Vinit Nijhawan: Serial Entrepreneur, Venture Capitalist

Passage to India Part 8

Mumbai-Delhi Tuesday December 23

I boarded the overnight train to Delhi at Bombay Central Terminal (the mixed use of old and new city names for Bombay is a metaphor for old and new India—the old structures retain the original Bombay and everything new is named Mumbai). I had forgotten to print out my e-ticket and was prepared to battle/sweet talk my way onto the train. My last train ride in India was over 20 years ago and I have a lasting memory of patiently standing in a queue to purchase a ticket that never moved as people muscled their way to the front of the queue. Getting on the train required sharp elbows and more than likely the conductor had sold your seat to the highest bidder. The contrast this time was stark. I had to pay Rs.50 ($1) to get a ticket printed out on the train. The familiar red-clad coolies/porters were still around but there was no need for their help, the boarding of the train was orderly, seats were assigned and the conductor was Amtrak-like amiable.

The train departed Mumbai on time, the orderlies prepared my bed in the four-bed compartment, with spartan but crisply laundered sheets and I promptly went to sleep. A couple of hours later I was joined in my compartment by two gentlemen who had boarded at an unknown station. I was in the Rajdhani express train, a series of overnight trains between the metropolitan cities in India. My ticket had cost about $65, a flight would have been $110. I wanted to experience train travel and to get a sense of the geography of India’s industrial corridor, running between Mumbai and Delhi, encompassing the modern states of Maharashtra, Gujarat, the central state of Madhya Pradesh (MP), the tourist state of Rajasthan and the largest and one of the poorest states in India, Uttar Pradesh (UP). I was traveling on the most expensive ticket on the Rajdhani, the least expensive was about $1.50.

 

I woke up at the crack of dawn when the porter entered the compartment to offer tea. I watched the sunrise over a misty, flat landscape. Everywhere I have been in India the sky is hazy. I cannot ascertain if it is industrial pollution, winter mist or smoke from wood fires, perhaps a mix of all three. Even here in the countryside the sky is hazy. It is as if the entire country is an incense filled temple. The passing landscape is a dusty brown and is dotted with patches of green marking small farms, stunted trees and an occasional herd of cows. Every thirty minutes or so we pass through a small town with a train station. Garbage is strewn everywhere on the tracks and occasionally there is a garbage dump alongside the tracks at the edge of a town, with foraging pigs and cows.

One of my companions is a Sikh gentlemen whose cellphone jingles a bhangra ringtone every few minutes. He appears to be a little under the weather and sleeps in between calls and occasional visits from people on the train: “Papa-ji kaisay ho!” (How are you, pops?). Just passed a larger town called Ratlam. We must be in MP since this where my wife used to get off to go to Indorethe capital of MP and onto the hill station of Mau to visit her aunt.

The landscape is greener now, dotted with yellow fields of mustard, irrigation fed no doubt as the last rainfall was likely during monsoons in July/August. The train passes over largely dry riverbeds. Power lines and telecom towers are everywhere. Motorcycles and trucks wait at level crossings. Kachrod station passes by in a flash of yellow walls and red bougainvillea. A field of cotton with a dozen men and women hand picking. A southbound flatbed freight train passes by, our train slows down with jerky braking, dwarf palms dot the sides of the tracks. I recall Yasheng Huang of MIT mentioning that the India is a tropical country while China is a temperate country and life is more difficult in tropical climates. Two days before Christmas I am sitting in an air conditioned train looking out at laborers working in what appears to be hot sun. In the bathroom I poke my hand out the open window and air feels cool. We fly by Nagda, a larger town in MP. I have a conversation with a porter in the hallway. Apparently this is a special Rajdhani that runs during holiday periods. He says that is not as luxurious as the daily Rajdhani from Mumbai to Delhi.

I don a long-sleeved t-shirt as the AC is slightly chilly. I have managed to avoid sickness so far, neither catching a virus nor bacteria via contaminated food or water. My travelling companion has a bad cold and I want to be cautious. I offer him a Motrin from my medicine kit.

We slow down to pass by Suwasa. There are a few schoolgirls riding their bicycles on the road parallel to the train tracks, all dressed in a school colored salwar kamiz. Their braided ponytails and dopatas (long scarves) trail in the breeze as they chat and ride. The landscape is increasingly turning yellow, with fields and fields of mustard. The country side appears to have more people. A child is flying a kite, apparently not made of traditional tissue paper but of foil. I had met a businessman who is supplying foil for kites and my first thought was the environmental damage all these abandoned kits would cause.

 

Stopped in Kota for 10 minutes. Got a chance to step out and stretch my legs. Lunch was being loaded. Crossed the Chambol river really a stream threading the middle of a huge flood plain. Got into a vigorous conversation with my cabin mates about the problems in India. This seems to be a favorite topic of conversation. Just found out the Sikh gentleman Pratap Singh Fouzdar who is a minor television celebrity who won the 2nd season of reality TV show The Great Indian Laughter Challenge. That’s why everyone keeps stopping by to say hello to him. On top of this he is a minor industrialist, manufacturing synchromesh gears for jeeps and army vehicles out of Agra. I am astonished by the level of entrepreneurship in India. There is no social safety net so everyone is hustling to make a living. Every commercial transaction has an element of negotiation, generally humorously exchanged. There is surprisingly very little pleading or bitterness evident from the poorest of street hawkers when you don’t buy—someone else from the mass of consumers will.

The other cabin mate is a Bihari from Patna who is a project manager for Neptune, a manufacturer of industrial power conditioning equipment. They commented on the sarkari (subservient) nature of Indians: conditioned in pre-colonial and colonial times to a hierarchy that exploited them: peasants by landowners (zamindars); they in turn by the Raja’s and the Raja’s by the British. This hierarchy sucked wealth out of the country during colonial times.

We arrived in Delhi almost two hours late, so much for Lalu-inspired efficiency! The car park at the Nizammudin train station was packed and chaotic. As with most activities in India, great intent, lousy execution.

Nizammudin Limited

 

 

The Great Indian Laughter Champion

Global warming and US entrepreneurs

I was at a "Go Green" dance in my hometown here is the Boston-area, sponsored by a local Global Warming Action group. It struck me as ironic and a bit absurd that we were revelling in order to raise money to save mankind's future on Earth. Yes a bit dramatic but, as the experts say, global climate change will have the most impact on emerging countries and not on the developed ones. So why should developed countries bear an unfair burden on reversing global warming? One could argue that the 150-year industrilization of developed countries made them wealthy and was a major contributor to our current climate woes. To now tell Brazil (rainforests), China (coal power plants) and India (coal power plants) to leapfrog to the latest costly enviromental standards is hypocritical at the least. On the other "invisible" hand, entrepreneurial first movers are favored, they amass huge wealth and use their incumbency to thwart insurgents. Technology or innovative business models are usually the weapons of choice. Ethnic Europeans have been the clear winners in this economic arms race in the recent past and deservedly so. What is the solution?

Some background on the the global warming debate (excerpted from various sources):

• From 1100 to 1500 AD significant deforestation took place in Western Europe as a result of the expanding human population. The large-scale building of wooden sailing ships by European (coastal) naval owners since the 15th century for exploration, colonization, slave – and other trade on the high seas and (often related) naval warfare (the failed invasion of England by the Spanish Armada in 1559 and the battle of Lepanto 1577 are early cases of huge waste of prime timber; each of Nelson's Royal navy war ships at Trafalgar had required 6000 mature oaks). Source--Wikipedia.

• In Michael Williams excellent book, Deforesting the Earth: From Prehistory to Global Crisis, temperate forests in Europe and North America were virtually eliminated by 1920. Tropical forests such as the Amazon began to be depleted relatively recently in the 20th century.

• The United Nations Intergovernmental Panel on Climate Change (IPCC) November 2007 report says: "There is also the moral/equity issue concerning the extent of the polluters obligation to compensate for past emissions (i.e., a form of environmental debt)..... "In particular, developing countries emit much less per capita and have contributed less to past emissions".

• From the Economist "How Green is their Growth": At the moment, perhaps 2 billion people have no formal access to modern energy—they make do with cow dung, agricultural residue and other solid fuels which are far from healthy. Unless foresight and intelligence are applied to the satisfaction of these people's needs, they may embrace the filthiest and most carbon-emitting forms of fossil-fuel energy as soon as they get the chance.

The grassroots climate change movement in the US is slowly creating change in the face of the failure of our government to regulate change. Innovation in business models (eg carbon offsets) and new technology (eg cellulose ethanol, clean diesel) is rapidly catching hold in the US. Many of us technology entrepreneurs are reinventing ourselves to participate in these new Cleantech opportunities. I am involved in the spin-off from www.degreeC.com of their AdaptivCool data center thermal management solution that can reduce energy consumption by 20-30% in a data center. Data centers consume 1.6% of the nation's electricity, and that consumption is doubling every five years.

Inspired US entrepreneurs have the opportunity to create the technologies that will make people's lives better in emerging countries, while reducing green house gases. This is a great way of paying our environmental debt to the world.

Consumer power in India

Based on purchasing-power parities, in 2005 the US, China and India were respectively 1, 2 and 4 in world GDP ranking. In 2020 this is forecasted to change to 2, 1 and 3. The rise of China as a global economic giant is well understood but what of India. With its crumbling infrastructure and corrupt politics, how will India rise to the third largest economy in the world?

The answer lies in consumer savings and spending. Some facts:

• Consumer spending accounts for 64% of the Indian GDP. This compares to 58% in Europe, and 42% in China.
• Of the $450M in annual consumer spending, only 2% is done with credit, direct pay or debit
• India has the highest density of retail outlets of any country in the world, 15 million. The US has 900,000 where the market is 13 times India's.
• Only 4% of Indian store are bigger than 500 square feet.
• Organised retail in India therefore has a great opportunity and is already growing at 20% annually.
• Local conglomerates such as Bharti and Reliance are planning huge investments in organised retailing in India.
• Global retailers such as Walmart and Carrefours are eager to enter India. Walmart would transform both the retail supply chain and would likely drive Indian exports. Walmart accounts for 10% of the exports from China to the US.

The Indian population is the youngest in the world and as income levels rise, they are busy buying all the things young people are want to: housing, transportation, financial services, processed food, entertainment, telecom services and so on.