GE’s India strategy will depend on how far the Modi Government is able to convert the current positive sentiment into a business-friendly environment.

Banmali Agrawala, President & CEO, GE South Asia, feels that there is a clear change in the body language of the bureaucracy — it has become more positive and reasonable. But, for this to translate into investments — with the focus on boosting manufacturing — policy will need to incentivise and not enforce conditions such as localisation, he told BusinessLine in an interview. Edited Excerpts:

What do you make of the new Government?

Things certainly look positive. The Government is in a mood to listen, which is refreshing. As of now nothing jumps out from a policy perspective, but what does come out is focus on governance. On the policy front, I think it will take some time. There are no magic answers. One is still waiting to see them take some hard decisions.

Do you see getting good business due to this positive outlook?

I think that will translate slowly. If there are opportunities and the Government is business minded, we will tap them.

What are you seeking from the Government?

We believe infrastructure development is the key. Investment in infrastructure is non-inflationary. What we have seen in other parts of the world is that a proportion of the spend on infrastructure is much higher than here. The overall GDP numbers do not give the details.

If you have very little capital formation arising out of building infrastructure, then it is not the right construct. Within the specifics of infrastructure, what is crucial is the means of payment and how the cost is recovered. This will essentially boil down to tariffs. It is not an easy game, but this infrastructure that is built needs to be paid for.

What is your manufacturing strategy here? And what, according to you, should the manufacturing policy be?

GE’s manufacturing is a combination of catering to the local market and exports. Being a global company, we leverage our supply chain. For a large product, a certain component may be sourced from outside.

As regards policy, if forced localisation is imposed, one has to figure out the consequences — if enough volumes or scales are not there, then the prices will increase.

If the volumes in the country are big enough, whether one forces or not, people will come and localise as it would be in their own interest. But, if the scale is small, companies will just give the country a miss.

The other thing about manufacturing is that if you aren’t globally competitive, it won’t work. I would position the manufacturing policy in such a way that manufacturers are incentivised.

The other perspective we have is that manufacturing investment has to be based on the domestic market. A certain share can be exported, but it is not practical to look at an export-focussed manufacturing policy.

How are you hard-selling India to your parent company?

We see India as a high-potential market, but actual dollars being invested is quite small as against investments in other places.

That is not because we do not want to invest, but due to a lack of opportunities.

We see opportunity if railway public-private-partnership projects take off, if oil and gas exploration increases.

The larger point is we want to be in India, we are willing to invest, if there is the slightest opportunity.

So far, there hasn’t been a case where we have put up an investment proposal and the parent has disallowed. When we do put up a proposal it has to be competitive. We have to say why it is better to do it in India. In manufacturing, we have taken a leap of faith to believe India is a place where we can invest.

We have 14 plants that are operational. So, it is not for want of resources or intentions that we are still relatively small here. In the GE context, a $10-15 million size is not very important.

How is overall India revenue shaping up for GE?

Our revenues have been growing year-on-year.

The challenge is to grow our volumes. Other markets are growing at a faster pace. There is no reason why India should not be a larger market for us. It is not a function of market share.

The point is that the pie for infrastructure in India is still very small.

While we don’t have revenue targets, what we want to make sure is that we grow as a factor of GDP. Market-share is high and we should be able to create opportunities.

How is your local development shaping up?

When we talk of infrastructure and meeting the need, innovation is the key, otherwise we simply copy and borrow designs to make things here, which is not sustainable.

We went down this path for health care and have been successful.

If you bring down the price of the product cost, then you need to sell that much more. That is something we are working on.

Over the last few years, with all the investments GE has made to localise its products, the price of its products is becoming lower.

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