Speaking about Indian strategic position in a changing world, Kotak said that this year has been one of the most interesting, challenging and difficult years for Indian business, something India Inc didn’t know how to handle. CII’s help in helping industry navigate the trouble has been critical, he added.
Kotak shared with the audience where he sees the business world headed once the current crisis is over. Every such crisis that came in the past few decades was followed by a reversion to mean, which means most of the time crises brought no permanent structural change, he said.
According to Kotak, every time there is a crisis, there is some amount of change in history, maps, world order, geography, etc, but things eventually always go back to normal.
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This time too, the probabiblity of structural change is zero, Kotak said. Most of India Inc believes that things will sort themselves out sooner or later, which would mean a reversion to mean again, Kotak observed.
Kotak also spoke about a kind of tribalism that has come to rule the roost in today’s time. The world is sliding into a tribal mindset which was the norm before 1945, he said.On Iran war, Kotak said no one had thought that a small strait (Hormuz) would make whole middle east this vulnerable. A deeply unsettled Hormuz is now making many people wonder as to what type of fate awaits Strait of Malacca — another critical trade artery for the entire world.
The key point in the narrative, according to Korak, is how India plans for what might be coming. In India, there is a tendency to be either excessively optimistic or pessimistic about how things will play out, he said.
Going forward, a country’s success or failure would depend up its control over assets, strong balance sheet supported by a favourable P&L, etc, Kotak said. The ability to generate revenue by a country through its resources or companies will determine the fate of a country, he noted.
US is powerful because of extremely powerful companies — Whatspp, Microsoft , Apple, Kotak pointed out. The US’s main strength lies in producing services or products which the whole world buys, he said.
Another lesson that India could learn from the US pertains to oil, Kotak observed. The US was horribly dependent on Arab oil 50 years ago, but it has fixed the issue now, and so Iran-linked oil turmoil doesn’t affect it as much as it does the rest of the world, he noted.
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Kotak invoked the trinity of Brahma, Vishnu and Mahesh to drive home the point that India, at this point, is in need of some creative destruction. India in general has remained stuck with the habit of preservation, he noted.
According to him, Indian busineses and consumers have always sought the comforting presence of Vishnu the preserver. But what the country needs instead are a creator and a destroyer — Brahma and Mahesh.
Kotak pointed out that at the moment, there is one area India must look into urgently — energy.
He elucidated this with an example: 60% of all cars in China are EVs; the corresponding number for India is just 3%.
Kotak followed this up with some stark messaging, saying that it happens because India protects a few companies. This needs to change, he said.
In another example, he talked about renewables, where Europe has had major successes in transition but India has fallen behind.
In areas such as EVs and renewables, India has to make progress at speed and scale, because at a time when tribalism has returned, India’s usual playbook may not hold, Kotak cautioned.
Kotak also backed PM Modi’s recent remarks on austerity and lessened consumption, saying India must prepare itself for prolonged global uncertainty and avoid “living beyond its means”.
He underlined the need for India to prepare for external shocks as Iran war chaos might get more prolonged than expected. Kotak warned that the impact of the Middle East conflict on global energy prices is yet to fully reach consumers and businesses in India.
Kotak also called for a long-term strategic approach from Indian corporates, arguing that the country had “financialized too early” and companies needed to focus more on investments and future competitiveness rather than short-term stock market gains.
With some ANI inputs