In an exclusive conversation with BWBusinessworld’s Suman K. Jha, Swadeshi ideologue S. Gurumurthy talks about the Patanjali business phenomenon. Referring to the battle between desi versus foreign-grown companies, he says cultural appeal is a necessary part of the innovation of companies like Dabur, Tata, apart from Ramdev’s Patanjali. Excerpts:
Is it an unequal battle — desi companies vs foreign multinational companies, with deep pockets?
Yes it is. In more than one sense. First, we are a debt-dominated economy, where current cost of capital has to be met, whereas the MNCs are driven by equity and they can postpone returns to the investors. Second, there is so much of phoney money unrepresented by production — over $700 trillions against power money of just $7 trillions that too much of hot money is seeking instant investment opportunities. Indian capital, or banks cannot compete with that kind of cheap money. So the MNCs are generally able to out-fund, undersell, outsell and buyout desi companies. This was proved in the case of consumer durables and automobile, where Indian companies lost out huge space to MNCs.
A number of homegrown desi companies are posing a stiff challenge to foreign brands. Ola is taking on Uber; Micromax is holding on to its base in the face of an aggressive Samsung charge; and of course, we all know about the successful Patanjali forward march. Can this become the norm? Can our desi companies, through innovation, and by invoking national pride, beat the foreign competition?
I will answer it in two parts. First of all in a business like local transport, I prefer neither an global or local major. This is a business, which can be efficiently done by small operators by forming a cooperative digital networking App. The Ola and Uber model converts present and potential entrepreneurs into employees. Therefore, I do not prefer either Uber or Ola.
It is true that some desi companies are doing well, but only in select segments. That Micromax has been able to stand up to Samsung in India is a good thing. But the strength of a company domestically is important for it to become face competition outside. Samsung would not have been able to penetrate the Indian market without being strong in Korea.
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