Posts from — May 2009

By many counts, the western state of Gujarat is the most friendly towards business. Early this year the captains of Indian industry stood side by side, praising the leadership of Narendra Modi, Chief Minister of the state and touting his name as a possible Prime Minister of India.

The national leadership of his Bharitya Janata Party (BJP) took note and took Modi’s face to the people of India at a national level. While the octagenerian Lal Kishan Advani was the proposed name for Prime Minister, the BJP showed Modi as an example of the party’s success and vision. Gujarat has clearly benefited economically during Modi’s tenure. But his anti-Muslim stand and accusations that his cohorts were somehow implicated in the deaths of hundreds of Muslims in rioting several years ago, have sullied his image and more. In fact, the United States refuses to grant him a visa.

While there were no state-level elections in Gujarat at this time, BJP-backed candidates in the federal elections did not do  as well as expected. Experts had predicted that Modi’s name and popularity would enable the BJP and its allied to win at least 20 of the 26 parliamentary seats in Gujarat. So far they have captured only 15, with one seat remaining un-declared.  In the meantime, the Congress party which some experts had almost written off in Gujarat, won a  surprising 10 seats in this state.

Once again, India’s electorate has confounded the conventional wisdom.  Results of the 2009 parliamentary elections appear to be leading to a resounding majority for the United Progressive Alliance (UPA)and its leader, the Congress Party.

Only hours ago the opposition National Democratic Alliance and its leader the Bhartiya Janata Party expressed hopes (now dashed) of forming a government.  The so-called Third Front and Fourth Front produced whimpering results at the polls.

The  UPA will return to power and will have a strong government.  The past several years have seen India mired in coalition politics and the leadership hamstrung by the demands of minority coalition partners. Last July the Communist Party of India (Marxist) broke away from supporting Prime Minister Dr. Manmohan Singh; the result was a showdown in Parliament that risked bringing down the government and was narrowly averted amidst charges of horsetrading and undue influence.

The latest results augur well for a stable central government in New Delhi. A government that should be able to enhance India’s stature in the international community while acting to grapple with the immense internal challenges around infrastructure, regional instability, fractious politics at the state level and much more.

In India, the “change we need” is stability, consistency and determination. A billion Indians have spoken. Now the government needs to deliver.  In India simple hope still implies audacity.

In my book, Doing Business in 21st Century India, I highlighted how media mogul Rupert Murdoch (CEO of News Corp) extolled India over China, even though he’s married to a Chinese woman who runs his China operations.  I also pointed out how India, unlike China, does not censor American media. This means that American media has a huge and growing opportunity in India.

This week, the Gray Lady, aka the New York Times, has come to the same conclusion, over two years after I wrote my chapter. Tim Arongo writes on May 3rd:

“In recent weeks, America Online shut its operations in China, for the second time. Warner Brothers, the movie studio that shares a corporate parent with AOL in Time Warner, had plans as recently as 2006 to open more than 200 retail stores throughout China, with a local partner. Today there are no such plans.”

I attended the Asia Society annual dinner last year and Viacom founder/CEO Sumner Redstone talked about the China opportunity and about entertaining top China officials at his billionaire pad in Beverly Hills. But as the New York Times noted this week, “CNN International is available only in hotels that cater to foreign business travelers and in embassies.” and Redstone’s  “MTV China, … reaches only about 14 million homes in the Guangdong Province.”

Viacom, meanwhile, made a significant investment in India last year with Colors, which has become the top-rated entertainment network lately. According the the Times, MTV India reached 30 million homes, twice that of its Chinese counterpart.

For Western companies the lessons of this go beyond revenues opportunities for the big media players. American media influences attitudes in India and ultimately creates demand for American products and services.  This is the big takeaway.