EXCLUSIVE INTERVIEW: IndiaGB meets ‘Make in India’ guru Amitabh Kant who praises Theresa May’s ‘passionate free trade agenda’
IndiaGBnews.com’ publisher Ben Pinnington caught up with Mr Kant at his offices in Delhi and hears his thoughts on Anglo Indian trade and the opportunities for British companies to support India’s sky rocketing economy.
IndiaGB: Mr Kant, you’re very clear that you want to make India an easier place to do business, how do you see the future?
India’s economy has grown on the back of its services sector, 65% of India’s GDP comes from the services sector. So, it’s very important that India drives its manufacturing.
Only 17% of India’s GDP comes from manufacturing and about 15% comes from agriculture. In the long run, if India is to create jobs, India needs to create a vast number of jobs with its very young population. India is passing through a window of demographic transition which rarely happens in history; 72% of India’s population is below the age of 32.
So the challenge for India is that it has to create about 100 million jobs by 2022. If India is to create that many jobs, manufacturing has to be a key driver of growth.
IndiaGB: What kind of products does India want to manufacture?
There’s intelligent manufacturing, or as you call it, smart manufacturing, but simultaneously India has several labour intensive sectors, like textiles, food processing, jewellery, the construction sector.
These are job creating sectors, so some states, like Gujarat and Maharashtra may have smart manufacturing but India’s a very large country, it’s bigger than 24 countries of Europe and since it’s a very large country, it’s very important that we create champion states.
We need at least about 12 champion states growing at 10% plus for three decades or more, as Gujarat has done earlier. Gujarat grew for almost 12 years at 10% plus, down to manufacturing mainly. In fact its growth rate was the same, a little higher than China.
Therefore you need many champions and you need many sectors, you need every state to find what it’s good at and drive it. And it must find its own core competency. Like Kerala grew on the back of travel and tourism.
And one of the key things which NITI is doing is to create this sense of competition among states, and helping the states to become more creative.
IndiaGB: What opportunities exist for British companies in India?
India is essentially a nation of small and medium enterprises. 90% of the job creation comes from medium and small enterprises. And the important thing for India is to grow with equity, and therefore it must have many more small and medium enterprises to raise the levels of productivity, to enhance their production, to become more efficient companies. And my belief is that innovation and technology is the key to India’s future. India must become a far more efficient nation; India must focus on its ability to evolve technology and innovation. Indian medium and small enterprises must be able to raise resources; they must disrupt the society much more.
And in all these areas there is a huge potential for Indian SMEs to work with UK companies. I also feel that there are several areas that India and UK need to work on.
One is the area of smart cities where technology will be a key driver. The process of urbanisation has ended across America and Europe, it’s just begun in India. India will see a lot of urbanisation and will therefore work with many medium and small enterprises to invent technology.
India is the only country with a billion biometrics. By 2024- 25 India will be the only country with a billion smartphones. And biometrics, smartphone and universal payment interface which is taking place, all three combined will drive change in a very big way. These three together will actually make India one of the most disruptive societies and everything in India will get transacted through the mobile telephone, everything.
By 2025 India will make, debit card, credit card, ATMs and cash machines all irrelevant. Everything will happen through biometrics and therefore this is the beginning of innovation in India.
IndiaGBnews: How do you encourage young people to become entrepreneurs, it’s a very demanding career choice?
The future of India lies in becoming innovative and one of the things we are doing is to disrupt our own education system first. There needs to be a radical change, and we are bringing into a number of schools labs with 3D computers and technology so they start disrupting.
We’re also supporting about 100 new incubation centres and upgrading our existing incubation centres. The intention is that they will disrupt as much as possible, so that India becomes a far more innovative society.
India has a very good eco system for start-ups and right now, there are about 19,000 start-ups. But by 2025 we’ll have about 100,000 start-ups and the valuation will go up massively.
IndiaGBnews: Do you think that Indian people are naturally entrepreneurial?
We need to be. Our young people are far more enterprising, I feel suddenly they have become job creators rather than job seekers. I was quite surprised to learn from a university colleague that 37% of the students actually set up a start-up or they joined a start-up.
IndiaGBnews: Do you think young people need to work for somebody first to learn how to do it before going into business themselves?
No, from the campus itself. And I find this happening in a number of areas, not merely in digital areas but in manufacturing, health, education. All our young start-ups are disrupting things in a very big way. So that movement needs to be provided with greater and better thrust.
IndiaGBnews: You’re a very senior person in the Indian Government. Britain is not alone in the market trying to woo India, as you say India is very much the future of the world over the next 100 years. How is Britain perceived by the Indian Government?
This is a very exciting phase in the movement of the international economic strategy of both India and the UK. The Modi Government has liberalised our economy in a very big way across a vast range of sectors and a good thing to hear was Theresa May talking very passionately about free trade across sectors.
And that’s why, since there’s a lot of passion for free trade, it’s important that while we are pushing for free trade, we must realise that free trade is across sectors; it’s across manufacturing, it’s across services, there’s no such thing as a selective free trade.
And if you’re allowing free trade in all sectors, then you need to allow it in terms of movement of people as well. And while this is an emotive issue in the UK it’s important to understand that London is a great city and the UK is a great country because it recognises merit.
It’s very important that meritorious people should find a place, especially those working in IT. They should not be held up due to a poor visa policy.
IndiaGBnews: What do Indian businesses look for in their partners, how should our British readers approach doing business here? Is India a country which is built on relationships? Or is it a country that prefers transactional business like say Germany?
No, we have a historical relationship with Britain, Indians have a great nostalgic memory of Britain, we’ve been a part of, and we are a part of Commonwealth, and it’s important that we drive change.
While we’ve seen investment rising with the UK trade has fallen. The past two years trade has come down by 8% and 14%. So we need to look at a post Brexit Britain and push our trade relations with the UK much better. There’s no rationale at all for trade falling by 8 % and 14% over the last two years.
IndiaGBnews: Is that because other countries are more adept at trading with India?
No, my view is that negotiating a trade agreement with Europe is a very complex issue. It may be easier to negotiate a trade agreement with UK but it has to be a win-win. You can’t have a trade agreement with UK without UK also realising that it needs to have a far more progressive policy on its visa regime.
There’s no such thing as selective free trade. If you allow free trade in manufacturing, then offer free trade in services as well. You can’t say that I’ll only do free trade in areas which are advantageous to me and I’ll stop the free trade in areas which are disadvantageous to me. How is that possible?
IndiaGBnews: On the point of the Commonwealth, how do Indians perceive the British Raj era?
There’s a sense of nostalgia, everybody has a close association with Britain but I think we need to look at the future rather than the past. There’s a whole range of areas where India and the UK can work together such as the creative industries and arts.
And those are areas which have opened up in India in a big way. There’s a huge amount of work which can be done by Indian companies and British companies together, in terms of co-development to penetrate third markets. There’s a huge amount of work which can be done in travel and tourism. These are areas of growth, where India and UK need to work together.
IndiaGBnews: Can you explain what NITI, the National Institute for the Transformation of India does?
India has grown with the planning process historically for 68 years. We’ve had five year plans; we’ve had one year plans. This was very much a relic of the socialist era.
When the new Government came into power one of the major decisions it took was that it would not do any more five year plans, so the five year plans have been done away with.
But what the Government does now is outcome based monitoring. For years we have done input and output based analysis and allocations based on input, but now we do just an outcome based monitoring.
Across sectors such as health and education we do very detailed outcome based monitoring. Based on that very detailed minutes are laid out, there’s a dashboard which monitors outcomes. So this Government is all about outcomes, it doesn’t get into processes, it doesn’t get into inputs.
But what NITI also does is to restructure institutions like the Medical Council of India. You can’t create a 21st Century India with 19th Century institutions, and therefore much of the institutional restructuring is happening from here.
What NITI is doing, instead of a five-year plan, is to create a 15 year vision document, a seven year strategy document, and a three-year action plan and the three year action plan will actually converge and integrate with the Finance Commission which will lay down the financial outlay.
IndiaGBnews: And in your mind, what does success look like?
NITI has evolved very rapidly to doing a great amount of structural change in the economy, in terms of forcing the pace of change through outcome based monitoring. Through that, there has been a lot of institutional reforms. To my mind it’s important that you know to measure change. What you can’t measure you can’t change, so outcomes are really closely monitored.
Quick fire questions:
What’s the best piece of advice you’ve ever received?
To always be optimistic, always look at the future and always be positive.
What would you still like to achieve in your career?
I always believe that I joined the Government service to really look at transforming India. The Government has given me an opportunity to perform that role, so my job has just begun. India needs to transform itself in various areas, from health to education to nutrition and we’ll do that.
For more details on Amitabh Kant: Twitter : @amitabhk87 www.makeinindia.com www.amitabhkant.in