Two faces of India: Tom Peters On Excellence

I AWOKE in New Delhi a few weeks back to these headlines in the local newspapers: Kleenex-Huggies set to enter India; India to play key role in GE growth; Spanish trade delegation to visit India.

In my room at the Maurya Sheraton Hotel & Towers, the world was at my fingertips by way of AT&T's Definity Voice and Data System 75.

Downstairs, a group of 100 very senior seminar participants were gathering and raring to go - and my experience in Bombay two days earlier suggested they would be perkier than the 600 American executives I had addressed in Orlando, Florida, the week before that.

This was India 1994. But what about the armed roadblocks we had seen on the drive in from the Bombay airport, a response to bombings a few months ago? And what about my walk the night before the seminar? Out of the Sheraton, then, one street later, down a dirt lane where half-clothed children squatted to defecate and a line of men stood urinating along a wall. You can imagine the stench.

Such blatant contradictions notwithstanding, it's no wonder that India is a priority for Kimberly-Clark (Kleenex), GE and the Spanish. The 250 million or so Indians in the middle and upper classes (about 40 million of whom make over dollars 40,000 a year) add up to a well-off population equal in size to that of the United States.

Moreover, these people 'want quality and are ready to pay for it', according to the South Asia head of Lintas, the advertising agency.

What a change. In the summer of 1991 India almost defaulted on its international debts. To the world's surprise, the prime minister, PV Narasimha Rao, responded with vigour and began to rip open the doors to a closed economy.

Many referred to India's economy as the 'licence Raj' - a vestige of British colonialism. New Delhi told companies what, when and how to produce, where to locate, what technologies to use and whom to take on as partners.

India's state governments were worse. 'Armies of inspectors', as one commentator put it, traversed the country making sure companies accurately attended to the elephantine load of paperwork, licence renewals, and so on required by further armies of underemployed form-creating bureaucrats.

Has it all gone away? Hardly. State governments still get in the way and duties are still high. The planned sale of flabby state enterprises is going slowly.

Asea Brown Boveri, which has invested heavily in India, has been waiting for approval to produce a new high-tech locomotive since 1987. But most licences at the federal level have been abolished. Bank reform is progressing. The average tariff is heading down from almost 90 per cent to 25 per cent.

Access to technology is improving and foreign multinationals can set up research and development facilities in the country.

The proof, of course, is in the doing, of which there is plenty. GDP growth is up from about 1 per cent in 1991 to 5 per cent, inflation is down sharply, and foreign exchange holdings have gone from pocket change to about dollars 11bn.

Most important, foreign investment - a dollars 200m trickle in 1991 - is flooding in at a rate of more than dollars 2bn a year. Approvals for Indian businesses to collaborate with big foreign firms jumped from one in 1990 and five in 1991 to 49 in the first six months of 1993.

India's trade with China doubled in 1993, and US exports to India rose by 37 per cent. The government has recently issued licences to Coca-Cola and McDonald's.

IBM, which was booted out of India in the 1970s, is back, as are AT&T, Walt Disney, Raytheon, Morgan Stanley and Sara Lee.

In Bangalore, heart of the entrepreneurial south, Singapore's Prime Minister Goh Chok Tong cut a ribbon in January to launch Information Technology Park, a wonderland that may employ 16,000 software and electronics engineers. Nearby, Motorola engineers are designing components for Iridium, the hand-held satellite phone system. The company's chief for Central and South Asia said opportunities in India were 'without parallel'.

The statistical litany is overwhelming. And I was overwhelmed by the enthusiasm and energy of all those I met, not to mention the spectacle of running with hundreds of joggers in saris, Nehru jackets and Nike shoes on the seaside promenade in front of my Bombay hotel at 6.15am.

Yet, unlike my newfound Indian friends who practise denial so artfully, I did not become inured to the desperation just a millimetre below the surface.

Thirty per cent of the world's poor live in India, and at times I felt the fingers of each one scratching at the windows of my taxi in hopes of a tiny handout. One hundred million Indians are unemployed, several times that number are underemployed - and the country's population grows by about a Canada a year, or more than 20 million people.

So which India is it? The one that ranked 123 out of 160 Third World nations on the UN's Human Development Index? Or the India that GE and Motorola are betting will become an economic power?

I am excited, repelled and confused in equal measure. And I think, in the end, that's about the right take on this most extraordinary country.

TPG Communications