The Hindu Business Line : `India is on a roll and people are betting on it'

India has done well. Earlier there was a feeling that it had political instability; governments come and change policies. Now there is conviction that whatever the government in power, economic reforms go on. — MR GOPINATH PILLAI, Chairman, Gateway Distriparks Ltd, Mumbai, and Institute of South Asia Studies, Singapore

Recently in Singapore

India is on a roll and businessmen in Singapore are interested in investing in India, says Mr Gopinath Pillai, Chairman, Gateway Distriparks Ltd, Mumbai, and Institute of South Asia Studies, Singapore. But India, he told Business Line, needs to get its act together on such things as its airports, the visual impact on first-time visitors, and its legal framework.

Excerpts from the interview:

What kind of investments do you have in India?

I have a number of investments in India, the big one is Gateway Distriparks (logistics facilitator for port-related activities); we have operations in Mumbai, Chennai and Vizag. We are a listed company with a market cap of $500 million. We've got the licence to carry containers on the Railways; we've already started through Concor to run services between the Western ports and North India. I feel the Railway Minister has done a great thing by stopping the monopoly and opening the sector to private players. (The company has three container freight stations and one inland container depot, making it the largest private-sector player in the area in India.)

And in Singapore...

We are in the education business, which is listed in London. We run ISAS, a private school for students from China, Vietnam, etc. Set up in 2004, its main shareholders are the Singapore Ministry of Trade and Industry, Foreign Affairs, and the National University of Singapore. We endeavour to build up in-depth knowledge on South Asia that will be useful for the policy-makers, bureaucrats and the business community.

Savan Infocom is the holding company for our education business; the word `Savan' is a French word meaning `a man of learning'

Has perception about India changed in Singapore?

Definitely, because India has done well. Earlier there was a feeling that it had political instability; governments come and change policies. Now there is conviction that whatever the government in power, economic reforms go on. The way the equity market had flared up, it put India on the global map. Of course, there has been a correction but that was due to global factors. But the fundamentals of Indian companies are still sound so there is no great desire to pull out, except for people and hedge funds who are there for short-term gains. India is on a roll and people are betting on it.

The negative on India is infrastructure especially for people coming from places such as Singapore, Taiwan or Hong Kong. When they land in Mumbai or elsewhere, the airports, the roads leading from the airports, and the drive to the city... all these are totally negative.

Obviously they have a hassle with small, cramped airports...

When you land in Mumbai, the long walk to the immigration...

Well, at Changi airport too the walk to the immigration is long...

Yes, but we have automated walkways, and the walk to Immigration is pleasant. In India you have to put your bags through an X-ray machines. If there are five-six airplanes landing at the same time... the last time I landed, Haj pilgrims were returning, and there was virtual chaos! And why do you need X-ray machines? Just as in other countries, one could be stopped and one's bag opened, that's fine. Of course, the immigration in Mumbai has changed tremendously in the last 10 years, but still it is not good enough. India is always compared to China, people always say why can't India be like China. But once you get into a hotel then it's a different story. The hotels are very good, the service is excellent, but your mind is already made up by the first impressions.

Also, India has stopped paying attention to its visual impact. The fundamentals might be very good in the economy but what people see makes a negative impression that is very difficult to wipe off. At traffic lights beggars and other elements nag you...

On the economic front, what would global businessmen like to see in India?

Infrastructure must be given top priority. A positive is that every government has got fairly good ministers and that's a great advantage. The young in India are very talented; I deal with a lot of finance professionals here and all of them are creative and talented... Among the best in the world. There is so much going for India, it should build on it.

On the political side there should be greater and long-term strategic thinking. They (politicians) should go beyond the next election and think what is good for the country vis-à-vis how do I get elected in the next election.

What areas look attractive for investment in India?

Infrastructure and education look attractive. I'm worried about education in India; at the top you have excellent institutions — the IITs and IIMs can be compared with the best in the world. But down the line, the quality deteriorates.

Are you looking at investing in the education sector in India?

Yes, I'd like to start a polytechnic campus in collaboration with the Singapore Polytechnique. I'd like to get the Singapore side firmed up first.

In which State?

My first priority is to get a tie up with a Singapore polytechnic, once that is firmed up, I'd look at Haryana or Pune, Hyderabad or Chennai. These are the possible locations.

How big would the venture be?

It has to start small, because I'd like to feel my way around. Gateway started with only Rs 10 crore; if you make a mistake you should be able to pull out without too much of a loss. By next year I'll have more clarity on the project. But I see scope for this venture because while at the top level you have good technical people you need more institutions at the middle level. Good technical people are the backbone of the manufacturing industry. Why is it that China does so well in manufacturing? It is their colleges at the middle level, not the high level that India has. It is the lower middle level, where it trains the mechanics, the artisans.

Earlier Singapore was such an important player in the region, but as the Indian economy surges, do people here look at India as a rival, a competitor, which will take away its business?

No, we know both China and India will take away a part of our business but Singaporeans are very realistic. It's no use crying over spilt milk or trying to stop anybody's progress. That is not possible, so we're trying to be useful to both India and China. People recognise there is a greater need to understand India and Singaporeans are encouraged to invest in India; their investment in China is tremendous already. We're so small, even if we want to take on anybody, we can't!

We were partners with Japan and now we look at both India and China as partners. I went to Japan to see if the Japanese would co-operate with us to go to India; the Japanese too are concerned about the lack of infrastructure in India so they get frightened. And the business cultures of Japan and India are very different, and when Japanese businessmen go to India they are shocked...

In what way?

Japan is a very structured place... when the train comes it stops exactly at the arrow, and the door opens. That is the kind of discipline they have, whereas India is disorganised and a free-for-all kind of place. So we went to Japan and said, `look we understand India so work with us; we'll go together.' And they are very keen to do so.

In what areas are they interested?

Mainly infrastructure, where there are huge opportunities, and that is good for India. You also need to look at your legal framework. What disturbs businessmen coming to India is that if a business partnership doesn't work, your partner can go to a magistrate's court and take criminal action against you at the drop of a hat, saying this chap has cheated me. And, a criminal charge is issued... and it takes ages to sort it out legally. It is used as a sort of blackmail by unscrupulous people...

And such things don't happen in China?

Well... it doesn't happen in Singapore or Japan. A Singapore court will not issue a criminal charge unless an investigation has been launched and they are satisfied... But in India reputable people are dragged into unnecessary legal hassles and the local partner can blackmail you saying, `you pay us and we'll withdraw the action'. This is common and worries foreign businessmen, and the government will have to step in and stop such things.

In a country like England, nobody will come out with a criminal charge if a partnership breaks; you go for arbitration, you wait and the arbitrator will decide who pays whom... in India it goes to court straightaway.

Which States in India look attractive to Singapore businessmen as investment destinations?

A lot of Singaporeans are looking at West Bengal... Buddhadeb (Chief Minister Buddhadeb Bhattacharjee) was here as a guest in my Institute and he was very popular with local businessmen, and invited people to invest in West Bengal.

We found him very different from other Left leaders. The trouble with the Left is that they want redistribution of income.

But, then, create income first. Don't talk about re-distribution before creating wealth!

Yet, the Left plays a good role, because traditionally there is an exploitative element in Indian society whether it is the higher caste exploiting the lower caste, the rich exploiting the poor... and the rich seem totally unconcerned about the social plight of the have-nots.

The Left tries to establish a social conscience but they should not stop wealth from being created.