We live in an age when businessmen command considerable influence in society. Ratan Tata, Mukesh Ambani, and Azim Premji are seen not as wealth creators but as nation builders. A good deal of business news today captures the imagination of the average citizen. A public issue, a trade agreement, the rise of a new corporate brand, a start-up, a collaboration is big news today. The guilt complex associated with making money has long since disappeared from the nation’s conscience. India’s stock markets are now in an explosive phase of growth and start-ups are reaping huge funds without any credible record of performance, largely on the trust of retail investors. Corporate India receives a reservoir of trust, goodwill and confidence from the nation and must return it in equal measure. Has India Inc lived up to those expectations? How much does an inclusive India figure in its vision?
Response to job crisis
Corporate India dreams big today. Brand power, digital technology, talent pools, scales of operations, and global connectivity are all part of its agenda. Yet, how much does the magnitude of India’s jobless growth overwhelm the big business? Mahatma Gandhi’s insight that “what we need is not mass production, but production by the masses” must be an enlightened vision of Indian business. Yet, the response of corporate India to the country’s job crisis has been more symbolic than substantial. The reality is that much of India’s blue-collar employment is generated in Small and Medium Enterprises (SMEs) and in its sprawling gig economy. Some 45% of India’s manufacturing takes place in the sweat shops of garments units, hazardous chemical factories and in unsafe engineering workshops. The jobs thus created are sub-optimal with low wages and unstable working conditions. India’s SME sector needs to modernise itself with the help of digital technology, professional management and better scale of operations. This is the ‘new economy’ and India’s corporate sector can extend a helping hand across the aisle to help the SMEs achieve this transformation. That act must not be seen as large-heartedness but market-driven and backed by a strong value proposition.
The Indian SME sector has many hidden treasures waiting for this makeover. Take the case of Indian food, which is popular worldwide. Most Indian restaurants abroad are owned by individuals with limited resources for growth. The result is that India has not been able to create a McDonald’s or KFC to bring Indian food to the world stage as a global business in scale and sophistication. How many corporates here have seen an opportunity in this space? Many big houses in India have rushed to invest in electric mobility. Why hasn’t even one of them seen the prospects of globalising Indian food? That could have created a million jobs for Indians.
Across the world, the informal sector is steadily evolving into the formal sector in partnership with the organised industry which is creating innovative business models. The most visible example is that of Uber and Ola, which have brought hundreds of individual taxi owners on their platforms to create a win-win situation for both, and added value to the consumer as well. This model could now be replicated in other situations. The vegetable vendor who wheels his cart to neighbourhood homes could be part of an e-commerce company and provide last-mile connectivity. The shoe shine worker at the street corner could be brought under the fold of a multinational shoe company to upgrade his work and quality of his life. The results could be overwhelming. They both could then open a bank account, be eligible for loans and credit cards, and be part of the formal sector with increased income and fixed hours of work. For the companies, the partnership offers a recognition for a meaningful contribution to the welfare of the community.
Learning from Taiwan
One needs to only look at Taiwan to understand how a low-level economy can transform itself through technology and innovation and become part of a global value chain. A quarter of a century ago, Taiwanese SMEs were selling cotton shirts, plastic flowers and wooden toys. Today, they are producing memory chips and laptops and assembling smartphones. Foxconn is now the main assembler of iPhones in several Asian countries. Jeff Bezos, the founder of Amazon, said during his recent visit to India that Amazon plans to invest $1 billion in digitising SMEs. The Government of India has launched an ambitious new e-commerce platform, ONDC (Open Network for Digital Commerce). This is a strategic vision which should unleash India’s entrepreneurial dividend. A combination of these efforts must ensure that a job-enriched India is now within our sight.
C. Sarat Chandran is Senior Fellow, London School of Economics
