That top western brands like Jaguar and Land Rover are now owned by the Tata Group and that Bharti Airtel is the fifth-largest telecom operator (by the size of its subscriber base) indicate the rising global aspirations of companies from rapidly developing economies. India has 20 companies in the 2011 edition of BCG?s global challengers list versus China?s 33. This gives India 14 challengers per trillion dollars of GDP versus China?s 5.8. Although these companies are less reliant on structural advantages such as low costs and focus more on innovation, the innovation is in their business models, not in the sectors in which they operate. Even though Indian and Chinese firms comprise over 50% of the 2011 list, they operate mainly in the construction, power and infrastructure sectors. So where is India?s Google or Facebook or Apple? This concentration in infrastructure-related industries is not only a reflection of the rate of growth of the Indian economy but also of its overall business and academic environment. A tertiary education enrolment rate of only 11.85%, of which only 4% enrol in PhD programmes, an R&D spending of just 0.69% of GDP and only one name in the 300-strong list of companies with the most patents held in the US?there are plenty of indicators of a largely unsupportive environment for innovation.
India ranks 134 on the ease of doing business, 177 on dealing with construction permits and 164 on the ease of paying taxes out of a list of 183 countries, according to the Doing Business report, 2011. While, the government has enacted several reforms to make online registration and submission of forms possible and access to credit easier, serious hurdles in setting up businesses, closing them down and enforcing contracts still remain. Add to this the fact that venture capitalism is still fairly small?the Indian private equity and venture capital association lists only about 39 members. This is usually a major source for innovative, non-traditional businesses?the Facebook and Google stories are examples of such enterprise. As the economy evolves and matures, so will business practice. In the meanwhile, the battlefield is set for competition between global multinationals and challengers for new markets, which will result in the ?cross-pollination of ideas and practices?.
