Business Week And Economist on India

Business Week has some very informative reports.

How India Clusters Growth: A slew of new manufacturing hubs, or “clusters,” developing across India, from Chennai in the south to the hosiery and knitwear capital of Ludhiana in the north take advantage of the traditional skills of a community, transforming local groups of workshops and small factories into a modern industry. For instance, the Ambur area has been home to leather workers for over a century, and the state of Tamil Nadu is India’s leather capital: Of the $3 billion in annual leather exports from India, 40% to 45% comes from Tamil Nadu, and a total of $750 million comes from the Ambur area alone. The cluster strategy is one reason that India is in the middle of a manufacturing boom. These clusters will be the bases of India’s manufacturing revolution.

Yahoo! Hosts ‘Hack Day’ in India: The one-day event attracted some 100 Web developers, who toiled over 24 hours to create new software using the company’s application programming interfaces. This was the third in a series of Open Hack Day held over the past year, and the first in Asia. In the software parlance, hacking refers to the “modification of a program or device to give users access to features that were otherwise unavailable to them”. Thus, hacks are not necessarily always conducted with malicious intent. At the end of the 24-hour deadline, there were 31 submissions and a member from each participating team had 90 seconds to showcase their hacks. The “Best in Show” award went to an application called “Maps Doodle”, which integrated Yahoo Maps with a canvas overlay. The “Brainiest Hack” award went to an application dubbed “YaHealer”, a Yahoo Widget that allows doctors to collaborate and share medical files and photos online.

Economist, as usual has a different style and focus too.

A Himalayan challenge THE Organisation for Economic Co-operation and Development has now produced its first economic survey of India, which once had some of the world’s most interventionist economic policies. India wins much praise for its reforms over the past two decades, but the OECD reckons that the country still has a long way to go: on many measures India scores badly relative to both member countries and the other emerging giants. The OECD estimates that on today’s polices, India can sustain annual growth of more than 8%.

87% of employment in Indian manufacturing is in firms with fewer than ten employees, compared with only 5% in China. Small firms cannot reap economies of scale or exploit the latest technology, and so suffer from lower productivity than big firms. State-owned firms still account for 38% of output in the formal non-farm business sector, yet the OECD estimates that private firms are on average one-third more productive than public-sector ones. States with looser labour- and product-market regulations enjoy higher labour productivity.

Adding sugar -Indian computer-services companies await Japanese customers. HCL, one of India’s biggest computer-services firms, has been trying hard to win Japanese outsourcing contracts for a decade. Its Japan Business Unit in Noida employs 25 fluent Japanese speakers who cater to visiting Japanese businessmen and supervise training in Japanese language and culture for the firm’s other employees. Around 250 software engineers are proficient enough in Japanese to converse with Japanese clients, albeit with laughably poor pronunciation. Last year India’s computer-services companies exported around $350m-worth of goods and services to Japan, representing 1.5% of the industry’s total exports. Japanese firms that have taken the leap have liked it. For example, Shinsei Bank works with numerous Indian firms to run an innovative corporate network, which avoids using mainframe computers and so allows it to launch new products faster. “It’s not just a cost thing, it is also a quality and service thing,” explains Thierry Porté, Shinsei’s chief executive.

Can dinosaurs dance? Alan Lafley who ran some of Procter & Gamble’s Asian businesses before getting the top job at the American company, sees Indian firms shaking up the way foreign companies operate, and not only with back-office services where many began. Hours after he uttered those words, Wipro, an Indian pioneer of software services said it would open a new development centre in Atlanta, Georgia, that will report to its headquarters in Bangalore.

Revving up – India’s software innovators were once sniffed at as merely low-cost offshoring and back-office operations. But firms like Infosys, Wipro and Tata Consultancy Services (TCS) have become world leaders in business-software services. S. Ramadorai, TCS’s chief executive, says his firm sees “innovation as a key enabler of its productivity edge”. He points out that his firm has been investing in R&D for 25 years and holds several dozen patents and copyrights. Navi Radjou of Forrester Research, a technology consultancy, applauds TCS’s “global innovation ecosystem” which brings together academic labs, start-ups, venture-capital firms, large independent software firms and some of its most important customers.

Innovation is also changing the pharmaceuticals industry. Small biotechnology firms, using networked approaches, are getting ahead of Big Pharma. This too opens the way for Asian competitors, like Ranbaxy and Dr Reddy’s Laboratories. These firms were once copycats, trampling on Western patents to make cheap generic versions of drugs. But increasingly they are shifting to process innovation and even new drug discovery.

Media abroad are taking notice of the silent revolution going on in India’s industrial arena. Today’s New York Times has one on how India is going to lead in

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