Nirmalya Kumar

Even when the story was very positive and people were going rah-rah about India, those challenges never went away. We have to solve those challenges. Having said that, we are a large market and companies will continue to come here.   Read More >>

   IBEF: Perceptions on the Indian economy have changed drastically with the downturn in GDP growth and investor confidence has been impacted negatively. What is your view on India's credentials as a business destination in the current milieu? Dr Nirmalya Kumar: Ok listen, there is no doubt that India faces substantial challenges. Even when the story was very positive and people were going rah-rah about India, those challenges never went away. We have to solve those challenges. Having said that, we are a large market and companies will continue to come here. What is the most exciting thing? The most exciting thing is when you are given a challenge to solve, which is worthy, which is difficult and which is important. In India, we have a lot of challenges to solve, which are very large, which are very worthy and which are very important. So I think we will always bring in energy from all parts of the world into India, because we have the challenges. So I see challenges as a positive, because they make people think harder, work harder, they energise people, they bring excitement in the economy. If you don't have any challenges to solve, what's the point of being around?   Read Less >>

Slowly, as these young people (in India) are trying to set up entrepreneurial ventures, an ecosystem is emerging around them. You have the PE companies in place. You have started seeing angel networks in place. In Mumbai, it is very easy to join an angel network as a syndicate member and then fund a lot of these small projects   Read More >>

   IBEF: The recent years have seen a rising interest in entrepreneurship among young, qualified and talented professionals in India. How do you see this impacting our innovation culture going forward? Dr Nirmalya Kumar: It is true that for many years, people in India aspired for a job with an MNC or with the Tata Group. Today, you are seeing a lot of young people who are willing to take risk. And this has been one of the most wonderful changes that you see in India that a lot of young people are aspiring for their own business. I am not saying in terms of percentages, but just in absolute numbers. In the end, we have to ask the question that what is the real asset of India? The real asset of India is the number of young people we have who are willing to start their own business, because they are the ones who are going to create the future value in this society. They are the ones who are going to create the future companies in this society. They are the ones who are going to hire lots of people in this society and they are the ones who are going to bring in new excitement and new energy into our society. So I am very positive of this. And you are beginning to see that slowly, as these young people are trying to set up entrepreneurial ventures, an ecosystem is emerging around them. You have the PE companies in place. You have started seeing angel networks in place. In Mumbai, it is very easy to join an angel network as a syndicate member and then fund a lot of these small projects at Rs 50,000; Rs 100,000; Rs 500,000 or Rs 10,00,000 projects. So I think you are starting to see an ecosystem build up where you will see a lot more entrepreneurship in this country. And you have to remember that entrepreneurship in this country is not new. Indians have always been entrepreneurial. They are only looking for systems and processes to help them become more effective. They are looking to be matched to capital. I think those are the processes that are coming. If I take the imagination of a young entrepreneur and marry it with the resources of a rich world country, then I have something very good, because here we have masses of young and hungry people who are willing to start and do and make a difference in the world. And in the Western world, we have a lot of capital waiting. If we can marry these two things together, then we have got a winning formula.   Read Less >>

As the customer enters a plane, they do not see that the jet engine was made partially in India, or if they go into a Boeing Dreamliner, they don't know that two mission control systems, which are critical, were actually designed by HCL in India.   Read More >>

   IBEF: You have talked extensively about the 'invisible innovation' paradigm with respect to India. What does it really imply and how is it expected to impact the Indian economy going forward? Dr Nirmalya Kumar: My India Insight book started with the question, “When will you see the 'Googles', 'iPods' and 'Viagras' come out of India.” And what we quickly realised was that we had made a mistake in our question, because the 'Googles', 'iPods' and 'Viagras' are end user products sold to end customers in the West. That kind of product development is very hard to do out of India, because for that you have to understand the customers in the West. And sitting in India, it is very hard to understand the customers in the West. But if you look at product development today, any new product is a bundle of sub-products and those sub-products are then sent to different parts of the world. And so you see a lot of innovation in India, which is taking place in the MNC R&D labs in India, but the end user does not get to know that this product was made in India. That is why we call it invisible innovation. For example, if GE is developing a new jet engine, a part of the product will be developed in America, a part will be developed in China and a part will be developed in India. There will be a process by which all the three sub-components will be brought together. But as the customer enters a plane, they do not see that the jet engine was made partially in India, or if they go into a Boeing Dreamliner, they don't know that two mission control systems, which are critical, were actually designed by HCL in India. So that's what we meant by invisible innovation that there is a lot of innovation that the end user consumes in the West where they don't know that a critical part of that innovation was actually developed out of India. And so we call that invisible innovation. Then there is another kind of innovation, which is process-based and not product-based. So for example, India is one of the few countries in the world where millions of educated, young, ambitious and smart people dream of working in a call centre. It is a dead end job in most Western countries. Only high school graduates or dropouts of high school graduates dream of working in that job. But in India, very smart, young and ambitious people work in that sector. And when you put in smart and ambitious young people in a call centre job, which is a very tedious job, they get bored very quickly, and the smart ones start innovating. They start saying, “Listen, how can we make this process better?” And we say that you have put in an injection of intelligence in a dead end process and you are seeing a lot of innovation coming out of that. You see a lot of innovation coming out of industries that a lot of companies in Western countries have given up as dead, but you call them process innovations and not product innovations. How do you run a call centre better? How do you run it with less people? How do you run it with better technology? How do you come up with sub-products out of a call centre, which you can sell to the customer. For instance, you tell the customer, “Listen, I am not going to sell you just the fact that I answer phone calls. I will sell you a system that will help you to reduce the number of phone calls that you get in the call centre. So that's what we call invisible innovation in India.   Read Less >>

India has become an essential part of the value chain of the R&D of any multinational company. That is why you are going to continuously see more and more R&D work coming into India.   Read More >>

   IBEF: India is currently home to over a thousand R&D centres that have been set up by multinational companies. What are India's unique strengths as an R&D destination in your view? Dr Nirmalya Kumar: The reasons why foreign MNCs come to India for their R&D work are very clear. The first reason why they come is because of the cost. The second reason they come is because of the scalability. R&D requires qualified and technologically advanced people. It requires engineers, it requires chemists, it requires biologists. And you need to make sure that you have enough of them. So of course, where are you going to find enough of them? You are going to find them in America, you can find them in China and you can find them in India. So India becomes one of the most critical components in the R&D engine of a multinational company. Initially in any multinational company, R&D was always done in the headquarters of the company. So if you were an American company, you did it in America. If you were a Swedish company, you did it in Sweden. Slowly they started saying that our R&D will be distributed across one or two other countries and they next chose another advanced country. So if you were a Swedish company you would probably say that maybe I will have an R&D lab in America. If you were a Japanese company, you would probably say that I will have an R&D lab in France or in the UK. But over time, they realised that the R&D job does not have to be done from start to finish in one physical location. Whenever you have a major R&D project, it is broken into sub-projects. And as it is broken into sub-projects, these sub-projects can be sent to wherever the capability and cost competitiveness exists. And when MNCs started breaking their projects into sub-components, they realised that for certain sub-components, India happens to be the best destination – both in terms of costs as well as in terms of the availability of talent. So India has become an essential part of the value chain of the R&D of any multinational company. That is why you are going to continuously see more and more R&D work coming into India. On the other hand, the downside in India, which is a significant downside, is when do we run out of people? As we say in our book India Inside, there is a mirage of mighty labour pools in India. Even though we generate a lot of engineers in this country, we don't offer in general the kind of engineers that an R&D facility needs. With a 1000 R&D labs in India for MNCs, we are running out of people. So one of the things we have to do if we want to continuously be in this space and expand this space, is that we have to ramp up our education system a lot more, so that we can pump out the hundreds and thousands of graduates that these R&D centres need.   Read Less >>

From the Tata Sons at a group level, we can't tell companies what to do. In fact in any case that would be the antithesis of innovation.   Read More >>

   IBEF: The Tata Group is one of India's largest business conglomerates that comprises over a hundred companies across seven business sectors. How do you enable a strong innovation culture across group companies and how do group companies collaborate and leverage mutual synergies for enhancing the effectiveness of R&D? Dr Nirmalya Kumar: You have to remember that the Tata Group was founded around 140 years ago. Like all new companies, we were founded on a pioneering spirit, which is how we did a lot of firsts. We had the first five-star hotel in the country. We had the first steel mill in the country. We had the first power plant in the country. The Tata Institute of Social Sciences was the first institute of social sciences. So we had a very big pioneering culture at Tata Group, and the Tata Group's foundation is on that pioneering culture. So of course that has been part of the genesis of Tata Group. As a company turns 140 years old; as it becomes a US$ 100 billion company; as you become 550,000 people, the question becomes how do you maintain, keep, sustain and ignite this spirit of innovation. And admittedly, this spirit of innovation is probably not as strong today as it was in the pioneering days. So we have to work harder to maintain that entrepreneurial and innovative thrust in our companies. How do we do that? So you have to remember that the Tata Group is a very decentralised organisation. Our group companies are independently run by a board of directors and a management that is in place to run them. From the Tata Sons at a group level, we can't tell companies what to do. In fact in any case that would be the antithesis of innovation. So we hope that most of the innovation comes from the individual group companies as they look at the underserved needs of their customers, the problems that their customers are facing and they say how do we innovate and provide better solutions to them. The second part is that as the Indian economy has opened in the last 20 years, we realise at the Tata Group that our very basis for being will slowly change. And it won't be any more that we are an Indian company and we have a great domestic market to serve. Increasingly, we will have to be globally competitive. This means that increasingly there are companies coming into India and they will be competing with us on our home turf. So we have to come up with products and services, which are as good as anything that the global competitors can provide. And if we can't do that, we will go out of business. This means that the reason to be is no more that we are an Indian company in India and we have the domestic market all to ourselves. It's no more going to even be on a cost basis as we may not be the cheapest, and at the Tata Group, we probably won't generally be the cheapest in any case. So what will be the basis of competition for the Tata Group? So we understand that the basis of competition for Tata companies in the future has to be innovation. And I think most Indian corporate houses are going to go through this transformation because for India as a country, we don't spend enough on innovation. Our R&D expenses are around 0.6 per cent of our GDP. China is at 1.2 per cent. America is at 3 per cent plus. Most of the Western countries are at 3 per cent plus. So there is a big innovation gap that corporate India faces and we will have to overcome that. And that gap is not only true for corporate India, it is true for us at Tata Group as well, because we are a part of this ecosystem that we have grown up in. So clearly, the basis of competition is changing. It's going to be more about innovation. From the Tata Group, at the centre level what we can do is to just encourage and be a catalyst. But we can't tell companies what to do. We hope that each of the group companies has a management in place that looks at the problems of its customers, looks at the problems that it faces vis-à-vis its competitors and realises in the end that innovation is the only way in which we can win. We have to come up with better products, we have to come up with better processes, we have to come up with new ventures and new business ideas. So we have to work on innovation on fairly broad terms.   Read Less >>