When innovation means a refrigerator

Jamshyd Godrej believes economic development in India must go hand in hand with environmental and social awareness.

"What we need today is innovation. Finance is not a constraint," says Jamshyd Godrej, chairman and managing director of Indian company Godrej & Boyce Manufacturing Company Limited, one of the country's largest corporations. When Godrej speaks of high tech and innovation, it should be taken into account that his company is mainly a consumer products company and that its business in mainly in India. Innovation, it turns out, is a matter of geography.

"One of the areas in which we want to expand is to the bottom of the pyramid, to the poorest people in India," he says.

High tech for the poor? Actually, yes, he says. Take refrigerators for example. Only 20% of Indians have one. This covers 80% of the upper and middle classes in the large cities, and only 1% of village dwellers. There are villages without even a single refrigerator, and that have no electricity infrastructure either.

What should be done? Develop a miniature refrigerator running on a long-life battery. But where do you find such a battery? Godrej has invested in several US semiconductor companies that are developing the futuristic technology that could enable a miniaturized refrigerator like this to conquer India. "Even if only the grocery store owner has a refrigerator, this community is now able to obtain products at a temperature and with a freshness it has never known," he says.

Why not bring these villages fresh milk daily and put it in cool boxes? Well, no-one reaches these villages every day. The Indian government mail service turns up from time to time, and it is the only relevant factor. To understand the roots of Indian innovation you have to understand the local market, which is based on hundreds of years of tradition and is not quick to change.

Goredj came to Israel to take part in the India-Israel Forum run by Tel Aviv University and to look for innovation here.

"To sell in India, you have to understand the culture and the differences between various kinds of Indians," he says, "At our company, we employ not only engineers and marketing people but also historians, sociologists and mathematicians, because the multi-disciplinary environment stimulates thought and innovation."

Do the Indians have an entrepreneurial nature? In the West, we are told about an Indian culture that believes in fate, so that everyone has a pre-determined role in society.

Goredj raises an eyebrow at this crude stereotype. "Certainly," he says, "Indian thinking is highly entrepreneurial, the education system is excellent, and many people also study abroad. There are many ideas, although they get stuck at the 'how do we make money out of this?' stage, because Indian entrepreneurs do not have rich business experience as in the US. Up to now, Indian entrepreneurs have not had access to capital, but that's changing.

"India is very different from what it was in the past. The entrepreneurs are very determined, consumers are more enthusiastic up to 1991, when the economy was opened up to competition, consumers had little ability to make choices. Now that's changing, and very fast.

"The changes in religion and in family relationships are slower. The caste system is alive and well; inter-caste marriages are still something frowned upon. How long will it take for this to change? Two generations? Ten generations? We don't know, and it certainly affects the economy, but nothing can be done about it that's India."

Do your young people who go overseas to study usually come back?

"If they're looking for a challenge, they return to India. With their education and contacts, they have unlimited opportunities in India, but without the infrastructures and without the salaries and without the conditions that they have in the US. I went back, but that happened because I had a family business. Someone was waiting for me."

You are the third generation in the family business. How do you manage to preserve the business down the generations?

"We believe that everyone should be involved in the family business in some way, but not everyone has to be a manager. The structure we have is special because we have five branches of the family; each is responsible for a different division of the business, but each receives exactly the same dividend."

What is the state of the Indian economy these days?

"The situation is problematic, because growth has fallen from 7-8% to around 5%, and one of the reasons for that is that the economy has become consumption oriented rather than investment oriented. There isn't enough investment in social and physical infrastructures. The level of investment fell because of insufficient government support and insufficient coordination between the different players. Nevertheless, we had an excellent monsoon this year, and it will generate a huge agricultural surplus that will lead to a better economy in the villages.

"The government knows that elections are close and so there's a chance that it will make better decisions. Gold imports need to be restricted. People are using gold to preserve asset values, and this is harming the rupee exchange rate. We have huge imports of oil and gas, and that needs to be restricted somehow. We should limit the gas subsidies given to the poor by better checks on who is really poor, or by finding them alternatives to gas, which they use for cooking, and that is not the most efficient use of energy. But when you have 100 million people below the poverty line, it's hard to get to everybody."

Social gaps are a problem?

"Certainly. Today there is much more aid to the poor. There is a right to food, although they receive only the minimum of the minimum necessary considering the high calorie output of these people, most of whom live in villages and do physical work.

"There is a right to education and a prohibition on working until age 16, a right to 100 hours paid work for one person in each poor family. These initiatives cost a great deal, and need to pay off quickly. I believe that as soon as the rural economy improves, our economy as a whole will improve."

How does the wealthy class in India, of which you are part, feel about the economy and the social gaps?

"Businesses in India have always been aware of society and the environment. We specifically are very aware, and we have a slogan, 'good and green'. If a product is not good for society and the environment, we will pass it up. There have been cases in which we have passed on a product and compromised."

You stress the environment. Don't you sometimes say 'let's first of all feed all these people'?

"But then everything would collapse. It's not possible to start now with accelerated development that isn't environmentally sound, in the hope of switching to environmental development further down the track. It simply doesn't work like that. It will have its revenge on us later. We can't afford that for ourselves.

"Look at what has happened in China. They made a mistake. They grew without worrying about the environment and society, and that's a great pity. They are now discovering what a pity it is. For example, there isn't enough public transport there, but too many cars, and everyone moves too slowly. And that's just one example."

Are you active in Israel?

"Israeli companies produce defense equipment with our help. They are obliged to transfer some of the production to India in order to win contracts with the Indian government. We hope to forge ties in other areas soon. We also support the Israel Philharmonic Orchestra Zubin Mehta and I are Parsi Zoroastrians, and distant relatives."

Published by Globes [online], Israel business news - www.globes-online.com - on January 2, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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