaries in India, started producing a state-of-the-art, indigenously-designed car, the Indica. The car had teething problems at first and was rejected by a now-discriminating public. But Telco engineers went back to the drawing board, fixed the flaws, and brought out a new version that swept the market in its category. From about 50,000 cars in the early 1980s, India produced over 1,200,000 in 2004, and exported 160,000 cars, many to the developed world. The Indian automobile industry offers an example of what trade liberalization and domestic competition can do - potentially some pain in the short run but enormous gain in the long run. Equally important, its success and the success of industries like IT offer young Indians convincing examples that Indian entrepreneurs can be globally competitive. The change in mindset towards business is as important as the regulatory and political changes I discussed earlier.
So what does this mean for the future? Fast-growing states will need more capital and skilled workers (as well as, of course, the necessary infrastructure, a matter on which there is consensus in India). India has a vibrant financial sector and it should have no problem raising and allocating capital but for one impediment—the government appropriates significant amounts of savings to finance its deficit.
Not only does this leave less to allocate to private investment or infrastructure, it is also a source of vulnerability if the country were to rely more on foreign capital. The need to force-feed the fiscal deficit to domestic banks also makes it hard for the country to open the capital account (or to privatize banks), a must if India is to achieve its legitimate aspirations of becoming a world-class financial center.
The greater bottleneck will likely be skilled workers. India's universities have not expanded in a manner commensurate with the growing skill intensity of its production. Even as India redresses its previous neglect of primary education, it needs to multiply institutions like the IITs and regional engineering colleges on which its current success is based.
A recent experience suggested it is infinitely more difficult to get into the IITs today than it was in my time. I met a teacher who was coaching a student in maths. I asked her whether it was for the IIT entrance exam. She said no, it was for the entrance exam for a coaching class. I said, ah, a coaching class for the IIT entrance exam. She said no, a coaching class for the entrance exam for another, more prestigious coaching class, which would coach the student for the IIT entrance exam. If this is the level of intensity of effort needed to get admission, we certainly need many more colleges like the IITs, and in many other disciplines also.
To generate the needed resources, not only should we charge a reasonable fee for higher education, while offering scholarships to the truly needy, but also we need to encourage more entry by private and foreign institutions. An uneducated mind is a terrible waste of national resources. China recognizes this. Unfortunately, in India, higher education continues to be one of the last bastions of the license-permit raj.
In addition, India also needs to focus on the deteriorating condition of urban living, especially given the increasing rural to urban migration. If India is to be internationally competitive in services, it needs to be able to attract knowledge workers who have attractive options elsewhere. We need better infrastructure within the existing cities, and new planned townships that can provide the amenities that a discriminating middle class and a growing migrant population want. Much of this primarily requires better management. It is a shame that Mumbai, which has access to twice as much water per day per capita than Paris has water available on average for only 10 hours per day, while Paris has 24-7 supply. And Mumbai is by no means the worst city. What is of particular concern is that the poor are the worst hurt by poor public amenities.
Despite the concerns I have expressed, India's fast-growing states and industries have a certain success-breeds-success dynamic which will be difficult to derail. More worrisome is job creation for India's growing unskilled labor force and the related problem of the laggard states, where the majority of low-skilled, undereducated Indians still reside. Ideally, of course, the laggard states would reform on their own. They would scrap archaic labor laws (few realize how pernicious these are because their effects, in terms of the labor-intensive firms that are unborn, cannot easily be seen), improve infrastructure and the business climate—and utilize their vast pools of underemployed low-cost labor to attract investment in labor-intensive manufacturing and agri-business. They would thereby catch up with the leading states in India. Unfortunately, though, there is a reason these reforms have not been undertaken so far—there are few things more persistent than bad governance.
Is the country then likely to face increasing political strife as the populous, politically powerful, but economically laggard states hold back the economically powerful fast-growing ones?
There is a more hopeful scenario—Europe had similar disparities but through various initiatives, prosperous Western Europe offered incentives for laggard European countries to reform. The external pull set reforms into motion, so much so that some of the former laggards like Ireland and Spain are now Europe's locomotives. If a loosely knit community of nations could do it, why can't a united nation of states? A reformist center—and India cannot afford to not have one—could play the role of the European Commission (expanding what the center is already doing on the fiscal side) and offer laggard states more incentives to reform.
Let me conclude with the lessons we draw from our past. First, our past policies, no matter how distorted, gave us a set of capabilities—in skilled manufacturing and in services. Our comparative advantage now lies in these areas. We should not sacrifice all this in a blind attempt to follow the Chinese path of unskilled, labor intensive manufacturing. No doubt, we need to improve the incentives for the creation of unskilled jobs—not just by getting rid of the archaic job protections of the past even while building a genuine safety net for all workers but also by improving infrastructure, especially in laggard states and rural areas so these areas connect better to the larger economy. But we also need to create a greater supply of skilled workers by energizing higher education. We need 50 IITs, not 7. The government need not do this—it has, however, to clear the way for private enterprise to flourish.
Second, we should realize the government cannot simply legislate outcomes. People react to government policy, so what is intended and what materializes can be very different. Government has to focus on getting the incentives right, and thereby enlist the energy of the people in support of change, rather than force them to use their energy to outwit the government.
This mindset that believes in the extraordinary powers of the government is not entirely a relic of the past. If we suffer from a shortage of university teachers, it is better to examine why no one wants to teach—could the fact that teachers in top management schools earn less than fresh graduates be a factor—than to resort to the old command economy tactic of banning schools from expanding abroad.
Similarly, if the goal is to improve primary education, we should avoid the knee jerk reaction of throwing more resources at the problem. We should ask why on any given day in a government school, only 25% of the teachers are playing truant, why at any given time only 45% of the teachers in a classroom are teaching, why the poor are willing to pay hundreds of rupees per month for a private school while avoiding the free government school across the street, and why a private school teacher shows up to teach as often as the government school teacher even though his pay is one fourth to one eight that of the latter's. Government has to understand how to improve incentives better before throwing more resources.
Third, the overregulation of the past has bred public cynicism towards rules and towards government. In a market economy, however, trust in rules and public institutions is absolutely critical. Instead of government standing above the people, it has to be by the people, for the people, and of the people. Even while paring down the role of government, we should make it more transparent, effective, and responsive to the needs of the people. We need to rebuild public trust in government.
If young people take more interest in local government, as many of you are, there is no doubt that the quality of our institutions will be forced to improve—the recent journalistic exposes of Parliamentary bribe taking area, and the prompt salutary reaction by Parliament, are a case in point.
Finally, even though India is approaching growth rates of 8 percent, let us not think the struggle is over. Our current growth reflects what we did right in the past. To sustain growth rates of 8 percent, a lot of policies have to go right—at high speeds, even a slight swerve can cause a major accident. Moreover, capacity quickly gets exhausted at high growth rates. So despite the warm glow generated by reports like the famous Goldman Sacks BRIC report, let us treat straight line extrapolations of current trends with the caution they deserve.
In sum, perhaps the defining metaphor for India today is churning, as entrenched interests lose power, as new jobs are created and old ones lost, as people move across states in search of better opportunities, as yesterday's Bharat becomes today's India, which becomes tomorrow's Bharat again. Recall the story of the devas and asuras churning away as the ocean of milk frothed and foamed. Out of the churning, first came poison, but further hard work yielded the divine nectar, amrita. Limitless optimism is justified, but hard work and churning lie ahead.
1 The views expressed in this paper are those of the author and should not be attributed to the International Monetary Fund, its Executive Board, or its management.
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