What is the nature of indian economy

sharesThe Indian economic miracle


Mahindrais the fifth largest group of companies in the country and produces cars, agricultural machinery and aircraft and controls banks and insurance companies. In total, the group made almost 17 billion dollars in sales in 2015 and is increasingly exporting to Europe and the USA.Anand Mahindrahas led the group alone since 2012. His fortune is estimated at $ 1.3 billion. He is one of the most important philanthropists in the country, he finances a university, donates scholarships, supports theater, film and cultural festivals.


Capital: Since China's economy stuttered, India has become a new star among the emerging markets. At 7.5 percent, the Indian economy grew faster than that of its larger neighbor in 2015. What has changed since Prime Minister Narendra Modi took office?

Anand Mahindra: Above all, this government brought fresh air. Modi wants to see growth in India and sees entrepreneurs as his allies on the way to his goal. He is determined to improve the investment climate and working conditions. He travels abroad a lot to attract foreign investors to India.

How does his course at Mahindra affect you?

Since he's in power, I no longer have to travel to Delhi to lobby my interests. Today officials from the Ministry of Commerce in Delhi called me and asked if I had any problems. We applied for several licenses for our aircraft production under the Congress government, but everything dragged on forever. Obviously some people wanted to be bribed. Today all the licenses are there without my having to do anything. For large corporations that meet all ethical standards and pay taxes, the working conditions have become significantly better.

Has the government already initiated concrete reforms?

The spring is slated for the all-important Goods and Services Tax (GST), a type of sales tax that will replace several local and state taxes. This makes the tax system simpler and the overall tax burden less. A new bankruptcy law is already in parliament, and the law is also being amended in the case of arbitration and legal disputes.

Opponents accuse Modi of making a policy for large corporations and forgetting the little man. Do you agree with that?

No. Modi knows full well that 80 percent of India's GDP is generated by small producers. But it will take a little longer for the reforms to reach them.

"India will take a leap forward"

Has the government been able to curb bureaucracy and corruption at the regional and local level as well?

The situation is changing, because nobody wants to mess with modes. I recently wanted to change the type of use for a company property in Maharashtra and have sent the necessary documents to the authorities. In the past, I would have had to go to the governor on a matter like this so that everything would go smoothly. Now his agency gave permission before I could plan a visit.

So why is India still doing so badly in the World Bank's business climate rating?

India will take a huge leap forward in the upcoming rating, I can tell you that. I advise the committee that draws up the rating. Unfortunately, there is still too little talk about improving the Indian business climate. The government has so far not been able to properly communicate its successes.

You joined the company in 1991 after completing your MBA at Harvard. What was the first thing you had to change at Mahindra?

Mahindra was founded in 1945, two years before independence. The development of the company reflects the fortunes of our country. India used to have a socialist command economy like the Soviet Union. There was no competition. We were allowed to produce a certain number of cars and tractors and buy a certain amount of steel or screws for them. Nobody had to pay attention to the quality, sales were guaranteed by the state anyway. Our machines often stood still, the workers played cards or slept. With the market economy reforms in 1991 everything changed overnight. Foreign corporations entered India. Suddenly we had only one alternative: either swim or drown. I had to shake up the workforce. People responded with a strike. One day, angry workers locked me in my office and threatened me. But at some point they gave in. Productivity increased by 120 percent within a year.

How do you create products that are globally competitive? Is there a recipe for that?

We had to make fundamental changes in all areas. We have reorganized production, introduced the strictest quality controls and built up marketing that did not exist before. All of our managers and senior engineers were apprentices at Lucas Engineering in Birmingham. And we brought in the German medium-sized company Hartmann Consulting as a consultant. We learned to question every detail and were able to make the production processes more efficient. But in the end it was our products that made the difference.