Michigan don wants India to embrace efficiency

The Michigan don says India is going to be the third-largest economy after China and the US by 2050, reports Venkatesh Ganesh.

Gautam Ahuja, professor of strategy, Stephen M Ross School of Business, University of Michigan, is widely known for his contrarian views on whether India is on the right growth path and whether Indian companies have it in them to become global players when it comes to scale, size and brand.

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Says Ahuja: "Going by the Goldman Sachs' BRIC (Brazil, Russia, India and China) report, India is going to be the third-largest economy after China and the US by 2050. To achieve that, however, Indian companies have to score higher on efficiency and innovation front than their current levels," he says.

He says that Indian companies should move from comparative to competitive advantage if they aspired to be among the top three economies of the world. Recently, Indian IT and BPO exporters have been seeking further tax sops in order to compete against other software exporting countries. "By 2040 if India becomes among the top three economies in the world, the rupee could be 14 to a dollar. What would Indian software companies do then," he asks.

Ask him about M&As that Indian companies (such as the Tata's Corus buy) have been busy with lately, he simply says: "Indian companies will have to be careful now since most mergers fail." Leveraged buyouts will be on hold because of a global credit crunch and mergers between relative-sized companies pays. "Sharks should not acquire sharks."

On 'innovation' in Indian companies, both in startups and established companies, he has a mixed view. "Indians are creative but lack the relentlessness to-be-the-best attitude," he says, adding the culture and behaviour of people who make-do with things that are below world-class standards was affecting India.