India’s global image is driven by private initiative

What’s India’s position in the world as we enter a new decade? In 1990, India was seen as a bottomless pit for foreign aid, holding world records in starvation and poverty. India tried to project itself as a Third World leader, but at international conferences other developing countries saw India mainly as an expert drafter of documents, not an economic or political role model. Many other developing countries outpaced India.

How things have changed in the last 20 years! India is now called a potential economic superpower, political counterweight to China, and probable permanent member of the UN Security Council.

Recently, foreign secretary Nirupama Rao delivered the Harsh Mahindra lecture at Harvard on “India’s Global Position”. She provided a grand tour of India’s foreign policy, and detailed relations with the US, China, and all regions. She covered much ground —terrorism , the Doha round, energy, climate change and much else. Her lecture was overwhelmingly about government policies and achievements.

I would have given a totally different lecture, emphasizing the role of corporations and individual Indians. These have altered India’s global position beyond recognition, not the government.

During the Cold War, despite thorny governmental relations with the US, corporate and individual relations boomed. The US became India’s largest trading partner. No Indian migrated to the USSR, but a million migrated to the US, and lakhs more flooded western universities. Once the Cold War ended and economic reform began, these private initiatives spearheaded the transformation of India’s global impact.

Cynics might call this the privatization of India’s foreign policy, but that would be inaccurate . Private initiatives have been a parallel stream, not an auctioning of official foreign policy. But certainly, India’s global impact is now driven mainly by private initiatives . Diplomacy buttresses these private initiatives, but now plays a supporting rather than leading role.

India is most famous for computer software and BPO. This instills fear in US workers and analysts, and has inspired a TV series “Outsourced”. A new word, “Bangalored” has entered the dictionary.

Indian industrial houses have become global giants through acquisitions. Lakshmi Niwas Mittal is the world’s biggest steel producer. Tata Steel took over Corus, six times its size. Tata Motors acquired and turned round Jaguar Land Rover, reviving world famous brands that had languished under Ford and BMW earlier. Birla has taken over Novelis to become a global name in aluminum.

Tata’s Nano has made India world famous in autos. But Bajaj, in collaboration with Renault-Nissan, is planning a rival. The R&D for this has been entrusted to Bajaj, not Renault-Nissan, overturning traditional North-South technological relations.

Virtually all Fortune 500 companies of the US have set up shop in India—they cannot afford not to be here. IBM and Accenture have more employees in India than in the US.

After decades of minimal relations, Indian companies are now making a big impact in Latin America and Africa. The software majors have major operations in several Latin American countries, and so have pharma and truck producers. Jindal Steel is building Bolivia’s first steel plant.

An even bigger change is evident in Africa. Bharti Airtel is now providing telecom in 15 African countries after taking over Zain’s operations. Essar has acquired refineries in Kenya. Many Indian companies have piled into Mozambique to exploit coal deposits newly discovered there. Zambia’s Konkola mine, the biggest in Africa, was once sold to a multinational Anglo-American firm, which failed to revive it. Then Sterlite acquired the mine and turned it around.

Economist Arvind Subramanian says India holds the world record in outward foreign investment as a proportion of GDP. Never before has a low-income country made such an impact globally.

Indian individuals have also become globally prominent. One lakh Indians now study in the US, its largest contingent of foreign students. The US now has three million people of Indian origin, three of whom have won Nobel Prizes. Indians account for nearly a quarter of all start-ups in Silicon Valley. Hundreds of Indians occupy top positions in academia (Jagdish Bhagwati, Amartya Sen), corporations (Vikram Pandit, Indra Nooyi), media (Fareed Zakaria) and Wall Street. Two Americans of Indian origin, Bobby Jindal and Nikki Haley, have become state governors, and Jindal could be a future US president.

The government has played a supporting role in these private initiatives. India’s economic rise has translated into political clout, and explains why the US decided to waive the nuclear rules for India and back its bid for Security Council membership.

However, India’s global image remains dismal in relation to social indicators and corruption. These are mainly government failures, though corporate crooks have also gained through crony capitalism. India’s image here needs transformation in the coming decade.

4 thoughts on “India’s global image is driven by private initiative

  • 2011.Apr.27 at 15:56
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    What a brilliant perspective by Mr.Aiyar. Truly, India has become an economic miracle by the awesome performance of india’s private companies and India’s great managerial capabilities. No one can as clearly elucidate as Mr.Aiyar what economic freedom can achieve. !!!

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  • 2011.Jan.14 at 14:46
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    India’s global image remains dismal in relation to social indicators and corruption… True! but aren’t we ourselves responsible for this government failure? The government becomes corrupt only because we are not able to push the accountability agenda far enough. One would not be doing justice by treating the government as a separate entity from the society at large, and its failure is our failure.

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