Brand India: Is it Withering ?

Ever since the Indian economy was liberalized in the 1990s, there has been much hype over India Inc. and Brand India being a possible next economic miracle. Though slogans like India Shining were used to describe the Indian economic growth story, there were some lingering doubts about the ability of the Indian corporates to rise to the challenge of globalization and take the lead in ensuring that Indian companies are able to withstand completion from foreign companies.

However, in the first decade of the New Millennium, most of these doubts were laid to rest as Indian majors like Infosys, TATA, Wipro, TCS; The Aditya Birla Group etc. were able to not only resist global competition but also takeover foreign companies leading to many commentators announcing that India has arrived on the global stage. Indeed, it became the slogan that global capital has nowhere to go, except to rising economies like India, given the rather impressive growth rates of 7-8%.

The events of the last couple of years have however belied much of this hype. With growth slowing down and a sense of inertia and policy paralysis setting in, the world looked askance at India and started to question whether Brand India was withering away in the face of a combination of global slowdown and domestic political compulsions.

Indeed, the last few months have seen a spate of policy missteps related to allowing FDI (Foreign Direct Investment) in various sectors like retail and aviation and a series of decisions regarding auctioning and pricing of resources.

This has resulted in an acute sense of disappointment with the Indian government and has resulted in lack of political cohesion that is much needed for growth and for Brand India to bloom.

The resulting slowdown in the Indian economy has meant that many commentators began to question whether the Indian story was grounded even before it took off.

However, not all is lost yet and the situation can be still salvaged. Just as India was able to weather the global economic crisis, a similar effort can be launched by the government to stimulate growth and kick start the economy. All it needs is decisive action aimed at opening up the economy and at the same time ensuring that global capital does not mean that inflows of purely speculative money flood the Indian markets.

The combination of liberalization and protecting the country’s interests as is done in China can help the country emerge from the shadow of the recent downturn and help it to regain its confidence. Indeed, India was doing this in the run up to the global economic crisis that really did not affect the country and there is no reason why it cannot do this again.

Finally, Indian corporates have to realize that the government does not exist solely to provide tax breaks and concessions and that they have a responsibility towards ensuring that they do not resort to crony capitalism. The way out of this morass starts all the stakeholders realizing their roles and then acting accordingly.

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