but not
The country is at a                  saves time,” says Genda Lal
                                     Baisla, owner of one of the larger
critical juncture as it              farms.
faces the prospect of                   These same farmers are suppli-
                                     ers to a company listed in Lon-
global recession and a               don that has its origins in Johan-
tightly­fought general               nesburg and has global opera-
                                     tions that stretch from Milwau-
election, writes                     kee to Moscow. Although few of
James Lamont                         the farmers openly admit to
                                     drinking beer themselves, they

         he small farmers of         are part of SABMiller's global
         Bansur village in eastern   drinks supply chain. Their barley
         Rajasthan overwhelm-        finds its way into beer distrib-
         ingly agree that life has   uted across northern India to
changed for the better over the      cheer the country’s claim to be
past 10 years. The reason is         the fastest-growing beer market
India’s greater engagement with      in Asia.
the world economy.                      One of the most often quoted
  Many still plough their tidy       figures to illustrate the promise
fields with camels. Between          of the Indian economy is the
about 100 of them, they share        number of new mobile telephone       Talking promise: the number of new mobile telephone subscribers in India has reached a staggering 10m a month as operators compete and drive growth                                 Reuters
only three tractors. They are        users who sign up each month.
troubled by the rising price of      This raised eyebrows when it         pitches the ruling Congress party     drained swiftly from the emerg-      when only in July government
food, particularly of wheat,         was 5m a month. But now the          against the Hindu nationalist         ing market.                          officials and business organisa-     Inside this issue                     More on FT.COM
pulses and edible oils. They have    figure has reached a staggering      opposition Bharatiya Janata             Many top business leaders          tions felt double-digit growth to    Ethical rules pose challenge          Charity is not the answer
also noticed that weather pat-       10m a month as mobile operators      party. The battleground will be       were soon appealing for deep         rival China was within reach.        Retailers must negotiate labour       Amy Yee looks at growing
terns are changing. The summers      drive growth by offering call        the economy.                          interest rate cuts and emergency       As nerves jangled in New Delhi     codes, says Alan Beattie Page 2       philanthropy and how business
are hotter, and the monsoon          rates for less than Rs1 a minute.       The international financial cri-   support from the government.         and Mumbai, a closed economy                                               is seen as a model for efficiency
rains a little less heavy.              The rampant growth in this        sis has had a worse impact on         Exports fell rapidly, iron ore and   suddenly looked appealing again.     Law firms fuel demand
  On the upside, the men feel        sector has become the talisman       India than policymakers and           rice contracts were defaulted on     Sonia Gandhi, president of the       The lure of India’s outourcing        Wanted: 1,500 universities
more connected among them-           that many turn to as reassurance     businesspeople had initially rec-     and mass job losses loomed.          Congress party, invoked the pru-     services is growing, writes                       Overstretched
selves and a world outside their     that India’s domestic consump-       ognised. The expectation was          Shares of some of India’s leading    dence of her mother-in-law Indira    Amy Kazmin Page 2                                 institutions are
village. What has revolutionised     tion is alive and well.              that, with exports representing       companies in sectors such as         in closing the Indian economy.                                                         unable to meet
their lives is the mobile tele-         But as global companies           only 17 per cent of gross domes-      property, pharmaceuticals and IT     But her praise for the nationali-    Scandal raises questions                          the demands of
phone – almost all of them pos-      increasingly change the lives of     tic product, India would be insu-     outsourcing fell sharply. Even       sation of banks in the late 1960s    After Satyam, all eyes                            job­creation, says
sess one. They receive weather       India’s 1.2bn people, the past six   lated from troubles elsewhere,        the heady days of the country’s      sounded a hollow note with a         are on regulators, says                           James Lamont
reports, discuss market prices for   months have been testing for         most particularly the US. The         domestic airline boom appeared       cadre of increasingly foreign-ori-   Joe Leahy Page 3
their crops and coordinate better    India and its engagement with        Sensex, the benchmark index on        numbered.                            entated business leaders eager to                                                        Imagining India
among themselves. They even          the forces of globalisation. The     the Bombay Stock Exchange, lost         The shine speedily came off        expand beyond India's shores.        Bollywood boost                                     James Lamont
find spouses for their children      country is at a critical juncture    more than half its value in the       India's ambitions as corporate         Amid the financial turbulence,     Movies are embracing                                reviews Nandan
                                                                                                                                                                                          new tastes, says Amy                                Nilekani’s book
this way.                            as it faces the prospect of global   second half of last year, the         valuations seemed terribly over-     there was worse to come for
                                                                                                                                                                                          Kazmin Page 4                                       of ideas
  “Before we would have to           recession and a tightly-fought       liquidity crunch was felt widely      blown. Growth projections were
travel, but now we just talk. It     general election in April that       and foreign portfolio investment      revised down to about 7 per cent,                Continued on Page 2
2                                                                                                        ★                                                                                                                     FINANCIAL TIMES FRIDAY JANUARY 30 2009

India & Globalisation
                                  Ethical rules impose perverse incentives
amid the
                                  GLOBAL SUPPLY CHAIN               shoppers. The pressures of           business, he says, thanks to      and power-intensive technol-     their manufactured goods in      like the Global Social Com-       working – employees, often
                                                                    such ethical sourcing, how-          access to cheaper fabric and      ogy, India, with its unrelia-    poor countries, particularly     pliance Programme and the         women, doing handwork
                                  Sourcing is a big                 ever, run the risk of exclud-        duty-free access to the EU        ble and expensive electricity,   Asia, are under continual        Supplier      Ethical    Data     such as embroidery at home
                                  factor for retailers              ing some of the poorest              market, India has managed         struggles to compete against     pressure to adhere to high       Exchange (Sedex), systems         – because they are harder to

storm                             after cheap labour,
                                  says Alan Beattie
                                                                    workers from the benefits of
                                                                    the global economy.
                                                                       The garment export indus-
                                                                                                         to hold its own in some more
                                                                                                         sophisticated products.
                                                                                                            But several factors go
                                                                                                                                           China. Its garment manufac-
                                                                                                                                           turers thus have difficulty
                                                                                                                                           when taking on China’s
                                                                                                                                                                            labour standards. At a time
                                                                                                                                                                            when consumers are feeling
                                                                                                                                                                            the pinch, the tension
                                                                                                                                                                                                             of sharing information about
                                                                                                                                                                                                             auditing and compliance pro-
                                                                                                                                                                                                             cedures which should help
                                                                                                                                                                                                                                               monitor. Mr Sahni says:
                                                                                                                                                                                                                                               “The audits are an incentive
                                                                                                                                                                                                                                               to do everything inside the
                                                                    try is a good example of             against it. An obvious one is     huge and hyper-efficient         between driving down costs       prevent one company being         factory and to use machin-
Continued from Page 1                                               India’s strengths and weak-          geographical isolation from                                        and holding up standards         undercut by low standards         ery. It is a headache to do
                                  For a country with a vast         nesses and challenges that           the lucrative export markets                                       only becomes more acute.         in another. “There is plenty      anything outside.” This
                                  source of cheap labour, India     lie ahead. Among its advan-          of the EU and the US. It is       ‘There are over                     Terry Babbs, Tesco’s inter-   of room for confusion and         means that production for
investors. In the closing         has often been a somewhat         tages in the global supply           unable to build up the short-     1,000 labour codes               national trading law and         duplication, which is why         export is increasingly domi-
days of last year, India suf-     late participant in the global    chain for clothing are rela-         distance quick-response sec-                                       technical director, says: “At    Tesco has put so much effort      nated by male, full-time
fered one of its worst corpo-     supply chains that snake          tively low labour costs and a        tor serving the high-fashion      in existence, and it             the top of our customers’        into initiatives like GSCP        employees, not by poorer
rate scandals in one of the
sectors leading its globalisa-
                                  around the globe. Even in
                                  clothing, one of its tradition-
                                                                    tradition of skilled workers,
                                                                    particularly in handiwork
                                                                                                         part of the European and
                                                                                                         American retail sector that
                                                                                                                                           would help if there              minds are price and availa-
                                                                                                                                                                            bility, particularly in tough
                                                                                                                                                                                                             and Sedex,” Mr Babbs says.
                                                                                                                                                                                                             “There are more than a
                                                                                                                                                                                                                                               women, and is often mecha-
                                                                                                                                                                                                                                               nised, reducing the benefit
tion drive. Satyam, the coun-     ally strong areas, some of        such as embroidery.                  countries such as Turkey          was a single code’               economic times, but they         thousand labour codes in          to the very poorest.
try’s fourth largest IT out-      the disadvantages that have          Rajan Sahni, owner of             and Mexico have estab-                                             also expect us to take care of   existence, and it would help        Mr Babbs says: “Our pri-
sourcing company, was dealt       prevented its challenging         Panorama Exports, a gar-             lished. Orders from Euro-                                          the ethical dimension on         greatly if there was a single     mary suppliers employ 1.8m
a devastating blow when B.        China for supremacy in            ment factory in Haryana              pean retailers to India have      mass-production clothing         their behalf.”                   code.”                            people, which is a significant
Ramalinga Raju, its chair-        international manufacturing       near Delhi, says that the            a lead time of 60-90 days.        industry, especially the mar-       There is a bewildering           Yet aside from managerial      footprint in the developing
man, handed in a letter to        continue to hold it back.         industry managed to defy                Other problems are some-       ket in artificial fabrics,       variety of different ethical     considerations are the poten-     world and means a lot of
regulators confessing to a          And like all other low-cost     predictions of doom when a           what of India’s making.           despite higher wages.            codes covering labour prac-      tially perverse incentives        people’s livelihoods are
$1bn fraud. The company’s         producers, it is also facing      global system of textile quo-        Clothing industries tend to         And as they target the rich    tices, environmental sustain-    that such initiatives can pro-    being improved by produc-
share price collapsed, Mr         the increasing challenge of       tas was finally abolished in         be most efficient when they       markets of Europe, consider-     ability, human rights and so     duce. The prohibitions on         ing goods for Tesco.” But
Raju was taken into custody       ensuring that the goods it        2005, allowing China a free          have a cheap and convenient       ations of ethical sourcing       forth. Tesco, along with         illegal child labour mean         some of the pressure that
and his board dismissed.          produces are not just cheap       run at the world market.             source of fabric. But because     increasingly come to the         some other big retailers, has    that companies shy away           retailers are under may
   The shockwaves were felt       but also satisfy the ethical      While low-cost Bangladesh            textiles, as opposed to gar-      fore. The big retailers such     tried to bring them all          from using traditional forms      mean that relatively few
by investors across the           considerations of western         has taken a lot of the denim         ments, tend to be a capital-      as Tesco that buy many of        together through initiatives     of sourcing such as home-         workers end up benefiting.
world who view the IT out-
sourcing industry as a pow-
erful driver of services-led
economic growth. Satyam

                                                                                                                                                                                                  Law firms fuel
had been one of the first
Indian companies to list on
the     New     York     Stock
   The fraud dimmed the
Indian dream. Mr Raju’s per-
sonal journey as the son of a
grape farmer in rural And-
hra Pradesh, growing up
                                                                                                                                                                                                  the demand for
                                                                                                                                                                                                  offshore services
without electricity, to study
at Ohio University in the US
and then become the chair-
man of an IT company was a
textbook case of the opportu-
nity globalisation could
bring.                                                                                                                                                                                            OUTSOURCING                             $23bn a year, according to the
   India’s openness has also                                                                                                                                                                                                              National Association of Software
attracted other enemies. The                                                                                                                                                                      Western companies are                   and Service Companies, while the
Mumbai terror attacks in
November were a strike
                                                                                                                                                                                                  looking for help in a                   country earns another $11bn for
                                                                                                                                                                                                                                          handling back-office work, like
against global capital and                                                                                                                                                                        widening array of areas,                responding to customer queries
India’s prosperity. Quite dif-
ferent from earlier bombs in
                                                                                                                                                                                                  says Amy Kazmin                         and complaints and chasing debt
                                                                                                                                                                                                                                          defaulters, for western companies.
marketplaces, the Pakistan-                                                                                                                                                                                                                 By contrast, India’s legal proc-
trained gunmen targeted                                                                                                                                                                           A few months ago, Ayetree Gogoi,        ess outsourcing industry – focus-
hotels frequented by Indian                                                                                                                                                                       28, was practising law in a provin-     ing on such areas as patent
and international business                                                                                                                                                                        cial court in India’s remote tea-       research, contract management
people and a Jewish centre.                                                                                                                                                                       growing state of Assam, litigating      and litigation support – generated
   In manufacturing the                                                                                                                                                                           civil matters.                          revenues of just $225m in 2007,
going was tough too. A year                                                                                                                                                                         Today, Ms Gogoi is part of a          according to ValueNotes, an
ago, the Nano car project to                                                                                                                                                                      team of 75 Indian lawyers and           Indian-based research company.
build the world’s cheapest                                                                                                                                                                        medical professionals combing             Yet that revenue grew an esti-
car – to be sold for Rs100,000                                                                                                                                                                    millions of pages of internal           mated 40 per cent in 2008, and is
pre tax – was held up as the                                                                                                                                                                      e-mails, annual reports, clinical       projected to reach at least $640m
spirit of the era. However,                                                                                                                                                                       trial data, and medical publicity       in 2010. “There is a sustainable
its main production plant in                                                                                                                                                                      material belonging to GE, as the        ecosystem that has come out,”
Singur, West Bengal, became                                                                                                                                                                       US-based company prepares its           says Aradhana Kolhatkar, a
mired in a land dispute that                                                                                                                                                                      defence for a high-profile pharma-      Value-Notes analyst. “There is a
highlighted the tensions sur-                                                                                                                                                                     ceutical product liability lawsuit.     kind of momentum that has built
rounding industrialisation.                                                                                                                                                                         The task of Ms Gogoi and her          up.”
   As Ratan Tata, Tata’s                                                                                                                                                                          colleagues – all employees of             Many analysts believe the push
chairman and one of the                                                                                                                                                                           UnitedLex, a three-year-old New         to offshore will intensify, helped
country’s most respected                                                                                                                                                                          Delhi-based legal process out-          by India’s solid IT skills, and dec-
businesspeople, struggled to                                                                                                                                                                      sourcing company – is to identify       ade-long experience handling
keep momentum behind the                                                                                                                                                                          documents relevant to the case.         other corporate back-office work.
project, further afield, his                                                                                                                                                                        “If I was still in Assam arguing        Som Mittal, president of Nass-
group’s acquisition of Jaguar                                                                                                                                                                     in a provincial court, I would not      com, argues that Indian firms are
and Land Rover, the British                                                                                                                                                                       have got this exposure,” she says       taking the lead in trying to woo
car marques from Ford, was                                                                                                                                                                        in UnitedLex’s ultra-modern office      new types of businesses. “Until
attracting strong criticism as                                                                                                                                                                    in Gurgaon, just outside the            now, people have moved to India
a vainglorious enterprise.                                                                                                                                                                        Indian capital. “Here we are part       what they thought could be
   “We analysts in the west                                                                                                                                                                       of a big product liability litigation   moved,” says Mr Mittal. “In the
are all looking at financial                                                                                                                                                                      that will impact the world.”            next 10 years, rather than a fol-
quarters and halves. But you                                                                                                                                                                        As well as handling litigation        lower role, as we have played,
have to give Ratan Tata           Expanding role: New Delhi is extending the reach of naval operations outside UN peacekeeping missions                                                      AP   support for GE, UnitedLex has           Indian companies will help their
credit for looking 20 years                                                                                                                                                                       lawyers overhauling contract tem-       customers, or their parents, drive

                                  Craving greater inf luence
ahead with this acquisition,”                                                                                                                                                                     plates and handling patent work,        this transformation.”
says Xavier Gunner, head of                                                                                                                                                                       and is also developing a practice         The path to growth is not with-
research at London-based                                                                                                                                                                          to help leading companies license       out obstacles. While India churns
Arbuthnot Securities and an                                                                                                                                                                       their intellectual property.            out graduates in fields such as
expert on the auto sector.                                                                                                                                                                          The start-up is still small, with     law, engineering and medicine
   India’s believers are doing                                                                                                                                                                    revenues of just $10m in 2008, up       every year, most of them still fall
the same. Higher growth,                                                                                                                                                                          from $2m in 2007. But UnitedLex         far short of the minimum stand-
the ambitions of its corpo-       FOREIGN POLICY                         nates with many Indian leaders,           nomic crisis today. If nations look     warming relationship with the          is in the process of doubling its       ards expected by western clients.
rate leaders, trade’s rising                                             but they acknowledge that if they         only inwards and imagine they           US. This had already begun in          headcount, from 500 professionals       “Our education system produces
share of GDP, and a high-         Alignments are shifting                achieved only one or two of the           can solve all their problems on         spheres such as education and IT       to 1,000 by the middle of the year,     trainable people,” says Mr Mittal.
quality, low-cost workforce
are all spurring India to
                                  as the country projects                more modest goals over the com-
                                                                         ing year they would be doing
                                                                                                                   their own, they will fail,” he says
                                                                                                                                                           outsourcing. But it took a civil
                                                                                                                                                           nuclear agreement, signed with
                                                                                                                                                                                                  amid surging demand for its
                                                                                                                                                                                                  services from crisis-hit western
                                                                                                                                                                                                                                          “We believe it needs to produce
                                                                                                                                                                                                                                          employable people.”
interact with the world as        itself on the world stage,             well.                                       Mr Singh has presided over one        the outgoing Bush administration,      companies trying to cut costs.            The scandal at Satyam, India’s
never before.
   The trials of the past year
                                  writes James Lamont                      India’s leadership craves a
                                                                         greater role in the world’s multi-
                                                                                                                   of the biggest shifts in India’s
                                                                                                                   international alignment since the
                                                                                                                                                           to lift sanctions imposed in 1970s
                                                                                                                                                           and unlock the potential of India’s
                                                                                                                                                                                                    “Cost pressure is really pushing
                                                                                                                                                                                                  CEOs, and giving the legal out-
                                                                                                                                                                                                                                          fourth-largest IT outsourcing com-
                                                                                                                                                                                                                                          panies, could also erode some
have been met by the gov-                                                lateral organisations whether as a        end of British rule in 1947.            relationship with the US, thought      sourcing industry a leg up,” says       companies’ willingness to entrust

ernment with equanimity.                       ost aspiring world        permanent member of the United              The world’s largest democracy         unimaginable a decade ago.             Anup Bhasin, the chief operating        highly sensitive jobs, or data, to
Prime Minister Manmohan                        powers are reaching       Nations Security Council or guid-         has traditionally behaved as a             “The new relationship rests on      officer. “Given that outsourcing is     Indian firms. “Once trust is dam-
Singh's sober assessment is                    into     the    policy    ing the global financial system at        leading non-aligned country, and        a convergence of US and Indian         already proven in IT and cus-           aged or broken, it takes a long
encouraging. “Our problems                     drawer for a checklist    the G20. They are also aware that                                                 national interests, and never in       tomer service, people are asking,       time to repair,” says Soumitra
will not be over in the cur-      to navigate the global politics of a   India plays a pivotal role in the                                                 our history have they been so          ‘Why not legal services?’”              Dutta, professor of business and
rent year. The difficult          downturn. None more so than            success of the World Trade Organ-         ‘The relationship rests                 closely aligned,” reports an Asia        Other high-end services are           technology at Insead, the Paris-
period will continue into         India.                                 isation’s global trade talks and          on a convergence of                     Society taskforce led by Frank         attracting attention. With western      based business school. “It’s not
2009-10,” he said. “The             The global financial crisis has      initiatives to combat climate                                                     Wisner, a former US ambassador         companies under pressure to pare        just a short-term hit. It’s a medi-
important point is that,          hit the country at an inconven-        change.                                   US and Indian interests,                to New Delhi.                          costs, they are looking to compa-       um-term hit that will affect the
although growth is lower, it
is still much higher than
                                  ient time, as it reaches out politi-
                                  cally and economically to the
                                                                           Growing influence, however, is
                                                                         not confined to the negotiating
                                                                                                                   and never have they                        Since the nuclear deal’s passage
                                                                                                                                                           through the US Congress, India’s
                                                                                                                                                                                                  nies in India to take on an array
                                                                                                                                                                                                  of jobs – from market research to
                                                                                                                                                                                                                                          development of the sector.”
                                                                                                                                                                                                                                            Yet Bhaskar Bagchi, country
most other countries.”            western world. The sliding mar-        table. India is fast modernising its      been so closely aligned’                foreign outlook has changed dra-       product design, engineering serv-       head in India of CPA Global, a UK
   So long as that is the case,   kets and liquidity squeeze have        armed forces, already among the                                                   matically, not only because of the     ices, legal support, and content        legal support services company,
investment bankers in Lon-        shown India and China far from         largest in the world. The deploy-                                                 global financial crisis, but also      development for publications.           says he sees no sign of a slow-
don and New York, along-          “decoupled” from US and Euro-          ment of Indian naval vessels in           always been regarded as a good          because of a devastating terrorist       For now, the off-shoring of           down. “There is now a very clear
side barley farmers in Rajas-     pean economies. “The Indian cen-       the Gulf of Aden to protect ship-         partner to have on single issues        strike on its financial capital.       these so-called “knowledge proc-        economic reason for both corpo-
than, will be happy to hurry      tury”, as some like to imagine it,     ping from pirates at the end of           but difficult to engage across a           Since the Mumbai terror             esses” remains small when com-          rates and law firms to look for
India’s globalisation along.      has hit an early global obstacle.      last year was a sign that New             range. Increasingly, as it projects     attacks last November, India and       pared to India’s massive IT             offshoring,” he says. “India has
                                    “The credit crisis has delivered     Delhi was prepared to expand the          itself more forcefully on the world     its neighbour Pakistan have been       exports and its business process-       proven that they can deliver the
                                  the first major external economic      reach of its operations outside of        stage, it is having to develop a        engaged in a frustrating diplo-        ing outsourcing industry.               same quality, if not better quality,
                                  shock of India’s meteoric 21st cen-    UN peacekeeping missions.                 broader, more consistent stance         matic exchange over who was              India’s software and IT service       from what they got when they did
    Contributors                  tury rise,” says Peter Mandelson,        In Manmohan Singh, the econo-           befitting one of the world’s fastest    responsible and whether they will      exports generate revenues of            the work onshore.”
    James Lamont                  the UK’s minister for business.        mist turned prime minister,               growing large economies.                be brought to justice. India’s for-
    South Asia Bureau Chief       “India is less dependent on export     India’s allies have had a partner            In this regard, India’s single       eign policy has quickly, though
                                  demand than China or other parts       hitting all the right notes.              greatest recent foreign policy          temporarily, narrowed to focus on       Profile: Omar Abdullah
    Alan Beattie                  of Asia, but the pressures on            “Our century will be shaped by          transformation, of which Mr             the instability of South Asia and a
    World Trade Editor            developed world investment can,        how we respond to the global eco-         Singh is the architect, is its fast     familiar stand-off with Islamabad,      Four days after he was sworn in        better public services, have
                                  and are, having the same impact                                                                                          with whom India has fought three        as chief minister of Jammu and         created hope.
    Amy Kazmin
                                  on growth in India, China and the                                                                                        wars in the past six decades.           Kashmir, Omar Abdullah, the               In a country where most top
    South Asia Correspondent
                                  other emerging economies.”                                                                                                  Some commentators, such as           38­year­old scion of a political       politicians are in their 70s and
                                    Mr Mandelson, on a visit to
                                                                         India                                                                             Gurcharan Das, the former chair-        dynasty, unexpectedly visited a        80s, he has stirred hopes among
    Joe Leahy                                                            Economic summary projections                              2008            2009
    Mumbai Correspondent          New Delhi this month, outlined                                                                                           man of Procter & Gamble in India,       maternity hospital in Srinagar.        many young Indians about the
                                  back-of-the-envelope steps for         Total GDP (Rs bn)                                     53,355.1         61,253.3   are critical of what they call a          What he found were filthy            potential for generational change
    James Fontanella­Khan         India, urging it to stay on its glo-                                                                                     return to the hostilities of the        walls, a broken heating system,        to reinvigorate sluggish, corrupt
    India Editor,                                                 Total GDP ($bn)                                         1,237.4         1,350.3
                                  balising path. He proposed:                                                                                              past. Rising Chinese and Indian         water shortages, problems at the       government.
                                  ● keeping trade flowing and the        Real GDP Growth (annual % change)                           7.8             6.3   economic development are higher         “fair price” pharmacy – and both          Yet trying times lay ahead.
    Amy Yee                       economy open;                                                                                                            priorities than a public row with       the hospital chief and his deputy      Kashmir is the centre of a
    FT Contributor                                                       GDP per head $ (PPP)                                    2,786.6         2,984.7
                                  ● signing the European Union-                                                                                            Pakistan, he says.                      absent. Mr Abdullah replaced           dispute between India and
                                                                         Inflation (annual % change in CPI, EU harmonised)           7.9             6.7
    Gavin O’Toole                 India free trade agreement;                                                                                                 Vishnu Prakash, one of the gov-      them and ordered an overhaul.          Pakistan, and its people have
    Commissioining Editor         ● using the optimism surround-         Current account balance ($bn)                            -34.6            -41.5   ernment’s chief foreign policy            Mr Abdullah has since made           been subjected to serious human
    Steven Bird                   ing Barack Obama’s presidency in       Population (m)                                          1,186.2         1,203.2   spokesmen, insists that one             similar surprise visits to a power     rights abuses both by insurgents
    Designer                      the US to strike a Doha trade                                                                                            advantage of his country’s large        station, a police station and other    and Indian forces. How he
    Andy Mears                                                           Foreign exchange reserves ($bn)                          248.9            248.4
                                  talks deal later this year;                                                                                              civil service is that India will        government facilities, creating        confronts these problems will be
    Picture Editor                ● using the downturn to shift          Exports of goods ($bn)                                   173.0            171.5   never be a “one issue” country.         anxiety among state officials.         the true test of Mr Abdullah’s
                                  into low-carbon technology;            Imports of goods ($bn)                                   296.5            279.0   With so much hanging on India’s           Yet among Kashmir’s weary            mettle.
    For advertising details,      ● and helping the Group of 20                                                                                            participation in global debates         population – reeling from 20           Full profile at: www.ft.
    contact: Angela Mackay                                               Industrial production (annual % change)                     4.5             4.2
                                  nations, which meets in London                                                                                           over financial infrastructure, cli-     years of separatist insurgency         com/india­globalisation­2009
    +852 2905 5552                in April, achieve a shift in inter-    Exchange rate, average (Rs per $)                          43.1            45.4   mate, trade and terror, the inter-      – the young minister’s activities, or       national politics to a new agenda.                                                                                       national community will want to         with their implicit promise of                           Amy Kazmin
    your usual representative                                            Sources: IMF; EIU
                                    Mr Mandelson's checklist reso-                                                                                         believe him.
FINANCIAL TIMES FRIDAY JANUARY 30 2009                                                               ★                                                                                                                                                                     3

                                                                                                                                                                                                     India & Globalisation

Foreigners battle for                                                                                                                                                                                                                 Profile:
                                                                                                                                                                                                                                      Abhinav Bindra
                                                                                                                                                                                                                                      India discovered a new hero on

nuclear power stake
                                                                                                                                                                                                                                      August 11 last year when an
                                                                                                                                                                                                                                      unknown 25­year­old won the
                                                                                                                                                                                                                                      country’s first individual gold
                                                                                                                                                                                                                                      medal at the Beijing Olympics
                                                                                                                                                                                                                                      by taking the men’s 10­metre
                                                                                                                                                                                                                                      air­rifle title.
                                                                                                                                                                                                                                         Abhinav Bindra has been
ENERGY                                nuclear establishment is ambiva-      lowed swiftly by top British                                                                                                                              hailed as the “Golden Child”
                                      lent about foreign involvement –      nuclear energy experts, led by                                                                                                                            and “Jewel of the Nation”. In a
Western companies                     and apparently determined to          Peter Mandelson, the UK’s minis-                                                                                                                          country obsessed with cricket,
see opportunities, but                ensure the state is not upstaged.
                                      “If you have been under sanc-
                                                                            ter for business.
                                                                              Yet profiting from India’s
                                                                                                                                                                                                                                      his gold medal reminded India
                                                                                                                                                                                                                                      of its potential in other sports.
New Delhi is nervous,                 tions for 30 years, you have a        thirst for power looks set to be                                                                                                                             “When he hit the bull’s eye
writes Amy Kazmin                     certain mindset, saying ‘Okay,
                                      we’ll do this on our own’,”
                                                                            an arduous process, especially
                                                                            for private US firms. “The hype
                                                                                                                                                                                                                                      with his final shot, the country
                                                                                                                                                                                                                                      rediscovered its self­belief, so
                                      Arundhati Ghose, former Indian        on the deal that it is going to                                                                                                                           to speak,” wrote Ayaz Memon,

         or    decades,     India’s   ambassador to the United              open up tens of billions of dollars                                                                                                                       editor of Mumbai’s Daily News
         nuclear establishment        Nations, says.                        of business to the US was just                                                                                                                            and Analysis.
         worked in almost total         Chronically short of power,         that – hype,” says Brahma Chel-                                                                                                                              However, his triumph also
         isolation, the result of     and heavily dependent on              lany, director of the New Delhi-                                                                                                                          highlighted the enormous
US-led international sanctions        imported oil, India wants to mas-     based Centre for Policy Research.                                                                                                                         infrastructural deficiencies India
intended to punish the country        sively expand its nuclear power         India’s Atomic Energy Act now                                                                                                                           faces in its race to be
for refusing to relinquish its                                              restricts ownership and opera-                                                                                                                            recognised as a superpower.
nuclear weapons programme.                                                  tion of nuclear power plants to                                                                                                                              The 2010 Commonwealth
  Barred from obtaining nuclear       ‘The hype on the                      government-owned companies –                                                                                                                              Games, which will be hosted by
fuel or technology from abroad,       deal that it is going                 and any amendment that opens                                                                                                                              New Delhi, could be the best
the state-owned Nuclear Power                                               the sector to even limited foreign      Nuclear future: a worker checks controls at the Kalpakkam reactor south of Madras                           AP    opportunity for India to fill the
Corporation of India, working         to open up tens of                    ownership is likely to trigger                                                                                                                            infrastructural gap.
with private firms, installed a
mere 4,000 megawatts of nuclear
                                      billions of dollars of                heated parliamentary battles.
                                                                              US firms are also unwilling to
                                                                                                                    Export to build two new 1,000MW
                                                                                                                    reactors – projects that predate
                                                                                                                                                          intellectual property disputes,
                                                                                                                                                          with foreign companies claiming
                                                                                                                                                                                                would limit foreign companies to
                                                                                                                                                                                                selling technology, supplies and
                                                                                                                                                                                                                                         Mr Bindra said: “The
                                                                                                                                                                                                                                      Commonwealth Games is a
power capacity, with another          business to the US                    conduct any nuclear commerce            the sanctions – and the Russian       Indian technology as their own.       services and prohibit foreign         fine opportunity to build a
2,600MW under construction.                                                 with India until New Delhi              agency is to help build another         “The motto of self-reliance is      equity stakes in any nuclear          sports culture in the country
  But when New Delhi was
                                      was just that – hype’                 adopts internationally binding          two reactors at the site. The         not just a slogan,” he says. “It is   power plant.                          and generate interest in sports
finally accepted last year as a de                                          legislation to limit private liabil-    NPCI also has an agreement to         an important element of our             That would be a significant         outside cricket.” However, he
facto member of the global            output to improve its long-term       ity in case of a nuclear accident,      acquire technology from France’s      technological march and our           brake on India’s development,         said funds should not be used
nuclear club – as part of a deal      energy security and meet surging      potentially another highly con-         state-controlled company Areva.       ambition to lead the world,” he       given     the   state’s    limited    to build sport facilities only in
with the US – India became an         demand. India’s national energy       tentious political issue.                  But while the NPCI wants for-      says. “We must conduct business       resources for such expensive          the capital.
accepted partner for the interna-     plan calls for 30,000MW of              “India has been very accus-           eign collaboration to help it rap-    in a manner that does not con-        projects. “It won’t be possible for      In one of his many talks with
tional civil nuclear trade.           nuclear power by 2020, 63,000MW       tomed to doing these through its        idly expand energy production,        strain us from getting into a top     the government of India to find       youngsters, Mr Bindra stressed
  Since then, western energy          by 2030 and 250,000MW by 2050.        state-owned companies or deal-          India’s nuclear research estab-       position, otherwise we simply         the resources on its own, which       that sport was an “integral”
companies have been beating a           Western companies see oppor-        ing with foreign state-owned            lishment – obsessed with ideas of     become the so-called fabricators      means international finance will      part of developing the country.
path to New Delhi. Yet even as        tunities. In January, executives      companies,” says Ted Jones, a           achieving technological suprem-       or service providers – fabricating    be required – and a lot of that is       “I dream of seeing India
they tout their wares, New Delhi      from 30 US companies, including       director of the US-India Business       acy – appears anxious.                something for x’s orders, y’s         going to be equity,” says V.          become a sporting
is still grappling with sensitive     GE, Westinghouse, Bechtel, Bab-       Council. “To induce the partici-           Last year, Anil Kakodkar, the      orders, or z’s orders.”               Raghuraman, a Confederation of        superpower,” he told them.
questions of how much foreign         cock & Wilcox, and Shaw Power,        pation of private companies, they       Atomic Energy Commission                India’s Congress-led govern-        Indian Industry adviser. “We’ll       Full profile at:
involvement to permit.                visited India for discussions with    need to. . . create an enabling         chairman, publicly cautioned          ment has yet to unveil publicly a     have to really see what comes         india­globalisation­2009
  After decades of self-reliance –    government officials and the          framework.”                             that foreign co-operation should      proposed legal framework for          out and how it gets legislated.
and little outside scrutiny of its    NPCI on meeting India’s power           The NPCI is working with Rus-         not erode India’s technological       nuclear commerce. But local           There are many questions that           James Fontanella­Khan
operations, India’s powerful          needs. The US delegation was fol-     sia’s state-owned AtomStroy             capacity, and warned of potential     newspapers say a current draft        have to be answered.”

Showmanship at the WTO that plays well with the poor
                                 Mr Nath face an uncertain         Pradesh would remove Mr           while some countries                along with Celso Amorim,       a force for liberalisation.      lower bindings [ceilings] on    over international promises
                                 time. While he refused to         Nath from the WTO circuit.        expressed frustration, Mr           for the developing world in    Ashok Gulati, co-author of a     agricultural tariffs.”          and liberalising trade.
                                 discuss it directly, Mr Nath,     In early December, as the         Nath insisted that a bad            putting their interests        book on WTO negotiations            That seems unlikely with       If Congress does lose the
Alan Beattie weighs              a Congress MP, was one of         votes were being counted,         deal for the developing             upfront in the WTO . . .       and agriculture, says India      Mr Nath in charge. Defying      elections, whoever takes
                                 the leading candidates to         the director-general of the       world was worse than none.          Sharp, witty, pragmatic and    has less to protect than it      a promise by the G20            over from Mr Nath is
up the approach of               become chief minister in          WTO faced a difficult                India has traditionally          astute, Kamal is sure to       claims. “We should be less       leading economies to take       unlikely to have the same
the country’s adroit             Madhya Pradesh. But the           decision about whether to         been one of the more                continue his meteoric rise     defensive,” he says. “We         no new protectionist            showmanship or political
                                 ruling BJP easily held on to      call ministers to a meeting       recalcitrant of the big             in India and the echelons of   would be in a better             actions, he raised soya         skills. But the pressure any
trade minister                   the state.                        that could either have            countries in global trade           world leaders.”                position to demand               tariffs in November.            new minister will face – to
                                   And if, as most assume,         achieved an outline deal or       talks. But under Mr Nath,             Yet some within India        concessions from developed       Placating soyabean farmers,     avoid being seen to sell out
Kamal Nath rarely misses         the ruling Congress-led           ended in another failure.         its influence has increased.        want to see the country be     countries if we agreed to        it appears, takes precedence    India’s poor – will remain.
the opportunity to make a        coalition in New Delhi fails        Many officials and              Along with Brazil, the EU
point. When India’s              to retain power in the            observers identified Mr           and the US, India has been
influential trade minister       forthcoming general               Nath as the main influence        part of the core negotiating
took time out from the           election, which must be           on that decision.                 group at the heart of Doha.
international policy circuit     held by May, Mr Nath could        Christopher Wenk, senior             And while Celso Amorim,
to campaign in November’s        face a spell in the political     director of international         Brazil’s foreign minister,
state election in Madhya         backwaters.                       policy at the US Chamber          plays an influential role, it
Pradesh, he was the first to       It is not a position to         of Commerce, said at the          is overshadowed by India’s
admit that questions about       which he is accustomed.           time: “In reality, the biggest    rallying of other developing
the World Trade                  Unlike many of his                calculation . . . on whether      nations to demand deeper
Organisation were not a          technocratic colleagues, Mr       or not to have another go         cuts in US farm subsidies
staple concern of voters.        Nath revels in the spotlight.     at a ministerial in               and more leeway for poor
  But still, he claimed time     His orchestration of other        December, is whether              economies to protect their
and again that the               developing countries in the       Kamal Nath, and India, will       farmers with import tariffs.
uncompromising stance he         Doha round, especially in         actually be willing to               For those who want a
took in the so-called “Doha      opposition to the US, evokes      negotiate or is he more           louder voice for the
round” of global trade talks     admiration from his               willing to run out the clock      developing world within the
stood him in good stead as       supporters and frustration        on 2009 and the end of the        WTO, Mr Nath is good
a champion of India’s poor.      from his opponents.               Bush administration.”             news. Pradeep Mehta of the
“They know I stand up for          More than a few officials         In the event, Pascal            Consumer Unity and Trust
them,” he said. “That’s why      and observers in                  Lamy, the WTO                     Society, a think-tank based
they support me.”                Washington were hoping            director-general, decided         in Jaipur, says: “He has
  Both the Doha round and        that a victory in Madhya          against taking the risk. And      been the rallying point,

Scandal raises questions
about disclosure regime
CORPORATE GOVERNANCE             least in the Indian context,”     fell in line with the market.     trolling shareholders to
                                 said IIFL, the institutional        The Maytas deal was an          reveal their share pledges.
The Satyam affair                research division of the secu-    attempt to cover up the              The move was welcomed
focuses attention                rities house, India Infoline.
                                 “Symbolically, it is akin to
                                                                   fraud at Satyam. By January
                                                                   7, the game was up. The
                                                                                                     by the market but experts
                                                                                                     called it “too little, too late”.
on the regulator,                the high-profile frauds perpe-    lenders had sold almost all          Professor     Sandeep       P.
says Joe Leahy                   trated by Enron, Worldcom
                                 or Parmalat, all of which
                                                                   of the Raju family’s shares.
                                                                     The question for analysts
                                                                                                     Parekh, visiting associate
                                                                                                     faculty at the Indian Insti-
                                 had overstated profits and        now is whether Satyam is an       tute      of    Management,
Early in the New Year, an        the value of assets on            exception.                        Ahmedabad and former
otherwise unremarkable           books.”                             The scandal has prompted        executive director of Sebi,
software industry executive         India’s stock market has       calls for the government to       said during his time at the
shocked India and the world.     borne the brunt of the reve-      tidy up loose corporate dis-      regulator he spent three
  B. Ramalinga Raju, the         lations. Since December 17,       closure requirements. The         years developing new disclo-
chairman of Satyam Compu-        when the first signs emerged      most prominent need is to         sure standards that have yet
ter Services, India’s fourth     that all was not right at         force controlling sharehold-      to be fully implemented.
largest information technol-     Satyam, the Bombay Stock          ers to reveal if they have           Common complaints about
ogy group by revenue, sent a     Exchange’s         benchmark      pledged shares to lenders.        India’s disclosure regime
letter to his board confessing   Sensex Index, has fallen 13                                         include the absence of a
to a crime so spectacular in     per cent to 8.674.35 points as                                      requirement on companies
its scale that many could        of January 23.                    ‘Symbolically,                    to file full balance sheets
hardly believe it.                  Part of the reason the         it is akin to the                 along with quarterly results.
  Apparently, Satyam’s bal-      Satyam fraud was such a                                                The other problem is
ance sheet as of September       shock was that it occurred        high­profile frauds               enforcement. In the queue of
was an elaborate work of fic-
tion in which everything
                                 in India’s multi-billion dollar
                                 information technology out-
                                                                   perpetrated by                    government agencies wait-
                                                                                                     ing to interrogate Mr Raju,
from revenue and profits to      sourcing business, regarded       Enron, Worldcom                   Sebi seemed to be last in
most of its cash balance of      as one of the most progres-                                         line.
Rs53.61bn was an invention.      sive industries in the coun-
                                                                   or Parmalat’                         And almost no serious
The fraud was carried out        try’s corporate sector.                                             white collar criminal in
over a number of years, Mr          The episode began when           In a market in which more       India has ever served time
Raju’s letter said, raising      Mr Raju on December 16 pro-       than half of the key constitu-    after sentencing.
questions over how the com-      posed that Satyam acquire         ents of the Sensex are con-          India’s corporate govern-
pany’s auditor, PwC, and         the Maytas property and           trolled by families, this is a    ance system is still regarded
stock market regulators          infrastructure companies          sensitive issue. But the          as among the best in emerg-
failed to spot it.               belonging to his family in a      secretive pledging of shares      ing markets. But the Satyam
  In one step, he under-         deal worth $1.6bn.                to lenders is a key risk for      episode shows there is
mined the confidence of             The deal was approved by       unsuspecting minority inves-      plenty to be done by regula-
India’s once unerringly self-    Satyam’s independent direc-       tors. Once a stock that has       tors and policymakers.
assured business commu-          tors. But within hours, insti-    been pledged hits a certain          “Corporate crime in India
nity,                            tutional investors launched       point, it will trigger a mar-     can’t be addressed by more
  “There has rarely been a       an unprecedented rebellion.       gin call, forcing the lender in   laws or indeed more govern-
case of a bull market not           Unbeknown to these inves-      question to begin selling.        ance,” says Krishnamurthy
having left a few fraudulent     tors, Mr Raju was sitting on      This can collapse the price.      Vijayan, executive chairman
residues, but the suo motu       a timebomb. He had pledged          Two weeks after the con-        of JP Morgan Asset Manage-
disclosure . . . by Ramalinga    his family’s 8 per cent stake     fession letter was released,      ment in Mumbai. “I suspect
Raju, the chairman of            in the company to lenders,        the Securities and Exchange       that rapid and forceful
Satyam. . . must be catego-      who had started selling off       Board of India, the regulator,    action against the perpetra-
rised as the mother of all, at   the shares as Satyam’s stock      made it mandatory for con-        tors is the main answer.”
4                                                                                                       ★                                                                                                                          FINANCIAL TIMES FRIDAY JANUARY 30 2009

India & Globalisation

Mobile operators scramble to dial up vast rural market
TELECOMS                                tion had analysts scratching            Mumbai-based brokerage Prabhu-           pares with $10.80 in China and              The government is still target-      yielded rich dividends,” Mr Mit-     ulation, remains enticing, opera-
                                        their heads – the $1.1bn acquisi-       das Lilladher.                           $52.50 in the US. Call rates per          ing 650m subscribers for mobile        tal says.                            tors will need to overcome barri-
A rapid growth in users                 tion of 60 per cent of Unitech             This growth is regarded as one        minute are just one US cent.              and fixed-line telephony by 2012.         The number two operator, Reli-    ers such as tight competition, the
offers big opportunities,               Wireless by Norway’s Telenor.
                                          “Faced with a saturated mar-
                                                                                of the showcase achievements of
                                                                                economic liberalisation that
                                                                                                                           Minutes of usage are among
                                                                                                                         the highest in India at 448 per
                                                                                                                                                                   But this will be possible only if
                                                                                                                                                                   the government stimulates devel-
                                                                                                                                                                                                          ance Communications, however,
                                                                                                                                                                                                          reported slightly weaker than
                                                                                                                                                                                                                                               cost of setting up base stations, a
                                                                                                                                                                                                                                               lack of organised retail outlets
reports Joe Leahy                       ket in the developed countries of       began in the early 1990s. It is also     subscriber per month, second              opment of untapped rural areas.        expected results as it rolls out a   and low population density.
                                        the world, the Indian market rep-       regularly held up as an example          only to the US with 812.                    There are signs that the cost of     new network based on the popu-         If the pursuit of rural subscrib-
If the world was slow to wake up        resents one of the last remaining       of how quickly India can develop                                                   growing in rural areas, which          lar global system for mobile com-    ers becomes too costly, many
to the importance of India’s            pockets of growth for global oper-      its infrastructure given the right                                                 requires huge capital expendi-         munications standard.                operators, particularly potential
mobile telephony industry, any          ators,” says a report by consul-        incentives.                              ‘The Indian market                        ture, is beginning to weigh on            GSM is used by Bharti and         new foreign entrants, may hope
doubts over how it views the sec-       tancy Cap Gemini.                          Analysts attribute this rapid         represents one of the                     operators.                             most of Reliance’s other rivals,     for a boost by participating in the
tor now were put to rest in 2008.         Last year, India overtook             progress to the government’s                                                         Industry leader Bharti Airtel is     including Vodafone of the UK,        country’s planned 3G auction.
   In November, Japan’s NTT             China as the country adding the         early moves to throw open the            last remaining pockets                    still doing well. In its third quar-   whose unit Vodafone Essar is           Entry into 3G could enable
DoCoMo paid $2.7bn for 26 per
cent of Tata Teleservices, India’s
                                        most subscribers to its networks
                                        every month. Operators regularly
                                                                                sector to private competition in
                                                                                tandem with the establishment of
                                                                                                                         of growth for global                      ter ending December, it reported
                                                                                                                                                                   stronger-than-expected net profit
                                                                                                                                                                                                          India’s number three operator by
                                                                                                                                                                                                          subscriber numbers.
                                                                                                                                                                                                                                               operators to relieve congestion in
                                                                                                                                                                                                                                               existing networks using the
sixth largest mobile operator, in       exceeded a net subscriber addi-         a strong regulator.                      operators’                                and added a record number of              Reliance is hoping to increase    standard’s higher bandwidth
a deal whose price shocked the          tion of 10m a month.                       Private-sector operators and                                                    subscribers to bring its total to      its subscriber base to 100m from     while migrating their premium
industry. It could only mean one          In spite of the global economic       equipment vendors have pro-                                                        85.7m in December. Chairman            61.4m at the end of December.        users to the new “data-rich” serv-
thing – NTT felt it had to have a       malaise, the total subscriber base      vided innovative tariff structures         However, analysts are ques-             Sunil Mittal says this was largely     Vodafone, meanwhile, is looking      ices enabled by the medium.
presence in the world’s fastest-        in India last year rose by 48.5 per     and attractively-priced handsets.        tioning how long the market can           through targeting villages, with       this year to take the second rank-     For India’s department of tele-
growing mobile market at any            cent to 346.9m.                         These measures have enabled              sustain this growth. Penetration          Bharti’s network now covering          ing from Reliance.                   communications, 3G could be a
cost.                                     “The slowdown in the overall          Indian consumers to enjoy the            in the most lucrative urban mar-          400,000 villages across India.            But while the potential of        moneyspinner as well, with offi-
   The takeover of Tata Teleserv-       economy is yet to impact the sub-       lowest prices in the world.              kets, the metropolises of Mum-              “Bharti’s strategy of extensive      India’s rural population, which      cials claiming it could raise
ices followed another deal two          scriber net additions,” says               India’s average revenue per           bai, New Delhi and others, is             rollout ahead of competition,          accounts for more than two-          Rs1,000bn along with an auction
weeks earlier whose hefty valua-        Nishna Biyani, analyst with             user, at $8.60 per month, com-           already approaching 80 per cent.          especially in new villages, has        thirds of the country’s 1.1bn pop-   of other forms of mobile licence.

‘Slumdog’ challenges a
comfortable tradition
BOLLYWOOD                           heart of India’s film industry     but it’s not an Indian film.”    sequences, melodramatic in
                                    – the success of Slumdog             Jag Mundra, an independ-       their acting style, and often
But melodramatic                    Millionaire has generated          ent filmmaker who has            reflective of conservative
‘masala movies’                     both excitement and angst
                                    over Bollywood’s relation-
                                                                       directed several “issues-
                                                                       based” films, such as Pro-
                                                                                                        Indian social and family val-
                                                                                                        ues. While they are circu-
remain popular,                     ship with global audiences.        voked and Shoot on Site,         lated abroad by niche dis-
finds Amy Kazmin                       To some industry players,
                                    the film’s Indian theme will
                                                                       believes Slumdog Millionaire
                                                                       – with its cast of relatively
                                                                                                        tributors, to areas with large
                                                                                                        South Asian populations,
                                    help give national cinema          unknown actors – could not       these “masala movies” are

              ith its gritty        greater international credi-       yet be made in today’s Bolly-    otherwise thought to have
              depiction     of      bility and distribution, just      wood,      which     remains     little international appeal.
              M u m b a i ’ s       as Crouching Tiger, Hidden         obsessed with “bankable             Simultaneously, movies
              underbelly     –      Dragon demonstrated to Hol-        stars” rather than a gripping    such as Deepa Mehta’s tril-
and an unlikely rags-to-            lywood distributors the                                             ogy of Fire, Earth, and
riches tale of resilience and       potential appeal of Chinese                                         Water, and Mira Nair’s                  Slumdog Millionaire’s success has enthused many urban Indians, although it is not an Indian production
hope, the film Slumdog Mil-         films in the west.                 ‘There is so much                Salaam Bombay and Mon-
lionaire has gained critical           “More people in western         chaos. People                    soon Wedding, which tackle              produced,      directed    and    opener,” says Mr Bhargava.       global film, without aban-      1950s,” Mr Lulla said. “Peo-
acclaim and box office suc-         offices will now be willing to                                      socially challenging subjects           starred in a film about a boy     “People are looking for con-     doning its domestic market,”    ple wanted to get out and
cess round the world, plus 10       look at and listen to things       want escapist                    with more naturalistic act-             suffering from dyslexia. A        tent.”                           says Mr Khanna.                 watch happy-go-lucky, larg-
Oscar nominations.
   Despite the film’s pedigree
                                    coming out of India,” says
                                    famed Indian producer,
                                                                       cinema. That’s                   ing (and far fewer songs),
                                                                                                        have found critical and box
                                                                                                                                                Wednesday, starring two
                                                                                                                                                classical but not bankable
                                                                                                                                                                                     All this suggests that as
                                                                                                                                                                                  Indian tastes change and the
                                                                                                                                                                                                                      Yet in the meantime,
                                                                                                                                                                                                                   Kishore Lulla, chief execu-
                                                                                                                                                                                                                                                   er-than-life escapist cinema.
                                                                                                                                                                                                                                                     “Today too, they want to
as a British production, its        Ramesh       Sippy,     whose      what Bollywood is                office success on the art               actors, was also a surprise       market segments, there will      tive of Eros International, a   forget their worries. We
international success has           Warner Brothers-backed                                              house circuit abroad, but               hit on the Indian multiplex       be a greater focus on script,    film company, thinks inter-     have recession, we have war
enthused many urban Indi-           film, Chandni Chowk to
                                                                       all about’                       had only limited audiences              circuit, with its taut story of   ideas, content and urban         national     demand       for   – there is so much chaos.
ans, now embracing it as a          China, has failed to shine in                                       in India.                               a vigilante against terror –      themes.                          “masala” films is growing.      People want escapist cin-
triumph of India’s cinema           its first week according to        story, and reluctant to stray       Yet Sandeep Bhargava of              and not a single song.               “The next stage for India        “Bollywood is where Hol-     ema. That’s what Bollywood
industry, which generates           Box Office Mojo.                   from idiosyncratic yet com-      The Indian Film Company,                  “2008 has been an eye-          is a film which will become a    lywood was in the 1940s and     is all about.”
about 900 films a year.                Yet others have felt            fortable formulas that have      says changing Indian tastes
   In Indian media inter-           anguished that it has taken        for decades found favour in      – especially among urban
views, Danny Boyle, the             a British production to suc-       the domestic market.             youth and the development
British director, has insisted      cessfully interpret India for        Globally, Indian films have    of more multiplex screens in
his work is a mainstream            a western audience.                been seen by distributors as     urban areas – are giving Bol-
Indian “feel-good” film,               “It’s not an Indian film,”      either suitable for Indian       lywood fresh impetus to
given its romantic love story       says Amit Khanna, a former         tastes, or the international     experiment           more      with
and underdog hero who               songwriter and media pro-          market, but rarely for both.     socially and thematically
overcomes         tremendous        ducer who is now chairman            Movies catering to India’s     challenging (and shorter)
adversity to secure triumph         of Reliance Entertainment.         mass audience are tradition-     films that target more
and, of course, the girl.           “We are trying to appropri-        ally around three hours          sophisticated, audiences.
   Yet, among directors and         ate it, but the vision is west-    long; punctuated by numer-          B o l l y w o o d s t a r A a mi r
producers in Mumbai – the           ern. It’s a film about India,      ous    song     and    dance     Khan, for example, last year

Diaspora suffers ambivalence
CITIZENSHIP                         ing jobs in public sector          to 549,000 a year in 2005,       in private firms, especially
                                    institutions, such as univer-      according to government sta-     in the IT industry.
Officialdom is wary                 sities, research laboratories      tistics. The result of decades      But Indian officialdom still
of those who have                   and state enterprises – the
                                    areas most desperately in
                                                                       of brain drain are evident.
                                                                          According to the US cen-
                                                                                                        looks warily at the overseas
                                                                                                        community. New Delhi has
made a life abroad,                 need of training and experi-       sus, people of Indian origin     in recent years started issu-
says Amy Kazmin                     ence gleaned from abroad.
                                      “India has severely under-
                                                                       are the best-educated, most
                                                                       affluent ethnic group in the
                                                                                                        ing “Overseas Citizens of
                                                                                                        India” cards to people of
                                    leveraged its diaspora,” says      country, with higher median      Indian origin. Cardholders
Despite India’s rapid growth        Devesh Kapur, director of          family incomes and more          say it is more like a life-time
and      his    undergraduate       the University of Pennsylva-       advanced degrees than any        multiple entry visa than gen-
degree in bio-technology,           nia’s    Center    for    the      other community. “The            uine citizenship, as it does
Deepak Jakhar, a 23-year-old        Advanced Study of India.           Indian diaspora is the most      not permit holders to vote or
aspiring cancer researcher,         “You would think that we           exceptional migrant group        take public sector jobs.
sees few career prospects in        would be tremendously wel-         ever in American history            Part of the problem
today’s India.                      coming of talent. In fact, we      besides the German Jews of       appears to be protectionism
   The job offers he received       are not.”                          the 1930s,” says Mr Kapur.       against the threat of compe-
to sell pharmaceutical prod-          In the early years after         India also has large, affluent   tition for jobs from overseas.
ucts had little appeal. An          independence, many Indians         communities in the UK, Can-      Yet non-resident Indians
internship in a government          went abroad on government          ada, Australia and the Mid-      suggest that policymaking
laboratory taught him that          scholarships to acquire skills     dle East.                        towards the diaspora is also
dilapidated state research          such as engineering and sci-          Private companies have        clouded by questions over
facilities offer little scope for   ence on condition that they        long recognised the benefits     definitions of who actually is
professional growth.                returned to help to build the      of tapping this vast overseas    “Indian”, given the partition
   That’s why Mr Jakhar,            nation. Today, in a perverse       Indian talent pool. Since        of the Indian subcontinent at
who has never travelled             inversion, western compa-          India’s economic liberalisa-     independence in 1947.
abroad, is now spending             nies plunder graduates of          tion began in 1991, many for-       “The breakup of India is a
Rs2m on a two-year graduate         India’s most elite institu-        eign companies have sent         thorn in the side of the coun-
programme – the second              tions – who have been edu-         overseas Indians, or their       try’s ability to think strategi-
year of which will take place       cated at taxpayer expense.         foreign-born children, to        cally about what to do with
at the UK’s Cranfield Univer-         Even during the recent           start operations, investment     its people because it doesn’t
sity. After he finishes his         years of economic growth,          funds, banks and other           know how to define it’s peo-
degree in clinical research,        the number of Indians going        enterprises in India. Many       ple,’” says Anand Shah,
his aim is to work in the UK        abroad as unskilled or semi-       Indian professionals living      founder of Indicorps, which
for several years and then          killed labourers has surged        overseas have also returned      brings people of Indian ori-
come home.                          from 199,000 a year in 1999,       to start companies, or work      gin, mostly from the US, to
   With a “UK-returned”                                                                                 internships in India.
label, he feels he will easily                                                                             India does seek to lure
land a good job in what by           Profile: Chanda Kochhar                                            capital from its diaspora,
then will be a large Indian                                                                             granting them a variety of
drug trial business. “Condi-         Chanda Kochhar joined                She joins a growing           special investment privi-
tions in India are improving         ICICI Bank, India’s largest       number of women at the           leges. Non-resident Indians,
day by day, but we can’t             private sector institution, as    top of India’s financial         for example, are permitted to
wait,” he says.                      a management trainee, and         industry.                        hold      foreign     currency
   In seeking out better             cut her teeth building its           Others include Naina Lal      accounts in India, which are
opportunities, Mr Jakhar,            then fledgling retail division.   Kidwai, chief executive          earn higher interest rates
the son of a small business-         This part of the bank later       officer of HSBC in India;        than they could earn at bank
man from the northern town           became its growth engine.         Meera Sanyal, chief              accounts at home.
of Rotak, is following a path           Now Ms Kochhar, 47,            executive of ABN Amro;              But Mr Shah says many
trodden by tens of millions          who was named as ICICI’s          Kalpana Morparia, who            people of Indian origin
of Indians.                          chief executive in December,      heads JPMorgan; and              would like to do more to
   Since the British colonial        faces the challenge of her        Manisha Girotra, the             help India tackle its chal-
period – accelerating since          life. Banks are in the grip of    chairperson of UBS.              lenges.
independence – Indians have          the downturn.                     JPMorgan’s head of                  “If the government made a
streamed abroad in search of            “The times are a bit more      investment banking is            serious effort to recognise
education, jobs and opportu-         challenging,” Ms Kochhar          Vedika Bhandarkar, and           that there are people that
nities unavailable at home,          said. “You need to                Kotak Mahindra Bank’s            have some sort of affinity to
creating one of the world’s          continuously monitor each         head of investment banking       India who would love the
largest diasporas.                   and every part of your            is Falguni Nayar.                opportunity to share their
   Yet New Delhi retains an          portfolio and keep                Full profile at:      expertise, or if they created
ambivalent attitude towards          calibrating actions to            /india­globalisation­2009        structured ways for people
its massive diaspora. It pro-        respond to the                                                     to contribute, you’d see a lot
hibits dual citizenship, and         environment.”                                    Joe Leahy         of people jump at the oppor-
bars non-citizens from hold-                                                                            tunity,” he says.

To top