Up the value chain http://www.goodnewsindia.com/index.php/Magazine/story/india-value-chain/
Sell clay, and you are selling a commodity. Make it into a pot and you have manufactured a product. But if in the end, you send a designer bowl to the markets, then you have a brand and all the big ticket profits. It has taken it a while, but there is growing evidence that India has internalised this simple reality. This is the secret of success in world markets: create true value first and then create an illusion of even greater value. India's legendary knowledge edge and its skilled, industrious workers are right now updating the act that said it all first: the Indian rope trick. Up from copra: When the British left in 1947, they left India with a mindset that it wasn't fit for anything more than exporting jute, copra, tea, spices and cashew nut. 'You stay with commodities and leave manufacturing to the industrialised nations,' seemed to be the message. Quite unwittingly, India's central planners' response of *making* India into a giant, seemed to confirm just that: Indians were not there yet. The one debate that won't die is how Fabian socialism delayed India's date with its genius. Do skip the debate. That date is at hand. When economic reforms began in the nineties, it had largely to do with dismantling domestic controls. There was no need to clear the way to the world markets: it lay open. Some captains of industry feared hordes coming through the open doors;after all, they had been beneficiaries of a closed-door India. But the doughty neo-Indian entrepreneur saw the open door as an exit leading to the world beyond. In just over ten years he has changed India's economy and its image. It is best to savour the changes by surveying the current scene. And it is best to begin the survey with jute, that so epitomised India. Today jute is making a style statement. It is no longer used as just sacking material. Indian application research has made it a candidate in the list of interior and accessory designers worldwide. On another front jute is being promoted as a geotextile, a class of material that is used in huge quantities in civil engineering works. Khadi is not far behind either, in its climb up the value chain. It is not a politician's badge any more. [In fact the pols wear less of it these days; is there a profound meaning in that trend?]. Khadi is haute couture. Today, the word itself is a brand that evokes and enhances India. Earlier this year, a media report quoted Giorgio Armani: "The khadi made in India is among the most skin-friendly fabrics we know. In fact the day isn't far when khadi-based designs will rule the world." The Gandhi inspired Sarvodaya Ashram, Delhi supplies fine, vegetable dyed khadi to Gucci, Donna Karan and Armani. The greatest world spend is probably on personal products. The Indian garment is no longer cheap sweat shop produce. Indian companies are buying brands or even better, creating them. And they, label their garments for the discerning buyer. Salman Noorani's 'Zodiac', is probably the first Indian company [--since the 1960s] that realised the value of branding. Its garments command an average of $60 a piece. Zodiac has three design centres worldwide. New York Times mused in May, 03: "Considering that India is historically credited with giving the world paisley, seer sucker, calico, chintz, cashmere, crewel and the entire technique of printing on cloth, it is anybody's guess why India barely registers on the global map of fashion." It went on to report what Jaqueline Lundquist, wife of a former US Ambassador is doing about it. She says,"Western designers have been coming to India and 'borrowing' for 50 years. It's not fair that all these American designers should get the glory for Indian design." She is actively redressing this style-piracy. Indian fashion was said to be *in*, a few years ago; it is now clear it will probably to stay in. Take in this typical news: Europe's leading jewellery company Hammer & Sohne commissioned Sadhak Shivanand Saraswati, 'a spiritual artist' to design a series for them. Such news is commonplace these days. In the 'hard' sector: You may dismiss fashion as 'soft' sector. But how about this: Dilip Chhabria designs an Aston Martin, the car deemed worthy of James Bond. Or the now routine pieces on A R Rahman: that he teams up with Andrew Lloyd Webber or that he has just finished scoring for a Chinese opus, predicted to rival 'Crouching Tigers...' Or that Samsonite is to locate its 'Global Design' centre in India. Or that Srinivasa Fine Arts, Chennai designs and distributes upmarket stationery like diaries, calenders, planners, albums etc through Neale Dataday, UK and retailed through the likes of Harrods. The point is, India is climbing steadily up the value chain on all fronts. The 'hard' sector is not visible to most Indians. Out there, small and medium businesses are staking new territories with products that range from bone china to car batteries. They succeed because, companies like Tata Motors with their Indica, Mahindra and Mahindra with their Scorpio and TVS Motors with their series of bikes have shown that Indians can design from scratch and meet world's quality requirements. Because, Indian companies are beginning to win prizes for quality, like the Deming and TQM -- a domain that seemed reserved exclusively for Japan. Because also, the government too has been supportive: it teamed with the Confederation of Indian Industry [CII] to form the India Brand Equity Fund in 1996. Its mission? "If India.Inc is ever to rival the vaunted Japan.Inc, it has to get its homework right and only then will any publicity ring true." There is increasing evidence the labours are paying off. India today is the greatest market for quality gurus, management consultants and deal seekers. It is even a high end job market: many Indian firms --eg. Jet Airways, Ranbaxy-- are hiring Westerners. Manufacturing had nearly been surrendered to China by prominent minds that ought to have been wiser. Today, about five years after China-scare-times, Indian manufacturing is alive and growing. As a supplier of quality parts to the global auto industry, India is becoming the rival to beat. Part of the reason of course is West's experience in India. Mercedes Benz says its India plant is its best outside Germany. Raymond Spencer, founder of Kanbay says, "India is a knowledge center. It is not a cheap labor pool. It's not a factory. It's a knowledge solutions center." It is that mindPlus labour that makes Bharat Forge, the feared competitor in the forged parts market; that makes auto-grade steel from Tata accepted overseas; that makes tens of little known 'wholly Indian' auto parts companies carve out markets. The values in the chain: In terms of food and beverages, it would be no news that the likes of curry, basmati rice and tandoori chicken are established favourites. But did you know that the Dabur's Chyawanprash, Hajmola and Boro Glow are becoming popular. Or that Kingfisher is a leader among beers? And wonder of wonders, in just under a decade since it began, Indian wine industry is placing its bottles on tables abroad. Stanford educated Rajeev Samant has almost single handedly created a niche for Indian wines abroad. Albeit the volume is small, his Sula wines are exported to Italy and California. The wine story is a classic illustration of how the value chain works. Grapes grown in Maharashtra was 'commodity' when it was table fruit; now transformed into wine and branded with elegance, profits are flowing down the chain. The farmer at the lower end is connected with the rich spender at the higher end. But these connections will not work if a country did not have a likeable image. India is going through a favourable re-rating. In a world full of turmoil, India's stoic calm, democracy, hospitality and family values are all being viewed with much admiration. Many societies have lost these and 'progressed' but are strangely restless. India on the hand is old-fashioned and yet 'modern'. It is scarcely doctrinaire. Its music, dance, crafts and religion are open and inclusive. Yoga, ayurveda, meditation etc have a universal appeal. India seems to say that you can be in many worlds at same time. Despite all these assets at the back, what matters most in the markets is the 'front end'. Here India is blessed with millions of her children spread all over the world. They study hard, work hard, do science, teach, manage huge corporations, smile a lot, are polite neighbours, don't sponge on the state, write great books in English, sing, dance, win beauty contests, love their children and respect their parents. And they seldom make bombs. It is natural that the country they come from evokes curiosity. And the products and services from there are well received. Now to the favourites: It is a comment on the times that success stories from the IT sector which first put India in orbit, should be listed last. Not because they are losing their edge; they are thriving, thank you. But what is happening is that India is not just IT alone, anymore. There are salients in other sectors as well. But knowledge-centred India reigns supreme. Just three years ago the Indian IT industry was the equivalent of garment industry's sweat shops, littered with phrases like data entry, Y2K and bodyshopping. About then, India began to do 'medical transcriptions' for US doctors. In a few months India had scaled up, met deadlines and turned in quality work. The world woke up to the opportunities that awaited in India. Soon 'call centres' popped up. The next link in the value chain was business process outsourcing [BPO]. Airlines, insurance companies, auto majors, World Bank etc began to shift their entire back office work to India and have these services delivered over the wire by an army of dedicated, intelligent young Indians. Infosys says that the 'offshoring' model has proven itself beyond all doubts. Gartner Research says that five Indian software companies have the most mindshare among nearly 200 top corporations when they think of outsourcing. Sophisticated jobs are being shipped to India: financial and market analysis for Wall Street, for instance. So many jobs are leaving the West that there is resentment building up. Far from bragging their deals, Indian companies have gone mute. 'Business Line' headlined in July, 2003: "Fallout of outsourcing backlash - IT services firms keep client wins under wraps." After all, has not New Jersey passed legislation --never mind, all that stuff about free trade-- to stop jobs going to India? But not everyone is discreet about India. Morgan Stanley and Nasscom - McKinsey have predicted that by 2010, India's BPO revenue will be $65 billion and fueled by that,India will be a trillion dollar economy. And ruining it all somewhat further for India's comfort, Andrew Grove has just said, that India's booming software industry, which is increasingly doing work for US companies, could surpass America in software and tech-service jobs by 2010. "He warned that America's software and service industries, strong drivers of US economic growth for nearly two decades, show signs of emulating the struggles of the US steel and semiconductor industries." There are more emerging successes. Bioinformatics is a new business field for Indian harvesters to mow into. This area has more to do with computers than labs. Indian are not doing badly with test-tubes either. In biotechnology India is marshalling its forces. The number of people working in the industry has grown to 8000 , up from 5000 a year ago; and most of them are scientists. The new Indian rope trick: Close by BPO is world class medical services available in India. There is a trickle of patients from the West --encouraged by Indian doctors they meet there, no doubt-- who are arriving in India for major surgeries. Apollo Hospitals is in talks with British health care authorities to formalise arrangement by which British patients will be routinely operated upon in India. But an emerging convergence of communications, robotics and surgical skills holds an ominous portent for world corporations and economies. For, India it can mean leadership in a market where it holds all the cards. We are not there yet, but you can have a glimpse of the things to come: Dr. Naresh Trehan was a successful young heart surgeon in Manhattan. By the 1980s he was grossing over a $1.5 million a year. He returned to India when he noticed that several of his patients were from India. In New Delhi, Trehan has created the Escorts Heart Foundation. All this by way of background. Today Dr Trehan sits in a corner of the operating theatre in front of a high resolution screen and moves levers with calm deliberation. The patient is about ten feet away. A robot wired to Dr Trehan's console is poised over the patient. For every movement that Dr Trehan makes, one of robots many hands makes a micro movement. It all happens in real time over the wires. The precision and steadiness of robot combined with the surgeon's knowledge and decisiveness result in unfailing success. Dr Trehan has already done over 50 such surgeries. Now imagine this. Ten years down the line communications will be so advanced and reliable that a robot 10,000 miles away in New York can move in real time to commands from an Indian Doctor in say, Nashik. Thousands of approved Indian surgeons will be operating on patients all over the world. Now, for surgeons, substitute cooks, teachers and general robot minders. Smart Indians --without moving a mile out of India-- will be nurses, baby sitters, security guards, machinists, assemblers and warehouse keepers. Hey, you there: do you know a better rope trick? Oct, 2003 ====================================================================== *~Jen Birmingham UK http://groups.yahoo.com/group/VascokarsUnited/ http://groups.yahoo.com/group/IEIGLC/ http://groups.yahoo.com/group/GoanStudentsAbroad/ ====================================================================== _______________________________________________ Goanet mailing list Goanet@lists.goanet.org http://lists.goanet.org/listinfo.cgi/goanet-goanet.org