Thursday, June 29, 2006

Mobile eatery

Mobile eateries have been around in Bangalore for a while. These eateries operate out of vehicles as seen above. They cook their stuff from some place, drive down to their regular area and set up shop. In the evenings, they just drive back to their homes. These eateries fulfil the need for cheap food (in Bangalore atleast) for the auto drivers, construction workers et al. They dish out pretty basic stuff at rock bottom prices.

When the police comes to drive them away, if at all, they just drive away. The cost of vehicles has gone down, especially ones like these - which can be obtained second hand or on short term "informal" lease. You can be pretty sure thats it is not a bank loan - its the unorganized sector at work.

Wednesday, June 28, 2006

Railways, real estate and opportunities

This report from Rediff set "Airport-like railway stations soon" set me thinking. While our present airports and railway stations are no better than cattle sheds (some of them are), so the title does not make sense right away. But inside there are plans to convert the existing 4 metro terminals of Bombay, Delhi, Calcutta and Madras into something like this:

...Separate arrival and departure lounges, shopping malls, and a high-tech electronic queue management system for passengers.

Rail Bhawan officials said the railways plan to construct additional floors at these railway stations, which will be leased out to companies to run mini-theatres, shopping malls, restaurants and food plazas.

About time they woke up from 19th centurly railway dreams and facilities. Only CIDCO railway stations in Navi mumbai (see link above) have shown how much can be gained out of a railway station in a true sense.

The railways are sitting on some prime real estate across the country and have built railway stations like cattle sheds (cement base and asbestos roof and pretty much nothing else). The value they could unlock out of the land these sheds sit on (even by leasing and not outright sale) is a humungous amount - enough to transform the face of the Indian railways, if used in the right way. See the opportunity they have lost out on- they could still catch up, but with the railways thats a distant dream.

So how about faster trains too?

Outlook Business

The Hathaway group has launched Outlook Business (not online yet) thus growing their stable from the weekly newsmagazine Outlook, Outlook Traveller, Outlook money etc.

The business magazine space in India is relatively uncrowded. Heres who make up that space. Theres a doughty Business India, (without online presence) which I think focuses more on data than on insight. Theres Business Today, (online only for print subscribers) a glossy that is high on jargon and glamour. Theres Businessworld, (free online for Indians?) until a few years back, an also ran, that reinvented itself into a weekly magazine and with considerable success too. I have found Business world to be the best of the lot for its crisp stories and occasional insight.

So, what does Outlook Business look like? Outlook magazine stole India Todays thunder by going weekly. In the Business space, Outlook Business is a fortnightly, thus avoiding competition with Businessworld. I read two issues - one on infrastructure and one on the Global Indian story. The magazine has pieces written by some eminent writers and has an eclectic mix of the serious and the "easy to read" stories. In my opinion, it seems to fit in a space between Businessworld and the other two- Business India and Business Today.

If you look at the magazine and their layouts from an end use perspective, heres what I have felt. Business India seems to talk like bureaucrats, Business Today seems to talk only to MBA students and wannabe CEOs while Business world seems to talk to the man on the street who wants to know about business - the real target audience. Outlook Business seems to be talking with a bit more depth than Businessworld though I am confused with its tagline - for decision makers.

Anyway, it is interesting competition in the business magazine space in India. Watch that space.

Tuesday, June 27, 2006

An eco friendly building

I got a chance to visit the office of The Energy and Research Institute in Bangalore. My first ever visit to an eco friendly building.

The building is an amazing piece of architecture. The building is spread across multiple levels with skylights spreading natural light across all but a few places in the building. There are terrace gardens and provisions for greenery at various places in and around the building. Why cant more buildings be built this way? These buildings consume far less energy in lighting, air conditioning besides being a great place to work.

More on green buildings, here and here.

Too much innovation

This "innovation" buzzword is getting a little too much. Pink papers are ga ga over it, recruitment ads have the word as a punctuation and now its on billboards too! The innovation buzzword unlike previous buzzwords is cheap - no consultants, no re-engineering - and it is easy for anyone to say that they are "innovative". Real innovation, though, does not come cheap.

Sunday, June 25, 2006

Forest view anyone?

The billboard for Mantri Tranquil. The byline reads "Homes with forest view". The accompanying visual shows a man running through a forest. But make no mistake. The ad nowhere says that your building will have a forest. All it says that your building will overlook a forest. And that is easy, because this place is just off the Madras Sappers military camp and they maintain the greenery in their camp area. So, the forest is meaningless beyond a point. You cannot run in it, neither can you enter it. But, even a view sells. After all, a forest view is far better than, say, a slum view and of course, you can charge a premium for it.

Saturday, June 24, 2006

Madiwala meets Manmohan

Today is the foundation stone laying day for the Bangalore Electronic city elevated toll expressway. This ceremony is near the wholesale market of Madiwala (which I often write about). The foundation stone is being laid by Manmohan Singh - the hope of the aam aadmi (ordinary person). But for the visit of the khaas aadmi (special person), quite a few aam aadmis have been affected. The Madiwala market has been closed,fenced neatly and the road wears a clean look today.

For those of you who know this place, it is the epitome of chaos and it is not exactly a clean place with mounds of vegetable waste lying around. If for a special person, the whole thing can be turned around, why cant it be good for the ordinary person? And then again, this is not about the present government, but about the entire system in India. As my friend says, "Jin logon ko problem solve karni hoti hai, woh apni problem solve kar lete hain" (Those who are supposed to solve our problems, only solve their own problems)

Friday, June 23, 2006

Why is this route busy?

Ever so often, I call up someone who belongs to "another" network from my phone. Ever so often, I get a reply that says "This route is busy. Please try again later" or its equivalent? This used to happen in the old era of the single telephone provider especially on the inter state routes and I remember one "workaround" was to type the number and add zeroes at the end. But even after our big telecom revolution, routes are busy.

Why? Why dont the network operators fix it? (This has something to do with traffic from one network to another network - and the operators are looking elsewhere, into their own networks).

Thursday, June 22, 2006

Of resorts and offsites

The Indian IT sector is booming leading to a boom in all sorts of subsidiary industry. Transport companies, house work staffing contractors, drivers, maids, gardeners, eating places and so on. With the IT companies growing by leaps and bounds and with every IT project team wanting to celebrate their success with a party at an offsite resort, needless to say, the business of resorts is booming.

Come over to Bangalore to see this phenomenon in operation. Just outside the city and I mean, just outside - you will see resorts of all shapes and sizes. A little beyond the regular daily driving distance of about 60 kms are the resorts which are preferred for overnight stays and picnics or team outings.

If you have a patch of land of a little more than an acre on the outskirts of Bangalore, you can set up a resort. Heres how:

  • Dont cut your entire coconut grove down (usually thats what you would have on the outskirts). Leave a few coconut trees intact.
  • Have a few manicured lawns. A few flowering plants.
  • Create a themed restaurant with open spaces and thatched roofs. Preferably connected over a water body.
  • Create a swimming pool, complete with water slide and kiddie pool, even if its all within a few square foot. Ensure that the swimming pool is not straight and not more than 3.5 feet at its deepest. Do all you can to discourage swimming.
  • Leave a few other trees intact or plant some trees in any case, especially along the periphery.
  • Buy cheap plastic chairs and lawn umbrellas.
  • Leave some open space and cover it with grass and put a volleyball net.
  • Do have a conference room, airconditioned. Offer mineral water to drink.
  • If you have more than one conference room, connect them through grassy pathways only.
  • Ensure that you serve decent food - if not superlative- also ensure that there is no hint of any traditional food. Panner and Masala must appear in alternative dishes.
  • To create a feeling of space, have some of these facilities at different levels.
The really good resorts have a lot of space, serve good food and are pretty creative in terms of their outdoor options - like river rafting, rapelling and so on. But, there are quite a few resorts that, really, have to be your last resort.

Wednesday, June 21, 2006

Home loans and consumer rights

A great piece by Gautam Chikermane. He writes about home loan agreements.

...Buried deep in the bowels of any home loan agreement is a sub-head that goes, ‘events of default’, within which is tucked away a clause that in English means, if the value of the house for which a loan has been taken falls below the loaned amount, the bank, unilaterally, can demand that the borrower make good the difference, or else be declared a defaulter....

He connects it to the broader picture of industries protecting their backs at the cost of the customer.

This is not the first time this industry has been playing with its customers. A decade ago, the con was in showing a low rate of interest, when it was fixed, that is, not on reducing balance. Borrowers who went in for fixed rate loans three years ago, are realising that the rate is not really fixed; the bank has the option to turn it flexible. Why home loans, a car on loan can’t be driven out of the city. Why banking, the risk factors of an IPO are often marketing spiels. Why financial services, an airline has the right to drop you in Bangalore even if your ticket is to Delhi; travel agencies don’t disclose visa or airport taxes; exchange offers of white goods are at the discretion of dealers; telecom companies’ freebies begin to cost after a few months.

I am sure many of us have had similar experiences. We had a bad time with our builder because his brochure and his legal agreement were different and he shortchanged us on many facilities. A friend of mine who bought a house from a "prestigious" builder here had to go through rate revisions (upward) post purchase or a "take it or leave it" clause.
Consumer rights have a long way to go in India.

Tuesday, June 20, 2006

Hyderabad or Bangalore

Indian Express has an interesting feature. Click the link above.

The page has info on both the cities including investment data. A lot more can be done though, including real estate price analysis or some graphics.

Schools and their names

Time was when a Christian name for a school meant quality. (It probably does even today, but anyway, thats another story.) In the locality that I grew up the most popular schools were Holy Family High School or St. Anthonys or General Education- English sounding at the very least, if not wholly Christian sounding names. Only a brave person would name his school Samaanya Shiksha (General Education, loosely translated) or even Pavithra Kutumb Uchch Paathshaala (Holy Family High School).

But if you thought that all the St.Pauls and the St.Peters were run by Catholic Christian organizations, well, be ready for a shock. There are schools, at least in Bangalore, for whom the name is just a brand - and may or may not mean anything beyond that. So, while choosing a name for my new school, if I cannot prefix or suffix it with International (and that means people expect a lot), I settle for a Christian sounding name!

Well, I was surprised when I heard it for the first time, but I am surprised that many people aren't.

Sambar noodles

Well, it sounds as preposterous as Paneer Coffee doesn't it? But Nestle seems to think that a Dal Atta noodles with a Sambar tastemaker would be worth a try.

Many years back, Maggi was launched with, if I remember correctly a Masala, Capsika, Chicken and a Sweet Sour flavour. Only Masala and Chicken have survived today. They launched a Southern spice flavour (my mom smelt it and said - oh this is sambar powder) too which bombed.

The Sambar flavour of the Dal Atta noodles is exactly the Southern spice flavour - in a new avatar. Well, it tastes like you have mixed sambar in your noodles and it is quite spicy - but I am not sure if thats the taste people are looking for in noodles.

The interesting thing though is that Nestle is bold enough to launch Sambar as Sambar, not Southern spice and that is perhaps an acknowledgement of the fact that Sambar is as chic as Pizza.

Monday, June 19, 2006

Free gift inside

Heres a good set of business culture posts on India. As I browsed through them, I remembered another thing that until a few years back, was a sureshot way to sell a product. To sell a product, offer something "free" alongside - was an unsaid marketing dictum.

Many years back, our house had an unenviable collection of soap boxes. Those plastic boxes in which one can keep soap in the bathroom. We had so many that even two odd decades down the line, some of them exist for holding trinkets, batteries and what not. At one point, my mother was fed up of the soap boxes. They used to be offered "free" with soap (or other things) - any new soap that had a promo usually featured a free soapbox if you purchased two (or three) - and we used to try out any new soap brand - regardless of the marketeers telling us to "stick to one soap". I am not sure whether our checking out new soap brands was driven by soap boxes, but giving things "free" was a big thing in Indian sales until a few years ago. It is used even now, but the impact of the "free" label in pushing up sales is questionable today.

There were freebies in everything. "Det" washing powder offered free buckets in the 70s. Soapboxes were the item of choice in the 80s. There were so many items that had "free" marked on them that companies began calling it "gift" inside - to differentiate themselves from the clutter. The theory being, partly correctly, that the Indian consumer typically has a tendency to like anything "free". Even today, saree shops, jewellers give a "free" pouch/wallet with their purchases - never mind that consumers pay for it in the price itself. Some customers actually ask, "Kuchch free nahi hai kya?" (Is there nothing free).

Freebies in India are offered for encouraging new tryouts (as in the case of trial packs). They are used to push a non moving product with a moving product of the same company. They are used to push the non moving product of a different company. They are meaningless - like a low quality steel tumbler, a thin steel spoon or a cardboard cutout. They are useful at times - Bata for instance offers a shoespoon free with every pair of shoes (beyond one shoespoon, its utility decreases). Many retailers give out a cheapo keychain. Some give away wall calendars. It has been taken to absurd extents - 20 grams free in a kilo pack for instance - or a reusable container free (duh! - that would be the bottle itself) or a plastic carrybag.

Today, it does not carry so much meaning - but in those days, getting something "free" was a big achievement - considering our economy and businesses were so tightly controlled - free very nearly meant freedom and it was about pushing the rupee farther.

Today brand awareness is greater than "free", but getting something "free" still has a small say in a few purchases - so deeply ingrained it is in our psyche. Will it work today? Well, depends on if the customer thinks, if its "paisa vasool".

Indian railways online

Online ticket booking will reduce queues at the Indian railway counters, it seems. Indian railways can do far better than employ an army of clerks at various railway ticket booking counters. From this Hindu Businessline piece...

The Railway's initiative to sell tickets to passengers through the Web has caught on well, with the service registering about 100 per cent growth rates.

For the first two months of the current fiscal, sales have more than doubled against the same period last year. In May 2006, about 3.97 lakh passengers used the Net to book their tickets against 1.81 lakh in May 2005. Similarly, in April 2006, 4.04 lakh passengers resorted to the Net avoiding the long winding queues against 1.95 lakh in April last year.

And its not just in the metros, its catching up in the small cities as well. Previous posts on nearly the same topic 1, 2.

Saturday, June 17, 2006

Software service - disruptive innovation

Think software and the names that spring to our mind are the Microsofts, the IBMs, perhaps the Yahoos and the Googles. Also in the same league are the SAPs, the Oracles and the like. Somehow, except for the stock market, there is a huge set of people out there who still dont think that the IT services model is any good because it does not have a product, or has too few products. They would like to see perhaps an Infosys OS or a Wipro Office or perhaps a TCS search engine - which is when they will accept that these are software companies. But, few, if any will give credit to these companies to creating a disruptive innovation model right under the very noses of the biggies like EDS, Accentures and the consultants. But the truth is, that is what they have done. A classic David who has given the Goliaths a run for their money.

If one analysed this using the five forces model by Porter, heres what you would get (or thereabouts). From a country perspective, prior to the launch of the "services as a business model", there was very little going for the IT services industry. It was mostly composed of bodyshoppers who sent out people on various visas to the US. To take the example of perhaps 20 years ago, they did the same work that "travel agents" did (and still do) for sending people to the Gulf. Somewhere along the way, companies realized that they could do more than just send people to the US as staff. They focussed on getting entire projects, Y2K was a great opportunity to do so and then just thought bigger and bigger.

Theoretically those visa providers to the Gulf could have evolved as low cost infrastructure service providers and morphed into a big construction firm back then, but then they werent really used to looking beyond their noses.

At that time, the threat of competition was virtually nil. Because, nobody viewed them as competition, they were partners. They helped the Accentures and the McKinseys implement the IT solutions. They helped companies plan for fluctuations in staffing; staffing without staff on their roles.

The threat of substitutes, again was marginal, since what would you really substitute a low cost service with - which was their basic premise? Also remember Y2K, when everybody needed people to tweak the 2 digit date with a 4 digit one.

Buyers could never get together and bargin, except for a large company like GE which gave huge chunks of their work to competing providers. Even today departments in many large companies dole out small projects unknown to each other. Ditto for supplier power, since there is no "supplier" for this industry per se.

Substitutes was another of the possibilities that was low, since ITES was emerging as a substitute to inferior bodyshopping/contracting without the headaches.

Rivalry among the players was few and far in the early days, since the market was so large, that there was (and still is) enough space for all the players.

So, while sections of the media berated the IT coolie model, these companies began to gain more businesses, make more money and get listed on some prestigious exchanges. INFY , WIT for one. As time went on, the Accentures realized that these guys are getting smarter and in the guise of IT projects are slowly learning the tricks of "reengineering", "business processes" and were stealing business from under their nose. The time when the Accentures came to set up their own centres in India was really the acknowledgement that this model is really a model and not a short term cost thing. So, for those who are looking for disruptive business models, take a look at the Indian IT servics industry and it is as disruptive as it can get.

Even today, the industry is relatively stable, though I foresee that in future, the range of substitutes available for the service industry will increase by leaps and bounds. Processing and software deployment could be automated, so the days of having a few hundred people on call to do maintenance work will be numbered soon. The companies seem awake to the future and are doing a lot more things than just rest on their laurels. They also seem to be inspiring newer entrpeneurs.

But while we wait for those days, our companies are doing more as can be seen in the set of acquisitions they have been making. So, hopefully, over the next few years, we will see the software service companies grow organically or inorganically into something else or into something more. What? Guesses welcome.

Friday, June 16, 2006

Its about the people

The previous post about education and the point on how our artificial shortages in the education field can be turned around to our advantage simply by increasing supply (not of IITs, but of decent schools and colleges) brings me to a point about the strength in our people.

Indians were among the biggest labour suppliers to Gulf infrastructure projects. We could have set up big infrastructure companies, but we missed that bus.

Indians are perhaps the largest number of contractors employed as coders abroad. Here is one place where we have converted that into an industry, that of IT services and it looks like we are getting someplace.

Indians are nurses in many hospitals around the world. We can convert that by selling as a destination for medical tourism. We are getting some business here too.

Indians are teachers in many schools across the world. Why cant we use that opportunity to create world class schools in India for Indians and foreigners? Many Indians are very well known professors. We ccould use their talent to establish some great universities and research centres in India. We are nowhere in this field and with our current shortsighted policies, we are going to stay where we are are.

In all of these industries, and any other industry, it is all about the people. Yes it is about infrastructure also, but then where does infrastructure come from? Another set of people.

We can be a supplier of labour to companies around the world or we can turn it around or create an industry out of any of these or other industry. For that we can either have our government enable those opportunities (which will never hapen) or be indifferent (as in the case of IT). Unfortunately, the mindset of the old men in our government is one of shackling our industry, our economy. Hopefully our private enterprise(s) will find a way to unshackle our country in some of these fields or in new fields.

Outsourcing of Indian education

Pratap Bhanu Mehta, recently in the news for putting in his papers from the Knowledge commission, writes. Some excerpts...

Since the market for talent has gone global, many of India’s premier institutions fail to attract bright students within their own borders who usually make their way to universities in the US, China and Europe.

India misses out on opportunities as Indians abroad file for patents and create businesses. One reason is the government’s rigid control over educational policy. To meet the demands of globalization, the government must spend more on education, increase student access, yet also extend greater autonomy to its universities. More funding combined with greater flexibility will strengthen research capability and secure talent within the country’s borders. India’s rigid regulation of education retards the intellectual growth of its institutions, diminishing their ability to compete for global talent.

Its share in the global higher-education market is miniscule, and there are significantly more foreign students in China than in India. According to a study by the Association of Indian Universities of 300 universities, the number of foreign students in India shrunk from 12,765 during the 1992-93 academic year to 7,745 in 2003-04.

The Indian regulatory system is very much modeled on central planning. It assumes that regulatory agencies can second guess the sectors where demand is likely as well as the appropriate content of education. Ironically, India met some demands of the IT sector, because a large number of private institutions managed to dodge the regulatory system by offering diplomas rather than degrees – which can only be conferred by government-regulated institutions.

The Indian education system is one of the most tightly controlled in the world. The government regulates who you can teach, what you can teach them and what you can charge them. It also has huge regulatory bottlenecks. There are considerable entry barriers: Universities can be set up only through acts of legislation, approval procedures for starting new courses are cumbersome, syllabi revision is slow, and accreditation systems are extremely weak and arbitrary. The regulators permit relatively little autonomy for institutions and variation amongst them.

A pretty good analysis of Indias education system - the same system that cranks up thousands of engineers who find IT jobs that has brought outsourcing to India. I hope some private initiative or idea like the NIITs and Aptechs gets around the artificial shortage of seats created in Indias choked education system. Should be easy, once companies start recoginzing them and then it doesnt matter anymore.

Thursday, June 15, 2006

Malls and community

Our weekly visit to the wholesale vegetable market, roughly equivalent to a bazaar has taught me a few things and set me thinking a few times. On this weekends visit, I was thinking about the two or four odd vendors that we usually buy from. Since I am a regular customer, I get good quality vegetables, good pricing and even tips like, well, today tomatoes are of a very good quality. Does the arrival of malls and reward points and membership cards spell the end of the trading community in one way of another?

I am not a great fan of crowds (and thats an understatement) and I dont mind shopping in a comfortable place (well!), but having said that, there is an element of personalization in purchasing stuff from, well, a human, and not from a shelf in an impersonal way. Surely, bazaars can be cleaned up and organized better and they would give the best malls a run of their money (if they get their supply chain without middlemen in place).

The personal touch makes such a big difference in a lot of things, and on a similar note, as malls and online shopping picks up, are we slowly losing the, real, human, touch? Do we need it or do we not?

Wednesday, June 07, 2006

Thinking out of the box - Power

The power situation in India is not great. Leave alone Six Sigma, we would be at half sigma if someone measured all the power cuts, scheduled and unscheduled. This has led to companies, apartments running their own power generation systems as a back up to the electricity supplied by the electricity boards. CII in Pune has shown how an out of the box solution can be arrived taking the above two into considerations. Gaurav had blogged about it when this proposal a while earlier, but now it looks like it has taken off.

The idea is as follows: (from the piece linked above)

The project, initiated by the CII, will see more than three dozen captive power plants generating power to do away with the planned load shedding that has plagued industry and citizens at large over two years now.

The unique project will see the participating industrial units generating and consuming their own power during the peak hours, thus freeing the MSEDCL grid, which will supply the surplus to consumers, liberating them from the grips of planned load shedding. Industry majors such as Tata Motors, Bajaj Auto, Wipro, Infosys and Cummins among others will, between them, produce under 100 MW of power under the new scheme.

For instance, since the MSEDCL was in no position to pay back the industrial units the operational costs of running its CPPs, it is raising the required Rs 170 crore plus by imposing a reliability charge of 42 paise per unit from subscribers consuming more than 300 units per month.

More power to such ideas.

Tuesday, June 06, 2006

Not a NICE thing to do

NICE, Karnatakas best known controversy and only real hope for a real expressway, unfortunately faces another speedbreaker. Now the state wants to take it over. If that happens, it will be beat the slowest flyover never built and it will be a ghost expressway that never got completed. Reports state that Karnataka is working on a law now, to "nationalize" this project. After having thrown a thousand roadblocks and fined by the Supreme Court,

The court not only slapped a Rs 5 lakh fine but told the state it had “malafide intention” when it appealed a Karnataka High Court ruling which favoured continuance of the project.

they are now trying this.

In a bid to defy the Supreme Court go-ahead on the Bangalore Mysore Infrastructure Corridor Project (BMICP), the Karnataka government plans to bring in a Bill that will allow the state to take over the country’s first private infrastructure project from its implementer, the Nandi Infrastructure Corridor Enterprise (NICE).

Looks like another Enron-DPC in the making. The update is that the government will only take over the "excess land". If that fails, then well, watch out.

Monday, June 05, 2006

Industrial clusters

Of late there has been a flurry of activity around newer automobile companies setting up shop in India, SEZs. Chennai is at the forefront of this activity. BMW, has, of course been the biggest news around, but they are not the only people to set up shop in Chennai. The Bombay Pune belt is a preferred destination, Delhi and the cluster around it is another one. All this came to mind as I mulled around the previous post on Silicon Valley.

That led me to thinking about industrial clusters in India. Take Bombay-Pune, Bangalore, Chennai and even the Noida-Gurgaon belt as an example. All of these centers have a balance of old economy and new economy ventures. The Bombay Pune belt for example houses industries starting from textiles to machinery to IT. The Noida Gurgaon belt also has a similar pattern. Hosur-Bangalore has a lot of aerospace, defence establishments among others. Hyderabad is an example of a place with less old economy ventures and more new economy ventures. Gujarat is an example of the reverse, where the old scores over the new. Both state governments are going all out to woo industries of all types. In almost all of these areas there is a steady supply of manpower through colleges (not necessarily hi fi colleges) and other technical training institutes.

The growth of Hyderabad is an interesting story in itself. IT is a land intensive industry because of its need for campuses as is manufacturing. AP and Hyderabad in particular has a lot of land that is essentially fallow and rocky. With doles like land, tax breaks Hyderabad has managed to make significant headway in attracing new investment - ISB, Microsoft, Infosys, Wipro, National Games and so on. The land around Hyderabad was lying waste in any case. Now it has generated employment and industry.

Gujarat is a different case. With an abundance of old economy ventures right from chemical to textile, IT has been slow in reaching out there. But with excellent infrastructure in places like Gandhinagar, it was only a matter of time before IT reached there and it has. Patni, TCS and a few other call centers have made Gujarat their choice.

The point of this post is that, industrial clusters are just that - symbiotic clusters. They feed off each other and need nutrients to grow - that also means colleges and manpower. Old economy feeds into new economy and together they sustain the cluster. Good roads, electricity, manpower, educational institutions are nutrients. Proximity to big cities, other industrial clusters are vital connections. Which is why I am sceptical of governments ability to attract industry to tier II cities without doing any groundwork. I mean, why would someone go and set up his company in a tier II city which has none of the above? So if any government is serious about developing the industry within or around a tier II city, these basic questions have to be addressed. So what about SEZ's ? Indias arguably biggest SEZ is the SEEPZ, but SEEPZ is essentially in Bombay which makes it almost self sustaining. Any other SEZ would also need all of these ingredients if it is become a success.

Friday, June 02, 2006

Silicon Valley, Start ups

I found this link on Abis blog and I couldn't but resist commenting on it. Paul Graham has written two pieces on How to be Silicon Valley and Why start ups condense in America. Both are amazingly well written pieces with some incisive analysis.

From a Bangalore (often touted to be Indias Silicon valley) perspective, the first piece says that we can get there, if only someone did those few things necessary. While Silicon valley may not sprout right away, it will happen over the next few years.

In the second piece he talks about the reasons why startups condense in America. Some of the reasons are that America - is rich, has a large domestic market, allows immigration, is not a police state. Amongst the reasons listed out are "America has dynamic typing for careers" and "America is not too fussy (in terms of regulations etc.)" and "You can fire people".

The last two are things that the government has to do, but the point about dynamic typing for careers is a pertinent point. In India all too often, we dont see too much of dynamic typing happen (Thanks to the IT industry where all and sundry from economists and architects are employed - it is happening in a small way). Companies arent too open to give opportunities to those who have worked in "different" areas or even to those who show an entrepreneurial streak. Try applying for a tech job without too much training or qualification and you wont get as much as a response. Part of the reason is also that there are a lot of people in India, so it is quite difficult to not find somebody for a position. I mean, if you want someone who wears blue glasses, works on pink mainframes - you would actually find a few, which leaves the door closed for those who wear green glasses but want to work on pink mainframes.

I wish this would change though!

The rise of the Indian economy

Link from Marginal Revolution to this piece which provides a historical context of the Indian economy.

Among other things is this observation about India today:

Two and a half percent of GNP goes into power subsidies; only half the electricity that's generated actually gets paid for. Some of the other half goes in unfortunate (we economists think) programs to give free power to the farmers.Unfortunately, the farmers who qualify for free power are the ones who are rich enough to be able to afford power in the first place. But having gotten free power, they let their neighbors tap into it. That's another portion of the power goes that way. Then there are those who tap the lines. It's dangerous, but people know how to do it. So half the power doesn't get paid for even while there's a big increase in the fiscal deficit, while one has very expensive power for those who do pay, which includes large industry. What do you do if you're an industrialist with power that costs more to buy than you can generate it for? You buy a generator, which is socially wasteful. A lot of the investment in India is wasted by companies' generating their own power so as to bypass the power system. So while there have been some attempts at privatizing the power sector and at imposing a regulatory system, there are still big problems at the moment.

And despite the overall optimism about India, a small para about China screams for attention.

China starts off with a higher standard of living. It has more manufacturing, a bigger economy, much better infrastructure, and a dense network of superhighways, as against India, which is just finishing its first superhighway grid linking the four big cities, the ones with more than 10 million people. China also starts off with a faster growth rate. It's been growing at 9-10 percent a year, it has a high rate--over 40 percent of GDP--of investment, it has practically universal literacy, and it has an open economy, measuring openness in terms of trade and FDI.

A good concise read about the Indian economy, I think.

Thursday, June 01, 2006

The telephone directory

I recently came upon this notice of a telephone directory exchange by BSNL here in Bangalore. There are distribution centers where one can go and get their old directories exchanged for new ones. I am surprised that a telephone directory exists. I dont recall referring to a directory ever in the last few years. I did pick up a Yellow pages once, but I usually prefer to visit a website or call up one of the dial up directory services like Just dial.

The argument can go that the directory still caters to those who have landlines - which is precisely the problem. The directory only gives you an update of only the landline subscribers of BSNL - which is not a majority. Mobile phone owners combined, exceed the total of the landline owners in India (as in a few other countries like Korea, Singapore, Indonesia). And then again directories are organized by cities which makes it all the more cumbersome.

And when was the last time you saw a cellphone directory? Especially with prepaid services, there cannot ever be a paper directory and online directories in these days of crank marketing calls.

All in all, I think that the telephone directory is a dinosaur and perhaps these phone companies will save a few millions if they stop printing a directory and concentrate only on their 197 (free dial up directory) service or on bringing it entirely online or accessible via mobile phones in a user friendly manner.