Bengaluru: Kevin Sneader is no stranger to taking calls from executives in the C-suite. As chairman of the Asian arm of the world’s biggest consultancy McKinsey & Co., he helps companies across the globe weigh the risks and rewards of their next big move, ranging from entering a country with geopolitical risks to getting more women in the workforce. In an interview, Sneader talked about his clients’ pet peeves about India, how Asia’s third-largest economy could work better with China and why it needs to put more women to work. Edited excerpts:
Considering you expect China to remain the world’s factory and its manufacturing sector to grow as much as 22% by 2025, is there any hope for Make in India project?
I think it is very important that we don’t get into a way of thinking that (if) China wins, (then) India loses. Or (if) India wins, (then) China loses. The reality is a strong China/strong India is good for both.
What I think will help both is if India finds a way to meet the shift that’s happening in China from an industrial economy to a consumption economy and if India finds a way to continue to be a source for some of the technology that China absolutely needs, whether it is in the area of artificial intelligence/robotics.
They both have enormous growth ahead of them.
What is your advice for multinational companies, especially retailers, looking to enter India?
People have been looking at India for a long time.They should keep looking.
We don’t, I think in any sense, have a view that says it’s time to rush in. But the day when foreign retailers can actually play a role in India is probably closer than it has been. Regulations have been changing, consumer insights have been changing.
Those days are coming, but I don’t think they are in weeks and months. I think we are talking years.
How many years? What could accelerate their entry?
I am not going to put a number on it. The degree of opportunity for surprise in India is high in both directions.
If the scenario we have is one where the regulatory burden starts to shift, where there is a sense that actually the openness to foreign investment in the retail sector has changed and if there is also a belief that actually this could be a way to create employment, not threaten it, if those circumstances occur, then of course, you could say it’s time to get in.
What are your thoughts on the Goods and Services Tax (GST)?
There are a number of big decisions that people have been asking India to take. Goods and services tax was actually one of those. Inasmuch as it signals that the country is phasing into some big structural choices, it feels like a positive development. It feels like something actually (aimed at) creating a more joined up economic environment where it is possible to move goods and services more easily across this huge and impressive country, where you can actually move to a (tax) system that is clear, more predictable, more consistent. All of those are things that business likes.
What are the top pain points for your clients in India?
There’s one word when you talk to people about India: infrastructure. Leave alone the fact that the airport is at one side of the city and the major economic hubs in the other, there’s a two-hour car ride in between; that is an issue. China invests roughly 8.5% of its enormous GDP every year in infrastructure. India’s numbers are at about 2% of a smaller GDP level. There clearly is a need and an expectation.
I’d argue this is not just about MNCs. It is (important) for the people of India as well.
If India is going to address its No.1 challenge, which is non-farm employment, then that’s going to occur in cities. It’s not going to occur just in Mumbai and Delhi, it’s going to occur in what we call the mid-tier cities (with population somewhere between 500,000 and 4 million).
Those cities need to grow and be able to deliver a quality of economic opportunity and living that they can only do if their infrastructure is sorted out. I think it’s that which really is the biggest obstacle to growth in India. India will have 69 cities with a population of more than 1 million each by 2025. Economic growth will be concentrated around these cities and they will account for 77% of growth between 2012-2025.
What else needs to change in India?
This is a country where women need to play and have their role in societal change. 17% of GDP sits with women, (while) China’s number (is) 41%.
And 41% is too low. It should obviously be 50%.
So when you are at 17%, don’t be surprised if the country’s economic well-being is being compromised and more than half the population’s well-being is being compromised. That can’t go on.
What can we do to boost women’s participation in the workforce?
I do think education, at the end of the day, is the ultimate passport. The second thing is societal attitudes—not an easy thing to talk about or to shift. But that conversation is an important one in helping society come to grips with equality and what that means and how that plays out in homes across the land, rural and urban alike.
The third thing is (while) overt discrimination can be dealt with, oftentimes what really gets in the way is the subtle discrimination, the insidious way in which people are preferred or chosen or otherwise. Don’t fall into what we call an unconscious bias.
Finally, how well are your clients in India handling disruption? What separates the winners from the losers?
Agility could separate winners from losers. Indian companies should be cautious not to just go down paths already trodden by companies in advanced economies, but find unique new ways to grow. This holds true for not only the well-established large businesses, but for SMEs (small and medium enterprises) and start-ups too—currently, India’s small enterprises are only 25-65% as productive as small-scale peers in other countries. India has a strong successful history of entrepreneurialism, and this is what needs to be harnessed and supported—both by business and by public sector.