In 2013, the Economist blamed “a lack of political resolve” for India’s persistent economic weakness, arguing the country “is unlikely to summon up the single-minded dedication with which South Korea, Taiwan and China created industrial jobs.” With Prime Minister Narenda Modi kick-starting infrastructure and tech initiatives, slashing barriers to investment, initiating mobile money programs for the poor, and driving reform on a dozen other fronts, the issue of political resolve is waning, even if the results of all this activity are still little more than a vision.
India is reaping a “demographic dividend” – a period of declining fertility, longer life expectancy, and better access to education. Basically, there are fewer mouths to feed, and more educated people to earn the money to feed them. India’s pool of workers with secondary or tertiary education will rise from about 360 million in 2010 to 660 million (or double the entire population of the U.S.) by 2030. Add to this swelling urbanization, steadily rising incomes, and the aforementioned political momentum, and you have the raw ingredients for a genuine economic boom. The Indian health and education systems, transportation and network infrastructure, media and entertainment, financial services, and retail and ecommerce sectors will be profoundly affected by an older, more urban and affluent population.
Western companies are having mixed results as they attempt to anticipate these changes. Apple seems convinced that Indian consumers won’t pony up for an expensive new iPhone the way Chinese buyers have for the past six years. The company wants to win India by selling refurbished and less pricy iPhones, but this plan is unpopular with local manufacturers, and ignores import rules and national pride. Alibaba and eBay have invested in local ecommerce champions Snapdeal and FlipKart, while Amazon says it will invest $7 billion to compete directly in India, taking advantage of the government’s recent decision to remove certain ecommerce ownership barriers. Cisco is investing heavily in network infrastructure, stoking a warm partnership with Modi’s government, which has placed a premium on connectivity for villages and rural areas. Indeed, there is a strong desire for the private sector to get more involved in multi-sectoral partnerships at the federal and state levels in India, particularly in support of flagship health, education, finance, and gender equality programs. Tech companies with an appetite for government and private-sector partnerships and a commitment to social impact will find a friendly reception in today’s India. They may also find success by testing the presumption of a frugal, less brand-driven Indian consumer in a more prosperous, urban, and better-connected market.