Big firms in India face new competition

business


IF YOU run a big firm in India you must straddle different worlds. The country’s leading bosses can wax lyrical about artificial intelligence and debate returns on capital with foreign fund managers. But they have also mastered India’s poor infrastructure and huge informal economy. Shiny campuses sit beside open sewers. Millions of customers can be reached only by dirt tracks. Suppliers and distributors often operate in the shadows. In a typical month an Indian boss might have wheatgrass shots in Silicon Valley, slug bootlegged single malt with a local politician and sip masala chai from clay cups with villagers.

India’s gross domestic product (GDP) is the world’s seventh-largest and its stockmarket the ninth-biggest, but the country is like no other major economy. The informal sector accounts for about 50% of output, 80-90% of jobs and at least 90% of firms. Red tape and bad roads mean the country comes 130th in the World Bank’s ease-of-doing-business rankings.

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