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India building up infrastructure

July 17, 2006

Reforms are progressing in such areas as infrastructure and agriculture, panelists stressed in the discussion focusing on the development of India.

The panelists were: Azim Premji, chairman of India's information-technology giant Wipro Ltd.; Isher Ahluwalia, chairwoman of the Indian Council for Research on International Economic Relations; and Eisuke Sakakibara, a professor at Waseda University. Sakakibara moderated the discussion.

Sakakibara: There has been a lot of interaction within Asia. India's interaction with China is increasing. Wipro is investing in China in various places. How would you see those interactions between East Asia and India, or China and India, along with Japan?

Premji: The major emphasis which I want to make on this issue is the globalization which is taking place in services - similar to the globalization which took place in products 15 to 20 years back. What business leaders as well as political leaders are realizing is that services, like products, can be rendered effectively in locations where they are most cost effectively rendered.

In India, the software industry was the pioneer in doing this in terms of globalization. It was then followed by the pharmaceutical industry. It is now happening in biotechnology.

Sakakibara: India is a well-known decentralized country. And some of the authority with regards to infrastructure building resides with the states. How are those policies coordinated between the planning commission of the central government and those of the state governments?

Ahluwalia: The prime minister has set up a committee on infrastructure which is actually serviced by the planning commission. The planning commission sees to it that the individual ministries are interacting with individual projects in the states.

Premji: In terms of infrastructure, you have seen remarkable improvements, which have taken place in telecommunications. Our telecommunications systems are among the most reliable in the world, and probably the cheapest. I think you are seeing a similar trend in terms of the effects of privatization taking place in road construction.

There is a major privatization of our civil aviation. We today have more flights per city by a factor of 10 as compared to what we had three years back. And orders pending at Boeing Co. and Airbus SAS are something like $35 billion.

Ahluwalia: One of the major institutional reforms that has taken place in the last two to three years in the rural areas is the (change in) agricultural marketing laws. You could not have the private sector doing marketing of agricultural produce. Now a number of states have amended their acts to allow the private sector to come in for marketing. This is a very significant change, because big companies are coming in and buying fruits and vegetables. They are trying to create a value chain.

(The Nikkei Weekly July 17 Issue)

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.