September 2022, Virtual
September 29 2022, Virtual
Now in its 27th year, the Business Travel Awards
Despite the global downturn and problems closer to home, says Jonathan Hart, India's unique qualities will ensure its survival
The Slumdog Millionaire of the business world, India has been catapulted from comparative rags to riches through a mix of resourcefulness and entrepreneurial acumen. But now it is battling to staunch a deeper-than-expected downturn in its formerly burgeoning fortunes.
It's putting a brave face on it, considering a portion of the damage has not been self-inflicted, resulting instead from the fall out of overseas buyers, suppliers and investors pulling in their horns, and that factors other than the credit crunch are conspiring to obscure a clear-cut return to upward momentum in the near future.
Traditionally turbulent federal elections, running until late May this year, have so far been clouding the way forward for a still growing but stifled economy feeding an increasingly demanding middle class among its more than a billion labour-intensive souls. They have also served to underline personal safety concerns for visitors in a volatile democracy with disparate internal politics and ambitions.
Heightened security in the wake of last November's terrorist attack in Mumbai doesn't yet appear to have fully convinced a chastened outside business world - although committed to India in the long-term - of any short-term panacea or of any immediate restoration of confidence in a place where business life has always involved the complex, changeable and wayward.
For all these contradictions, plus an already depressed domestic market, India's credentials apparently remain solid. Together with its in-bred resilience, fiscal stimuli, a weaker rupee and a growth rate tailored to six per cent for 2009, encouragement can be drawn from a pre-election Reserve Bank promise that its financial sector continues to be sound, safe and well-capitalised. All this points to a potentially sharper and more rapid recovery than most of the rest of the world. However, a March survey of major Indian corporations, some currently undergoing critical contraction, put that recovery at least 14 months away at the earliest.
With countless development projects currently stalled, plus business, event and tourist traffic staying away, a glance at the country's international and domestic travel industries echoes the mood of shorter term uncertainty.
British Airways has axed London-Kolkata and both Virgin and Finnair have suspended their Mumbai services this summer. At the same time, the heavily over-extended domestic air industry is in disarray, barred by national regulations from seeking foreign re-capitalisation.
The Centre for Asia Pacific Aviation predicts furious mergers and acquisitions activity, plus further retrenchment this year in both the full-service and low-cost domestic air sectors that have already seen the Jet Airways/Jetlite combine swallow Sahara, and Kingfisher/Kingfisher Red absorb Air Deccan. Among others, a merger between SpiceJet and Go Air is now mooted and state-run Air India/Air India Express, having shed large numbers of employees, is seeking a US$800m cash injection from the government.
At the same time, already hard hit hotels are coming to terms with losing the vital revenue that would have come from hosting this year's International Premier League cricket tournament, transferred to South Africa due to security concerns.
In the home-grown deluxe sector feeding the top end of the UK market, Oberoi has axed its overseas offices, while rival Taj Hotels appears to be riding out the storm with a fingers-crossed pragmatism.
"The fact is, something had to give," says Subhash Thaker, vice president sales and marketing, UK & Europe, for Taj. "India's economy was already overheating and the brakes had to be applied. In overall context, we view the Mumbai event as an unnatural phenomenon and the downturn as an aberration. Our perspective is that, for the most part, international business is locked into India as an essential solutions provider or supplier and is unlikely to be going elsewhere in the longer term." Doing business with India is like riding a tanker, adds Thaker. Instead of stopping dead, it takes time to manoeuvre and turn. "Every cloud has a silver lining and we see this as a period of essential re-assessment and adjustment to get India back on track," he says.
The new coalition government is expected to be galvanised into further liberalising foreign direct investment and moving faster with infrastructure improvements, both kick-starting gears that seemingly had failed to fully engage or been put on the back burner since the trading reforms and globalisation policies of the 1990s first rocketed a formerly inward-looking country towards international prosperity.
Notable among improvements are confirmed plans to modernise and expand an outdated transport infrastructure, seen as offering opportunities for UK business in the consultancy, accountancy, machinery and chemical fields.
Along with continuing opportunities in a wide variety of sectors - India potentially is as much fertile ground for small and medium enterprises (SMEs) as it is for bigger business - UK Trade & Investment cites a minimum £40 billion federally earmarked for roads, railways and airports.
Airports alone are a key target, with most international gateways modelled as multi-faceted 'city in their own right' complexes, supplemented by an ultra-modern network of non-metro airports.
Despite India's airports virtually doubling in number to 85 over the past five years, their overcrowding and functionality, or lack of it, remain primary bugbears among frequent visitors.
Given a traditional keep-it-in-the-family, thrifty Indian philosophy of saving for a rainy day, as well as its tendency to be quixotic and changeable, those same visitors might be tempted to take with a large pinch of salt a Civil Aviation Authority promise to increase the total to no fewer than 400 airports across the country over the next 10 years.
Nonetheless, while other countries may have burned their financial boats for some time to come, it is a philosophy that eventually should see the combative but ultimately self-protective India Inc through its current troubles.