TAKING STOCK: Concentrate on core strengths Why do I keep harping about free trade, open markets, ending of licensing provisions, scraping of all controls on domestic and foreign investments, making the currency convertible, and ending the taxes on income? Because that is the way, the only way, for any country, be it India or Nepal to discover its real strengths. Companies, which face competition, realise that to do well in a globalised environment they have to be world-class and this they can only be if they concentrate on their core competencies. Gone are the days when business houses could manufacture and trade in everything and still show a profit. What happens in a protected environment? India is a perfect example. Up until the early 90’s, India was closed and protected. India concentrated on doing it all. Companies were protected from foreign competition by steep tariffs of over a 100 per cent, or, in the case of consumer goods by outright import prohibitions. They were also protected from domestic competition by a stringent licensing policy. It took years for the government to dole out licenses to competing business houses. Yes, India made a lot of things, but were they world-class? Indians got shoddy service and even shoddier products. ‘Made in India’ label was shunned and was synonymous with a down market, unclassy, look. The Ambassador car churned out by the Birla group’s Hindustan Motor typified what was wrong in that era. This ugly vehicle was India’s principal motor vehicle. The Fiat Company too probably reserved its worst models for the Indians. Now what is the situation? Even though the markets in India are still protected — car imports are to this date virtually prohibited — the number of companies manufacturing cars in India has exploded thanks to the abolition of the earlier licensing policy. Toyota, Hyundai, Suzuki, Ford and General Motors, with their production plants in India, are all vying to woo the Indian consumer. The story gets even better. India which could not have sent its Ambassador car free to any country, is now exporting autos and auto parts to countries around the world. In fact Tata Motors, Hyundai and Mahindra are facing some difficulty in meeting demands of the Indian market, such is the rising tide of export orders. Are motor vehicles and their parts, the only manufacturing success story for India? Not at all. Tata group’s Tisco, now relatively unprotected, has emerged as one of the world’s lowest cost producer of steel and is buying Corus of UK. Indian pharma companies too have been in the news. Ranbaxy and Dr Reddy’s laboratories, have become world-class producers of drugs and have established a significant presence in the US and European nations. This is what one of India’s premier business family doyen, Kumar Mangalam Birla, had to say, “India is world’s largest exporter of cotton yarn, the largest manufacturer of motorcycles and two-wheelers, the lowest cost producer of cement, aluminum, CD’s, and steel. We are number five in pharmaceuticals.” In fact, if anything, the true story about the strength of India’s manufacturing successes has been largely overshadowed by India’s growing prowess as on information technology (IT) superpower. Would India have created a monster software and computer industry in a regulated and protected pre-1990 environment? I am afraid, not. Narayan Murthy, head of Infosys, talks of days when his senior executives had to make dozens of trips to New Delhi to convince bureaucrats to let them import a computer. Now that their energies are no longer required to manage officialdom, the same energies have been channeled into marketing their products and services in America, Europe, Japan and Australia. India, like Infosys, is just in the process of discovering its true strengths. Let Nepal exceed what India has done to free its economy and it too will discover its real strengths. For this to happen Nepal must do away with its myriad controls on everything ranging from imports, foreign currency, domestic and outside investments, and licensing of everything from TV channels to cell phones. (The writer can be contacted at: everest@mos.com.np)