It has been around three decades since Indian companies started going global. First, was the Aditya Birla Group, followed by the Tata Group, Mahindra, Godrej, Airtel, Reliance and many more. What does their internationalization tell us about their brands globally, and have they even begun thinking of themselves as multinational brands?
The one strange feature of their going global, is that it coincided with India’s economic liberalization in 1991. The purpose behind the latter was to open the Indian economy to more foreign investment and to allow more international trade. I am sure the policy-makers at the time did not think that it would have the unintended consequence of encouraging Indian companies to invest overseas.
Between April and November 2020, global investments of India Inc totalled US $ 13 billion, and over 50% of their revenue is generated overseas. And although India is the world’s largest democracy, which I believe creates the right conditions for brands to develop, be nurtured and thrive, these companies have yet to realise the full benefits of being, and owning, brands.
In recent years, India is increasingly turning into an illiberal democracy, verging on authoritarian and autocratic rule. We might have our elections regularly, but the space for open discussion and dissent is being deliberately curtailed, and our democratic institutions constantly undermined. This will have deeper repercussions on Indian industry, businesses and brands.
India Inc. is usually wary of being critical of government policy, of speaking up and voicing their honest opinions, preferring to toe the line irrespective of which party is in power. In fact, their money helps to finance Indian political parties’ electoral futures, in a system that is increasingly opaque especially under the new electoral bond system introduced by this government. As a result, crony capitalism and corporatism of the kind that Edmund Phelps refers to in the American context, are all too commonplace and established in India.
This is at the core of policymaking in India, which is why successive Indian governments after Jawaharlal Nehru’s term as Prime Minister, have never been able to formulate a coherent and consistent industrial policy, These days, policies are made to appease political interests in certain regions, particular industrial groups, and are nearly always designed to benefit big business. The economic and business growth that can accrue from pursuing such policies are at best short-term and extremely limited. India is fast turning into one of the most unequal societies in the world, and it appears that even the World Bank has stopped calculating India’s Gini coefficient; the last available figure is .35 for 2011.
India ignores its entrepreneurs and small and medium businesses at its own peril. They continue to be the country’s largest employers, albeit in the informal sector. They could either be a millstone around India’s neck, dragging the country down and pulling it back from achieving its potential. Or they could be the source of immense growth and value in the future, taking India leagues ahead in a decade or so.
Which will it be? I have always argued for a more equitable system that recognizes the economic potential in each of our MSMEs, and provides them with an environment in which innovation thrives. As I wrote in an Owl Wisdom Podcast of mine, India’s competitiveness lies in enabling and empowering our large MSME sector. It is also a better way to shift to a more formal economy. What is required is more innovation and specialization.
On the subject of brands, there are two dimensions to consider and both are important especially in the early days. The first is the performance of Indian brands in the home market and how attractive it makes investments in India for global partners. This is dependent on government policies and the overall investment climate. The second is how Indian brands perform overseas, how they are perceived and their ability to compete in the global market.
Then, there is the tendency to pick champions and winners, which one ought to guard against. Often, there is also the practice of choosing winning sectors or industries. If these are based on a scientific understanding of a nation’s competitive advantages and future requirements of a country, they might help provide direction to a sensible industrial policy.
It is only recently that Indian brands have started making it to global brand valuation rankings. Among global Indian brands, the Tata Group leads with a brand valuation of US $ 21.3 billion, though its global position is 77th in the Brand Finance Global 500 Rankings 2021. During the past couple of years, Reliance Jio and Airtel too have done well, as have a few Indian banks and tech companies. In the presentation below, I share some of my thoughts on Indian brands in the global marketplace.
I believe that India’s competitive advantages are in knowledge-based industries such as information technology and pharma and a lot of what I share in the presentation is about the fundamental shift that India has made in its exports. I also talk about what India Inc and the Indian government need to do to make Indian brands more salient internationally. It is about strengthening the hard and soft power of Indian brands.
One of the ideas is also to form an India Brand Advisory Council in association with CII and FICCI, with advertising and brand communications professionals on board, to develop more comprehensive policies for Indian brands to be able to compete globally.
And finally, Indian companies will have to focus on building their corporate brands with distinctive brand strategies and positionings that work globally. Bon voyage, Brand India Inc!
The featured image at the start of this post is of Lake Palace Udaipur, Rajasthan, India, part of Taj Hotels, from Pixabay.