Uday Kotak is known for speaking plainly. The 67-year-old stirred up a debate in 2025 when he called out scions of Indian business families for becoming full-time family office managers and investors rather than building businesses.
Kotak has spoken plainly again, this time at the Confederation of Indian Industry (CII) annual summit, the elite gathering expected to collectively handhold Viksit Bharat—the pithy phrase for a set of hopeful socio-economic targets for 2047.
The billionaire banker told them that they had become too comfortable and focused on lobbying to protect individual firms. He said tribalism was making a global comeback after 80 years and only raw power, territory and ownership counted anymore, even as India struggled with a weakening balance sheet and investor desertion.
The country has been funding its external sector deficit with copious capital flows, seen as the global buy-in into a potential Global South rags-to-riches story. Acknowledging the grim situation, Prime Minister Narendra Modi asked Indians to cut back on fuel consumption, foreign travel, gold purchases, and even fried foods.
Doing business, patriotically
Paraphrasing John F. Kennedy’s peak-patriotism slogan to “let’s not depend on what the country can do for us, but what we can do for the country", Kotak, who has emerged as a statesman from Mumbai, said Indian businesses were using liberal tax breaks to maximize treasury gains instead of reinvesting. Union finance minister Nirmala Sitharaman has tried hard to “crowd in” private investments with tax breaks coupled with capital expenditure. Yet, corporate India ignored the memo.
Kotak surely knows his friends well. He knows that the call of the nation may not make much of a headway with them anyway. Which is why he proposed that the government consider an investment allowance—over and above the tax rate, which he called phenomenal—to push them to think at least three to five years ahead.
Imagine that—Indian companies' thought horizon is a mere three to five years. Not even 21 years, the target for Viksit Bharat or just about the time when a generation comes of age.
Builder first
Kotak hits the nail on the head when he says India financialized too early. One only has to look at Kerala's healthcare sector—arguably the best in the country—for the most visible impact of early financialization. The state had a healthy mix of public and private hospitals providing affordable, high-quality healthcare to everyone. In the past few years, however, the influx of ARPP (average revenue per patient)-chasing investors has lured doctors and technicians away from smaller hospitals to higher-paying jobs, driven up patient costs, and edged out small suppliers of consumables and devices.
Data from the Indian Medical Association shows that 1,306 outpatient clinics and 444 small hospitals shut down in Kerala over the past five years, while investor-backed hospitals expanded rapidly. This is not to say that financialization is solely responsible for the rising costs, but it’s a significant contributing factor in shifting sector objectives.
While Kotak wholeheartedly supported private equity and venture capital, his core point was that India's current account should be strengthened and that assets should be owned by Indians. That’s easier said than done.
Consider what Sanjay Nayar, former KKR India chief and currently chairman of VC firm Sorin Investments, wrote recently: India needs to fix its debt-to-GDP ratio in the next three to five years.
Nayar wants the government to activate the National Asset Monetization Pipeline and the National Land Monetization Corporation, both approved yet on-paper blueprints to sell government-owned companies, ports, bridges, highways and land.
Nayar estimates global funds would line up if the sale is “executed with the discipline of a private transaction rather than the inertia of a government scheme” and easily generate about $200 billion. On any other occasion, it might have passed muster, but in a tribalist world, when the country’s balance sheet is under pressure, it’ll be nothing but a fire sale of national assets.
Practical patriotism
Even in strategic sectors, which have been opened up, the private sector is unwilling to take investment risks. For instance, companies are reluctant to use indigenous technology for nuclear power despite the government easing the liability regime, which hitherto has been a major hurdle to investment. The approach also speaks to Indian companies’ hesitation to invest in research and development, as they remain steadfastly focused on return on equity and return on capital employed.
Is selling bridges and highways to foreigners patriotic? In a world with tribal rules, as Kotak described, Indian ownership of infrastructure is crucial, strategic even, should the country find itself fighting a war. In 1991, former prime minister Narasimha Rao famously redefined self-reliance as “the ability to pay for our imports through our exports”. That oversimplified thesis came apart during the Kargil war when the US denied India localized GPS data, severely handicapping military operations.
But since infrastructure is crucial and required fast, what choice does India have but to rely on foreign investment?
“Dead” resources, such as the gold hoard of Indian households and diaspora capital that can be gainfully used, says Nayar. Much of that gold is owned by middle-class and rich Indians who understand that gold is the only reliable store of value in a topsy-turvy world. Government attempts with gold monetization and bond schemes failed spectacularly when prices rose. As for convincing the diaspora to invest in India; tough sell when even domestic capital is flying out.
The Bombay plan
Kotak wants India to emulate China in building strength in the public sector by joining hands with the private sector to improve sectoral efficiency. That sounds like a plan.
In fact, it sounds like an old plan devised by a group of India’s leading industrialists, including J.R.D. Tata and G.D. Birla at Independence. It pitched a central role for the state in directing the economy, with no role for foreign investment. While policymakers never acknowledged its influence, economists have noted that its core ideas permeated the first three five-year plans. It simply acquired the moniker “Nehruvian socialism”.