India business model comes in for foreign criticism
Anand said instead of calling it a conglomerate, he would rather call the business model as a federal structure.
Mumbai: Leading industrialists like Anand Mahindra and Kumar Mangalam Birla defended the conglomerate structure followed by domestic companies amidst criticism from their overseas counterparts that such a model slows down the decision-making process when globalisation demands quick and focussed solutions.
Participating in a discussion at the CNN Asia Business Forum 2016 during the Make in India Week, Edward L. Monser, the president of Emerson Electric Co, said the globalisation has brought multiple layers of decision-making and speed has become a big issue.
According to him, in a conglomerate structure, there will be a certain business with the highest priority because of which other businesses will have to adjust and eventually suffer.
Responding to this, Mr Birla said: “We have focused companies run by independent boards.” “Each business unit is completely empowered and the leadership team which we have is excellent. And then, we have an activist corporate centre who guides them,” he added.
On the other hand, Anand Mahindra, the chairman of the Mahindra group, said instead of calling it a conglomerate, he would rather call the business model as a federal structure.
Meanwhile, both Mr Mahindra and Birla highlighted the need for bringing in innovative technology and digitisation to make the Make in India initiative a grand success instead of trying to get some large-scale low skilled jobs into India.
“There will be a migration of large-scale low cost factories from China to India. But that shouldn’t be the only kind of manufacturing that India does. Is there going to be disruption in the way we make in India? Manufacturing should be democratised, digitised and decentralied,” said Mr Mahindra adding that what India requires is global Indian brands. “If you have to build Brand India, you have to first build global Indian brands,” he said.