‘Govt should make the frame, people should do the painting’

Nestle S.A., world’s largest food processing company, is entering its 100th year of operations in India this year. The Swiss major expects half of its global sales by the end of decade to come from emerging markets including India. After having doubled its sales over the past four years in India, Nestle is set to invest for the next stage of growth. Business Line caught up with Paul Bulcke, Chief Executive Officer of Nestle, who feels that India should open up its economy further to foreign investors.

Excerpts from the interview:

What kind of larger story you see for Nestle in India?

It is logical when we say emerging markets will account for 50 per cent of our sales in the foreseeable future. By dynamics of mathematics we are going to get 50 per cent, considering that 80 per cent of the world’s population is living in emerging markets. We are linked to the people because we are in the food business. In that scheme, India is important because you have 1.2-1.3 billion people here.

How important is India in your overall scheme of things with respect to investments?

India has the potential to be a good growth engine. We at Nestle have been part of that dynamics and have been investing for that opportunity. We have invested half a billion Swiss Francs in the past few years. The potential for growth is huge.

But you have to have continuity in policy and there should be a further opening up of the economy. Talking is one thing and doing is another. I think the time of doing is right now.

What list of priorities of action you would like to see?

First of all, you have to have a continuum in policy. For me, the Government should make a frame and let entrepreneurship and private initiatives flourish in that frame. In other words, the Government should make a frame and people should do the painting. The problem is when the Government starts to make the painting …then it doesn’t work. Infrastructure is definitely a problem. Power and education are the other problems. You have a very strong educational system. But do we find the right professionals? These are the longer-term problems.

In the short term, the economy should be opened up in a meaningful way for foreign investment and also for companies which can bring new inspiration and ideas.

The opening of retail sector is one of the big debates in India. What’s your take on this?

We are linked with farmers directly for many years. We are quite a sizeable company too and you see Moga milk district in Punjab where we went 50 years ago.

We are proud to be part of the development of that region. A company that takes itself seriously, that has a strong set of values and is projected to be in the country for long-term is not going to jeopardise supplies.

If you have serious companies coming in a serious way, it’s a win-win situation. Sometimes, we are afraid of some things. You can organise that but we lose out on the bigger dimension. There’s so much lost through inefficiencies in the supply chain from the farm to the table.

Inefficiency is never an argument. Leadership should take steps and bridge the today with the tomorrow because people are involved. That may entail some pain. Development has to be given a chance.

What about Nestle’s own experience? You have run into roadblocks…

I cannot talk about too many things. In general, supply chain is one thing. Industrial development should go hand in hand with infrastructure. Power availability is another thing. The continuum of these developments is a little bit missing and that’s the criticism we hear from the people.

You have been in India for 100 years now. How do you see your presence in India going forward now that it is no longer legally binding for you to have a local listed entity?

We still are listed on the exchange. We still see the meaning of that. We still have board members who bring in an understanding of the localities of India. We respect that. For the time being we have our board.

How do you see the India consumer economy?

The total is large. That’s where we are. We can do more in the premium and super premium products. In general potential is here. ‘Out of home’ sales is another opportunity where we can play a role too. It is linked again with the complexities of the supply chain. Then there are institutional sales and catering, which are more of value-added products. It is a big opportunity for value-added products.

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