The Hindu Business Line : `We need to mould our scientific talent'

Dr Manik Kher is a rarity in Indian academia: A researcher who gets out of the armchair and goes out into the field to collect the data around which she constructs her theses. A UGC Research Scientist at the University of Pune, she has published widely in journals as well the mass media and is the author of seven books, all of which reflect her preoccupation with the modernisation of industrial production through the optimisation of the equilibrium running through technology, systems and people. Her latest book, Technology Assimilation in Joint Ventures: The Indo-MNC Experience (Response Books), deals comprehensively with all aspects of a joint venture, from negotiations to the resolution of disputes, and highlights critical issues faced by Indian companies and multinational corporations in technology transfer, training, marketing, and research and development.

In a free-ranging interview with Business Line, she spoke about the complex dynamics of joint ventures and related subjects.

Excerpts from the interview:

You have, in the concluding chapter of your book, Technology Assimilation in Joint Ventures: The Indo-MNC Experience pointed out that Indian companies have had "a tough time negotiating each and every nuance of their JV activity, from equity share to marketing arrangements." You have further observed: "At times, Indian managers were humiliated due to their foreign partner's lack of seriousness in all aspects of business interactions. Foreign technology vendors sometimes took their Indian partners for a ride by selling slightly modified versions of old models as upgraded and new. They totally ignored the spirit of training in technology transfer and took a strictly legal approach to it." Is the disinclination of MNCs in joint ventures with Indian partners to adhere to the spirit of such ventures attributable to the failure of the latter to deliver their side of the deal — readymade production bases, a marketing network and so on — or to other considerations? If this is due to other considerations, what are they?

Prima facie, my observations appear to have been harsh and difficult for many to accept.

However, they have emerged from my interviews and discussions with people working across all levels of hierarchy in Indo-MNC JVs — From managing directors to skilled operatives at the shop-floor.

Most JVs formed between 1996 and 1998 have disappeared from the scene. The companies are very much there, but they are virtually owned by the MNCs. I would attribute its reason to the very rule of the business game. The MNCs will always aspire to acquire a full control over the companies.

Nobody opens a business for charity. If and when the Indian companies go to lesser-developed countries, I am sure they too will follow the same business tactics in the sale of technology and marketing and exploit the buyers' weaknesses to their advantage.

The MNCs have used these tactics almost everywhere; JVs have been splitting up in China too. We are disillusioned because of our rosy expectations from the MNCs. Our companies dreamt of entering the global market by using their association with the MNCs as a springboard. But none of the companies I studied could obtain such a benefit.

Their entry in developed countries was prevented by the very clause in the JV agreement that they would sell the produce directly only in those countries where the MNCs did not have a presence.

This left us only with a few countries such as Sri Lanka, Nepal and Bangladesh (mostly SAARC countries). Only a couple of companies managed to convince their JV partner to offload their production to India. However, with the growing opposition by the trade unions abroad, such a possibility will be still rare in the foreseeable future.

You have stated in your book: "JVs are basically power relationships. In order to withstand the MNC challenge, we need to capitalise on our own strengths which, for instance, lie in agro-based products and biotechnologies. We need to welcome R&D and commercialisation in these areas of production." Can you elaborate on this?

It is the partners' compatibility that holds the business relationship together. No MNC will approach you unless you have a brand image, a sound economic position, good marketing network and competent employees at all levels. It is a fact that though we can manufacture a technically superb product with zero defects, Western countries beat us in the aesthetic appearance of the products with a good finishing touch.

Therefore, my contention has been that we should capitalise on our strengths which lie in our research on indigenous herbs, agricultural and horticultural products. Our intellectual capital in the field of bio-technology can beat the best in the world. But we need to mould our scientific talent into technological applications. In the case of the agro-horticultural products, we have to improve our packaging systems. We also have to fulfil their statutory requirements for marketing. Our research potential needs to be complemented with great determination for quality and technological perfection.

You have recommended that Indian companies, as part of R&D, should focus on patent searches to obtain state-of-the-art technologies, thereby saving themselves "the rigors of reverse engineering and (the) payment of exorbitant fees to technology." Why haven't Indian companies paid sufficient attention to R&D in spite of the manifest advantages?

By and large, Indian companies have had a petty trader's mentality of making a fast buck without any long-term vision for building business with a good technology. We have lacked the urge to achieve excellence and steer ahead.

We have been a complacent and self-glorifying people. This mentality has percolated among businessmen, making them give importance to the production and marketing personnel and totally ignore those in R&D and maintenance.

Our companies awakened only when they were invaded by fierce competition from the MNCs and the consumers' preference for foreign goods which were denied to them till the opening of our economy.

Can you expand on technology spin offs and how they should ideally be implemented in India?

A technology-spin-off refers to a swift change in the end use application of technology rather than the one intended originally. Many products which have become part of our daily life are based on technologies innovated for the defence and space applications in the US.

The Internet security system, for instance, was designed by the US navy. A number of products innovated by NASA for astronauts have been indispensable for common people the world over.

Our defence laboratories, DMRL, DL, LASTEC, and DEBEL for instance, have had a great potential in this respect. Laboratories of the Department of Atomic Energy have some excellent technologies which can be commercialised. So also is the case with some of the CSIR laboratories, especially the National Aerospace laboratory. But the entrepreneurs are not coming forward due to apprehensions of market failure.

We need to be very careful in making market surveys before selecting products for commercialisation. At times markets need to be created with campaigns for consumer awareness. Rampant corruption is killing the entrepreneurship of our technocrats. Small-scale units are cash starved because the large-scale companies to whom they supply products and services do not make timely payments.

If they fail to pay on the agreed date, which in no case should exceed 120 days, it is mandatory for the buyer to pay interest on delayed payments at the one-and-a-half times the prime lending rate charged by the State Bank of India.

There is no stringent enforcement of the Interest on Delayed Payment to Small and Ancillary Industrial Undertakings Act, 1993. Big and otherwise well-known companies, as also the PSUs have been notorious for making awfully delayed payments without any interest. Any entrepreneur prefers a quick payment to inordinate delays with interest, for it is only the timely availability of finance that improves his chances of surviving competition.

A synergy between laboratories, industries and universities and technical institutes is lacking. I get a feeling that people with good potential and capability are demoralised due to organisational politics, lack of rule of law and a lack of faith in the system that it will encourage and support sincerity and devotion to work.

The onus of creating such an atmosphere lies on each one of us: Those in power, out of it, and far away from it too.

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