China vs. India: India Leads Somewhere
Posted : June 20, 2006 at 6:47 pm [IST]
The recent study by Boston Consultancy Group (BCG) and CII is revealing. A dozen rapidly developing economies (RDEs) including India, China, Russia, Brazil, Hungary and Turkey are home to about 100 companies that are tearing down old business bastions, with 21 Indian and 44 Chinese firms. BCG chairman Arun Maira said, “RDE-100 grew at a rate of 24% per year from 2000 to 2004. The Indian 21 grew at a faster rate of 30%. They also earned operating revenue of $15 billion, a margin of 25% of sales compared to the RDE-100 average of 20%. “Interestingly of the 44 Chinese companies, only one was privately owned. But all except ONGC in the Indian 21 were privately owned,”
India scores considerably over China in terms of its participation from the IT, automotive and pharmaceutical industries. In fact, the presence of the auto industry has also surpassed the much-hyped IT sector with as many as five Indian auto companies making it to the list, which includes Tata Motors, Bajaj Auto, TVS Motors, Mahindra and Mahindra and Bharat Forge. India’s private sector is going great. However, I wish some in textiles and steel became a company of global scale.
In two other areas, India’s performance is uniquely better.
Strong credit quality of Indian banks stands in stark contrasts to that of the Chinese banks. The top four-stateowned Chinese banks alone are estimated to have made non-performing loans of a minimum of $133 billion (this being official figure the actual by some estimates may be three times as high). Even based on the official figure, NPLs (nonperforming loans) in the Chinese system are triple of those in India. NPLs in Indian banks average about 5%.
As according to the UNCTAD World Investment Report 2005, in an Outward FDI Performance Index for 2002-2004, UNCTAD placed India at rank 54 as against China’s 72. The Outward FDI Performance Index is the share of a country’s outward FDI in world FDI as a ratio of its share in world GDP.
In figure of US patent filings between 1999 and 2002, while India filed 1018 patents, the Chinese figure was 980.
China must be the benchmark for all relevant sectors of India. Wherever India has a lead, it must not find excuses to be left behind. It must maintain the lead and improve on it. IT and IT-related services are those areas, where Indian enterprises will have to work hard to maintain the lead. It will make the per capita GDP of the country grow better, as the compensation in this sector is better than those in the manufacturing sector where the Chinese enterprises are excelling. India must also try to improve the quality of innovations, R&D, and higher education to maintain the lead. This is the opportunity to prove our long tradition of investigative education.
- Indra
Category: Government Policy/Administration |
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