An aura of determined confidence permeated the 12th Annual India Business Conference held in early April at Columbia Business School. The first speaker, Shri Piyush Goyal, India’s minister of state with independent charge for power, coal, and new and renewable energy, declared, “the most important change that Narendra Modi brought during his first two years in office has been rebuilding a sense of hope.” With programs that have set the foundation for “decades to come,” he said, “India is getting back to its growth agenda.”
Here are five views worth noting from the conference.
- Change is happening, but progress is slower than some hoped. Goyal, from the ministry of power, says impatience is understandable but misplaced. “India is building a skyscraper, not a two- or three-story building,” he said. “For that we need a robust, sustainable foundation.” He said the current government is prioritizing issues and monitoring progress.
- Don’t expect transportation infrastructure to pop up overnight. First the bad news. The World Bank estimates India needs to spend about $1.7 trillion on infrastructure over the next three years — about as much as its annual GDP. That’s not going to happen, both for economic and political reasons. Although the country is making progress with energy and digital smart city networks, and is “not an ostrich” when it comes to a dearth of rail, highways, and waterways, in the words of Ben Eijbergen, program leader for India at the World Bank, bankable projects are rare. Prerequisites include making public/private partnerships more attractive to backers, cutting through bureaucracy, improving communications between government entities that need to coordinate on projects, and easing taxes on privatizations.
- Every household in India will have 24/7 access to power by 2019, three years ahead of the 2022 target, according to Goyal. That’s the good-news side of the equation. Indicating that the power grid has already reached most villages, he said the next step is to partner with local governments and companies to wire homes. Renewable energies will be a growing piece of the equation, especially now that many technologies have become cheap enough that they no longer require subsidies and capital is available through new financing tools such as infrastructure trusts. Goyal also predicted 100 percent penetration of electric cars and vehicles by 2030.
- The continued digital revolution will connect far-flung rural and second- and third-tier Indian cities. For example, Nirvana Digital, a large YouTube network in India, expects education videos will be an important tool to help train the country's next wave of employees. And look for a medical revolution as villages connect doctors and patients via video. The e-commerce platform that the giant Tata conglomerate is launching targets wealthier Indians who cannot access the same goods in their city as they can when they travel to London or Dubai. The site, which will specialize in higher-end clothing, electronics and consumer goods, will resemble an upscale shopping mall more than an Amazon model as it lets retailers control their own brand messages and set their own prices.
- The tourism sector is a (still somewhat buried) treasure trove. Tourism already represents 7.7 percent of GDP, but, considering India houses half of the world’s historic monuments, that share is “nowhere near what it should be,” said Sanjay Jain, senior director of finance, Indian Hotel Companies. Four obstacles discourage both international and domestic tourists: subpar infrastructure, safety and hygiene concerns, numbing bureaucracy that discourages development (China has 10,000 branded hotels; India has 1,000), and mediocre marketing. Although the first three challenges are particularly daunting, the panelists agreed that the hospitality sector is starting to skirt some issues with creative solutions, including spiritual and yoga tourism, medical tourism, and homestays with rural Indian families.