A Beautifull mind
Posted by g.e. on February 12, 2007
Was reading this interview on Rediff yesterday and was stuck by the energy and the vision Mr Mukesh displays. The bit on SEZ made me wonder if the interview is of someone from the Planning Commission.
We are working at putting the most modern technology in farms at Indian costs. I always say whatever the US implements in dollars we should be able to do it at exchange rate of Rs 10, then we would be globally competitive.
We talked of IT. What is IT? It is the arbitrage between the per hour rate in the US and India. We have gone from zero to $20 billion in exporting software, employing about 1 million people in 10 years. These million people changed the brand of India, consumption pattern and gave us the confidence that we can do everything.
The arbitrage has narrowed but is still there. It will disappear in a few decades by which time our software exports may be $100 billion. From a million people, it will benefit 10 million people. If that is what has happened in software, imagine what will happen in agriculture.
Let me give you some numbers. Take potatoes, the most common food across the world. From Bill Gates to my driver, everybody eats potatoes. Now, plot the prices. Farmers in Uttar Pradesh and Bihar get about Rs 4-5 a kilo; in the Middle East, the wholesale price is about Rs 25-30 a kilo. In the US, Sam’s Club, it is Rs 90 a kilo. In Europe, it is Rs 110 a kilo. The arbitrage is 1:20. If we get our produce right, and if the US market is opened up, you will be surprised how quickly we reach $20 billion.
The food market is much bigger than the software services market. And the money goes straight into the hands of millions of farmers. The spinoffs are enormous — jobs, houses, durables, a whole new consumption boom will start in rural areas.
The logic of SEZ is simple. India is long on talent and we need to create as many jobs as possible in manufacturing and services.
India’s land bank is about 750-800 million acres. Out of this, 500 million acres can be potentially farmed, but today only 300-350 million is arable and used for agriculture. We need to bring the remaining 150 million acres into productive use. More than 100 million households rely on this land base. India is creating 800,000 engineers a year and 400,00-500,000 semi-professionals. So we will bring in about 2 million professionals into the workforce annually over the next 20 years. We need to create jobs for them.
What is missing? It is integrated infrastructure and a reasonable assurance of facilities that are good for at least 10 years. My target company would want to come to India but operate near the big metros. This is the example that you learn from Shanghai or Shenzen. That is where our SEZs with integrated infrastructure come in — they provide an integrated airport, seaport, transportation, power and housing — all at sensible costs.
When I put out a comparative chart, I should be able to tell big employers: this is how we compare with Singapore, Dubai, Shenzhen or Malaysia and Korea. On every parameter, I should beat others in cost and quality of infrastructure. India might be short of infrastructure but here you have guaranteed infrastructure and talent.
You are near Bombay and Delhi and have access to the Indian market and global markets. So ours is an employment-led SEZ. The strategy is first to get the employer. I think we can create 5 million jobs in each of the two 25,000-acre SEZs. But we need many more just to make sure that most of our educated youth is occupied.