India the darling of world economic forum

India's Minister of Commerce and Industry Kamal Nath, center, speaks with the media at the World Economic Forum in Davos, Switzerland, on Saturday.
India's Minister of Commerce and Industry Kamal Nath, center, speaks with the media at the World Economic Forum in Davos, Switzerland, on Saturday. Anja Niedringhaus / AP
/ Source: The Associated Press

Dell Inc. founder Michael Dell asked about manufacturing semiconductors. Nestle SA CEO Peter Brabeck-Letmathe raised the problem of water supplies in rural areas.

India was the darling of the World Economic Forum this year as it sought new investment. In the hot seat at Saturday’s breakfast were key Indian policymakers, who came to the annual gathering with the country’s top business executives for the first time to promote the nation’s rising economic star.

India’s booming economy is growing at about 7 percent annually, and Finance Minister Palaniappan Chidambaram told a VIP audience of the world’s business leaders that the government was aiming for growth of 8 percent to 10 percent.

Yogesh Deveshwar, president of the Confederation of Indian Industry and chairman of ITC Ltd., said economic reforms have unshackled “Indian entrepreneurship” and the country is embarking on an effort to develop the rural areas where three-quarters of its 1 billion people live.

Besides the potential rural market, India “can actually be a food basket for the world,” he said.

The next Silicon Valley?
Dell, whose company is the world’s largest direct seller of computers, noted that electric power and gasoline fueled the industrial age, “but in the information age, the fuel, at least in a hardware sense, is semiconductors.”

Dell asked if India — which has a large and growing information technology base — was thinking about investments in producing the key component of personal electronics from computers to cell phones.

“If you look at the countries that have pursued this — Taiwan, Singapore, Ireland and now, of course, China — there’s been a concerted government industrial policy to essentially create this new industrial machinery,” he said.

Commerce and Industry Minister Kamal Nath said semiconductor manufacturing “is really the kind of manufacturing which we want ... because we believe that one job created in manufacturing generates three jobs in services.”

He invited Dell to provide input to a group developing a policy “which gives a quantum jump in this for the next five years.”

Chidambaram, the finance minister, said “we must move quickly” to establish facilities that assemble, test and make computers and other IT products, and one or two will begin work this year.

Dell interjected: “I’m not talking so much about the assembly and the packaging. I’m talking about the fabrication — the foundry which is really a very significant investment, and is really needed for manufacturing to flourish in a significant way.”

Nath said India’s impression was that assembly, testing and production would come first, “but if you could lead the way to set up a fabrication first, we’d be very happy.”

Violence clouds economic future
Brabeck-Letmathe, chairman and chief executive officer of the world’s leading food company, said Nestle has been working in rural India for many years, and he welcomed the rural economy becoming a top priority. However, he said the lack of adequate water supply posed a problem.

Montek Singh Ahluwailia, India’s deputy planning minister, said the government was addressing the problem by focusing on better conservation and locating new wells.

Golf course designer Robert Trent Jones wanted to know about ending the fighting in Kashmir and promoting more tourism there. He said he had just helped design a course in the disputed Kashmir region, which India and Pakistan have fought two wars over.

He asked whether there was any hope for settling the nearly 60-year conflict that would spur tourism to a beautiful region.

“The government of India is committed to resolving the issue between India and Pakistan,” Chidambaram said.

A record 3.9 million tourists visited India last year, an increase of about 25 percent, and some went to Kashmir despite the conflict.

“But if peace returns, obviously the number of tourists will multiply,” Chidambaram said.

“What we really need to do is take this peace process forward,” said Nath, the commerce minister. “We really need to address the issue of terrorism, and the world and all of you sitting here need to address the issue of the nurseries of terrorism.”