The India Dialog: Harvard Business School’s Christian Ketels on India’s competitiveness trajectory

By Ritu Jha-

Christian Ketels, Principal Associate at Harvard Business School, says one has to realize that manufacturing alone is not going to solve the job creation issues that the India is facing; one has to look at more issues. “And that’s what we’re trying to do in the competitiveness roadmap for India.”

Ketels spoke on the “Competitiveness Roadmap for India@100″ at The India Dialog session for 2023 organized by US-Asia Technology Management Center and Institute for Competitiveness held at Stanford University on February 23 and 24, 2023.

“We had an interesting discussion at India Dialog on manufacturing and services. India is already a service powerhouse but, there are more opportunities, not just in high-skill services, but also in other services like healthcare, kind of for entry-level jobs. But, I think we need to overcome that dichotomy between focusing either on manufacturing or on services.

I think India has a lot of opportunities in manufacturing, traditional textiles, to learning from what their neighbors like Bangladesh have been doing more successfully. There’s a huge market in India for renewable energy equipment and more traditional things like automotive, telephone and so on,” said Ketels.

He is not overly concerned at the moment at some multinationals moving out of India. “You need to look at the individual companies to know what’s going on. One has to realize that manufacturing alone is not going to solve the job creation issues that the country is facing… We outline opportunities in a whole range of sectors that have to be pursued, and specifically understanding those markets and then coming up with strategies that apply to those.”

On China, Ketels said, “There is a clear opportunity. Large multinational companies are looking to become less dependent on China in their global value chains, but they are so invested in China that that’s also going not to be a zero-one change. But gradually, I think opportunities will increase. The other opportunity is that India has a huge growing domestic market. I think companies understand that long-term, the changes in the geoeconomic situation require that if you have a large market, you also better have a bit more of a manufacturing footprint in these locations. These are all factors in India’s favor, but to make it happen is not easy, because that means you have to have the right real estate, employees, logistical changes, financial structures, and the ability to import goods.”

He then took a look at India’s apparent hesitancy on free trade agreements: “India has made bolder moves in the past with tax incentives,” he said. “On trade, India’s wearing a little bit of a sense that on the one hand it wants to be part of the global economy, it sees these opportunities and also understands that you can’t limit imports if you want to be successful as an exporter. On the other hand, it is arguably rightfully concerned about being over-flown by Chinese imports and others. So that’s why I think India is looking for the right way to deal with this. Maybe not quite there yet, but I think it has identified exactly the right issue. So hopefully it will end up in a position where there is a more dynamic strategy that will improve the competitiveness of our companies and our location and also allows us to be more integrated.”

Ketels feels that the energy question is critical for the world and for India. “And I think the huge investment demands require changing the energy market in India by addressing the existing problems like the utilities that are in bad financial shape, mobilizing more money, and getting equipment manufacturing going in India.”

He said the growth rate is going to be quite high, but making exact predictions is difficult. There could be another global crisis, India is exposed to that. There could be policy mistakes and so on. But I think there is an opportunity for robust underlying growth. So that’s not what I’m too worried about. It’s the medium-term decisions that now need to be made, creating an institutional architecture that works for India for the future and so on. Now is the time. This is India’s moment and hopefully, the leaders will be able to move in that way.”

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