A fear often expressed at various levels ever since the economic liberalisation process began in 1991 is: will Indian companies be able to survive the competition from foreign companies?

I strongly believe that in a liberalised economy, there is room for everyone. The most important factor for the success of a company is its vision. Vision is also very important in joint ventures as it has to be common and agreed to in the beginning.

Vision varies on two parameters-one is for short-term returns or long-term returns, and the other is the vision of investment. It is only when there are differences in the visions of both partners that collaborations break down.

I believe that a local partner in a joint venture can give a lot of value addition in terms of marketing and add to it. Therefore, this marriage flourishes. But if the useful factor is not there and no money is coming from one partner, the other is bound to take charge, irrespective of whether it is a joint venture between a foreign and Indian company or two Indian companies.

But I have no doubts about the capabilities of Indian companies. We have seen many Indian companies do well and survive. The managerial skills we have in this country are outstanding; after all, even when multinationals are coming in, they are using Indian managerial skills.

Take Nirma. It is a great success story. At one point of time, Nirma's growth in detergent powder was substantially higher than Hindustan Lever's. Even today, in the competitive sector of toilet soap, Nirma has come in and is doing very well. Nirma has a good distribution and marketing strategy, it is producing a good quality product and is competitive. I think there are many areas, including most competitive sectors, where Indian entrepreneurs have not only survived but flourished.

Yet, the fact is that in many other sectors where foreign companies have come in, Indian companies did not recognise what competition really means. And when they saw that they would not be able to stand up to that competition, primarily based on the technological sophistication of the products coming in, some of them have now decided not to welcome foreign investment.

In every liberalised environment, there is a fallout. We cannot make up for years of no investment in technology in a year or two. It is the survival of the fittest. That is what liberalisation and competition is all about.

Looked at from the consumer's perspective, this is the best thing to happen. Competition brings prices down. From the consumer's perspective, liberalisation and the coming in of foreigners is a very welcome step. From Indian industrialists' point of view, competition is getting tough. For years and years, we have not invested in technology. Now suddenly when we are facing competition, we are finding it difficult.

Indian industry wants time. But I want to know what is the right (amount of) time. Is it five years, 10 years? What we are probably forgetting is that the longer we take to get our projects upto international standard, size and technological base, the more we are keeping ourselves out of the international markets. We have to prepare ourselves for the opportunities that India will have once the WTO is in place.

At the same time, we have entrepreneurs who are not afraid of competition. Does Dhirubhai Ambani even bother about competition from foreign companies? The reason is that he has set up state-of-the-art international economic size plants which can compete with the rest of the world.

Ranbaxy is doing well in the high-technology pharmaceutical industry. Parvinder Singh doesn't cry wolf about competition from foreign companies. Ranbaxy invests heavily in research and development; they have been doing it for many years.

On the one hand, you have Nirma. From a small entrepreneur he has grown to a big size and fought the biggest multinationals, Hindustan Lever and Procter & Gamble. On the other hand, you have Reliance, which has done so well on its own. So there is enough room for everybody.

In my view, the best way forward is that either we upgrade our technologies and be competitive like a Nirma, or we have joint ventures where there will be value addition from both sides.

The biggest crisis faced by the country is unemployment. And unemployment cannot be removed without investment. Whether it is government, private sector or foreign sector, we need investment.

In a liberalised economic scenario, there could be shakeouts, mergers and acquisitions in high-technology areas such as the engineering sector. But I don't think it would happen in the pharmaceuticals sector. It could happen in the electronic and telecommunication sector where a lot of Indian companies have tied up with foreign companies for technology. I don't think there will be a shakeout in many other sectors. We are fairly strong in petrochemicals and textiles.

The biggest challenge is faced by mid-size companies, those in the Rs 200-500 crore turnover bracket. These companies have to decide what their core competency is, stick to it and then grow in it. There are lot of companies in this segment which are not in one industry but in many industries. They have to go out and get technology. Those who have done it are doing very well. There are any number of success stories of small entrepreneurs who have gone out and brought in technologies. These companies can even become ancillaries in their core areas to ensure that technology support continues.

What the Indian industry should do is to focus on core competencies. There is room for everyone in the market.

(As told to Veeshal Bakshi)

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.