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16 THE ECONOMIC TIMES The Edit Page THE ECONOMIC TIMES | BENGALURU | FRIDAY | 10 FEBRUARY 2017

Lest Co-founders FOLK THEOREM Falling demand from moneyless country cousins hit consumer goods firms

Confound Infosys
Good communication should flow both ways
Infosys is going through growing-up pangs of the kind
Demonetisation Snailed It India’s largest FMCG company, a sub-
sidiary of British-Dutch conglome-
peculiar to Indian mama’s boys, whose fond parents just rate, Unilever. It has been in business
cannot believe that their precious offsprings continue to
get tender, loving care under their new management just
in India for 84 years. Many things that
you use at home everyday, like Pond’s Let Go of
and Pears soaps (launched when the
as they used to in their parental home, and try to interfe-
re. Reportedly, some co-founders have sought to correct
company was called Lever Brothers),
Brooke Bond and Lipton tea, Bru cof-
the Past
fee, Kissan juices and jams, Lakme
some deviations at the top of the company from its found- Abheek Barman shampoos and creams, Fair and Lo-
NEERAJA RAGHAVAN
ing values and practices. They should desist. The new

I
vely bleaches and so on, are market Why do unhappy events stay
management deserves a chance to prove that it is up to n 1917, in a magazine called leaders. HUL sales fell 1.2% between on in the mind? Why are we
‘Sandesh’ that he edited, Suku- October and December. haunted by those episodes in

FILE PHOTO
the task of transforming the way Indian information te-
mar, father of Satyajit Ray, wro- It gets worse for companies like our lives that left us grief-stri-
chnology (IT) companies have been doing business ever te a story called ‘Hashir Golpo’, Dabur, founded in 1885 by Daktar S K cken, frustrated, resentful,
since they started riding the outsourcing wave. or Laughable Story. It was a ta- Burman — the first two letters of his hurt, guilty or upset, and not
Infosys’ driving force, public face and guardian angel le of a postmaster — a very exalted honorific and the first three of his Keep calm and slither on by those that left us happy and
post at the time — and his penchant surname make up the brand name — contented? Across the mind’s
Narayana Murthy now wants Indian IT to stop its depen- for telling tales that nobody, not even which claims to be the world’s larg- where more than 70% of citizens live this has led to a different problem. screen, unpleasant images of
dence on visas. This is a perfectly legitimate goal and so- his bosom buddies, found funny. est producer of mass-marketed ayur- and toil. Two, that notebandi has hit The drop in supply from villages, the past flash by more often
mething that the present management would have little The story of the economy is turni- vedic products, including chyawan- Bharat and India in equal measure. where cash is scarce, has created sup- than fulfilled pleasant ones.
ng out the same way. The governme- prash, a bestselling ‘tonic’ paste. Dab- To see why, remember there is no red ply bottlenecks in cities. So, middle- Perhaps the key lies in the
quarrel with. However, Murthy himself had wanted In- nt claims things are fine after the bi- ur sales dropped 6.5% between Octo- line between cash and cashless sect- men and traders in India will profit word ‘fulfilled’. Fulfilment im-
fosys to not neglect its bread-and-butter work model, zarre cash clampdown of November ber and December. ors in the economy. at the cost of Bharat. Food price in- plies completion. It refers to so-
when he had seen the company lose 8, 2016. Numbers, from business or Marico, a successful latecomer, A company like HUL will happily flation will shoot up in India. Bharat mething that is over, finished
factories and farms, tell a different compared to HUL and Dabur, has pay suppliers with cheques or throu- will not gain from this. with, with no loose ends. Close
steam. Transition is not easy. It calls story. If everything was fine, sales of flagship brands like Parachute coco- gh electronic transfers, but will glee- There have been knock-on effects: that file. We need to click on the
for doing new things even as doing old stuff like biscuits, shampoo, hair oil, nut oil and Saffola cooking oil in its fully accept small cash sales from mil- truck rental rates have dropped, tru- filename if we wish to open it.
things continues to bring in the reve- potato chips and bhujia, and so on, portfolio. Never mind: its sales sank lions of distributors across the hin- ck sales are stagnant, the entire eco- Otherwise, the file is tucked
would be galloping, right? 7.5% in the same time. Colgate-Pal- terland for, say, hair oil or detergent nomy is slowing. On Wednesday, we away inside a folder, somewhe-
nue till the new business model stabi- molive, a diversified soap-to-pet food sachets that weigh a few paltry grams. learnt that the capacity utilisation re. However, numerous haunt-
lises. Managing the transition calls Kissan Fall in Ponds, while… maker, which is listed only in the US Where, then, is the red line? of plants that generate electricity ing memories continue as cur-
for new people, new incentives and, at Well, they aren’t. In its February 5 ed- and India, saw sales plunge 7.7% af- using coal or gas, is at a 10-year low. rent files. Something in each
ition, this newspaper carried a repo- ter demonetisation. …No Parachute for Saffola Why? Probably because thousands one of them remains to be
times, new values to make the new rt about the reality faced by compa- On February 8, analysts at broker- Almost everything you eat — from of small or mid-size industries are finished. It may well be an
incentives work. New values, per se, should not be a prob- nies that make so-called ‘fast moving age Motilal Oswal reported that pro- cereals and vegetables to meat — is backing down, making less. Mean- apology that was due. It could
lem. Whether an effective transformation of the compa- consumer goods’ (FMCG), in jargon, fits after tax (PAT) for 13 FMCG com- produced in the hinterland, where while, the government will keep glo- also be an unwillingness on
from soap to chyawanprash. The res- panies that it follows, have been flat bank branches are scarce and ATMs ating about the gains from noteban- our part to accept a loss.
ny is afoot is the nub of the matter. Revenue per employee ults are dismal. This newspaper rep- year on year, for the October-Decem- non-existent. Most transactions are di; citizens will find no cheer. Whatever the case, that nig-
is a good yardstick to measure the extent of change in the orted that between October and Dec- ber quarter — for the first time in 12 in cash. Farmers buy fertiliser and Anyway, back in Sukumar Ray’s gling file is always open in the
ember 2016, sales of Godrej Consum- years. This is only a top-down view seeds in cash, pay farm workers in story: his audience is jaded with the mental computer screen. As
company’s business model. This has not been dramatic,
er Products, which produces Cinthol of the impact of notebandi, but it is cash. When 86% of the cash dried up, half-dozen ‘humorous’ tales the post- sole operators of the ‘files’ that
as, say, HCL’s has been. Entry into new, cutting-edge areas soap and Good Knight insecticides, important for two reasons. so did rural India. master repeats incessantly. So, one trouble us, we have it in our po-
of business is another measure. TCS’s big-data analytics among other things, fell 0.4%. One, it proves that corporate India This newspaper has reported that day, they decide not to laugh. wer to ‘complete’ those files and
Hindustan Unilever Ltd (HUL) is is umbilically bound to rural Bharat, newly harvested vegetables like pota- The postmaster is not amused, and save them, too, in that folder in
for GE does not quite have its counterpart at Infosys. The
toes and tomatoes are being dumped asks, who else can tell better tales than the recesses of the mind. But
goal of creating serious consulting capability within the on highways or fed to cattle, because him? His audience selects Bishu, not to do that, we will have to let go
company remains a work in progress. farmers cannot afford the cost of tra- the best raconteur in the world, to tell of some of the pride, hurt, gui-
Yet, it is too early to call the transformation set off un-
Corporate India is umbilically bound to rural Bharat, nsporting these to local markets — a tale. And for every sentence Bishu lt, resentment or whichever
where more than 70% of citizens live and toil. And, where prices have crashed because stammers out, they fall over each emotion is coming in the way
der CEO Sikka a flop. Indian IT faces tough challenges in cash has evaporated. Today, when other in laughter — only to put the of our ‘completing’ that file.
the Trumpian world. It could do without internal muti- notebandi has hit Bharat and India in equal measure there’s some cash available in cities, postmaster down. Each religion has its own pre-
scription for this ‘completion’.
ny, as it rallies forces against external threats, and steady Confession, forgiveness, mind-
communication among stakeholders will help. fulness, conscious acceptance
— all these are different ways
CAMERADERIE of telling those open files to

Toll Earnings close. For, this is one computer


that never shuts down — not

Budget’s Welcome Earnings from highway toll plazas grew in double digits in 2015-16
(13.3%) and 2014-15 (12.7%). In the current fiscal, the bulk of the
revenue collections have come from UP, Rajasthan,
TN, Andhra, West Bengal, Gujarat and Karnataka…
even when we sleep. Our trou-
bled dreams testify to that.

Boost for Real Estate “Never get


Annual earnings
from toll plazas
Revenue collection
in top 7 states Chat Room
It is welcome that the Budget proposes several measures to ra- a mime Collection* (` crore) April 1-Dec 16, 2016 (` crore)
tionalise tax and boost transparency in the policy-challenged
talking. He Will Notebandi
6,762

Uttar Pradesh 756


real estate sector. Abroad, in the mature markets, real estate
Win Votes?
5,969

accounts for almost half the GDP growth; the like figure for re- won’t stop.” Rajasthan 572
5,294

5,128

al estate activity here is far smaller. Clearly, there is much po- Cash-strapped citizens will
Marcel Marceau Tamil Nadu 478
tential for growth in the sector — of course, contingent on over- Actor heave a big sigh of relief now
that the Reserve Bank of India
all growth and dynamism in the economy as a whole. Andhra Pradesh 437 has announced the enhanced
The Budget seeks to shift the indexation base year from 1981 weekly withdrawal limit of
West Bengal 295
AFP

to 2001 for the levy of capital gains tax on land and real estate, cash from savings bank accou-
Total
Source: Lok Sabha

nts to .̀ 50,000 from the current


which was long overdue. An unrevised indexation base year is Gujarat 258 `5,128 cr Lost my head, I have, .̀ 24,000 from February 20, and
perverse incentive to hide and not fully disclose capital gains
in housing and real estate. Additionally, infrastructure status
2013-14 2014-15 2015-16 2016-17
(up to Dec 16) Karnataka 217
(Including `1,135 cr
revenue shared
from BOT, or toll,
young Jedi. no curbs on cash withdrawal
from March 13. The move,
*Including revenue shared by BOT projects; figures rounded off projects)
for affordable housing and its broader ca- coming close on the heels of
tegorisation are both moves in the right easing cash withdrawal limits
for current and cash credit
direction of reform. Further, removal of accounts, will also mean that
the tax on notional rental income for one savings account holders can
year, from the date of issue of completion INTELLECTUAL PROPERTY INDEX 2017 Citings withdraw .̀ 50,000 from ATMs
in one go if their banks allow
certificate, would allow real estate devel-

Hello, Innovation Nation


it. While the government may
opers to liquidate inventory and avoid ad-
ditional tax burden. Long-Term have been partially successful
in steering the economy towa-
rds digital transactions, it re-
There are still other notable housing-related measures in the
Budget, such as the increased quantum of refinance for real
Vision mains to be seen if the unique
strategy of demonetisation
estate, or the move to extend the period for external commerci- vironment and, in turn, spur innova- on information technology, new invest- will win votes for the BJP.
DOMINIC BARTON ET AL
al borrowings for housing at reduced rates. Yet, there remains tion and economic growth. But it must ment restrictions in certain sectors,
widespread opacity in real estate, and which needs to go. Re- start by addressing the issues at hand. and burdensome local-testing require- Corporate short-termism has N J RAVI CHANDER
The Indian government purports to ments that jeopardise proprietary in- been the subject of ongoing Bengaluru
portedly, construction permits require several dozen clearan- understand the value of a strong IP sys- formation for telecommunications and debate among leaders in busi-
ces. We surely need to move to a system of online issuance of
such permits, across states. The base-year indexation needs
tem. The inauguration of PM Narend-
ra Modi came with the promise of tan-
information technology equipment.
The National IPR policy recognises a
ness, government and acade-
mia for more than 30 years, The Premier, Not
decadal change, for predictability and transparency. The way Mark Elliot gible change, and the introduction of a
new National Intellectual Property
number of gaps in India’s IP system.
However, it dismisses the need for more
with much of the discussion
focusing on whether it destro-
the Opposition
ahead is to frame concrete rules under the Real Estate Act, Rights (IPR) policy pledged positive st- extensive legislation reform. It provid- ys value. Recent surveys of C- The jibe at former PM Manmo-
2016, and also revamp regulatory oversight across jurisdicti- The next life-saving medical treatment, eps toward an improved IP standard. ed no reforms to mitigate the challeng- suite executives that we have han Singh is quite unbecomi-
ons. We do need to systematically shore up resource allocation the next groundbreaking technology, But despite the announcement of a es and uncertainties rights holders face conducted suggest that pres- ng of the country’s prime min-
for housing and real estate nationally. the next fashion icon, the next hit string of high-level pro-IP initiatives, protecting their patents, no proposals sure to deliver strong short- ister. PM Modi sometimes ten-
book, song and movie: all could be none has been accompanied by con- to modernise outdated copyright laws, term results has increased in ds to forget that he is the prime
made in India. crete legislative progress. and no suggestions for appropriate the last five years and, as a re- minister, and
India is atop a breaking wave. It’s at Worse, the government has recently sector-specific IP protections, such as sult, many executives believe not someone
the cusp of a transformation. With bold taken steps that weaken India’s own regulatory data protections for sub- their companies are using ex- in the Opposi-
leadership and constructive policy, In- businesses and discourage foreign mitted biopharmaceutical test data. cessively short-time horizons tion. Undoub-
Front-row fatigue has led to a dia has the potential to become a lead- businesses. For example, a Delhi High It’s time for India to enact these mean- in their strategic planning. tedly he is an
different set of opinion-makers er among innovative economies, dri- Court judgement endorsed the blatant ingful legislative reforms. However, evidence that short- excellent sp-
ven by knowledge, science, techno- copyright infringement rampant at In addition to strengthening its copy- termism genuinely detracts eaker, but he
logy and creativity. the University of Delhi. In the interest right laws, some of the most substanti- from corporate performance often gets car-

Celebrities are Going The first step toward harnessing this


potential is to nurture the roots of inn-
ovation by investing in a strong intel-
lectual property (IP) system. The US
of commercial gain, the university
continues to provide a photocopied
master-copy of course textbooks for
students to photocopy themselves in
al reforms India can make are related
to its patent system. Specifically, Indian
lawmakers should consider modifying
Section 3(d) of the Indian Patent Act.
and economic growth has re-
mained scarce, which does
not correspond to any single
quantifiable metric and is a
ried away by
his own oratory. While he is
successful politically, Manmo-
han Singh has, indeed, excel-

Out of Fashion Chamber of Commerce released its


2017 International IP Index earlier this
week. The index reveals the relation-
the university library.
Creators in India’s own Bollywood
understand the damage caused by this
This Act continues to create an addi-
tional obstacle for innovators seeking
life sciences patent protection. This ob-
confluence of many complex
factors.… This discussion do-
cument aims to provide a fact
led academically. Some lines
should never be breached.

A revelation this week by the veteran fashion designer Tom- ship between a strong IP system and a decision. Bollywood loses almost $3 bil- stacle places India out of step with int- base for this ongoing debate ANTHONY HENRIQUES
host of socioeconomic benefits. lion each year due to India’s inadequa- ernational norms and is inconsistent through a systematic measu- By email
my Hilfiger that A-list celebrities charge anything from Countries with stronger IP systems te infrastructure to fight online piracy with the minimum standards required rement of long- and short-ter-
$25,000 to over $100,000 to sit in the front row of fashion
shows dressed in clothes by the designer-du-jour — with An-
are more likely to have more robust
business environments and greater
and camcording. These costs extend
to other industry sectors, as well.
by the WTO’s Trade-Related Aspects
of Intellectual Property Rights pact.
mism at the company level.
Using a data set of 615 large- Of Course Trust
gelina Jolie reportedly commanding $1 million for ‘pay-for- access to venture capital, foreign dir-
ect investment and high-value jobs.
India has increased tariffs and duties Additionally, to help foster the grow-
th of innovative digital technology,
cap and mid-cap US publicly
listed companies from 2001 to
Begets Trust
pose’ appearances — is cautionary. More so as it comes in the Citizens reap the benefits of more India’s legal framework should pre- 2015, we have created a five- It was amusing to read that the
context of famous faces conspicuously disappearing from clinical research, experience greater serve the patentability of all forms of factor Corporate Horizon In- AIADMK MLAs, who seem to
the catwalk-side perches in New York these days. This phen- industrial growth and gain access to technology, including software. dex. The index is based on pat- support Sasikala, were sent to
omenon obviously cannot be blamed on current usual sus- more licensed music outlets and other And across all industries, meaningful terns of investment, growth, secret locations so that they
creative content. The bottom line is trade secrets protection will help bols- earnings quality and earnin- would not shift their loyalty to
pects such as Donald Trump becoming the US President or that strong IP systems deliver the legal ter legal certainty for innovators and in- gs management of the listed O Panneerselvam in the num-
India’s demonetisation. Instead, it begs the question of whe- certainty that enable risk and stimu- vestors in India. In many cases, if confi- companies. It enables us to se- bers game that matters in the
ther realisation is finally dawning that such celebrity place- late an innovative economy. dential business information is stolen, parate long-term companies formation of government in
ments do not translate into significant sales any more thou- Unfortunately, the 2017 index rank- the innovator has no avenue for relief. from others as well as compa- the state now. Trust is an imp-
ings reveal that India continues to lag No other economy stands to gain re their relative performance, ortant trait of leadership, and
gh they catch the cameras at award-show red carpets. Worse behind the rest of the world in IP pro- more from strengthening the Indian IP after controlling for factors a leader cannot shut out sub-
still, overexposure has led some of these celebrities to inva- tection, coming in at 43rd place out of system than India itself. A system that such as industry characteris- ordinates thus. What a leader
de the fashion designing arena themselves! 45 countries. Of a total of 35 points cal- embraces robust IP protection will in- tics and company size. needs to have is confidence of
Meanwhile, the power to move markets appears to have shi- culated using 35 indicators of a strong centivise innovators to continue devel- Our findings show that the subordinates and not fear of
IP system, India scores a meagre 8.75, oping the next groundbreaking tech- companies that we have clas- losing their loyalty and love.
fted to another set of opinion-makers, who are valued more earning a failing grade of just 25%. It nologies and will place India on the sified as ‘long term’ outperfo- After all, trust begets trust.
for their social media followings than their famous faces. As lags significantly behind the median path to becoming one of the world’s rm their shorter-term peers
label-centric buying is giving way to eclectic personal mix- index score, 15.39, and the average leading knowledge-based economies. on a range of key economic S RAMAKRISHNASAYEE
FILE PHOTO

score of India’s neighbours, 17.64. and financial metrics. Ranipet


’n’-match styles, disseminated widely daily and instantly, In-
However, the index is more than a The writer is executive vice-president, US
dian designers who are still counting on celebrity front rows grading system. It’s a policy roadmap Chamber of Commerce’s Global Intellec- From “Measuring the Economic
Letters to the editor may be addressed to

and Bollywood divas as ‘showstoppers’ better take note. that India can use to improve its IP en- With the IP switch turned on tual Property Center Impact of Short-Termism” editet@timesgroup.com