The rise of Indian multinationals

Former Member of the Planning Commission and Secretary to the Prime Minister's main Economic Advisor, N. K. Singh (left), Professor — Science, Technology and Society, Naushad Forbes, and the Chairman of Marico Industries, Harsh Mariwala, at the Stanford Asian Technology Initiatives (ATI) global entrepreneurship conference in Mumbai on Saturday. — Photo: Shashi Ashiwal  

MUMBAI, AUG. 21. The Indian software industry is the number one exporter today, overtaking the gems and jewellery and textile industries, according to Kiran Karnik, President, National Association of Software and Service Companies (Nasscom). Mr. Karnik was speaking at the Stanford Asia Technology Initiative (ATI) global entrepreneurship conference on `The rise of the Indian multinational: Global business trends' here today.

Mr. Karnik said of the total merchandise exports of $60 million software exports accounted for $13 billion. The industry grew at 30 per cent last year despite slowdown in U.S. economy and the projected growth this year has been pegged at 32 per cent. He attributed the performance to India's excellent brand value and the PQRS factor — Productivity, quality, rate and skills where the last factor referred not just to numbers but to scalability of skill sets as well.

Nevertheless, there were certain issues that needed to be addressed for India to emerge as an IT superpower. In order to ensure adequate security and privacy of large data, the Nasscom was working on a framework on which legislation and enforcement go hand in hand. On the issue of human resource development, the Nasscom was working with State government schools to introduce the English language and computer education, at the primary level itself, besides ensuring regular updation of knowledge dissemination practices from the secondary level upwards. Mr. Karnik was also optimistic about the improvement of infrastructure particularly in the telecom sector.

Earlier, in his keynote address on knowledge based business practices, Ajay Piramal, Chairman, Nicholas Piramal group, said India's share was only $6.5 billion of the $470 billion global pharmaceutical industry. However, in terms of volume, the country was the fourth largest consumer and manufacturer. India was also among the top five manufacturers of bulk drugs and growing at 30 per cent. Another interesting feature was that of the top ten companies in India in terms of market capitalisation, only one was a multinational and others were Indian.

Mr. Piramal added that India had several opportunities in the pharma sector. These included development of drugs for tropical diseases which had great potential with more than 12 per cent of the demand coming from this segment, but only 15 drugs had been developed over the past 25 years.

Second, the country enjoyed a great cost advantage in terms of developing a new product — $30-35 million against $1.2 billion that it would cost in the U.S. A third factor in India's favour was the availability of skilled R&D personnel that was compounded by the fact that there had been a reverse brain drain of sorts with research fellows coming back to the country after receiving high quality training abroad.

N. K. Singh, former member of the Planning Commission and Secretary to the Prime Minister's main Economic Advisor stressed the need for a sustained 7-8 per cent growth in GDP over the next five years in order to acquire a competitive edge in international markets.