I wrote this second column on Brand India in the Calcutta Telegraph of 15 December 2009.
A NEW BRAND DRIVER
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We Indians implicitly believe in India’s great past. Recently, that past has been given a statistical underpinning by Angus Maddison. To celebrate the beginning of the 21st century, Maddison wrote a book called The World Economy: A Millennial Perspective. There he says that India was the world’s largest economy in the first millennium AD. It produced one-third of the world’s income in the first century, and 29 per cent in the 11th century. Under the Mughals in the 17th century, India’s share of world income was 24 per cent. Although China had overtaken us by that time, India’s share was greater than that of the whole of Europe. By 1951, India’s share had fallen to 4 per cent. Why it fell so far is a question we can leave to historians.
What is striking is our poor performance since Independence. India had an extremely high brand value in 1947, despite Partition and the communal riots. Its new rulers got much publicity and goodwill because of the way they had won independence without violence; the world assumed that now that India was independent, it was bound to emerge as a major power. But the expectations were belied, and the opportunities went to waste. The government tried State-led industrialization, and wasted the one major national asset it had, namely private enterprise.
It introduced comprehensive import substitution, and built up inefficient industries. As a result, they could not use international markets to expand. The global market is 25 times as big as India’s; an industry that can access it can grow much more than an industry confined to the home market before it faces a market constraint. A number of countries, which were initially poorer than India, did just that; they built up internationally competitive industries. As a result, they grew much faster and became richer than India. And by establishing their presence in the world market, they built up their brands. By the 1980s, little countries like Korea, Taiwan, Thailand and Malaysia had better brands than India.
Luckily for us, the import substitution strategy finally broke down in 1991, and India went bankrupt. Liberalization was forced on India. When I was taken into the government in 1991, changing the world’s image of India was one of our most serious problems. After forty years of socialism, instability and failure, people across the world were sceptical that India had changed stripes.
But the reforms of 1991 worked. India opened up to foreign trade and investment. As trade and investment flows increased, so did the interest of the outside world in India. Today, the circumstances have completely changed. Indian government officials do not have to go round the world trying to interest investors today; instead, they spend their time making complicated rules about which foreign industrialists can invest in India and which cannot and on what terms. India’s image has also changed over the years. Before Independence, India was known as a country of elephants and snake-charmers. Maharajas were its brand ambassadors. Their pomp made for good spectacle; their foibles were lapped up by the Western press. But the rulers who took over India in 1947 were not fond of the Maharajas, whom they regarded as remnants of a feudal age and friends of the British. They were ashamed of elephants and snake-charmers; they dreamed of a metallic, modern, industrial India signified by dams and steel mills. So they wasted the images they had inherited.
But the image they wanted to project was different from India’s reality, and it continued to be different from the image abroad of India. The disjunction between the two images — the image that people had abroad and the image that the rulers of India wanted them to have — has persisted. The rulers wanted the world to see India as a modernizing, industrializing, dynamic nation. But industrialization was slow to come, so it added nothing to India’s brand. Instead, India became a large-scale importer of foodgrains in the 1950s, and became known as a country of the starving poor.
The last famine we had was in 1966; we have been producing enough foodgrains since the 1970s. Nuclear bombs were exploded, first by Indira Gandhi in 1974 and then by Atal Bihari Vajpayee in 1998. They made no difference to the balance of power; both explosions were purely public relations exercises, designed to create an image of a strong India. But strength does not come from an atom bomb. The explosions only created the image of strutting rulers who thought a lot of themselves.
What changed the image of India was something that the rulers had nothing to do with. In fact, they did not know when it began to happen, and did not get a chance to stop it. It was the coming of the information technology industry, and the creation of the market abroad for programmers. India just happened to have a large number of engineers who could turn to programming; American IT companies began to come to India in the 1980s and hire them away. And it is these code writers that changed India’s image. During a visit to Germany some 15 years ago, a German came up to me and said, “You Indians are so intelligent!” I thought he had gone mad. It was the Germans who were most intelligent; theirs was a most difficult language, and even their children could speak it. But the German was referring to our software engineers.
The IT boom, which transformed India’s image, had nothing to do with our rulers. But they did recently do one thing right, namely the Incredible India campaign. It was a short, simple, snappy slogan; no Indianisms in it. It was not descriptive; instead of telling, it mystified. And the visual images that accompanied it were not of steel mills and dams; they were just images of beauty. So Indians — even official Indians — are capable of doing things right; that gives me hope for the future.
Now, the IT boom has done its work for India’s image. Net exports of software earned $44.2 billion — a quarter of our invisible receipts and 15 per cent of our total current account receipts. Industry leaders continue to make optimistic projections of its growth, but it is likely to slow down for two reasons: first, because India has already conquered the easier markets and second, because Indian wages have gone up. The Incredible India campaign created enormous interest in India, but it has gone to waste: transport within India has become crowded and chaotic, and Indian hotels have become absurdly expensive. Even for Indians, a holiday in Malaysia or Thailand costs less than a comparable holiday in India. Today, Indians spend nearly as much abroad as foreign tourists spend in India, and our net earnings are negligible. In 2008-09, Indians spent $9.4 billion abroad; foreign tourists spent $10.9 billion in India.
So we need new drivers for Brand India in the next ten years. What might they be? It depends on where we want India to go. Our plans should be ambitious but realistic; they should be located in our international environment, and use our strengths. My ideas must wait for the next column.
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