For multinationals in India, manufacturing in the country is a “challenge”. Erich Nesselhauff, MD, Daimler India Commercial Vehicles, had on hand a long list of problems that companies such as his face here.
“When you start in India you think there is a rule book. But the rulebook isn’t real. This makes it extremely challenging for MNCs to plan our investments. You can never tell what you can rely on. And you never know when it’ll turn positive. For example, GST was supposed to be implemented in 2010, but it was 2017 when it finally got done. There is no rule in India that cannot be changed,” he said.
Mr. Nesselhauf was speaking at The Huddle on a panel titled “Cracking the code: challenges and opportunities for MNCs in India”. In introducing the session, moderator Vinita Bali, former managing director of Britannia Industries, scoped the size of the potential of India. Foreign Direct Investment in the country was at $4billion in 2006. This has seen a very sharp growth, and now stands at $60 billion. “While this might look significant, the reality is that even now most sectors are under-served. The potential is so much higher,” she said.
That India is a significant market cannot be disputed. On his third month in the country, Peter Betzel, CEO Ikea India, said that while his company would contribute to make the country better, the reverse was going to be equally significant. “We have a long-term view and long-term commitment to India. When it comes to small space living, the value of the family and the ambition for digitisation, I feel confident that India will make Ikea better.”
In assessing the problems of operating in the country, what Wal-Mart discovered is that it is very similar to several other emerging economies. “But at the same time, the potential that India offers is immense,” said Krish Iyer, CEO, Walmart India. “We decided to look at India as a subcontinent. So, from 2014, we decided to focus on six states. The idea was that each of these States were as big as a country, so it made sense to do this,” he said.
All the panellists were of the opinion that the absence of a single legislative framework was the cause of most of their problems. Labour laws, for example, are localised. Ikea, for instance, has been working on starting their store in India for the past five years. In any other country, this doesn’t take longer than two years.
The other challenge in operating in the country is the lack of an educated and qualified work force.
“In other countries you have a list of suppliers and you just pick the ones you want. Here you select a supplier and then you spend time and money to train the people in order to make them competent enough to fulfil global standards,” Mr. Nesselhauf said.
Mr. Iyer had a slightly different view. Talent in India is sector dependent. In the technology sector, for instance, India was a big asset. His company got technology at 20% of the global cost in India.
Published - February 17, 2018 11:03 pm IST
