The Hindu Business Line : Emerging India: New roles and responsibilities

A vibrant India is rapidly emerging onto the global economic platform. For the first time, a democratic country with a population of over one billion will be actively participating in growth, trade and investment. This has significant implications for the world economy and the process of globalisation. India must assume new roles and responsibilities to manage the impact in a way that benefits its development as well as that of the world.

During the first eight months of 2006-07, industry achieved a growth rate of 10.6 per cent, with November production touching the highest monthly increase since mid-1996. GDP for the year will end around 9 per cent, among the highest in the world. Corporate bottomlines are expanding by multiples, matched by the rise of the stock market, while overseas acquisitions have become the success story of the year. Exports are expected to reach $125 billion and demand for non-oil goods from overseas has already touched $65 billion.

Trade and investments

In the global context, the emergence of a large consuming and producing nation has the potential to alter the terms of trade and investment. India needs to work multilateral trade talks to its benefit, stressing its natural and comparative advantages.

We need to build on the foundation that trade and investment present to develop deeper engagement between nations on critical issues. Economic partnership has the potential to alleviate the scourge of poverty and raise standards of living rapidly. It can enhance productivity, transfer technology and raise exports and employment.

Thus, trade and investments must be vital tools in the task of development. The Doha Round of the World Trade Organisation has to be revived for maximising trade gains, and India has a key role to play in negotiations as a voice of the developing economies. Trade is already being promoted through initiatives such as regional and bilateral trading agreements.

India's negotiations with various groupings and countries is proceeding rapidly, following the successful implementation of pacts with Sri Lanka and Singapore. Negotiations with Japan, the Gulf Cooperation Council, Mercosur countries of South America and ASEAN (Association of South East Asian Nations) among others are ongoing, and will deliver new opportunities for Indian industry.

Slowing demand

The global economy is forecast to suffer from a downturn in consumer demand from developed economies, which are growing at low rates.

Before this starts affecting the growth of developing countries, with significant negative implications for the alleviation of poverty, India has the potential to build consumer wealth and be a market as well as factory of the world. This will require additional investments from overseas to complement the high rate of domestic savings and investments. Attracting capital will be a centerpiece of the new Indian economy, as international companies look at India as a manufacturing base.

Another critical responsibility for India in the evolving scenario is ensuring the best deal for its people. At the one end, India can push the agenda for cross-border movement under Mode 4. On the other end, India needs to meet the aspirations of the growing population entering the workforce in higher education, vocational training and skill development.

Movement of People

When we talk of globalisation and of a borderless world, the focus so far has largely been on the movement of goods, capital and, largely, financial and logistical services. There is as yet no clear framework for the movement of people. On the other hand, developed economies are becoming more restrictive with respect to immigration and the movement of labour.

If the Doha Round has to have a successful outcome, then it must remain true to its original mandate of being a Development Round. It is critical for India to be more aggressive in promoting services trade.

IT and IT-enabled service exports have been increasing, with $6 billion revenues from the BPO sector alone. Other services, such as tourism, healthcare, professional services, etc., have high potential as well, but India's advantages in these must be brought to the attention of global companies. It is also possible to leverage India's strengths in higher education to attract more overseas students.

Growth by innovation

One of India's key advantages in the technology-driven era of globalisation has been the use of innovation to propel growth. As innovation continues to be a driving force for development, government and corporates in India need to steer ideas and concepts into development. High-technology, research and development, and constant innovation will be key to India's future growth. Currently, India spends less than 1 per cent of its GDP on research and development. Translation of innovation to enterprise demands close cooperation of industry and academia.

Multi-lateralism is also required to play a role in minimising risks to the global economy. Several emerging and potential threats to the world are becoming noticeable, such as climate change, pollution across borders, pandemics, or water shortages. These need to be managed in a comprehensive manner by all countries acting together, and India must play a key role in this process.

Environment issues are of particular interest and Indian companies have demonstrated that they can use the available technologies for carbon trading credits. Synergy of government and the corporate sector can help India evolve into a significant player in the global markets.

Policy-makers' prerogative

India's new roles and responsibilities are not the sole prerogative of its policy-makers.

The corporate sector has to assume new identities as well in order to leverage India's human talent to succeed in the world economy. More important, a partnership of the government, central as well as State, and the private sector is critical for making India a large player in the world. The theme of the Confederation of Indian Industry's annual Partnership Summit 2007 is built around India's new development paradigm. Being held in Bangalore from January 17-19, the Summit is host to a galaxy of international and Indian political and business leaders.

It will devise strategies for the new India in a variety of areas, including trade, investment, technology and innovation, and people resources. The Partnership Summit 2007 promises to generate ideas for all, including government, business and international participants.

(The author is CEO and Managing Director of Infosys Technologies Ltd.)