Chairman, The Tata Group
Senior Global Affairs Analyst, CNN
Tata Chairman Natarajan Chandrasekaran discusses the global business, economic, and trade climate, as well as his thoughts on how governments can harness the connectivity and efficiency of artificial intelligence to build a stronger and more resilient economy for all.
GOLODRYGA: Hello, everyone. Welcome. I hope you’re enjoying your lunch, and coffee, and conversations with friends. I’m really looking forward to this conversation that I’m going to have with a new friend that I’ve just made. Natarajan Chandrasekaran is the chairman of the board at Tata Sons, and the holding company and promoter of more than one hundred Tata operating companies. You all know his background and his resume, and I don’t want to spend too much time talking about that. That’ll be a discussion in and of itself. Welcome. It’s great to have you.
CHANDRASEKARAN: Thank you.
GOLODRYGA: You have co-written a wonderful new book called Bridgital Nation, and I hope all of you if you haven’t picked up a copy there’s one out front. We’re going to talk a little bit about the book, we’ll talk about news of day, we’ll talk about India. And then we’ll open it up at about 1:30 for questions from the audience. Just so you know, everything here is on the record. And it’s going to be an interesting conversation. So I’m happy to be with all of you here today. My name is Bianna Golodryga, by the way. I’m with CNN News.
So I want to start with some of the economic headlines out of India. And it’s going to relate to the book in the sense that India has just now surpassed the U.K. and France as the world’s fifth-largest economy, with a GDP of 2.94 trillion. And a new report, it also suggests that India continues to develop a market economy. That’s the positive news. The not-so-optimistic news, however, is India’s real GDP growth, it is expected to weaken for the third straight year from 7 ½ percent to 5 percent, an eleven-year low. And India’s unemployment rate has reached a five-year high.
A lot of questions of how to marry the two, a growing economy, lots of internal problems and structural problems, and the role that technology can play in that. And that’s where this book comes in, because you really address it in a two-pronged approach. It’s twin challenge troubling India. Talk about how you address it in the book.
CHANDRASEKARAN: OK. It’s a good commentary that you gave. So we can talk about the economy a bit later. Let me talk about the book in the larger context of technology, India, artificial intelligence, and the general fear that AI will take away jobs, and so on and so forth. I think if you look at India, I have been reflecting on this for a very long time because all my career I ran a tech company. So I only applied tech to solve either business problems or large-scale public sector problems, and public services delivery, and so on. I also grew up in rural India. And so I have observed so many things over the last three decades.
And largely all of India’s problems, according to me, can be grouped into two categories. One category, I call it access. The second category is jobs. When I say access, it comes from the fact that we have a lack of everything. You take doctors, we are shortage. Teacher, we are shortage. And at any point of time we are shortage of four hundred thousand teachers, all you really need is forty thousand teachers. If you take doctors, it’s six hundred thousand shortage of doctors—2.5 million shortage of doctors. We are dealing with a global average, whether it is doctors or teachers, to patients a ratio—or ratio with students. And judiciary. We don’t quite have the number of judges we need for the country. I’m told that we need about seventy thousand judges and we have probably one thousand. So you take infrastructure, we have shortage. We have hospitals, we have shortage. And on the other side, we have a lot of talent.
GOLODRYGA: You have ninety million people entering the workforce by 2030.
CHANDRASEKARAN: Every month plus ten million people coming into the workforce, OK? And it’s going to be there for the next ten years. I think basically in the next ten years we will need about—more than one hundred million people coming into the workforce. I think if I’m right, the China number is about twenty-three, twenty-four million in the same ten years, and the U.S. is about ten million. So you see the scale. So if this is what the two problems are, you would have thought that we would have managed it in such a way that the supply and demand meet each other. There’s a lot of demand, and there’s a lot of supply—assuming that if you have the right human resources you can solve all these problems. But I think over the years we seem to be trying to solve all the problems in two different ways.
So the idea of the book is how do you connect the access challenge and the job challenge together. So you solve both problems, so that they meet each other. The basic principle is that if you take the access side of thing, you cannot solve this problem by putting more capital and going into building programs which will take next ten years and twenty years. If you go on a hospital building spree or you want to educate more doctors by opening hundreds of thousands of medical colleges, it’s not going to happen. So how do you use technology? So we started about doing pilots.
We did a health care pilot—multiple healthcare pilots. And to cut the long story short, some of the findings are if you take an expert, the expert doesn’t spend all his or her time on only doing the stuff that person needs to be done. Most of the time they are doing work way below their expertise. That’s because the entire middle is missing. So we have people who are low skilled or no skilled, or we have people who are super skilled. And the middle, there’s a lot of gap. So how do you use technology to augment the skill level of these people so that we can perform at a higher level.
So that led to the theme that AI, and machine learning, and all the things that go with—cloud and the entire digital stack—should be for all. It should not be elitist. Then you can employ people. You need to train everybody. Nationwide we need to train twenty-five to fifty million people all on digital. And it’s much easier to train people on digital than teaching them math, and science, and counting, and reading, and writing.
GOLODRYGA: So why hasn’t that happened yet, in the sense that when you talk about technology and the role that it plays in the U.S. economy—we have an aging population here in the United States. So there’s a real challenge as to people who are older, training them under certain technology, as we’ve seen advancements continue over the years. India has a very young population, about seven hundred million under the age of thirty. That’s twice the size of the United States that’s just under thirty. One would think, in theory at least, when it comes to exporting technology and training technology to a younger section of the economy and workforce, it would be easier. Why hasn’t there been any inroads made there?
CHANDRASEKARAN: I think the problem—the problem is you start comparing the deployment of technology the same way with India and the U.S. That’s where the fundamental problem lies. They are two different markets; two different problems. In economies like the U.S., you have aging population. So you use technology to replace people. Your usual video is about robot walking in the snow.
GOLODRYGA: Job killer, right? The AI job killer.
CHANDRASEKARAN: (Laughs.) So that’s your—that’s your metaphor. And the second thing is, you use technology to drive everything. You want to drive productivity in a market which is not going, in an industry which is capped out on growth you need to take costs down, so you apply technology to take costs down. The fundamental difference in India is that the market itself is not there, because the access is not there. Normally when you create the access, the market develops. So technology should be used to develop the market in an economy like India, whereas an economy—the advanced economies it is for revenue opportunities. So there’s a fundamental disconnect.
GOLODRYGA: So it’s a unique situation we’re talking about in India and developing countries.
CHANDRASEKARAN: All developing—India and all developing countries the market will get created by the deployment of technology. Whereas here, the market is being developed to be efficient through the use of technology.
GOLODRYGA: So what’s the barrier now, if in fact you can introduce, you know, technology on a mass scale?
CHANDRASEKARAN: So, access. So how do you—how do you train all these people? How do you—one is teaching. The other one is how do you build access. So you need digital solutions. And we did a pilot and it works. We can talk about that. It does two or three things. One is that you’re able to shift the work down dramatically. So the experts have so much time that they can actually do only the expertise that they have—the level they have to apply. There’s a lot of mid-level jobs. And then we’re able to dramatically increase the skill of a lot of people with no skill and low skill. And we’re able to reach people. And we’re able to go to people in rural areas, where there is no facilities. We’re able to reach people because everything is in a cloud, everything is—you know.
GOLODRYGA: Right. You talk about the disparity, and there’s a lot focused on income inequality in the U.S. It’s a big theme of the election here. It’s on a much larger scale in India, and income inequality throughout various states in the country. Is that getting worse? And how do you expect some of your suggestions and the role of technology to hopefully help overcome the disparities?
CHANDRASEKARAN: Well, it’s not getting worse. In fact, I’m very positive over India. So we’ll talk about that next. I’m not negative on India. So now I think the—it’s true that the inequality is there, because our per capital income is close to $2,000, but we have a state in the south which is $9,000 and we have a state in the middle of India which is $600. So that’s the kind of disparity that we see. So but fundamentally, if you are able to train people and employ people using technology, and if you can let them know how they can use these tools, you can solve the access problem. The moment you solve the access problem, market opens up. So health care can be solved, education can be solved. We talk passionately about small and medium enterprises. All those small and medium enterprises also suffer because they are very unorganized.
See, the other distinct difference that you should keep in mind is that in the U.S., you are 100 percent formal jobs. The first time you are getting used to informal jobs due to gig economy.
GOLODRYGA: Gig economy, right.
CHANDRASEKARAN: We are 80 percent informal jobs, OK? We are a country of people doing their own thing. And what this will do is to drive the formalization of jobs at a dramatic pace. If you formalize jobs, automatically you will see an uplift of minimum 15 percent in the benefits to people. And that will give them quality of life. That’ll give them access. That’ll increase the consumer spending. That’ll grow the economy.
GOLODRYGA: Well, another challenge to the economy is getting more women into the workforce. Currently only 23 percent of eligible women are in the workforce in India. And a lot of the issues that we’ve just been talking about really can’t be addressed unless you start to see more women enter, correct?
CHANDRASEKARAN: Yeah, that’s a big problem because we—if you take our economy, almost half of the people—only half of the people have secondary education. And we have about 120 million women over there who have the secondary education, but only 23 percent of them work. Also, the problem is that this ratio’s coming down. It was 27 percent and it’s come down from 23 percent.
GOLODRYGA: So why is that?
CHANDRASEKARAN: I think it’s there are lots of different reasons. And generally Indian women do a lot of miracle work, right? Because the facilities are not there. There are so many things that they carry. So most of them, once they get married and then decide to have children, after that they don’t come back to work. So there’s a lot of drop-out ratio. So a lot of—a lot of facilities need to be created or a policy framework needs to be created. Actually, some of the things have been done, but still the execution’s a problem. Many of our policies is right—policies are right. But then, they are not implemented the way they’re intended to be implemented. Or, they’re not adopted the way they’re supposed to be adopted.
GOLODRYGA: So unintended consequences, perhaps.
CHANDRASEKARAN: Unintended consequences.
GOLODRYGA: I want to go back to implementing some of your ideas, and the use of technology in health care in particular. There is a chapter that you open the book with where you focus on a middleman who basically drives his car to the center of town, and people from various areas come near and far with their medical problems, and he helps facilitate them to various doctors or receive the health care that they’re looking for and in search of at the time. That seems very primitive, right, at this day in age. And when you’re talking about the introduction of technology, the need for more doctors, talk about the pilot program in Kolar and how that can sort of rectify the issues facing the country.
CHANDRASEKARAN: See, Kolar is a district outside Bangalore. Most of you know Bangalore for software, but this is a district outside Bangalore. It’s about thirty-five lakh people. That’s—thirty-five lakh is 3.5 million? Yeah, 3.5 million people. And what we did was we created an AI machine learning-based software which can capture structure and sector data and created a huge healthcare platform. And we created—we took over the primary health center, spoke to the government. There’s a lot of—the primary health care is predominantly done by the government, most of it are dysfunctional in many of these states. They don’t meet the basic criteria, the work criteria, like, you know, minimum there should be two doctors, and so many nurses, and there must be four beds, and so on so forth. Many of these criteria are not met in these hospitals.
So we took over the hospitals in this district, and then we operated the technology, and then we—there are low-end workers called Asah workers, who basically interface with the patients. And we kind of trained them on digital. We gave them an iPad. And then we created a middle-skilled people, we call them digital workers, and basically gave them the tools that are required and the screens that are required so that they can take—you know, whenever a patient comes, first we register the patients. And going through the entire standard operating procedure and taking all the data, so that finally when the patient is ready the patient goes to the doctor, the doctor only—the doctor has all the information in the cloud, so that appears, and the doctor actually spends minimum amount of time.
We were able to increase the productivity of the doctors by more than 50 percent. And we were able to register all the people in that district into the system because we would proactively reach out, everybody to come into the—come into the registration. And the most important thing is, because these primary hospitals are not functional currently, most of these people end up going to either prayer clinics or go to the tehsil hospitals. So the tehsil hospitals are all over. But what we’re able to find is that most of those people that come there have a basic fever, or a viral, or, you know, they just needed to be spoken to half the time. So—
GOLODRYGA: Not an emergency.
CHANDRASEKARAN: Not an emergency. So a huge drop off upstream.
GOLODRYGA: And could this program be scalable?
CHANDRASEKARAN: Yeah, absolutely. Absolutely. I think the whole program can be scalable. All we need is—we imagine a situation where all these primary health care centers are beautifully connected. And there are many different ways it can be implemented, but the point is the health care is a state subject. So we will deal with every state. So there are implementation issues, and there are regulatory issues. So what can be done by technology? What can be done by technology? You have to be a qualified doctor to do certain things. So when you go into the details, I’m pretty sure there are more things we’ll find out. But those things can be overcome.
And two, three things will be achieved. We have extrapolated the number of doctors that we will need by 2030. What is the shortage? Eighty percent of the shortage will be met if you implement this, without adding more doctors into the system. What I think is that we will dramatically decrease the gap in the ratio between patients to doctors, because many of this—many of these problems will be take care of by the lower-level people. And we will additionally create one million jobs, only in this sector.
GOLODRYGA: That’s very promising.
GOLODRYGA: I wanted to ask you, one of the questions I had here—this is one of the benefits of having time beforehand to chat, because I was going to ask the role that some of Modi’s policies have played in some of the visions that you have going ahead and recommendations in the book, and his views on some of the recommendations you discussed with him. You had a conversation with him about this book. And he seemed to sign off on everything.
CHANDRASEKARAN: Well, I think, you know, it was a development meeting. And at the end of it, I presented him with the book. And I spoke about the themes. He bought into the whole idea. And then immediately he agreed to run through the book. In fact, he was kind enough to run through the book at his house. I think he fully gets it, that most of our problems can be solved only by bringing technology. What we are saying is pure technology for the sake of technology will not work. Technology and humans, AI and human have to work together. And there is a way it can be done. And the fundamental difference is that digital will enhance the productivity of people, it will create new jobs, and it will provide access to people, to thinks that in other ways they have been deprived of for ages, and it will take a long time to provide. And he gets the concept. He appreciates it. In fact, I would say that I was quite fascinated how he spoke about the concept in the launch.
GOLODRYGA: He interpreted it in a way that you couldn’t even—right?
CHANDRASEKARAN: He interpreted it—yeah, yeah. Because he was more coming from practical social angle, and how it would impact different sectors. And he spoke extremely well. It’s there on YouTube, so.
GOLODRYGA: And I want to ask a few more questions about Modi, and sort of the current dynamics at play within India right now. But before we get to that, there’s been a lot of renewed focus—and I want to say one of the themes recently at Davos—has been the talk of stakeholder capitalism. And that’s happening both in the U.S., and you have the Business Roundtable, people like Larry Fink really addressing that. From your perspective, as somebody who’s been embracing this for a long time within the company, what does it mean and how sustainable is it? Because it all sounds great on paper, but it’s the implementation that—
CHANDRASEKARAN: I think—I think for us this is the only way we have functioned as a group. Our group has done so many things for the last one hundred years—more than one hundred years, one hundred fifty years. In fact, the eight-hour workday was introduced by Tata Group in 1914. Maternity leave was introduced in 1915-17, something like that. Employee insurance was introduced in—around the same time. And then creche for bringing children for working women was introduced in part of our company in 1910. So there are so many things, the social policies were introduced. And the group is known for the stakeholder capitalism, like, from the word “go.” In fact, the famous story that I would say is that in—I think it’s 1946, our then-chairman was standing in the Munich railway station. And this German company called Krauss Maffei saw the board member was there, they approached him, and then said: You know, we have all these engineers and they don’t have any work here due to the war. Can you take them with you? You just give them some good work, and they will be very happy, and you’ll be—you don’t have to do any other—any other thing. And then in 1948, post-independence, they got a letter from—(inaudible)—saying that now that we can pay you, how much we should, you know?
CHANDRASEKARAN: So I think the responsibility, and commitments, and being fair—when I say stakeholder capitalism, this not only—not only implies the society is—but even beyond that, doing the right thing has been—has been in the group. And I don’t think it’s difficult to do. I feel that if you do it that way, actually it’s cheaper, because always you’re fighting all the time. In fact, you get better goodwill and it’s not—see, in India, we have a law now, 2 percent. Every company has to—has to contribute 2 percent of pre-tax profits.
GOLODRYGA: That’s something that’s being discussed, at least. We’ll see if it’s implemented to that degree—
CHANDRASEKARAN: No, it’s implemented in India.
GOLODRYGA: No, no, I’m talking about around the world and in other companies.
We have a visit planned between President Trump and Modi this weekend I believe. And I grew up in Houston, so I covered Modi’s trip to Houston—the Howdy Modi trip that they really seemed to embrace him wholeheartedly in Texas. And the two leaders were holding hands. Now we’ve got round two with Namaste Trump. What do you envision coming out of this meeting? The president clearly wants some sort of trade deal announced. There have been tensions between the two countries over trade for the past couple of years. Do you envision a trade deal of sorts?
CHANDRASEKARAN: I think the president has said that the trade deal is going to happen post elections. (Laughs.)
GOLODRYGA: Well, we’ll see. We’ll see. It’s just a matter of whatever he’s tweeted. Yes.
CHANDRASEKARAN: So I’m not expecting much. Not much expecting much.
GOLODRYGA: Not expecting much.
As far as some of the—
CHANDRASEKARAN: There may be some sort of a trade deal, but not the whole length.
GOLODRYGA: Not the whole length? Something on paper, something he can tweet about.
CHANDRASEKARAN: Maybe some quick things, maybe.
GOLODRYGA: Is the—well, Modi has already promised to buy some aerospace equipment from the U.S. So maybe that’s something that the president can anticipate and be happy about.
How is the country prepared for the coronavirus? You talk about the deficiencies that you currently see in health care. For a pandemic—it’s not been labeled a pandemic officially yet, but it looks like we may get there at some point—is India prepared?
CHANDRASEKARAN: My view on this is, you know, lucky for us, we’re not impacted. We have two or three cases reported in Kerala. Let me say this, if it is coming from outside, we’re pretty good and handling the borders. We are fine with that. We know how to check, how to quarantine, and all of that. If something like this had happened internally, I’m not so sure how we would handle it, you know what I mean? If something had broken within India, there would be a much, much, much different problem.
GOLODRYGA: Right. If this wasn’t in Wuhan, if this had come originally from India.
CHANDRASEKARAN: Something like that in India, then it would have been extremely difficult.
GOLODRYGA: But from now, in anticipation or—right.
CHANDRASEKARAN: From things—yeah, coming from outside they’re pretty good and handling the borders.
GOLODRYGA: Because it’s interesting that the neighboring Pakistan has told those residents that are in China right now to stay there, because they are not equipped to handle—
CHANDRASEKARAN: But they brought—they brought—India brought home—
GOLODRYGA: Yeah, brought your—the residents home.
CHANDRASEKARAN: And they have got facilities, and those things, yeah.
GOLODRYGA: And last question before we open it up to the audience. I know this is a sensitive topic, but it’s about internal domestic turmoil within the country now. We spend a lot of time talking about the economy, but it would be remiss to bring up some of the nationalism that this party, BJP party and the president, is accused of fanning throughout the country, whether it be anti-Muslim, whether it be what’s taking place in Kashmir, some of the laws that are being introduced. From your perspective, is it worrisome? Are you seeing an increase in nationalism tendencies from the administration? And as a business leaders and as a citizen, does that bother you?
CHANDRASEKARAN: Increasing nationalism is everywhere. It’s not only India.
GOLODRYGA: Yes, definitely. It’s a global problem.
CHANDRASEKARAN: Yeah, so. But the way I look at it is there are two or three tacks I take on this one. First is as a businessman, there are always these kind of things going on, OK? I mean, if you take the—when I was running TCS, there would always be something on the H-1B visa. And probably the maximum number of questions I used to answer, I’ve ever answered in my life, is what’s going to happen to you when you go down because of the H-1B visa. The maximum times I’ve answered a question. So similarly, all these issues will have their own implications, which as businesspeople we’ve got to handle it in such a way that our employees, our other stakeholders, everybody’s interests is going to be protected. That’s one set of things.
The second answer I have for you is that if you take any one of these issues, all of these issues are mixed issues in India. They’ve been there for a very long time. We are a very diverse country. We are a very complex country. The whole Kashmir Article 370 has been there—has been an issue since independence. And BJP’s position on this has always been clear, that they will repeal it. It’s not the first time they’ve said it. They would have done in 2004 when they were in power. So similarly, if you take the Ayodhya Temple, which has been talked about, the Supreme Court came of it a judgement. It has been there, I think, I don’t know, 1500s, maybe? It’s been there for a very, very long time. And their position has been known.
So if you take any one of these issues, there are three or four tricky issues which are the issues that need resolution, but nobody—everybody was kicking the ball down the can. And these guys are going the direction saying that this is what we will do.
GOLODRYGA: So you don’t see it bubbling to some point of—
CHANDRASEKARAN: OK, so that’s the way they are handling it at the end of the day. So if you take a Kashmir thing, there’ll be always two schools of thought. There’ll be people who say that the way they have gone—some people will say—three views. Three views, actually. Some people will say it was wrong to repeal Article 370. But what’s the alternative? They won’t say. I’m not taking for or against, but I guess what I’m saying is that this one, what it does is puts it very much part of India. It’s not like there’s a special status. So there is other side of view.
The second aspect if you look at the same 370, some people say what they did is right, but they could have done it differently. This kind of criticisms go on. But my point is that if these issues can be resolved—and every country wants to secure its border. So the third implementation is all about securing borders, securing a border, saying who is your citizen who is not your citizen. It is a very complex affair in each one of these different points of view. I think my view is that as long as these things are done in a way that everybody is carried along—because there is never going to be a situation in all these issues where you’re going to have consensus. But from my point of view, where I stand I’m not for or against each one of these, but I’m more interested in ensuring that my ecosystem—
GOLODRYGA: Remains stable.
CHANDRASEKARAN: Remains stable.
GOLODRYGA: And you, from a forward-looking perspective, you envision that it will?
CHANDRASEKARAN: Yeah. Yeah.
GOLODRYGA: One final question before I open it up, sorry. And that’s just about technology and obviously the embrace of it. And you’re proposing more of it being implemented throughout the country as a necessity. There was just the new law that was proposed, the first law of its kind, a data protection law. And this raising the question of who owns the data, AI facial recognition technology, something that’s being discussed in China as well, and other countries. Does that concern you at all, about data privacy and the role—
CHANDRASEKARAN: Not actually. I think, you know, we are unnecessarily trying to solve this problem in a very simplistic way. There are two kinds of problems. One, the physical problem. Another one is the digital problem. The physical problem, everybody knows that who can come in, who cannot come in, visa, what visa, you know, all kinds of stuff. So the whole production is around the movement of people. The second one is a digital problem, which is a data problem. And data has got three problems. One is the data privacy, data localization, and data resiliency. And we cannot follow it in a uniform manner because the trust levels between countries are different. The same way as your movement of people.
And there are nations between whom we have clear agreement, we believe, common goal. There are nations where we don’t have that comfort. The same situation with data. And it’s going to be very hard for companies, because companies would like to have a database, single cloud. And it’s not going to happen.
GOLODRYGA: So get over it?
CHANDRASEKARAN: Yeah. Because it is the same problem. It’ll be very good for me, with a U.S. passport probably you can travel to so many countries. But I’ve had situations where I’ve admitted U.S. guest, they forget the fact that they need a visa in India, and they land in India and find out that they don’t have a visa and they cannot enter the country, because they’re not used to that. Whereas, with Indian passport, we travel to most of the world with a visa, right? The same way, the data situation is going to be difficult because with some countries we will not trust, so you won’t actually have the data.
GOLODRYGA: Well, for those in New York may not have global entry access either, so I mean—
CHANDRASEKARAN: Yeah, yeah. So this is—this is—
GOLODRYGA: Different approaches. (Laughter.)
CHANDRASEKARAN: So this has to be solved. This can be solved. But we will recognize the fact that data privacy can be reformed. It think it will—Europe has got a very—taken the lead, actually. And some countries, they are behind, I feel. I think the European model—
GOLODRYGA: You like the European model?
CHANDRASEKARAN: Whether I liked it—see, in the business world the question is not what you like. You want stability. I’m just saying, tell me what it is.
GOLODRYGA: Yeah, right. Or what works. And what works.
CHANDRASEKARAN: Yeah, what works. Tell me what it is, and this is what is allowed, and this is what is not allowed. That’s fine. I’ll deal with it. The problem is when you don’t take a position, you just keep going. And so data privacy will get sorted. And data localization and data resiliency, there’ll be multiple implementations.
GOLODRYGA: OK. On that, let’s open it up for questions. Over here, this gentleman.
Q: Thank you, sir. I’m David Braunschvig.
The title you chose for you book is reminiscent of the book that by far was the most successful one published by the Council on Foreign Relations, Startup Nation. Having read cover to cover to your book just before this session started, I understand, also based on your comments, that your focus is very different from that of Dan Senor. It’s much broader. Yet, the question of radical innovation and what does it take to foster radical innovation is well-posited in Dan Senor’s book. In Israel, in California, and to some extent in Cambridge, England, you have an agglomeration of people from different horizons, speaking different languages, immigrating from different countries. And according to the consensus, if you want innovation—which is not necessarily the topic of your book, I understand—you need to attract talent from different parts, different cultures, different languages. My question is, do you feel that India is doing enough for that? And what would it take for India to create ecosystems of different people coming to India for innovation?
CHANDRASEKARAN: I think—I don’t think that’s the problem. The problem is not that we’re—if at all there is one place that is most diverse, it’s India. I mean, the diversity is just so huge. Even within the country, it’s so huge. And attracting people from different parts of the world, from a legal perspective I don’t see a problem. The problem is whether we have the enabling infrastructure. So our problem is execution. I keep saying it. We can’t solve our problems through policy. Our problem is the execution. Even on a very clear-cut policy we have so many interpretations on execution. It’s all about execution, and we’ve got to execute better. That is my view. And also, we have this huge gap. And so many people need to be skilled, and so on and so forth.
If we can do skilling in a grand scale, and we can digital to people, rather bridgital to people, innovation will happen. See we did another pilot—we have a pilot. Do you know Kumbh Mela? Have you heard of Kumbh Mela? So about five, six years ago there was a Kumbh Mela in Nashik. This Kumbh Mela is a festival where people come and take a holy dip in the river. During the period of Kumbh Mela in this one place, thirty million people come in. So we created a small innovation center called Digital Impact Square. We thought we will foster innovation with the local community, partnered with MIT Media Lab.
So we got MIT Media Lab and some places in India, but all the people who build the app and the solutions for the Kumbh Mela were all people from the local community. So in preparation for that, we were able to teach them some skills. You won’t believe the number of apps that they built to solve problems. They came up with some wonderful, wonderful solutions. For example, if an area is going to be covered, they will put a map with some (ID ?). So they will count number of people crossing, and they would—using cellphone towers to identify the area which is populated. I was just fascinated with the number of apps that people were able to build.
So I think innovation will come. But our innovation is—innovation is—it’s not that it is not happening because there is not diversity of talent. It’s more the infrastructure is not there. And in fact, we got to the extent of saying that innovation should not only happen in IT industry and tech industry. We need that ecosystem for small and medium enterprises. We have—we need innovation clusters. We need it for textile, we need it for every single industry. And there are pockets in India, there are different zones where these—(inaudible)—are there. But they all have infrastructure problems. They don’t have access to capital. They’re, like, we need a small amount of money. We need about ten—I mean, sixty, course, what, I don’t know, $1,000 or $10,000, or something like that. Or $10 million or something like that.
But the point is that he can’t get the loan because the doesn’t have the papers. And without getting the loan, he can’t get the papers. I mean, it’s so many—we talk about that, that particular case, the example of a guy called Amit (ph). We talk about it in the book. So our problem is slightly different. We just need to execute. The policy is there, the money is there, but it doesn’t reach the right people. So we need to execute with that.
GOLODRYGA: Right up here, Frank.
Q: Chairman, thank you, sir, for a very, very interesting—a very interesting presentation. And those of us who have not had a chance to read the book have a treat in front of us.
I’m really pleased you’re here, not only to present the book but as the representative of the great company of Tata. Your reputation proceeds you, in as much as Tata has always stood for values—human values. And you’ve described them today in your opening—or, in the last question you were asked. But you’ve also stood for an open, competitive Indian economy in which private enterprise is in the front row, and in which India competes and brings—and you’ve incubated foreign enterprises over the years and brought them to the Indian table when that was not fashionable.
So where is India today? Is India a nation that is going to continue to open its economy? Is it going to retreat from or enter into international trading arrangements? Is India going to maintain a heavy state-dominated industrial and service system? Where is India going? What is Tata perspective?
CHANDRASEKARAN: A great question, Ambassador.
I think from an opening of the economy perspective I think it’s we are—we are on a road that we cannot go back. I think it will just get increasingly more open and more open. That’s the way it will happen. I don’t think there is any move to retreat on any step. They will open up more sectors. Some sectors, obviously there will be a lot of sensitivity. We can talk about any specific sector, to the extent I know I’ll be open enough to answer. But I think the—I believe in India for many reasons. I think our cities are—our country’s urbanizing. Our consumer class is growing. We contributed only about 5 percent of the world’s middle class. And we will contribute to be one third of the world’s middle class by 2030. So a lot of statistics to back up, a lot of data to back up. But there will always be situations where the growth is not going to be like this. There are always going to be years which are bad, due to any number of reasons. Even now the current situation where there’s a lot of criticism about the growth dropping.
Some are due to issues that we really needed to solve. You find lots of issues in terms of leverage, and these things have to be corrected. And first time you have a policy to correct it, like the bankruptcy court. Previously we didn’t even have a situation to curb these things. But could it have been corrected faster? The answer is yes. Are we moving at the pace at which we should be moving? The answer is no. Can we do things better? Yes. GST is a great vehicle? Yes. Has it been implemented smoothly? No. So I think if you take our recent history, I would say the direction is right. Sometimes the velocity is frustrating. OK?
So I am of the view that the trends are absolutely irreversible. So there will be a lot of growth. Whether it will all be uniform, whether it will jump to 8 percent, 9 percent, 10 percent, I mean, I cannot say. We’ve got to execute better. We’ve got to execute better. I keep saying this—execute, execute, execute. If we can bring a lot more execution, and certain banks maybe we are doing things faster, in certain areas we got to go slower, because you can’t—it’s a big machine. You can’t do too many things at the same time. So that’s what we are doing.
Q: Steve Hellman, Mobility Impact Partners.
As we look forward in the twenty-first century, obviously India’s going to play a significant role. Do you see specific areas where India can actually take a world-leading role in emerging technologies, especially coming from your own personal perspective? The twenty-first century’s all going to be about artificial intelligence, or machine learning, or health care innovation, or industry 4.0. Are there areas where you see India emerging as a global leader to define the technology path forward on some of these different sectors?
CHANDRASEKARAN: Absolutely. I think there are tremendous possibilities because if you really see—it’s not that we cannot execute. We have done some of the most fantastic programs. Our income-tax filing, if you see how the income tax have been completely digitized, techified, it’s just one of the fantastic platforms. Our—(inaudible)—how it has been drawn up. These are all very complex programs, large-scale programs. I mean, in fact, whole elections are conducted. (Laughter.) So there are many things we do well. It’s not that we don’t do well. Then we have a lot of programs, public programs, which we have been able to implement very well. But we don’t seem to have a consistency. Sometimes we don’t execute well.
I think with all the skills we have in technology we have to recognize two or three basic facts. One is if all our problems are going to be solved, it’s going to be solved only using technology. We neither have the resources nor the time on our side to do it any other way. We have to go all out, whether it is health care, whether it is banking, whether it is tourism. Everywhere, the ecosystems are developed using tech. Everybody has to adopt technology. And they got to believe that adopting AI, machine learning, and all the technologies, you in fact create a productive dealing, in fact create jobs, and we should not fall prey to this question that we create fear in people so that the unions get very worked up—tech will come out, jobs will go. That mindset should be completely eliminated.
The third thing is that we have shortage of everything. So you’ve got to get the utilization of sweating off everything that we have to the maximum. We cannot afford to waste anything. So if you take many of our sectors, because of disputes and because of NPAs, many of our assets are not functioning. We cannot have this situation. We’ve got to solve these issues fast, and we’ve got to get every asset to perform. So these are some of the things that we got to do. But whether or not we can take leadership, I think it is all a leadership problem. You have a problem in this country, OK? I don’t think that you are going a very easy way.
So whether it is the West or whether it is on developing countries, India can produce a model. Education, many of these sectors, we can create technology-based solutions, which are very, very forward looking, because that one thing we have is that we don’t have an existing legacy in many of these place. Or, even if we have, it’s really too old a legacy. If it is a legacy that is functioning, then you have a problem. You cannot leapfrog.
GOLODRYGA: Yeah, we should use some help with some of our apps here, as we’ve learned over the past couple of months. I think there was—right here.
Q: My name is P.J. Juvekar from Citigroup.
So my question is on the U.S.-China trade war. Although the phase one was signed, it looks like there’s going to be trade tensions for many years to come. So can India take advantage of that? What can India do? And secondly, related to that, you know, how is the Make in India program going, that campaign that Modi started, in your view?
CHANDRASEKARAN: I think some of these things—(inaudible)—but none of these advantages are going to be one-month and two-month cycles, OK? For example, this whole coronavirus thing has impacted our pharmaceutical sector in a big way. I understand that some raw material that’s required for producing—(inaudible)—it’s only source in China, globally. There are certain medicines in India have go about 40 percent, 50 percent, 70 percent in the last one month because if the stock runs out—I was talking to all the pharmaceutical companies. They told me that, you know. They just sort of stop, because you cannot source it from anywhere else. All over the world they depend on China. So there are—there are things like that which, you know, India can take advantage of. But none of these can happen in three months’ time. OK, there is a trade war, so what can we do in 2020? It cannot be. You’ve got to have a plan.
The world will recognize that it’s not good to be dependent on one nation, like China. So if you have a value proposition, absolutely you can create an industry in manufacturing, in pharmaceuticals, and every other industry. But I believe that there is a huge domestic market in India. I think we’ve got to address that, even if you take tourism, right? We get ten million people. Hawaii gets fourteen million people. Come on, right? So a huge opportunity. The tourism need not be from international travelers. I can be from domestic travelers. But there are lots and lots of opportunities for the stragglers. But we got to stay with it and we got to implement.
GOLODRYGA: To the trade question, do you envision that the U.S. and India—
CHANDRASEKARAN: It’s going to be a long, drawn process.
GOLODRYGA: And the preferred trade nation status? Do you think—how significant is that for the U.S.? The preferred trade nation status that was taken away by the U.S. Do you envision that in whatever deal comes out of Trump’s trip to India—
CHANDRASEKARAN: It probably depends on the—depends on the details, right? It probably depends on the detail. I know the top issues are India was wondering what—
GOLODRYGA: It’s part of the China problem too, right, the details? (Laughs.)
CHANDRASEKARAN: Well, you know, the top issues cannot be solved in one day. So we got to figure out a way of doing ten other things work. We have a very good U.S.-India CEO forum. I tell India side. So the businesspeople from both sides want to make a lot of things happen, and we meet informally also. So I think there’s a lot that can happen with India and China—or, India and the United States. Because the people like each other, people work with each other very comfortably. So it’s not different at all. But there is always going to be always one or two extra issues. So we shouldn’t bring those extra issues as the number one on the table. Then we don’t make progress.
GOLODRYGA: Baby steps. Better than nothing at all, right?
CHANDRASEKARAN: Yeah, yeah. Get everything done. On the big issues keep it a long way. That’s the only way.
Q: Thanks very much, Mr. Chairman. Nat Keohane from Environmental Defense Fund.
I have a question that touches on many of these issues around access and leapfrogging legacy, and it’s energy—and specifically energy in the context of climate and air quality. I’m curious about your thoughts on applying technology, thinking about access and so on, to meeting India’s energy access challenge, and doing in the context of the global crisis on climate change, which is something that India has not contributed to, but which it will face significant impacts from. Thanks very much.
CHANDRASEKARAN: The thing on energy it’s a big thing, a big factor. And at least I can—I can say that the—there’s a lot of policy push towards the new form of energy, the green energy. And fully recognizing that sustainable—(inaudible)—issues, India is not—India is not debating or questioning whether it’s needed. It’s a very important issue. India wants to do everything it can. But obviously, it will negotiate a timeframe, negotiate—I mean, again, the devil is in the detail, OK?
And on the power sector, we have totally 330 gigawatts of power. And you know, our incremental additions on renewable has been tremendous. People will always say, no, prime minister said 175 megawatts and they have done—gigawatts—and they have done a hundred gigawatts. Hundred is not a bad number. How many have so much of (thermal power ?). So it’s a big push that’s happening.
At the Tata Group level, we are also shifting all our growth to renewable. And more importantly, we are also trying to do certain new types of solutions. We have come up with a renewable-based microgrid solution, which will produce from thirty kilowatts to one megawatt. And it can solve a particular village—the electricity needs of a village sort of with a fixed number of households with some small and medium enterprises. If you’re able to—we are doing it in a village in Bihar. I would say partner. And it’s operational. But you’re trying to include the cost structure, quality, everything we’re watching, then we want to scale it up. We’re partnering with the Rockefeller Foundation on this initiative.
On the electric cars, we have taken the lead. We have created an electric vehicle ecosystem. So we are going soup to nuts, and we are slowly expanding. So we believe that these are bets we’ve got to make and we’ve got to solve. India won’t grow otherwise, because we have three million vehicles or four million vehicles, now to go to ten million, fifteen million. So if you don’t get in early, I don’t know how many of you know, this, in 2000 India had more vehicles than China. India had one million vehicles, China had six hundred thousand vehicles. China had—
GOLODRYGA: You’re about to have more people too.
GOLODRYGA: You’re about to have more people too.
CHANDRASEKARAN: China has twenty-four million vehicles now, and we are hardly three or four million. So the good thing is that that expansion has not happened, positive way of looking at it. So if you can get the electric vehicles in, we’ll cast the growth up. So—
GOLODRYGA: So this is—go ahead. Well, this is an issue you as a company are addressing head on, and other companies around the world continue to. I’m curious, with President Trump taking a step back, and removing the U.S. from the Paris climate accord, given the amount of energy and effort that the Obama administration put in to having India join, have you seen any impact on the effort that the government has on prioritizing climate change in India.
CHANDRASEKARAN: In India? No, no.
GOLODRYGA: Regardless of whether the U.S. is participating?
CHANDRASEKARAN: No, no. The Indian situation is that India is very committed, regardless of the U.S. And we will convince the U.S.
GOLODRYGA: Any last question? Right up here in the front.
Q: This is Niyaste (ph) from TCS.
Given that technology is going to drive the future, not only for India but every country, do you think that the education system has to be completely revamped? And will the group do something on this?
CHANDRASEKARAN: I don’t know what we will do, but I think that we’ve got to teach the whole digital skills and our twenty-first century skills. We believe that digital collaboration, creativity, these kind of skills have to be taught early in life. And we have to revamp our whole education system at every level—at the basic level, entry level, and even at college level. I think everybody wants to get a tertiary education. I believe that it will have to be given different carrier parts, a lot of vocational have to be, and a lot of digital-based vocational training have to come in. So a lot of revamp is required for the education system. And I don’t know what we will do on that.
GOLODRYGA: The conversation we’re having here in the United States as well, maybe not to the degree as India needs, but it’s definitely a conversation we’re having here.
OK, well, thank you. This has been a wonderful conversation. I appreciate it. It’s a wonderful book. Roopa is your co-author there. All of you, if you haven’t picked up a copy there’s one outside. You’ll love the book. It’s been a pleasure being with you. Thank you so much. Enjoy the rest of your day. (Applause.)
CHANDRASEKARAN: Thank you.
GOLODRYGA: Thank you. That was great. Thank you.