this week, corporate leaders had said that the industry
is used to the volatility of Indian democracy and that
economics has been decoupled from politics. But speaking
to Karan Thapar, in Devil''s Advocate, Tata said
that if this government is out of office prematurely,
it would be damaging for the economy. " It will cause
the momentum of growth, which we enjoyed, to pause if
not reverse," said Ratan Tata, Chairman, Tata Sons.
He admits that despite the prime minister''s enthusiasm
on reforms, he has not delivered on them, because the
numbers do not stack up in the government''s favour. "The
prime minister has seriously and genuinely wanted to see
reforms take place," said Tata.
Tata believes the unintended consequence of the nuclear
deal not going through would be rejoicing in the neighborhood.
He thinks those that want the government to dump the deal
have misunderstood it.
"The only people who will be happy probably would
be Pakistan and China. The benefits that the civil nuclear
deal will bring to the country will be enormous,"
Tata said he decided to stick on with the small car project
in Singur, in West Bengal, despite violent protests because
chief minister Buddhadeb Bhattacharya stuck his neck out.
"A lesser person would have succumbed to political
pressure," commented Tata.
And he yearns for the days of single party rule, or strong
coalitions, so that in India, there would be a serious
debate on issues, not opposition for the sake of opposition.
a chairman of Tata Sons, do you welcome the prospect of
a mid-term election, or do you fear its consequences for
both growth and the investment climate?
I fear the uncertainty in the political environment, which
will certainly cause India to stumble, will cause the
momentum of growth, which we have enjoyed, to pause if
not reverse. And I for one have been extremely encouraged
by what has happened in India. It started in the last
regime and continued under Congress rule
forward and becoming an economic powerhouse.
And that could start unravelling with a mid-term election?
I believe it could if there is a mid-term election. I
hope there is none.
What would happen to our target of 10 per cent growth?
Would a mid-term election make it unattainable?
I wouldn''t want to comment on that but certainly it would
make things difficult.
if at the same time the nuclear deal were to unravel,
what impact would that have both on FDI inflows into the
country and the perception of India as a destination of
The civil nuclear deal with the United States is in
many ways the best possible thing that has happened to
India in a long while.
from the fact that it enables India to go ahead on a much
larger scale in the much needed area of power of
nuclear power which is clean power it also takes
away many of the dual use sanctions which have hurt India''s
time this will give India a tremendously powerful position
in the knowledge industry, in R&D, in high technology.
I believe the benefits the nuclear deal will bring to
the country will be enormous and I''m very very sorry that
on various issues this is being beleaguered.
if it doesn''t materialise this is a serious loss and set
back for India?
I believe it''s a serious setback to India. I believe the
only people happy to see this not happening are probably
Pakistan and China.
could it also have an impact on FDI inflows?
I think it could because I think there would be repercussions
and there would be reactions. I really do believe that
if it doesn''t happen, the only people who would be happy
and benefited by it not happening will be the people of
Pakistan and the people of China.
if the deal doesn''t happen India would lose?
You might say that. Yes.
In May, speaking at the Confederation of Indian Industry,
you said, "We''re not doing enough to reach this
landmark of 10 per cent growth. India is not thinking
big enough, not taking bold enough steps." What
are the steps you wanted the Government to take that have
not been taken?
If you look at China and India, one glaring difference
is that everything China has done has been enormously
bold; in fact unbelievably bold, on the verge of seeming
to be overkill. (In contrast) We''re always growing in
small increments and we''re always behind the curve because
our demand exceeds supply and we''re always trying to catch
up. And, perhaps, the time has come to go ahead of that
curve and think really boldly.
Do we lack the confidence to be bold? Do we lack the
vision? Or the courage?
I think its part of our culture. We''ve come from a planned
economy which was suppose to balance supply and demand,
and we just did what we had to do. I think that''s a culture
of the past.
So we have to change our way of thinking?
Yes and we have to have the courage to be able to live
with over supply because the planned economy and licence
raj has created another mindset which is that you don''t
live in an open, competitive world. You live in a world,
which buffers and protects you.
we have to live in competition and with competition?
And to be able to win in a competitive scenario. India
is very entrepreneurial but somehow in the private sector
we are afraid to do that. We are afraid of competition.
We are afraid of foreign competition. We often don''t want
to see this take place. And yet, when I take the automobile
industry, we have everybody internationally in India,
and Indian carmakers are still surviving.
Conquer fear and have an urge to win.
Just a few days before you spoke at the CII, you also
wrote a letter to the prime minister in your capacity
as the chairman of the Investment Commission, about the
momentum of economic growth. You said, "It''s in
danger of getting dissipated by delays and roadblocks
for no apparent reasons. The net result is that the country
is negatively impacted in investment and industrial growth
and the opportunity of being globally competitive."
What response did you get from that letter?
I didn''t get a response other than an acknowledgment
and an agreement that we would meet, but that meeting
hasn''t taken place as yet. But the PM agreed to meet the
Investment Commission on the issues relating to this letter,
and he has undertaken to generate responses on the specific
projects that I had listed.
You wrote to the PM in May as chairman of the Investment
Commission, and you did not get a response other than
an acknowledgment. You got an acceptance to meet you,
but four months have passed, and that meeting hasn''t happened
been because all of us in the Investment Commission have
also been travelling. I cannot say that it''s an issue
that lies with the PM.
It''s not that the PM hasn''t responded with alacrity
In that letter, you drew specific attention to hold
ups in two areas insurance and banking.
And you said that if restrictions were to be removed in
these two fields, India could see perhaps see $2 billion
or $3 billion more of FDI. Now given that the government
is publicly committed to reforms in these areas, when
those reforms don''t materialise even after a lapse of
two or three years, what message does it send out to the
It doesn''t send out a positive message. Sometimes
these issues get overblown by foreign investors, but by
and large, if India is to open up its economy, it will
need funds from outside. India needs to be a more open
financial economy. Therefore financial services, banking,
insurance needs to be opened up.
There can be constraints on market share that you put
so our financial services don''t get dominated by foreign
companies but, nevertheless, it needs to be opened up.
When it''s not opened up, despite the fact that the
finance minister and the PM have committed themselves,
then don''t investors both in India and abroad begin to
doubt the word of the government?
Usually it is not government policy that leads to
this kind of roadblock. Usually its vested interests in
the country, sometimes in the private sector, sometimes
from the public sector, that works its way behind the
scene into policy, which blocks moving forward.
You mean vested interests in the form of industrialists
who think they might suffer, actually work behind the
scenes to impede some of the reforms the government is
committed to, and as a result those reforms don''t happen?
It is not industrialists only, it may be individuals,
it may be elements of the political environment, it may
be the public sector.
what sort of government is it that makes a public commitment
for reform, and allows backstairs-vested interest to hold
its hand in restrain its action?
I think in fairness to our government, that kind of
thing happens in varying degrees all over the world in
Does it happen more frequently in Indian than elsewhere?
Perhaps it does happen more frequently because India is
in the process of transitioning, and it has to open up.
If the next few weeks or months turn out to be the
last lap of the Manmohan Singh government, how would Indian
industry regard the three-years of UPA rule and in particular
the UPA''s handling of the economy?
We have had a prime minister who, in many ways, has made
this country proud. He''s an upright person of high ethical
values. I believe he''s been respected all over the world
for what he stands for. At the same time I think this
government has not been able to perform as it could have
or should have performed.
Has the government talked more about reform than it
To some extent that could be true. It has been very vocal
on reform. The prime minister has genuinely and seriously
wanted to see the reform take place. I think the political
system has not allowed delivery of that reform to take
Given the track record when it was in office between
1998 and 2004, how would you regard the possibility of
another BJP-led government in power were there to be mid-term
I wouldn''t be able to comment on that. Many of these
reforms and much of the start of the economic boom happened
towards the end of the BJP government.
you have no reason to fear a BJP government. You hope
that they would carry on the way they were.
You have spoke about how the pressures and compulsions
of coalition politics impose caution on the government
and restrain them. And even a prime minister like Dr Manmohan
Singh with the bold vision is unable to act boldly, why
India has to go through mid-term elections. Would you
therefore hope that we return with a single-party government?
If I leave mid-term election as an issue aside I really
do wish we could go back to the days when we had stronger
coalition or single-party in government or two-party system
in the House where you really dealt with issues and you
dealt with serious ideology rather than issues of opposition
for the sake of opposing.
And that sort of boldness can only come if you have a
strong government, and a strong government has to be a
single party government preferably or at least a very
strong coalition, not the sort of coalitions we are seeing
at the moment.
Well, it has to be a strong majority.
A strong majority confident of itself and therefore
a prime minister who has the confidence of that majority.
A strong government, a strong majority, confident of itself,
committed to what it is doing and having one voice.
To come back to the thought of boldness, which you
have emphasised on, am I right in believing that boldness,
if it is going to implement itself and work through in
policy and vision has to come from the man at the top.
When the prime minister is bold the country can be bold,
when a prime minister is forced to be cautious and hesitant
- everyone else becomes cautions and hesitant as well.
I think you are putting too much load on the prime
minister. When the country has to be bold yes the government
has to be bold yes the prime minister needs to lead the
country in that way.
each of us also has to be bold in the businesses we run,
in the investment decisions we make, in the marketing
moves we do - we have to be bold we have to try to stretch
the envelope we have to try to be the leaders not in the
country alone but on the global basis.
boldness has to come from within each of us.
Absolutely and it is wrong just to focus on the government.
Boldness has to be the thing that embodies the way we
do our business.
That''s the message for the future - be bold.
bold, be brave and you will be successful.
In fact internally I have coined a phrase in the group,
"Think big, be bold - leader never falls."
Karan Thapar: Thank you for talking to us.