India Transformed

by Rakesh Mohan

  Aided by a young population willing to adopt technology, and supportive government policies, we are convinced that our country is well positioned to leapfrog the digital wave. Reliance Jio sees itself as the catalyst of this transformation just as it was to the nation’s telecom revolution in the 2000s. When we put the power of data connectivity, computing, software and information together, performance changes drastically. As a company it is our belief that the next twenty years of human civilization will collectively achieve more than what has been achieved in the last 300 years. Reliance Jio, with its best in class digital infrastructure, is well poised to spearhead this digital transformation and move towards accomplishing the government’s vision of Digital India. Our initiative to provide ‘any-time, anywhere access to innovative and empowering digital content, applications and services’ seeks to propel the next wave of transformation, aided by technology. With the Jio offerings based on the widest coverage, substantially superior network quality, transformational data capacity and affordable services, the outreach is unparalleled. Reliance Jio seeks to address any obstacle in the path of India becoming a digital society: it is working simultaneously on three fronts to ensure availability, quality and affordability.

  How Digitization Will Transform India

  Digital progress is expected to remove impediments to growth. Research suggests that a 10-point increase in a country’s digital score leads to a 50–60 basis points increase in GDP per capita for an economy, depending on what stage of digitization it is in.20 Evidence of other countries also suggests a sharp improvement in labor productivity and growth when there’s digital progress. According to a World Bank study, Internet adoption resulted in labor-income gains to the tune of 13–19 per cent in Peru. Similarly, in South Africa, cellular phone coverage increased employment by 15 percentage points, led largely by increase in female employment.21

  The impact of a digital transformation is not just limited to economic growth but is much more inclusive. Digital apps on education, health, agriculture and climate change, among others, would transform lives through digital learning and innovation. According to research, a 10-point increase in the digitization score leads to an increase of approximately 0.13 points in the human development index score of a country.22

  Eventually an India powered by the digital revolution will transform governance itself. The transformation in bringing governance closer to the people is already visible in some measure as payments for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) go online, as we see people seeking help from the police station to the Ministry of External Affairs in the matter of issue of passports or visas.

  In Conclusion: A Services-driven, Technology-supported, Domestic-demand-oriented Growth Strategy

  In conclusion, while I am happy and highly satisfied with what Reliance has achieved for India and for itself in the past twenty-five years because of the advent of economic reforms, I see an even greater scope for the future. India today is different from what it was twenty-five years ago. Still, we have a long journey ahead as a nation.

  As the pace of change accelerates, today’s young have far greater aspirations and hopes. They are impatient to move ahead. Correspondingly, India’s reform agenda has to match their ambitions; its implementation must become speedier and far more result-oriented. At Reliance, we are engaged in nurturing the next generation of leaders, empowering them with skills befitting the entrepreneurs of tomorrow. Personally, I see this as my biggest job—to hand over a strong company for the next generation of employees, consumers and citizens.

  As a company as well as a nation, we need to set our purpose, to follow what our ancestors called swadharma, the pathway to becoming what we are meant to be. Reliance’s journey from hydrocarbons to retail to the new digital life is merely the outer manifestations of this idea. I believe that once we know what our country needs and how we can provide it, everything else, from finance and people to markets and value, follows. And we are not going to be alone in this venture because I believe we need hundreds of Reliances to serve the India of tomorrow, each firmly grounded in its own strength, each delivering value and creating wealth, each competing and supporting the others.

  A quarter century ago, India embarked upon the path of economic reforms out of compulsion. A combination of internal crisis and external developments forced India to accept reforms. Now is an opportunity for us to embrace the next set of reforms consciously, out of free choice, after careful consideration of all the internal and external opportunities. Along with opportunities will come challenges. Yes, digital may be the next big thing, but it is also the next big disrupter. As leaders, we need to embrace this disruptive potential and use it to leave behind a stronger company, a stronger nation, as we move on.

  Experience has taught us that consensus-building may take time in democratic India. But it ultimately succeeds and sustains itself only because it has buy-in from the people, as they see reforms yield tangible benefits. Be it banking, insurance, telecom, civil aviation, highways or power—India has seen that gains have come from reforms and increasing competition. Multiplicity of players has always been our strength and we must do everything to encourage it.

  Through all this constant process of churn and change, if I am sure about one thing it is this: that the prosperity of India is a future destined. Nobody can stop us, but us. We need to make our choices for the next twenty-five years wisely. And once we have chosen our path, we must follow it with the might of our collective will and the faith of our collective destiny for the materialization of our collective aspirations.

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  Rise of the New Entrepreneurial Classes and the Emergence of a High-growth Economy

  Sunil Bharti Mittal

  We are clearly looking at a future where entrepreneurship is going to play a pivotal role in economic growth. No discussion on Indian entrepreneurship would be complete without a reference to the global aspirations of Indian businesses, which is essentially a phenomenon of the last ten years or so.

  The impact of the economic liberalization of the 1990s is best understood when seen in the context of its influence on entrepreneurship, which had largely remained in chains in post-Independence India. The reforms had come as a breath of fresh air to businesses both old and new, but the impact was most visible in the case of a new breed of young aspirational entrepreneurs, who could perhaps have never taken the leap but for the historic change in process. Having started my entrepreneurial journey in 1976, I had lived through the ‘Licence Control Raj’ long enough to realize the enormity of the change ushered in by the reforms.

  But, first, a bit about the political–economic environment that shaped the new ideological narrative.

  The 1991 economic liberalization was truly an extraordinary leap of faith that not just swept aside the decades-old legacy of socialism and state control but scripted a new economic landscape carved around free market and globalization. The change was as much ordained by our fatigue with a rapidly decaying economic ideology as by the alarming balance-of-payments crisis that the country faced at the moment. India went to the extent of pledging its gold reserves in the international market and, in fact, almost sold its embassy in Japan to raise foreign exchange. Besides India’s own financial troubles, what perhaps accelerated the change was the disintegration of the Soviet Union, India’s long-standing ally, and the rapid strides being achieved in China under a liberalized regime. The twin developments were forcing a compelling global narrative.

  The ideological orientation of the political establishment in the country had already given the first signs of ‘breaking with the past’ through deregulation of industrial licensing in the mid-1980s under the Rajiv Gandhi government, though only in a limited way. Entrepreneurs like me took their early steps during this period and, in a way, prepared themselves for the big changes of the 1990s. Bharti started manufacturing telecom equipment during this period, which also shaped our aspiration to become a mobile service provider when the
sector was opened up in 1992. Introduction of private participation in air-taxi services during this period proved to be a precursor to the full-fledged private airlines, which entered the Indian skies in the 1990s when the sector was finally liberalized.

  Political uncertainty during 1989–91, when two minority governments came and went in quick succession, didn’t allow the process to take shape any further.

  The real impact of liberalization on entrepreneurship can never be understood in its entirety without a reference to the restrictive regime of the Licence Raj of the post-Independence years. Till the 1980s, India lived by very complex import and export policies and a very difficult industrial-licensing regime. Few people could get industrial licences, which were required for all kinds of manufacturing. Licences were usually granted to people who found favour with the government for lack of a transparent system of giving them out. Established business houses remained the obvious choice for the limited number of licences selected to be doled out; cronyism prospered. Small entrepreneurs had to be simply ‘lucky’ or ‘extremely creative’ to find small openings in government policies to move ahead. Even those ‘creative bursts’ often proved inadequate as new entrepreneurs always remained at the mercy of the government policy dictated by ‘a select few’.

  Here is an example of what it meant to be at the mercy of ‘a select few’.

  The first significant trade that we did at Bharti was to import portable generators into the country. We had entered into an exclusive agreement with Suzuki Motor Company of Japan to import portable generators. From 1982 to 1984, these imports became highly successful, and we set up a large distribution network across the country. However, in 1984—in one swoop—the Government of India decided to put a ban on the import of generators. The reason was very simple and straightforward: two business houses managed to get licences to manufacture generators, and they went to the government asking for a ban on these imports. All our pleadings for a review fell on deaf ears. So, overnight, we were ‘out of business’!

  Such an environment demanded you, as an entrepreneur, to always be prepared in the hot seat, ready to take a plunge into something new and unknown as soon as the government hit you with an abrupt policy change.

  The 1991 reforms ushered in profound changes in the economy. The government under Narasimha Rao, with Dr Manmohan Singh as the finance minister, junked the concept of ‘licensing’, pruned the restrictive list of imports and brought down import duties significantly. Several sectors, including telecommunications, were liberalized to include the participation of the private sector.

  The early 1990s saw the emergence of a set of new companies led by first-generation entrepreneurs in these liberalized sectors. Notable among these were Jet Airways, one of the finest airlines in the country today, and Zee TV, a well-known media house with one of the widest range of media channels. Then you had companies that had pioneered the IT space, such as Infosys and Wipro, though I must add that, more than domestic deregulation, it was the emerging global opportunity that held the key to the exponential rise of IT companies.

  India’s economic liberalization has all along proved to be a political conundrum. Government after government fell by the wayside whenever they tried to force the pace of reforms. While Narasimha Rao lost the elections in 1996, Atal Bihari Vajpayee—who also pursued the reforms agenda quite aggressively—lost after a six-year term. In fact, in the first fifteen years of reforms, India had five different prime ministers. Interestingly, despite strong and strident political opposition led by the Left against liberalization, all these governments exhibited remarkable fortitude in continuing on the path of reforms. This constituted a clear proof of the underlying political consensus among the non-Left parties in the country, though every political party, irrespective of their ideological leanings, struck a populist tone to oppose the reforms while sitting on the Opposition benches.

  Luckily for us, political discontinuity never really threatened ideological continuity, though periodic elections and the aforementioned populist play from the Opposition benches did, at times, slow down the pace of reforms. The Opposition was particularly visible in the area of foreign direct investment. It perhaps had something to do with our colonial hangover!

  Looking back on the twenty-five years of liberalization, it’s quite apparent that such massively transformational economic changes were destined to be slow moving, often coming in bits and pieces. The inherent complexity of Indian democracy and federalism makes consensus-building a time-consuming process. The recent Goods and Services Tax (GST) legislation, one of the most crucial economic reforms, is closer to reality now after being first conceived of in 2006.

  Despite the opening up of different sectors, life was still quite challenging for new entrepreneurs as the environment remained non-conducive and challenging for them. My own tryst with mobile telephony was a case in point.

  In view of my earlier experience with manufacture and marketing of push-button telephones, I had an instinctive attraction towards mobile telephony when the sector was opened up to private players in 1992. But I was acutely aware of my handicaps. First, Bharti, though a well-known name by then through its Beetel-branded phones, was a small company—with an annual turnover of about Rs 25 crore—for such a big dream, as most of the big names of the Indian industry were lining up for this historic bidding process. The other problem was more technical in nature. Given the clear lack of expertise and experience among potential bidders, it was mandated that every bidder had to have a foreign partner with expertise; for a company of our size, it was difficult to find a big global player as a partner.

  After striking a partnership with Emtel, a small Mauritian company, I managed to convince the French mobile operator SFR after much persuasion (which incidentally even contemplated pulling out of the bid at the last moment, citing our small size as a big concern for a large company like themselves). Fortunately, good sense prevailed, and we not only managed to go through the bidding process unscathed but eventually won the Bombay Metro licence (‘Mumbai’ now), surprising everyone. A small player like Bharti winning a mobile licence obviously didn’t go down well with other bidders and led to some unwarranted litigation, which finally ended with Bharti being offered the Delhi-circle licence instead of the Bombay one. Finally, we managed to launch our service in Delhi in September 1995.

  Finding network equipment suppliers was another challenge we had to contend with. After signing with Ericsson for the supply of equipment, which was to cost us almost $27 million, I clearly remember telling their president, Kurt Hellstrom, ‘I can pay you only 15 per cent of this and the rest only when the networks are up and my customers are happy.’ This was an audacious statement to make before a reputed global equipment supplier. However, it was a statement coming from an aspiring entrepreneur short on capital but eager to reach out to his dreams. More often than not, what saved the day for the new class of entrepreneurs was that they were never short on spirit.

  The trials and tribulations of my small company did highlight one thing: notwithstanding the reforms at the highest level, the system at the operational level still suffered from decades-old inertia, which was ironically trying to undo the very things that the macro-level policy changes aimed to achieve. Twenty-five years later, I feel extremely happy that the sheer exuberance of the new class of entrepreneurs triumphed over this systemic inertia to make the ‘India Story’ possible.

  Liberalization was not going to be a ‘one-shot affair’ though, as it also involved the resolution of many sector-specific regulatory issues that kept popping up every now and then. Governments from time to time addressed these issues effectively to maintain the momentum. A great example of this was the way the newly elected NDA government in 1998 under Atal Bihari Vajpayee addressed the issue of high fixed licence fees for mobile telephony, which struggled with slow growth in the early years. It made a momentous decision to shift from the fixed licence fee regime to a revenue-share model under the New Telecom Policy (1999). This e
ased the operators’ financial burden considerably and helped them prepare for the next stage of growth; at the same time, it filled the government coffers with much higher fee as revenue share, given the explosive growth of the sector. Such policy calibration often became a necessity in the long-term interest of the industry and the country.

  Another big challenge for a nascent sector like mobile telephony was in getting the ‘right people’. There was an acute shortage of telecom talent (mobile technology, in particular) in the country when the industry was liberalized. Job aspirants often remained sceptical about the sector’s stability. The problem was particularly severe in the case of a small company like ours. We often had to fall back on people from other sectors to fill up positions in functions such as marketing and customer service. Often, I had to use my personal charm to impress upon ‘good talent’ to join us. The other problem we encountered, although only temporarily, was in terms of organizational stability, given the rapid rate of organizational growth in the mid-2000s, which we had to undertake to meet the exponential rise in demand. The organization did shake for a while under this rapid expansion load but settled down soon.

  Rapid growth also entailed increasing organizational complexity for us. We had to not only find new managerial talent to handle this complexity but also be careful not to allow bureaucratic tendencies to set in, which has invariably been the bane of large organizations. We did take particular care to maintain the ‘heart of a small company’ in the midst of increasing organizational complexity. Speed and agility in decision-making remained a priority for us. In fact, these twin virtues turned out to be the most critical enablers for the new class of entrepreneurs.

  Penchant for innovation and the ability to think ‘out of the box’ happened to be reliable allies of the new breed of entrepreneurs. The need to cater to India’s unique market condition required them to be creative with their products and processes. They had to create/adapt products suitable to Indian tastes and preferences and, more importantly, bring them within the reach of the Indian ‘buying power’ through appropriate innovation and engineering.