Xerxes Desai headed Titan Industries starting in the 1980s and ran the company until his retirement in 2002. During his tenure as vice chairman and managing director, he was one of the key players influential in making Titan one of the few globally recognised Indian brands.
But while his stint at Titan is widely acclaimed, fewer people know about his social engagements and passion for urban issues in India. On loan from the Tata Group, he was part of the New Bombay Project in the early 1970s. He also served on the National Commission on Urbanisation constituted by Prime Minister Rajiv Gandhi in the early 80s.
Desai has served on the trust boards or management committees of well-known institutions such as the Tata Institute of Social Sciences, the International Institute for Population Studies, the Indian Institute of Science, and more recently the Bangalore-based Indian Institute for Human Settlements.
He lives in Bangalore, where Christopher Lopaze caught up with him to know his thoughts on the juncture that Indian industry finds itself at, the hopes and prospects that the new government has brought with it and the risks that lie ahead for the country.
Nationally, the new government at the Centre has brought with it a lot of hope on every front, but most notably perhaps in industry circles. Markets too have responded with cheer. As an industry insider for the greater part of your life, what do you see as the concrete reforms absolutely necessary and critical to drive industry in a positive direction?
That’s a very good question. There is an enormous amount of talent and entrepreneurship in this country. It needs to be released, but it also needs to be monitored and regulated. Industry itself – industrialists, businessmen – need to realise that their future and the future of their industries must take into account what is good for the masses.
We have legislation mandating corporate social responsibility, but it might be reversed or modified by the new government. That is a step in the right direction. You need to free things up, yes, for sure. But then people have to follow the law, and follow a certain code of conduct. Each industry and business must have its own code of conduct, and all the paraphernalia needed to ensure that nobody is doing things which are unlawful or unethical.
Now, following the law would also entail a very efficient policing system, and a very efficient judicial system. You need to put much more money into the judiciary so that it doesn’t take years for cases to be heard as happens now.
So, it has to be a combination of two things: freeing up, but at the same time making sure that no one takes advantage of that freedom, or go against the law or against the acceptable code of behaviour. That is the very big task for India.
In fact, I was reading this morning about studies by the Security and Exchange Board of India which show that the number of firms having whistle-blowing schemes is very low.
Free up, but at the same time ensure equity and an increase in equality. We have 1300 million in this country, but how many of them actually participate in the market? If there is well-distributed prosperity, if there is more money flowing to the bottom of the pyramid, then that is creating a market for your products. If you don’t do that, we’ll reach saturation levels pretty soon. You have to increase consumer buying power and focus on people at the bottom of the pyramid.
Unfortunately, what has emerged is a new kind of ruling elite in this country which thinks it’s above the law, and that is an extremely dangerous thing.
There is no other country in the world that has as many conflicts as we do. It’s not just the rich versus poor, or the old versus young, - there are religions, languages, ethnic groups, castes, the rural-urban divide, the villager-forest dweller divide and so on. And now to these many conflicts, we have added this additional conflict between the people and the ruling class, which is comprised of politicians and moneybags and some of the mafia. And that’s horrible.
All of these things have been experienced by every country, I suppose, but we are a century behind. This country needs to become more civilised. There are many things and one can’t talk about everything, but these are some really deep-rooted issues that we need to deal with.
Speaking of conflicts, some are grabbing a major share of the discourse, for example, the one between environment and industrial development, or between social subsidies and economic growth. How do you see these -- are they necessarily mutually exclusive? How do you see present-day India poised in terms of the balance between these components?
Those are two completely different: environment and subsidies. Let me take the easier one first, which is subsidies. I think that in a country where there is no income pyramid, but rather a pagoda, there is no alternative to providing certain subsidies for the very poor. Just because you’re not able to do it well, doesn’t mean you should now forget the target, the very poor person.
The whole concept of poverty in India, as determined by the levels needed for an individual to sustain himself, is ridiculous. I don’t think the people who have worked on this have really applied their minds to the issue or put themselves in the shoes of the poor to understand what their needs really are, and what it costs. Whether it’s food subsidy, or it’s housing, or sanitation, I think these are critical enough things to be subsidised.
Housing, health, education, food, these are things that simply have to be subsidised in a poor country like ours, and the rich should be willing to pay the taxes that are needed to sustain that. Today the marginal rate of taxation is something like a little over 30 percent, which again is ridiculous. The government is afraid of raising the tax levels on the very rich because they are wary of antagonising big business. These values need to change, and I am all for subsidies, and I’m all for finding the right way to connect the subsidy to the target.
However, there are a few subsidies that make no sense, like that on petrol or diesel. It doesn’t go directly to the bottom of the pyramid. It’s supposed to trickle down, but it never does. If you have cheaper diesel, it doesn’t mean that the guy at the bottom of the pyramid is better off. So some subsidies are wrong.
Since oil constitutes such a huge drain on our foreign exchange resources and leads to the balance of payments deficit, oil, including the gas we use at home, needs to be made more expensive. We get a cylinder at a subsidised rate of 500 rupees, 12 cylinders a year, and anything else you find on the market is 1000 rupees. That doesn’t make any sense.
As far as the environment is concerned, there needs to be better balance. If you’re looking at environment in terms of pollution, I’m not asking for any compromise. The quality of the environment -- whether it’s air quality, water quality, or even the land itself or the damage you do to the land -- is crucial. We have to be very cautious about maintaining that.
But when it comes to land acquisition for industrial development, we need to find a solution. The land acquisition act was an attempt to find a solution, a step in the right direction.
When you’re acquiring land from a poor peasant at the bottom of the pyramid, his land is not a marketable commodity. His land is not only the source of his livelihood, but the very basis of his entire social and economic structure. If you take that land away, you are uprooting family, you’re separating him from his neighbours, his medical centre, site of education, access to finance (bank, post office) – almost everything. And that is why the rehabilitation of people who are uprooted for industrial development is an extremely important thing.
Then again, industry is needed. Cities need to expand. Today, cities account for one per cent of the land use in India, or perhaps even less. But we have to find a middle path.
Look at the tribals who live in India’s forests, who have gained support from the extreme left wing. They are sitting on a lot of mineral wealth. While the mineral wealth needs to be exploited, at the same time something needs to be done about the person who is going to be displaced. That person’s vision of things is so limited in terms of what he can do and what the world is all about, that this great big wide world to him is a fearful place.
People are not all rational. People have feelings and emotions, which makes this a very complex problem to solve.
Frankly, one of the greatest challenges for a developing country like ours is to be able to develop a sustainable model. If the rest of the world, the whole world, wants to live like Americans or some other developed economies do, then we require at least two planets in terms of resources. Since we don’t have that, the whole consumption pattern has to change.
China, India and Africa have to develop a comprehensive development strategy which makes it possible for us to live within this one planet, and make do with the resources of this one planet that we have. This is crucially important.
Post Narendra Modi's Independence Day speech, "Make in India" has become a tagline of sorts. But the domestic manufacturing sector itself hasn’t made impressive progress over the years. What are the real constraints and challenges that hold the Indian manufacturing sector back?
Well, I feel “Made in India” is a long way from being something like “Made in Japan” or “Made in Germany” or “Made in the United States” or “Made in Great Britain”.
The impression that people have of India is formed by what they read in the newspapers or see on television, and it is a fact that media is full of things that have gone wrong; they rarely report things that are going right. For “Made in India” to be a success, you have to have very good products, very well-marketed, very well-accepted; that’s the only way to go. I had a major difference of opinion with Ratan Tata when he wanted to take money abroad. Today, the bulk of our assets are abroad, the bulk of our income comes from abroad, not from India.
But the opportunities really are here. We have the goodwill. There is a need for our talents, a need for our products. There is a huge market waiting for us, and then we go and buy land abroad, buy Corus Steel, but what does that achieve?
It satisfies some egos, especially in the business world. “Ah, you know, I have offices in London, New York, Paris, I have an industry in the U.K, in Europe,” so on and so forth, but really, so what?
The needs, the opportunities are all in this country. I’m glad that Narendra Modi is talking about “Make in India.” It can put the focus back on manufacturing. There was a time when I was told that manufacturing was no longer a priority and that we needed to get into the service industry. But no country can prosper without a strong manufacturing base. That is how the Chinese have done remarkably well and why they’re pulling ahead of us in every way.
I would say, let’s make really good products, price them well, market them well, sell them well. Distribution is always the problem, especially with consumer products. The IT industry has been doing tremendously well but they haven’t yet come up, in all these years, with a consumer product except for Tally, which is a purely Indian accounting package. I think it is used in our office in London to some extent.
So, in that sense, I am very happy about the “Made in India” proposition. But the real value of such a label would come only from Indian companies when they make good products and successfully sell the same in foreign markets. If they can do that consistently and well, then yes, there will be a time when people will respect the “Made in India” label.
If you were to identify the one biggest promise and the one biggest threat to India today, what would each of those be?
There are so many threats that I have to mention a few instead of one. There is the value system of the ruling elite. That is a huge threat. It can be an opportunity, but as things stand, it is a major threat to development. Then you have inequality - caste and religious divides, ethnic divides, linguistic divides.
We have seen increasing importance being given to the English language in the past. Now, things are beginning to change and people seem to be leaning towards local languages, which again I think would be a step in the wrong direction if taken too far. We need to start preparing citizens for the world. The Internet is predominantly in English, which is a great source of learning.
Then you have our terrible education system and our healthcare system. It is all of these things taken together.
One thing that people do not understand is that poverty is an expensive thing to have. It has huge costs associated with it, which do not just mean subsidies. If people are ignorant, uneducated, malnourished, you’ve got a problem.
One of the highest costs associated with poverty is the increased risk of disease. Take the Ebola virus, for instance. It could not have started in the United States of America, or in Sweden. But it could start in Africa, or Southeast Asia. The consequences of poverty for society are huge. That is one more argument for us to be much more egalitarian. Therefore, our mind set has to change.
Foreign policy, too, needs attention. We must have friendly relations with our neighbours so that we don’t have to spend large sums of money on defence.
And of course one of the biggest threats now is terrorism, which, of course, applies to the world at large. And that, I believe, needs to be dealt with -- well, merciless would probably be the wrong word to use -- but it needs to be dealt with very, very firmly. There has to be, in my opinion, a global compact to deal with this kind of terrorism and put an end to it. It’s not only a military strategy but also economic. But when extremism takes a military stance, it simply needs to be eliminated.
I think organisations like the Islamic State or Al Qaeda are a big threat, not just to India, but to the world in general, and we have to suspend some of our liberal concerns to get these out of the way. One has to make an exception of the kind of war you’re fighting against such bodies. Sometimes it has to be an eye for an eye, and a tooth for a tooth.
Speaking of promise, it comes from the youth of India, and the talent that resides among them: their energy, entrepreneurship, the aspiration to be global citizens. I think this is the greatest hope for our country. The people in school or college, and those who have just started work, they are the people who have the enthusiasm and the desire to do things right.
A new generation has taken over. They are doing things differently. They are playing more by the rules. I see a change in attitudes. They form the core of very sophisticated Indians with a worldview and the right values, individuals who can distinguish themselves anywhere in the world. They are also our hope. But they are up against all kinds of social and political problems. If we can deal with the social and political problems, we can deal with anything.