India (34 page)

A new dispensation was beginning, focused on Asia, the effects of which were not yet fully understood. Much current thinking about India and China is the product of old knowledge and expectation. Three out of every five people alive today are Asian. It would be easy to assume American hegemony in the late twentieth century, or European hegemony in the late nineteenth century, means occidental supremacy must continue. The assumption that the rest of humanity will acclimatize to Western precepts, as happened in various forms over recent centuries, no longer holds true. Rather than examine the reality of the present, which is that all certainties are being turned upside down and everything is fluid, there is a tendency to look at superficial signs like the Asian love of brands (Cartier, Bulgari,
Hello!
) and deduce that, with some adjustments to existing business models, Western power will remain intact. This is an outdated and fantastic view. The Beijing government’s quiet and swift diplomacy has proved lethally effective in making economic gains, and particularly in securing raw materials like iron ore and natural gas from African countries. China’s authoritarian capitalism, while very different from India’s self-critical, democratic and sometimes unbalanced entrepreneurship, is part of a realignment of existing global patterns of political, economic and ideological power. Multipolarity is coming.

Although slower than China’s transformation following the death of Mao, India’s rapid success has induced a sense of baffled wonder elsewhere in the world. What on earth is happening? Why are Indian businesses suddenly doing so well and buying up foreign companies? Is India rich or poor now? Does devotion to the extended family offer a template to other countries, where family structures have broken down, and is the Indian business
family the supreme embodiment of this structure? Why does Indian identity remain so powerful even while globalization is altering the country profoundly? How does it feel to be part of a freshly minted meritocracy, where genuine social mobility is possible in parts of the country for the first time in history? Is India today—diverse, democratic, dissenting—potentially a unique strategic ally for the West, and a possible antidote to the rise of stricter global powers like China and Russia? With so many things shifting internationally, and the spread of Indian entrepreneurs and software engineers across the world, India’s reputation was being redefined.

Financial analysts were suggesting that if present rates of growth continued, India’s economic position would be further transformed. Guessing precisely where the country was heading was a popular pastime, since no one could be certain of the answer. One of the more influential projections, which shocked foreign business people into acknowledging the possibility of a radically reshaped global economy, was a 2003 Goldman Sachs report,
Dreaming with BRICs: The Path to 2050
. It suggested that by the year 2050, Brazil, Russia, India and China (BRIC) might collectively overtake the economies of the G6 (the United States, UK, Japan, Germany, France and Italy) in GDP terms. By 2032, India could overtake Japan, and, by 2041, China could overtake the U.S. India was projected as the only BRIC economy that would still have high growth rates by 2050, since it had a younger population. China, because of the demographics created by its one-child policy, was set to decline from a paramount position in around 2023.
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There were many arguments against this dream of the future—like climate change, the shrinking of the Himalayas, political instability or inertia, river pollution, severe water shortages in parts of north India, mineral depletion and the running conflict with Pakistan—but it seemed inevitable that before the middle of the twenty-first century the global balance of economic power would have shifted and India would lie somewhere near the centre.

The largest economies in a multipolar world would not be the richest in per capita income terms, because their populations were too big, and this would make strategic business decisions much more difficult. If you were selling to a market where perhaps a third, or two thirds, of people would never be likely to buy your product, how should you arrange branding, advertising and distribution? Marketers jumped at the chance to project speculative new interpretations of the Indian customer to hungry foreign firms. One Indian report estimated the country presently had about 100 million people in urban areas who belonged to the top three socio-economic classes, and that they consisted of “partition’s generation,” which had a
“high regard for functionality”; a “transition generation,” which believed in “credit/debit living”; and a “no-strings generation,” which had “unchecked optimism” and apparently thought “bad is the new good.”
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Could you sell to such people? Or should you keep your prices low in order to try to capture a new type of consumer and win their loyalty? If a billion Indians were now drinking 100 grams more tea each year as their incomes rose, where would it come from—Africa, perhaps? Imagine if you could sell fifteen razor blades a year to 400 million men, or a small car to 60 million families; or might it be better to identify your customers from among the super-rich? When Chanel launched itself in New Delhi in 2005, the company held a fashion show and an exhibition of its iconic jewellery at the Imperial Hotel. The clothes certainly sold fast. Then, it being India, there were inquiries from the wealthy onlookers whether it might be possible to buy the antique jewels and the entire exhibition too.
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A follow-up report to
Dreaming with BRICs
by Goldman Sachs in 2007 advised that India’s position had been understated. It now thought an increased growth rate of 8 percent represented “a structural increase rather than simply a cyclical upturn” and might continue until 2020. India was racing along, with some of the fastest-growing urban areas in the world. This report made the valuable point that if these projections were correct, India would only be returning to its historic position as a major economic power: before the late eighteenth century, its share of world GDP had always been higher than 20 percent. “By the 1970s, after two centuries of relative economic stagnation, that share had fallen to 3 percent—the lowest in its recorded history.”
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The global credit crisis, which started a year after the Goldman Sachs report was written, did not significantly alter these optimistic projections since the Indian economy was comparatively unexposed, and more than half of its GDP depended upon consumer spending.

India’s creaking road and rail infrastructure restricted its ability to make the necessary leap forward. Certainly some new building projects were speedy, including several offshoots of the Golden Quadrilateral Highway project started by Atal Behari Vajpayee when he was prime minister, linking Delhi, Mumbai, Kolkata and Chennai. Parts of Delhi were being transformed: the metro was a revelation, with cheap fares, sleek Japanese-style trains, air-conditioned coaches and a simple, well-designed layout. A journey which might take an hour by a clogged and pitted road could be completed in
eight smooth minutes. A large sign warned that travelling on the roof of a train would attract a fine of Rs50, although I doubted it would be possible to get on top of a train without being electrocuted. New Delhi, a city conceived and executed by the British as their power waned, was now part of a criss-crossed and ever expanding national capital. I went to see one of the roads in the sky that was being built over the city, following an ancient drainage ditch dating to the time of the Mughal emperor Babur.

This new elevated road would be 2.5 miles long and three lanes wide on each side, and would ease the traffic that was presently crawling helplessly through this part of the city. It was being built for the government by a private company. They were working out of a casting yard, with the road being constructed like a giant Lego model, piece by piece. Cement, sand, water and chips of crushed stone from a mine near Gurgaon were mixed together and poured into an immense cage of steel bars to create a slice of the road. “The whole beauty of this,” said Dilip Mathur of the construction company as we watched, “is that each segment is matched.” Every giant slice, a D-shape, was made either straight or curved according to a computer model of the complete road, and matched to the one it would sit next to in midair. Not many workers were required, just great precision. All around us were notices saying: “Think Safety” or “Use the Appropriate Tools.” The casting yard worked twenty-four hours a day under floodlight (P. C. Mahalanobis would have been pleased), and when a dozen segments had been cast, they were taken to their resting place not far from the banks of the Yamuna and joined together with long wires to make a prestressed span of road, a solid unit 34 metres long. Each span was lifted into place using a launcher—it was an enormous device, the sort of thing you might see in a dockyard—enabling the stretch of road to rest securely on rubber bearings between two piers. Every third span of road was joined using an expansion bolt, to cope with changes in temperature.

I drove with Dilip Mathur to look at the work. Delhi was going about its business. A section of the elevated snake was sitting in the sky. “Here,” he said, pointing upwards, “we had to raise it an extra four metres because of an old tomb.” A family of aggressive pigs was rootling in the drainage ditch. The future route of the road was clear; you just followed the dirty water. This was to the advantage of the builders, as they did not have to destroy buildings to sink piers. We drove further. “Others would take three or four years to make this road,” said Dilip, “and we will do it, start to finish, in fifteen months.” It was being constructed in twelve different places
at once; when I first arrived at the casting yard, I had imagined it would be constructed in one go, from A to B, rather than organically.

At a junction we climbed up a long spiral ladder and walked along the elevated road. Each section had been covered with a coat of bitumen. Workers were putting the barriers in place along the edge. How much were they paid? “Rs10,000 a month [around $230], plus overtime. If you don’t ensure lodging, fooding and pay, you don’t keep the good ones.” Dilip explained things that seemed obvious to him, and obvious to me once they had been explained. The outer curves or edges of the aerial road were super-elevated. Why? “Otherwise the centrifugal effect would pull the vehicle off the road and make it skid. The surface is engineered—raised—by 4 percent on average.” So it was like Scalextric, on a real-life scale; if you did not raise the curve, the cars flew off. We looked out across the city, in various directions. It seemed an epic thing, building a road. “We have a small priest who comes,” said Dilip, “he brings coconuts, flowers, incense.” When did he come? “When we finish 1,000 segments, when we put a pile cap [the base of a pier], when we start the casting yard or the launcher, or if it’s a festival. That’s for the luck of the project. Sometimes we do a bhandara, when we give common food to everyone from the top officers to the workers. It’s lunch for all. We might do a puja to remove ghosts from along the course of the road, especially if we’re working in a far-flung area. We also do a puja for tools and tackles. Seventy percent of people in India will do a puja every day after taking a bath; they will worship god for a few minutes. We do the same for the course of the road. There is a god, Vishwakarma, who invented the cartwheel in ancient times, and he is the god of machinery.”
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With the subcontinent now seen as a gargantuan potential market, global brands were seeking to reach new consumers, recruiting Indian staff and trying to buy up companies in India. The predatory activity worked the other way too, with Sunil Mittal buying Zain, and Europeans feeling astonished when Tetley, Jaguar Land Rover, Corus (containing the remnants of British Steel) and a chunk of Piaggio Aero were snapped up by Tata. A colossal Indian property developer, K. P. Singh’s DLF, bought the luxury hotel group Aman, and the Chinese firm Nanjing Auto bought MG Rover, Britain’s last mass production carmaker. When Tata made a move to buy the hospitality firm Orient-Express, which was listed on the New York Stock Exchange, the CEO of Orient-Express responded that any association with
the Indian company might reduce the value of the brand. Tata was livid, calling this a “prehistoric” response and saying Orient-Express should realize Indian companies would “take their rightful place in the international arena … Enterprises and individuals must recognize and adapt to these fundamental economic changes. We believe that those with a fossilized frame of mind risk being marginalized.”
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Cadbury was an example of a once British company that was creating a new Indian market. They had been in the country since a year after independence, selling at low volumes in a land with no tradition of eating chocolate. When you found a Cadbury’s chocolate bar in India in the past, the heat had usually damaged it.
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Now they wanted to target the new consumer by developing or inventing traditions, using products like Cadbury’s Celebrations, aimed at people who usually bought mithai—Indian sweets—on special occasions. A TV and cinema advert showed an aspirational couple passing on an unwanted gift, which was passed on by a similar couple until eventually it found its way back to the first couple. The suggested solution was instead to give a Cadbury’s gift box, which had a starting price of Rs100, or a little over $2. At the opposite end of the scale they sold individual Cadbury’s éclairs, and small fruit and nut chocolate bars. The adverts focused on occasions when Indians celebrated by “sweetening the mouth”—such as a birth, a religious festival, an election or passing an exam—and aimed to persuade people to substitute Cadbury’s chocolates for the local halwai’s sticky traditional confections made of sugar, milk, ghee and nuts, topped with silver or gold leaf. According to Cadbury’s head of marketing: “The products are also more hygienic in comparison to most mithais and are a convenient food.” Other adverts showed human heads exploding in a chocolaty mess, and raunchy college girls using éclairs to entice money out of a boy. In the words of a company statement, detailing new publicity: “One of the most significant sequences in the commercial shows a pizza delivery boy working overtime on the eve of Diwali. He gets surprised with a Cadbury’s Celebrations being gifted by the customer he delivered pizza to. The gesture warms his heart and makes him feel appreciated.”
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Everything about the positioning of this famous British chocolate brand (started in the nineteenth century by philanthropic Quakers who wanted to steer people away from alcohol and towards coffee, tea and chocolate) was put into a distinctive Indian cultural context—even if the lucky delivery boy was handling American fast food.