Foreign Direct Investment (FDI) and our economic growth – Part IV By Dr. Bobby Srinivasan and Dr. Sudhakar Balachandran

April 22, 2015 | Posted by bobbysrinivasan << back to blog

This is an ongoing conversation between a professor and his student.

Student: Prof. In your opinion what will make India succeed?

Prof.: The answer is fairly simple. Produce goods and services whose quality is second to no one. In terms of functionality, usability, design, manufacturability and operational ease are some of the important factors to consider.

Student: Can you be a little more specific?

Prof.: I will use an example. Ikea, a Swedish furniture company is the case in point. If you visit their outlets say in Singapore you will find it amazing of the range of furniture and fixtures that they produce and make it available to its customers. Generally, all the items come unassembled but by following the set of instructions that accompanies the product one can assemble the product with ease. Their furniture are so contemporary, meets the needs of discriminating customers, very reasonably priced and durable. In this case product innovation, be it size, colour, texture, simplicity which is what the customer needs is made available. Do we have local companies which can do a similar job?

Student: What other qualities are relevant?

Prof.: In an international competitive environment, quality, value for money, durability are all extremely important. We in India, have a long way to go. Besides Indian manufactured goods are not in a position to immediately replace a foreign product. First we must strive to make products of quality with high reliability. The buyer will want only good quality for the price he is willing to pay. Just imagine when our goods are displayed along with the Chinese, Korean and Japanese product, it must have equal chance for being selected.

Student: How do we get there?

Prof.: Simple. If all of us strive to deliver the best we can and are willing to take this commitment, the quality will be assured. If foreigners believe that India can produce good quality they will not hesitate to come here. They know that good quality commands premium.

Student: Are you then saying that we should not strive to become cheap cost producer?

Prof.: I am not saying that. If foreign companies are looking for location to produce cheap quality goods there are any number of countries in the world especially those whose currency has taken a big hit in the recent times against the dollar. The emphasis should be on quality and when our PM talks to the foreign companies, he should assure the following,

We will ensure that whatever we produce will confirm to the highest standards.
We will try to bring down the cost not at the cost of quality.
We take pride in what we produce and sell
Our products will meet the best global standards.

If these promises are made and kept, FDI will pour in. We don’t need to sell, foreigners will come to us. India is a land of high creativity. Every old temple, church and the Taj Mahal will speak for that. How come we compromised and accepted lower quality and achievement. I don’t know but certainly we can revive it now.

Student: I feel proud to be an Indian. What are your final words on this topic?

Prof.: We are proud people. We believe in creativity “Every product we sell we stand behind it”. If this motto becomes a reality, there is no telling how high, we will go. Any compromise will make us only vulgar and unreliable. This should never be allowed to happen.

Student: Thanks for a very entertaining discussion.

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