Gurcharan Das, author, explores what India needs to do to sustain its growth and move from an economy of potential to one of broad-based prosperity in a conversation with Fahad Moti Khan. He reflects on India’s economic progress since liberalisation, while arguing that the country has yet to build the industrial base needed to create jobs at scale. The conversation examines manufacturing, global investment, deregulation, labour-intensive industries and the role of competition in building globally competitive Indian companies. Das also discusses the quality of education, the potential of AI to expand access to expertise, the need for stronger research and innovation ecosystems, and the governance reforms he believes are essential to India’s next phase of growth.
Fahad Moti Khan: Welcome, sir.
Gurcharan Das Thank you
Fahad Moti Khan: India Unbound predicted India’s rise 25 years later. Where have we succeeded? Where have we fallen short? And what still stands in the way?
Gurcharan Das: Well, 30 years ago, in 1991, I predicted the rise of India. India has grown at 6.5% a year. For a democracy, this is unprecedented. We have lifted 450 million people out of poverty. The middle class has grown from 10% to 30%. In the meantime, we have also created a Green Revolution. We have become from being an agricultural-deficit country and importer to the fourth-largest exporter in the world. We have become a player in the IT space, and domestically we have created a digital revolution. So there is a lot to feel good about. Per capita income has gone from $100 to $3,000. However, we have failed to create an industrial revolution. Every country that went from poverty to prosperity in the last 200 years went from an agricultural surplus to industry. We seem to have skipped the factory stage because manufacturing represents less than 15% of GDP, employs around 11% of people, and 45% of our working people are stuck on farms and small holdings. Most of them are redundant. Agriculture simply doesn’t need that many people. So that is the heart of the problem. That’s our success and our failure. The fact is, that the conditions today, it’s not too late. We haven’t missed the bus, entirely. It would have been better if we had done this 10 or 15 years earlier, and we can discuss why we didn’t do it. But the fact is today, infrastructure is far better. Logistics are far better. We’ve taken a lot of friction out of the system and frankly, thanks to Mr. Trump, to be very honest, he has pushed us to open our economy. That was the original sin of India, and that went back to the 1960s. When you close your economy, you are basically telling the world that we are not confident enough to import your products and export our products. Mr. Trump has changed our mindset.
FMK: I think not just ours; it’s a global phenomenon now.
GD: But in our case, he called us the “king of tariffs.”
FMK: Right.
GD: That’s an insult. That’s not a compliment, to be the king of tariffs. So we were not an open economy, despite liberalisation. And that’s what we can discuss: why and how did this happen? But really, the fact is that we have to get back to the basics. So, given the push from America, our scramble to make FTAs with the European Union, the UK and other countries, has led to a much more open mindset. And that’s the only way. The way is through labour-intensive manufactured products.
FMK: Right.
GD: And you don’t need AI technology or anything for that. That’s very straightforward. That’s what creates jobs. And we have only about a dozen years before robotics will take over.
FMK: Right.
GD: Fortunately, AI will kill the white-collar jobs and not the blue-collar jobs.
FMK: That is correct.
GD: So the factory jobs still have time. And that’s where we are at this moment. The other thing that’s happened in this last year is also a realisation that we are the most overregulated country in the world. There’s an organisation that is a subsidiary of TeamLease in Bangalore. They worked out, actually meticulously calculated, that in India there are 69,000 compliances. A company has to make 6,500 filings.
FMK: Right.
GD: And of those filings, a quarter or a fifth are jailable. If you make a mistake in your filing or if you have not complied, you can go to jail. So it almost feels like we are one of the most hostile places in the world to do business.
FMK: It’s almost like we assume guilt of a business enterprise and operate with that lens.
GD: And that really goes back to this anti-business attitude.
FMK: That is correct.
GD: And so, if you have that kind of mentality, the only model that was available to a country at that time — I’m talking about the 1950s — was the Soviet Union because we followed the Soviet model. The idea was that the public sector would be at the commanding heights of the economy. Those are the words from the Second Five-Year Plan. Therefore, a lot of industry was barred from investing. If the Tatas wanted another steel plant, they couldn’t have had it.
FMK: That’s true.
GD: It was reserved for the public sector. And the second part of it was that the private sector was crooked and needed to be regulated.
FMK: Correct.
GD: And the regulation took the form of what Rajaji called the Licence-Permit-Inspector Raj and really, it was all done in the name of the poor.
FMK Right.
GD: The big mistake we made in 1991 was that we didn’t learn from other countries. What did China do? You see, we both had the same kind of bureaucracy — India and China. In India, we inherited a colonial bureaucracy whose people were trained for law and order.
FMK: That’s correct.
GD: And you got brownie points.
FMK: In law and order, their entire job was to control.
GD: Law and Order, that means if somebody wanted something, you said no. You got brownie points for saying no. That’s how you got promoted.
FMK: That’s correct. I mean, have we missed our Deng Xiaoping moment? Or do you think we’d see something like that in the coming future? One of the things that people don’t talk about, because of the sheer amount of control the Communist Party had and he had on the Communist Party was that the principles of land, labour and capital were also kept on the side. He subsidised where subsidy was required, kept the currency artificially low and did everything that was required for the country to take off. Whether it was right or wrong can be debated, but they had a single-mindedness in terms of becoming an economic superpower. So have we missed that bus? Is it possible for us?
GD: No, no, no. I don’t think we’ve missed that bus. But we should learn. As I told you, we did not change the incentive system of our bureaucracy. We did not change the attitude of the people. People still believe that reforms or the market make the rich richer and the poor poorer. People can’t distinguish between being pro-business and being pro-market. And so we’ve landed up with the politics of freebies. If a reformer — say, if I went into politics and decided to run for election — I would say to my constituents, “Look, I’ll get investment. Factories will come. Jobs will be created, and you all will be much happier. Plus, I’ll improve the schools so we get the skills for those jobs.” And what will the party opposing me say? “From tomorrow, I’ll give every woman ₹1 lakh a year. I will give you free electricity, and I’ll give you this free, that free…” So who do you think people will vote for?
FMK: Absolutely.
GD: They’ll never vote for me. They’ll say, “You’ll be gone.” Now what needs to be done?
FMK: That’s the solution.
GD: What needs to be done is essentially, as I said, we’ve created a digital revolution. From 42 per cent to 85 per cent Bank accounts have grown, and so the formalisation of the economy has happened. The government has set up three deregulation commissions in the last year. The people heading those are very senior people — former Cabinet Secretaries and a present Cabinet Secretary. So they mean business, and they’ve already shown what they can do.
FMK: Right.
GD: But I’m hoping for a bonfire of these 69,000 compliances. It won’t be easy. But the whole Jan Vishwas Bill that has passed Parliament is about trust — that regulation should be based on trusting the citizen. In addition, we have other reforms still to be done. But if we are serious, those will be done too. We have certain deficiencies, like our electricity rates are being subsidised, so we are not competitive. Freight rates on the railways are not competitive. But that’s where PLI comes in. And if you use it well, the best example of using it well— the low-hanging fruit that will show us the way — is the manufacture of iPhones in India.
FMK: That’s correct.
GD: Two years ago, less than 1% of global iPhones were made in India — 0.2%.
FMK: That is correct.
GD: Today, 30% are made in India. One hundred percent were made in China. Now, just the assembly of the iPhone — not the components or anything.That’s where the big jobs are— has created two lakh jobs. Seventy percent are direct jobs, and there are four times as many indirect jobs. So that’s a total of 800,000 jobs.
FMK: That’s correct.
GD: Seventy percent are women. They’ve put up a dormitory in Tamil Nadu, almost like a five-star facility, for 20,000 women. That is how China did it. The most interesting part of the story is that when Vietnam heard that they had lost the iPhone to India, the Prime Minister of Vietnam got on a plane, flew to Cupertino, California, the headquarters of Apple, met Tim Cook and persuaded him. He said, “Look, we’ve lost the iPhone, but give us the iPad, and here are the reasons why you should give us the iPad.” And he succeeded. The moral of the story is that we should, similarly to the iPhone, target a brand leader in the world. Target them and say: Nike shoes, garments, Zara, food processing. These are all labour-intensive — toys, electronics, assembly. If I were a Chief Minister of a state, that’s what I would do. I would take a delegation of business people, show them our capability and tell them what we can offer. And in the case of Apple, Apple didn’t invest in the factory. Foxconn invested.
FMK: That’s correct.
GD: So similarly, there are contract manufacturers available. That’s what we need to do.
FMK: And that was my next question. You know that we are assembling Apple. Why don’t we have Apple?
GD: Okay. So the answer to that is: when we closed our economy, we closed it to competition. A company becomes strong…the school of becoming successful for a company is competition. We say, “Oh, but our people don’t invest in R&D. Why should they invest? They’ve got the market sitting there. Why improve your product if you’ve got a 60% market share?” But you allow global competition to come in, suddenly you have to compete. And then, if you whoop them in your own market, you go to the next one and get the confidence and so that is really the way. I seem to be blaming the ’60s and ’50s. But why didn’t this government do it? In fact, it raised tariffs. It did the opposite. These people said “Atmanirbhar.” Now, Atmanirbhar has two meanings. It means self-reliance, which is good, but it also means self-sufficiency, which is bad. Unfortunately, when Mr Modi says Atmanirbhar, a lot of people take the message that, “We don’t need foreigners. We can do it all ourselves.” That mentality is the mentality of poverty. And so, if we want to go to that Viksit Bharat goal — and we can do it.
FMK: There is intent. Actually, you can see the intent.
GD: There is an intent. So hopefully all these things will come together. There are other things we have to do.
FMK: I’ll tell you, there are two periods in which we had remarkable growth in two different industries. I’ve seen this with my own eyes. There was a time when we made the export of garments from this country tax-free, and suddenly places like Noida were full of garment exporters. It really grew. But it was periodic. It was allowed for a decade or so, and then it was pulled back.
GD: But it was not the tax-free treatment that really killed our hopes of becoming a Bangladesh-type garment exporter. What killed it was legislation called Small Scale Industry Reservation. Everybody said, “Small is beautiful.” So the government said, “We don’t want big companies to enter.” They set a limit, and basically around 700 industries were excluded. So people like the Tatas, Birlas — any decent-sized company — could not enter. And that did not go away until 2008. That law. And today you ask, “Why didn’t the Tatas go into garments?” Because they were not allowed. And then, by the time it opened, they were busy doing TCS and other things.
FMK: Yeah. And it’s a sin, actually, if you think about it. We are perpetually in deficit, thanks to our petroleum imports and so on. And it puts a lot of pressure on our currency because most of it is balanced by remittances from blue-collar workers, if you really think about it. So for an import-dominated country, it is imperative that you encourage whatever form of exports you can. Because the tax is not important; the foreign exchange is.
GD: Correct.
FMK: And another such thing happened was the STPI of India. I’ve been a beneficiary of that. I used to run a services company. Anything that we earned in dollars — there were bonded warehouses that were created with any office that you had. You just had to submit a plan and ask for it. Any money that you earned in foreign exchange was made tax-free. And I’ve been a beneficiary of that. It meant that I would take a flight, go to Europe, go to the Middle East, go anywhere I could to corner any kind of business that I could. The reason was that I knew that if I made a dollar, that entire dollar was mine. I did not have to pay any taxes on it. At some point, even that was taken away and prematurely.
GD: Taxes have never been the most important thing. It’s good that we should use tax leverage and certainly tax holidays to make ourselves competitive. And that’s where PLI comes in. I was telling you about Apple — how they persuaded their headquarters. Our main problem, actually, is garments. The single biggest reason why India did not succeed in garments was, one, the Small Scale Industry Reservation. The other was our labour laws.
FMK: Right.
GD: What is our situation with labour laws? We’ve done some improvement with the labour codes that have been announced, but we still have to make ourselves competitive.
FMK: In 2023, I was in London doing a roadshow for a bunch of my companies and my studio to be able to raise capital. I wanted to create a corridor for European money to come into India. European money has also lagged behind. There were two conventional industries that missed the IT bus completely, and now they’re looking to get into the new economy. I said, “You can’t find a better place than India. A lot of innovation is happening, there are lots of entrepreneurs and so on. Why don’t we create this corridor where European money comes into India?” I went and met over a dozen people, including people at the London Stock Exchange. I met more than a dozen merchant banking, investment banking and private equity firms. I was surprised to see that India was nowhere on their thing. In some places, I saw that they were actively investing in Africa and Latin America — countries like Brazil, Kenya, Nigeria and so on. I was like, “We’re better than that. Why would you not come to India?” And they said, “No, it is far easier and more straightforward for us to operate in Latin America and Africa than it is to operate in India.” I was completely shocked by that response.
GD: Well, it’s a very sad thing that India should be getting far higher foreign direct investment than it does. Its image is poor. It’s a difficult place to do business, according to what investors tell us.
FMK: Which also means that we have to do narrative-building often. There are regulatory issues and so on. But I would like to believe that we are easier to operate in than Nigeria, so to speak.
GD: The answer, as I told you, is: what did the Prime Minister of Vietnam do when he heard they lost the iPhone?
FMK: They went and sold it.
GD: So you need every Chief Minister of a state who wants investment to do the selling: “Look, we have changed. We have set up the regulatory bonfire.”
FMK: A classic example is also the auto industry in China. You could not have a majority shareholding. A Chinese company had to hold 51%. But for Tesla, China made an exception and gave them a 100% subsidiary within China because they wanted them to operate there, learn, train and so on. So even a country that was already a giant by then made that exception.
GD: That was the difference between India and China. China actively wooed investors. My company was going to set up a factory in China. We had a product called Oil of Olay, and China had become a very big market — the biggest in the world — for Oil of Olay. We were going to set up a factory, so we were looking at several possibilities in different provinces. The person who went from our company was met at the airport by the mayor with a red carpet. He said, “Invest in my state for these reasons. I’ll give you this. I’ll give you that. I’ll make sure you get electricity. Your factory will be running in three months.” That’s how they talked to investors. And believe it or not, they went abroad to get those investors.
FMK: That’s correct. Believe it or not, this happens in the US also. There are mayors of cities who have come to our offices and said, “Why don’t you set up here? We can incentivise you.” They don’t incentivise as much as China, but there is actually a mayor walking into your office in India saying, “Why don’t you come and set up a shop in Washington State? We’ll give you these incentives.” So it’s a developed economy coming to a developing economy and saying, “Why don’t you set up a shop with us?” Now, this brings us to something else. Government and policy are, of course, very important. But it’s not everything. A large part of our success story has also been written by private entrepreneurs. There’s a boom in entrepreneurship. We have over 200 unicorn companies at this point. In terms of sheer numbers, we have the third-largest startup centre in the world, after Silicon Valley and China. Which brings me to the next point. Most of the solutioning that we are doing is derivative. It either tries to copy existing models — Uber becomes Ola, Amazon becomes Flipkart — or it is arbitrage-based. Post-1991, arbitrage was a great thing to sell: “Our engineers are ten times cheaper than yours, so you might as well do it here.” What’s the way forward?
GD: The answer is that Indians don’t lack ambition. They don’t lack innovative ability. We are jugaad people. So the answer is going to be to first create a world-class brand before you go world-class. In other words, we start competition in our market, and I think certainly some of these startups will scale. People will spend in R&D.bWhy do you do R&D? Because you want to create a superior product — superior to your competitors. You have to create a product that is superior.
FMK: That’s correct.
GD: R&D helps you create a superior product. At P&G, we had 1,000 people working on detergents — PhDs trying to make the shirt whiter.
FMK: Correct.
GD: Because there was competition. So what I’m trying to say is that it’s not cultural. It’s not that somehow we lack ambition. Actually, that is not true. We are responding rationally to incentives. There was no incentive to do it in any other way. And now you can even think — I was very happy to see Amul going abroad to many countries.
FMK: That’s correct.
GD: Anyway, that’s the quick answer to your question. And the reason why Sony became a global brand is because Sony became a top brand in Japan first.
FMK: Correct.
GD: Similarly with Toyota and Honda, and the same with Samsung. You first succeed in your own territory and then you have the confidence.
FMK: And we have a rich history of trade in this country. If you really think about it, right from the Silk Road. Very few people know that we used to be rich traders in the Middle East. If you look at countries like Oman, the UAE and so on, Gujarati traders ruled the roost.
GD: Well, I can tell you because I have edited, for Penguin, a 17-volume history of Indian business and the Indian economy. These are slim volumes, beginning with the Arthashastra. The second volume is about Roman trade. One ship from Rome would arrive at a South Indian port every day. The Roman senator Pliny, in 78 AD, rose up in the Senate and told the senators, “We are losing 65% of Rome’s gold and silver to India because…”
FMK: They are buying stuff from them.
GD: We were buying cotton and black pepper and spices, and they weren’t buying anything of ours. So he said, essentially, “Either we sell them something, or stop wearing those togas. They’re made of Indian cotton. Tell your women not to use pepper in our food.”
FMK: Is he the Donald Trump of his time?
GD: He was the Donald Trump of his time. He had a trade deficit. And this trade deficit, by the way, was the story. India had a trade surplus right through till the Industrial Revolution.
FMK: We were 25% of world GDP at one point in time.
GD: That’s right.
FMK: So, at the beginning, before we started recording, you asked what the concept was. Why are we doing One Big Future? We want to go back to that glory. At least some of us will have to start believing that it is possible for us. We probably won’t be able to go back to 25% of world GDP — hopefully, fingers crossed — but we want to get to the point where our products set the benchmarks like they did at one point in time. And, like I said, we do talk about our past, but with arrogance. We don’t see our past as inspiration. We had the first university in the world, and so we went and talked about it. Everybody talks about it. But we’re not talking about how that legacy, that pride, has to be revived. This brings me to the next question. A country like Japan — one of the most ignored or not-talked-about aspects of it is that Japanese teachers are among the best-paid public or private employees. They are among the best-paid in the world. You know their teachers afford Ferraris in Japan, which brings us back to our education system. In the absence of that, that’s where the crop of talent comes from. I’ve gone through our education system and, thankfully, it is very affordable for all of us. I remember my school fees used to be ₹40. I went to a convent school in Chittaranjan, and ₹40 was something my father could afford. So we went to a nice school, got the education and that paved the way for whatever else. But the majority of Indians don’t get that.
GD: Yeah, no, that’s an area where we have failed. I think, again, let’s talk about the successes. One thing we have achieved is almost universal schooling. Ninety-eight point two percent of children are in school.
FMK: Right.
GD: So we’ve solved the quantity problem.
FMK: Right.
GD: But the quality problem is the crux of the whole thing. Only about 10–15% of Indians get a decent education. And the government schools have failed so badly that now 51% of India’s children are in private schools.
FMK: Right.
GD: And these are not elite schools.
FMK: They’re actually as good or bad as government schools from that perspective, if you really think about it.
GD: Well, except the teacher shows up. One out of four teachers does not show up in a government school, and one out of two who shows up is not teaching. That was the famous results of the Kremer study done at Harvard.
FMK: True. And talking about solutions, is a hybrid model of instructors and tools that are available, like AI and so on, the way to go? Because obviously, we cannot produce millions of teachers overnight.
GD: Yeah. I know what your question is. And I’ll tell you, first of all, to talk about teacher salaries. I’m delighted to hear how Japan pays teachers. Ferraris or no Ferraris. But in India, the starting salary of a primary-school teacher in the government in Uttar Pradesh is ₹70,000 a month, which is reasonable. That’s very good. Considering that if you go to IIM or IIT and get ₹70,000, you feel very happy.
FMK: That’s correct.
GD: The point is that the teacher is absent, unaccountable and often running a private business. So again, it’s the lack of accountability. And the salary difference is so great between teachers. I’ll tell you that I know a teacher in what we call a low-fee school. The fee of that school is ₹1,000 a month, right here in Delhi, and the school teacher’s fee is ₹8,000 a month. It is far better and more motivated than any government school.
FMK: Which is what I said.
GD: So I just wanted to get this clear: one of the causes of our failure in education is this. And now, to your question about AI. The hybrid model. I met a schoolteacher from a small town in Uttar Pradesh. She told me — and this was all her initiative — that she had given every child in her classroom an AI tutor. The person could converse in his or her mother tongue. In the case of Bihar, it could be Maithili. You can speak in Maithili. You don’t have to know how to type or anything like that. You don’t have to know English. What she had done was that, in the local language, a child, if he did not understand the lesson, could ask the tutor to explain something. She had a dashboard, so she knew which children had understood the lesson and which had not. She would call them and tell them, “After class, if you like, we’ll end the class 15 minutes early. You ask the tutor what you didn’t understand about this class. I’ll be sitting in front.” And you know what the answer was? After one month of this, the children said, “We understand your class. We understand the lesson far better.” And she suddenly felt insecure because they got better teaching from AI than they did from her. She felt, “Oh my God, am I going to lose my job?” And I’ll tell you what I’m trying to say to you: this is the inspiration. What if this could happen in every village in India? It should.
FMK: You know, we talk about generational talent. When a scientist in the 18th century, before the age of 25, had already worked out the laws of motion and gravity, he had cracked so much of what was known at the time. To calculate all of that, he had created calculus as well. He did all of that before turning 25. And it took us a hundred years. Newton’s law of gravitation stood for a hundred years. And he was very honest about the fact that, “I don’t know how it works. I know it works, but how does it work…” It took more than a hundred years for Albert Einstein to come in and essentially talk about the fabric of space and time and how it curved. He explained why gravity works. It takes a hundred years sometimes for a generational talent to come in and change the paradigms that we exist in. Which means that every child that has not gotten the opportunity — there could be hundreds of Newtons that perished because we could not provide them with the fundamental education that would have taken them to the next level.
GD: Correct. Before I came, I started a programme with an NGO that I’m on the board of, called Bolo English, just using an app called Hello English. The app, if you went through it, was like playing a game for a child. In my case, it was my cook’s daughter who came from a village near Almora and was desperate to learn English. She’s the one who really pushed me into this. I discovered that by the time she left the house, after two months, she had acquired a speaking knowledge of about 500 English words and had learned really fast. The confidence she had to converse in English was remarkable. When she arrived, she couldn’t say a word. But when she left, she said, “Thank you. I’ve enjoyed staying with you. It’s nice weather here. You must come and visit us in Almora.”
FMK: What a remarkable feeling. The child gets confidence.
GD: So we started this programme called Bolo English, where there were 80 classes that you could go through. For a child, it was like being rewarded to go from one level to another. It was like playing a video game. She loved it and she could do it. And we said, “Let’s do it.” So that’s where I got the idea that technology plays a key role. And we did an experiment in Delhi in five low-budget schools — low-fee schools — giving them a tablet, or a screen, so the kids could really learn English that way.
FMK: And I think this is one of the things where I’d urge the government to take a long, deep look. You have to make the instruction ecosystem flat. If you flatten that and make sure that everybody has the opportunity to get similar instructors, teachers should not be removed. They should be there. They’re there to instil discipline and so on. But they have to be aided so that the quality of education being disseminated is correct.
GD: In fact, we’ll do that at some point. The key thing, if I were a Chief Minister of a state, is that the teachers would have to be retrained.
FMK: That’s correct.
GD: That’s the biggest obstacle. But at least 20% — if 80% of the teachers don’t have the right attitude, 20% are really right. They will see the possibilities of this. But don’t confine this to education. I’ll tell you about another experiment. A friend of mine is a doctor. He’s a famous doctor. A couple of years ago, when I first came across this, he started speaking the diagnosis into his Mac for transcription and so on, using AI. He would examine the patient and then ask AI for the diagnosis. He first made his own diagnosis, then asked AI for a diagnosis. He’s now done it with over 500 patients. And he says that AI’s diagnosis is invariably superior to his.
FMK: Oh, absolutely.
GD: He says he might have forgotten something, but the knowledge base of AI was so much greater.
FMK: I’m in the process of investing in a startup like that. They have glasses that are worn, and a patent has been filed. It’s an Indian startup.There are Meta glasses with a camera. The reports come in front of the doctor, and these are printed reports. The camera captures them, and the glasses listen to the conversation between the doctor and the patient for symptoms and so on. Now, legally, you cannot use AI to provide the diagnosis, but it acts as a co-pilot to smooth over things that you may or may not have missed. And because it has a huge database to compare it to, it can help.
GD: Just imagine, Farhad, there’s a village and a poor woman at midnight, two o’clock in the morning. Her daughter has a high fever and is very sick. All she has to do, if she’s got an AI system and has been trained, is speak the symptoms of that child.
GD: Correct.
FMK: In fact, it can be interactive. If she misses something, the AI can prompt her.
GD: Yeah.
FMK: Even local health workers, if you think about it.
GD: But the point is there are no health workers at two in the morning.
FMK: That’s correct.
GD: And so she can tell the AI, “I don’t have a doctor at home right now. Prescribe something to me.” That prescription that AI gives her can be for the morning. And, by the way, the AI will know which pharmacies are in her neighbourhood and where she can get the medicine. It could even know the inventory of the medicines there.
FMK: If there’s something as simple as hydration, it could suggest that.
GD: What I’m saying is that at night, that poor woman can just ask AI for advice on what she can do right now, whether it’s hydration or something else.
FMK: So in education itself, moving a little higher, it comes to the fundamental question. If you look at the reason why America, and before that Europe, has so much IP, you almost went to Oxford. People who go there say that every second place has a plaque of a Nobel laureate in physics or some other field. There’ll be a Turing, there’ll be somebody else. Something big was invented there. Something big was discovered there. Before World War II, it was mostly European countries — Germany, England, France, Italy and so on. After that, it was largely America where a lot of innovation came in. And they came in because they understood the commercialisation of a proposition. If someone has come up with a proposition, a scientist has come up with something, they back it without the expectation of immediate ROI. And then, when it achieves its result, they know how to commercialise it. That is probably the key. If you create a building block of a big technology, you earn the maximum from it. So if you made a chip — a GPS chip, for example — and one company made 52% of the GPS chip, they made money on all of it. What needs to be done to push STEM graduates in the direction of R&D and also create an environment for the commercialisation of these ideas?
GD: That’s a very important question. To begin with, I think we’ve talked about primary education and so on, but certainly, very quickly, it’s not rocket science. Everybody in the country should be using AI. We always jump in and say, “Oh, but there are these problems. Cognitive skills will be lost,” and all that. Let’s look at the glass of water that’s half full and not half empty. My point is that you start somewhere. First of all, AI literacy should be pretty universal.
FMK: Universal.
GD: And it’ll get there because it’s too good to keep out of people’s hands. We have a billion smartphones.
FMK: That is correct.
GD: You can just ask any question. From my own research, I use AI. I use AI as a Socratic partner. I use AI to test my ideas, and I get very, very good feedback from it. So what I’m trying to get at is that in every field, we need this AI literacy. And that will happen. It would help if teachers were partners of the students rather than fighting it. And then the next stage is what you’re talking about. If enough people — the IITs, the IIMs and colleges of different universities — start the process, and the startups themselves, which have become unicorns, become role models for others, you get there.
FMK: That’s a great point you’ve made. And just to add to it, one of the things I’ve spoken about in certain forums is what I’ve noticed in China. There’s Alibaba, there was Tencent, and a bunch of other big companies. What they did was essentially create a corpus, and that corpus went downstream into a bunch of innovative companies. They generously incubated companies, gave them access to capital as well as networks to take their businesses forward. And these were companies where they had minority shareholdings. They did not hold ownership with the intention of controlling them. The intention was downstream innovation. “I have the capital. I am really good at doing what I’m doing. I have a directory called Alibaba.com. I have Ant Financial. I’m making pots of money. I can’t do all the innovation myself.” So I would basically do downstream investment. You’ve been the head of one of the largest companies in the world in India, and you’ve interacted with the big players in the industry. Do you think there is a movement that is required in this country?
GD: That’s where it begins. I mean, we learned it. This is lesson 101 from Silicon Valley. These guys with pots of money should become venture capitalists. They should invest in startups.
FMK: They should invest in research-centric startups that have the potential to create a big difference, without the expectation of ownership. And that is very important. The founder’s motivation to continue running something comes from what they’ll do for themselves. If you take a majority stake in a company, the motivation dies.
FMK: And that’s the thing.
GD: It’s the incubation ecosystem. Ecosystems incubate. I absolutely agree with you, and we could be doing a lot more. Companies like TCS and Infosys should be incubating.
FMK: And not always from the ROI lens.
FMK: That’s important.
GD: Yes, but ultimately you don’t want to lose money either.
FMK: Of course.
GD: I think that’s a far better model than for the government to do
FMK: they do it through sovereign fund routes and so on, which are professionally managed. But direct infusion of capital — and no ownership intention — is a bad idea.
GD: And that, too, requires very high levels of governance. One of the big reforms we need in India is reform of governance. I wrote a book called India Grows at Night. Its original title was India Grows at Night: When the Government Sleeps, which means India’s success is a story of private success and public failure. India has risen despite the state, not because of the state. By the way, my publishers thought that was a bit rude, so we didn’t go with that original title. But that’s really the story of India. What we need, though, is a modicum of governance. One of the things that most people forget is that what drives a lot of people out of India is not money. It’s actually governance. Today, for anything you need, you have to bribe, that is not decent.
FMK: That’s one part of it. But also, recently, for this foundation that we’ve created, it took me and my co-founders three or four visits to get a tax code. I want to pay tax. I want a tax code. It is not an incentive. It is a burden that I’m taking for myself. To get a GST number, we had to make three visits. They were very polite. They seemed efficient. It’s not that they asked for a bribe. There was no bribe involved. But the point is: why do I have to?
GD: It should be online.
GD: Exactly.
FMK: Why do I have to?
GD: So what I was saying is, it’s a bigger story. And there is some progress because in the tax department they have moved income tax to faceless assessment.
FMK: Right.
GD: And that is a good step.
FMK: Oh, it is. It’s remarkable and it’s in the right direction.
GD: In my case, my CA tells me that since they introduced it five, six or seven years ago, we haven’t had to visit an income-tax officer or had a visit from an income-tax officer.
FMK: Everything is automated. Also, with passports, for example…
GD: the tax is paid online and refunds come online after a month and a half. There is no friction. It’s not perfect, I’m sure. But GST is also trying to move in that direction.
FMK: It has to.
GD: But apart from this, the bigger issue is things like the judiciary. There are four pillars of governance: judiciary, police, bureaucracy and Parliament. I’ll tell you, in the case of the judiciary, why should it take us 15 years to get justice when it could be done in two or three years? Why should there be five crore cases pending in the lower courts? Seventy percent of inmates in our jails are undertrials. This is one kind of failure. Police — I’m a privileged person in the country, but I get scared going near a police station.
FMK: My father was a policeman, but I got scared going near a police station.
GD: And why should the police be the handmaiden of the Chief Minister and be needling opposition MPs all the time? Then let’s take Parliament. Why should one out of four members — and now three members — of Parliament have a criminal record?
FMK: It’s a very, very large—
GD: Sorry, but the fourth pillar is the bureaucracy. You ask yourself: you’ve run an organisation. I’ve run an organisation. Why should a person who works 14 hours a day and is rarely effective and his batchmate, who works two hours a day and spends the rest of the time politicking, both get promoted on the same day? They get the same salary, and chances are the person who is politicking may actually pick up the plum job. How can you run an organisation — an organisation that runs the country — with that incentive system? We talked about reforms. This is a more important reform if we want to achieve that Viksit Bharat goal in 2047.
FMK: If there is a filing that you’ve missed, or if there is a discrepancy in something that’s happening, they’ll write to you and ask for a clarification: “Did you make this mistake? Is there a problem?” They take your response and, if needed, they’ll meet you. If you start a company, they’ll give you support. Thankfully, the Government of India has also started Startup India and so on. There is a certain amount of tax holiday that they’ll give you. There are incentives that they give you. More importantly, if you’re creating local jobs, they’ll give you an office free of cost. They’ll give you incentives for local jobs. Some countries, including Taiwan, give you subsidies.
GD: We’ve discussed this. Basically, this is why thousands of Indian millionaires have moved to Dubai.
FMK: That is correct.
GD : And similarly, Singapore. Now it’s a little more difficult to get PR, but—
FMK: And this brings me to a very interesting question. While everybody else is moving out — there’s a brain drain, as we call it — what happens? You chose to come back. You had an opportunity to stay on in either the US or UK. With your profile, you could have gotten any job. A P&G CEO from India can get anything anywhere. Why did you choose to come back? And since there is a possibility that a whole bunch of Indians, because of the geopolitical situation and whatever is happening in the US, may come back, why did you come back? And what is your message for these people who might come back?
GD: Certainly, the level of governance was much better in the US. By the time I got to be 50, in my forties, I was, in fact, one day driving to work in Cincinnati, Ohio, which is the headquarters of Procter & Gamble. I was head of global strategy at that time. There was a meeting of the team from Pampers. We make a product called Pampers baby diapers. It was a global meeting where R&D people were saying what new developments they had made on the product. The Europeans, Latin Americans and Asian countries were presenting their plans. I’m looking out the window and I’m saying, “Is this what life is all about? Selling the next case of Pampers?” Surely there’s more to do in life. And so that’s the thinking. I think most of us — whether you are at the top of a company earning millions or you’re lower down — everybody asks that question: “Is this what life is all about?” In my case, I decided to come back. And in my case, it was also triggered by something that was going on in India. That morning, while driving to work, I turned on NPR, National Public Radio, and there was an interview that talked about the fact that the reforms in India — this was 1994 — were in trouble. And if you ask me, I got so scared by that because, for me, our independence was not in 1947. Our Azadi came in 1991. And so it was that fear. I had met Manmohan Singh when he was a junior fellow in the Finance Ministry, and I was running the company. We had become friends. I never asked for any favours or anything. I had his private phone number and his email. So I shot off an email. I said, “I read this news.” By now, he was Finance Minister and was doing those reforms. I said, “Look, why is nobody selling the reforms? Why are we just keeping quiet?” I didn’t expect him to reply. But he said, “Why don’t you come back and sell the reforms? Help us.”
FMK: Wow.
GD: And so that gave me some josh.
FMK: To the people who are either forced to come back or are voluntarily looking at coming back, the message would be that since you had to migrate because our opportunities were limited, why not come back and create that environment?
GD: Yes. And now, of course, India has changed.
FMK: That’s correct.
GD: India has changed in my time. Switching from being CEO and managing director of Procter & Gamble worldwide, I became what my wife called a “starving writer.”
FMK: Last question. What is your crisp take on the One Big Future of India?
GD: Well, the India of my dream is India that — and it’s a doable one. This is not a Goldilocks future or a Cinderella fairy tale. For 30 years, we’ve been growing at 6.5%. That’s damn good. Today, we are the fastest-growing major economy in the world. All we need to do is take that 6.5% to 7.5%. Do the reforms. Create an industrial revolution, which is doable. Bring in more Apple-type companies, Nike and others. So it’s all low-hanging fruit. What I’m trying to say is that taking growth from 6.5% to 7.5% will take our per capita income from about $3,000 today to about $12,000.
FMK: That’s remarkable.
GD: Now, the Viksit Bharat goal is $14,000.
FMK: Right.
GD: If we can do that, great. But let’s be happy just taking it up by one percentage point. This is the power of compound interest. One percentage point — if we continue at 6.5%, we’ll still cross $10,000, which would not be bad. So what I’m saying is that I’m talking about a time when the middle class will be not 30%, but 60%.
FMK: That is correct.
GD: And for me, the first duty of the state is to enable people to live with comfort. We may have lifted people out of poverty. Absolute poverty is now only 2.5%, which is good. But people are still at the lower end. You just cross the poverty line and you’re still very vulnerable.
FMK: Correct.
GD: So when people have got some comfort, it’s not going to be easy because AI is there. It’s going to eat up a lot of jobs. But people will still need to wear clothes. Children will still need toys. Everything will not be on a screen.
FMK: That’s correct.
GD: People will still need to wear shoes. And yes, there’ll be robots, etc., but I still feel there’s enough and more room for it. If you can get some of those people off the farm and into factory jobs, do what Vietnam is doing and what Bangladesh did with garments. It’s not rocket science.
FMK: It isn’t.
GD: And that’s my idea of the future of India.
FMK: Of India. Thank you so much. It was such a pleasure talking to you. This was remarkable.
GD: But also preserve our democracy.
FMK: Yes.
GD: Our democracy is in danger of turning illiberal.
FMK: Absolutely. And we couldn’t have asked for a better opening episode for One Big Future. This was remarkable. Thank you very much, Mr Das, for taking the time and talking to us.