In an article in the Harvard Business Review, Vijay Govindarajan, Coxe Distinguished Professor at Dartmouth’s Tuck School of Business, and Ravi Venkatesan, former chairman of Microsoft India and Cummins India, discuss 3 Reasons Global Firms Should Keep Investing in India.
Excerpts from the article:
India’s infrastructure spending is growing
“Companies such as JCB, Cummins, AECOM, and General Electric and investors such as Brookfield have successfully capitalized on India’s infrastructure investments. In fact, JCB makes half its global profits in India.
It’s been estimated that India needs $5 trillion in infrastructure investment to sustain its economic growth, but local Indian companies lack the competencies needed. This means significant growth potential for multinationals who have core competencies in high-tech infrastructure solutions such as jet engines, turbines, CT scanners, and satellite communications.”
India’s emerging middle class is strong
“In India’s consumer economy Amazon and Renault’s ultra-low-cost Kwid car have done well. This is because these companies have adapted their approaches to other markets rather than copying and pasting their developed market models across the world.
To succeed in India, companies must be willing to take a clean sheet of paper and start designing to the middle of the economic pyramid.”
The country is in a tech startup boom
“The startup ecosystem, now the world’s third largest, is maturing rapidly and is no longer dominated by copycat e-commerce companies. In fact, tech startups have attracted over $20 billion in the past three years.
“Government agencies and tech volunteers have come together to create “India Stack” — a set of APIs giving governments, businesses, startups, and developers a common digital infrastructure on which they can build and deliver presence-less, paperless, and cashless services. India has a vast number of consumers and a large, highly educated, and young talent base. But its problems in healthcare, financial services, education, and judicial systems can only be delivered by effectively leveraging technology.
This means huge opportunities for tech startups in these sectors, and we’re already seeing innovative tech companies enter the Indian market.”