Thursday, August 27, 2009

Want to grow rich in India? Think poor.

Economic crisis has turned the attention of India's corporate honchos to some of the country's biggest challenges.
By Jason Overdorf - GlobalPost
Published: August 26, 2009 06:29 ET

NEW DELHI — In India, the economic crisis may actually be good news.
During the salad days of the past decade, India's entrepreneurs grew fat selling gas guzzlers and palatial homes to the country's new rich, while ignoring the needs of the biggest segment of Indian consumers: the poor. It was an expatriate Indian, the University of Michigan's C.K. Prahalad, who first posited that there were millions to be made selling to the “bottom of the pyramid.”

Now that's starting to happen.

The rich aren't buying, and Indian businessmen are finally starting to look at the teeming masses as something more than cheap labor. The result could be the solution of some of India's most persistent problems — an abysmal housing shortage, chronic underemployment and an unsustainable rate of rural-urban migration, for instance.

“The slowdown was a great thing to happen to India,” affirmed management consultant Harish Bijoor, who said the downturn has encouraged companies to look beyond the “low-hanging fruit” in the urban market to the vast multitude of consumers in India's rural heartland — which still accounts for more than two-thirds of the country's population and some 60 percent of its gross domestic product.

“There are a whole slew of energy products, both solar and thermal, and cook stoves and all types of things, all of which are aimed at reducing fuel consumption or replacing traditional fuels,” said Vijay Mahajan, founder of BASIX, a microfinance company that provides credit to more than a million poor customers. “And there's a whole slew of clean drinking water products. These have both health and economic benefits.”

The best example of the upside of the downturn, so far, comes from the real estate sector. Throughout the boom years, posh high rises were the name of the game in Indian real estate. But as the buyers for $200,000 to $1 million apartments have dried up and falling property values have left builders scrambling to finance the completion of existing projects, a dozen-odd companies have begun to take interest in building housing for the nearly endless market represented by the urban poor.

Led by Tata Housing's so-called “Nano homes,” which will go for as little as $8,000, these ventures represent the entrance of respected business leaders into the low-income housing market, including figures like Jaithirth Rao (founder of outsourcing heavyweight Mphasis), Ramesh Ramanathan (founder of the citizen's action group Janaagraha) and established companies like Bangalore's CSC Constructions. The trust factor that these players bring has given this sector new viability, according to Subir Gokarn, chief economist at Crisil, the Indian arm of Standard & Poor's.

“The focus on the base of the pyramid to create scale businesses was overdue,” Jaithirth (Jerry) Rao said. “You can sell millions of homes in this category, whereas in the upscale category you can only sell tens of thousands.”

But real estate isn't the only sector where the financial crisis has had an unexpected upside for India's future. Almost every type of business — from refrigerators to motorcycles to computers to mobile phones — is now looking to the vast market represented by India's urban poor and the legions living in its villages. By increasing competition, this expansion lowers prices, connects the dispossessed to the broader economy and makes new, income-generating products affordable.

“Telecom is a great example. The kind of price at which a rural poor person can now talk to their migrated family members and so on is incredible,” said Mahajan. “That's all happened because of the penetration rush and price competition, and the same thing is beginning to happen in microfinance, it's beginning to happen in solar energy. The volumes attract new suppliers and as more suppliers come in, then competition sets in, and it's a win-win for all sides.”

The push to widen the footprint of broadband internet and boost the average revenue per user from low-income mobile subscribers, for instance, has put more muscle behind the network-based computing devices like Novatium's NetPC — which provides a computer, broadband access, software and support to consumers for a bundled price as low as $25 a month. Recently Airtel, India's largest integrated telecommunications company, launched a similar service, while Nokia has rolled out its Nokia Life Tools range of agriculture, education and entertainment services for consumers in small towns and rural areas. Samsung has launched Solar Guru, a solar-powered mobile phone.

The sales network for fast-moving consumer goods and products like motorcycles and refrigerators is also expanding into the rural hinterland. Motorcycle maker Hero Honda, for instance, has boosted its “touch points” in rural areas from 2,000 in 2006 to 3,500 in 2008, while Godrej Consumer Products Ltd. will appoint 1,500 wholesalers in small towns and villages this year, up from 500 last year.

Eventually, Godrej plans a presence in 50,000 of India's 650,000 villages. And the impact of this expansion on Indian villagers goes beyond simply being able to buy a greater range of products closer to home. With the purchase of a motorcycle or mobile phone, for instance, a rural Indian gets much more than a leg up on the Kapurs next door. He gets a “prosperity creator” that connects him to the job market 28 miles away, said Bijoor.

Next on the docket: clean drinking water, cheap electricity, basic healthcare and other bottom of the pyramid products and services that may attract the attention of big firms, as marketers “rob the rich” for premium products so they can also sell basic necessities to the poor.

“It's a Robin Hood marketing which is going to capture the hearts and the emotive imaginations of the largest numbers of consumers in this country,” Bijoor said.

Source URL (retrieved on August 27, 2009 21:40 ):

Wednesday, August 19, 2009

CSI: New Delhi

At India's first private forensic laboratory, business is booming.

By Jason Overdorf - GlobalPost
Published: August 19, 2009 07:11 ET

NEW DELHI — For Dr. KPC Gandhi, a former police inspector, the truth is an obsession.
He believes it's a fundamental human right that India's legal system is too overburdened to guarantee. That's why, in 2007, Gandhi set up India's first private forensic investigation laboratory, Truth Labs, a firm that will soon have offices in Hyderabad, Delhi, Bangalore and Jaipur.

“Crime can be stopped by involving and engaging and enabling and empowering the common people,” said Gandhi, who resigned from the police force after a 40-year career in forensic investigation to start Truth Labs. “Within one-and-a-half years, we started getting cases from the courts, including the high court, from the police, and from a large number of subordinate courts. I get calls from four or five people every day, asking for some consultancy about fraud or forgery.”

As India modernizes, more disputes are arising over inheritance, forgery, impersonation, marital infidelity and even corporate espionage. But because India has one of the world's smallest police forces, and because the civil and criminal courts face a backlog that runs into literally millions of cases, getting to the bottom of mysteries and resolving conflicts through the legal system is fraught with problems.

A simple dispute over a forged will, for instance, might take 25 or 30 years to resolve in court. Using techniques now world famous thanks to C.S.I., Gandhi promises a solution in 24 hours: the truth.

Truth Labs charges a little more than $100 per investigation, and the company waives even that nominal fee for destitute or deserving clients — like a teacher who lost his job because his superior had forged his initials on a document used to pilfer government funds.

“We're interested only in the people's welfare, finding the truth, and rendering them justice,” said Gandhi, who explained that Truth Labs primarily acts as a facilitator in the arbitration of disputes, rather than providing evidence for use in legal proceedings.

The cases that Truth Labs has solved range from paternity and inheritance disputes to criminal cases of forgery and fraud. In one case, an industrialist family from Mumbai approached Truth Labs for polygraph testing after a young bride confessed that her father-in-law had propositioned her when it was discovered that the husband was infertile and they were planning to have a test tube baby.

In another, DNA testing proved that a husband's suspicions about the paternity of his second child were unfounded — ending years of marital strife. And in a third, Truth Labs document experts verified that a will that had divided a family for more than two generations had been doctored by an unscrupulous cousin.

In all of these cases, like the majority that Truth Labs investigates, the guilty party confessed when he was confronted with scientific proof, and the certainty of the resolution allowed the disputants to move on with their lives.

“We are getting quality cases where a genuine problem arises that has been persisting in a family for generations, and they come to me and within a day or five days their problems are permanently solved,” Gandhi said.

It's a curious business model for India. Though the use of forensic science for preventing fraud was pioneered here during the British Raj by Sir William Herschel — who in 1858 concluded that the fingerprint was a "signature of exceeding simplicity" that defeated even the local genius for forgery — in modern times the Indian legal apparatus is no more known for cutting edge science than the bureaucracy is for its speed and efficiency.

Senior police officers readily admit that the most common form of investigation amounts to rounding up the usual suspects and slapping them around. And in several famous whodunits — like the 2008 murder of Aarushi Talwar, a 14-year-old girl who was found with her throat slit in her family's New Delhi apartment — blatant mishandling of evidence by bumbling constables has virtually precluded a genuine investigation.

According to Jagadeesh Narayanareddy, a professor of forensic medicine at the Vydehi Institute of Medical Sciences and Research Center in Bangalore, India's mortuaries lack basic facilities, a shortage of qualified personnel makes forensic investigation impossible in many cases and cultural prejudices often override science in cases involving rape or disputed paternity.

In rural areas, for instance, officials often skip autopsies for suspicious deaths, either due to medical ignorance or even to keep crime statistics low, while larger hospitals carry out autopsies as a matter of course whether they are needed or not — burdening personnel and putting unnecessary stress on the bereaved.

But it's just that kind of incompetence, along with the public's nearly complete lack of faith in the police and the court system, that makes Truth Labs a booming business.

“At a peak load, we can handle up to 3,000 cases a year,” Gandhi said.

As the backlog of cases in India's court system continues to mount, there's unlimited room for expansion.

“This has a larger role to play, because people are not fully aware of the services we offer. We expect every state will have these Truth Labs in the next 10 years,” Gandhi said.

Source URL (retrieved on August 20, 2009 01:07 ):

Tuesday, August 11, 2009

the ugly indian

Move over, America. The world has a new rude traveler to detest.

By Jason Overdorf - GlobalPost
August 10, 2009

NEW DELHI — The instant that the fasten seat belts light went out aboard Cathay Pacific's inaugural Delhi-Bangkok flight this summer, a chorus of metallic dongs erupted like a romper roomful of Ritalin-deprived 5-year-olds turned loose on an arsenal of xylophones.

The passengers were attacking their call buttons.

In seconds, flight attendants were up and running. By the time they began dishing out the special meals, tempers were beginning to fray.

“Whiskey!” demanded an old man with a white beard when the young Chinese flight attendant tried to put a meal in front of him.

“Sir, we are not serving drinks now,” the flight attendant replied politely. (Dong! Dong-dong! Do-Dong, dongdong!)

In the next row, another man, younger but no less eloquent, reached up to press his call button, and the flustered attendant caved and uncapped the Scotch.

“Arre, such a small peg she's given you,” the old man's companion protested.


Once the world loved to hate the Ugly American — fat, loud-mouthed and blissfully superior in his utter cultural ignorance. But since the economic crisis put the kibosh on American and European travel budgets, there's a new kid in town. India's rampaging outbound travel market has thrown a much-needed lifeline to the tourism industry in Southeast Asia, Europe and farther afield.

For those schlepping bags and serving drinks, though, the Ugly Indian can be so demanding that the lifeline sometimes looks like it has a noose at the end of it.

“It's a cultural thing,” said Pankaj Gupta, part-owner of Outbound Travels, a New Delhi-based travel agency. “In India, we have servants to do everything in everybody's houses mostly, so people are just sort of used to getting stuff delivered to them.”

Culture conflict has already resulted in several public relations debacles. In May, for instance, a group of Indian passengers caused a minor sensation in the local press when they leveled allegations of racism against Air France — saying that when their flight was delayed for 28 hours in Paris other passengers were transported to hotels, but the Indians were made to wait in the lounge. (The distinction was not made based on race, but on possession of a valid Schengen visa, the airline maintains).
In a similar incident in 2006, 12 Indian passengers accused Northwest Airlines of racism when they were offloaded and detained in Amsterdam for what flight attendants called “suspicious behavior.”

“Imagine arresting 12 guys just because they were changing seats and talking on their cellphones when the plane was taking off,” wrote Indian humorist Jug Suraiya in his Times of India column. “Everyone does that in India all the time, and no one gets arrested.”

But just as the American tourist's penchant for plaid never stopped France from chasing his dollars, the Indian tourist's insatiable thirst for Scotch hasn't made his rupees any less attractive. Tourism boards from a laundry list of countries have flooded Indian cities with delegations — or simply set up shop here. Airlines and hotels abroad have wooed Indian travel companies with bargain basement rates, and pulled out all stops to compete — throwing open their kitchens to traveling Indian chefs, topping up their in-flight entertainment libraries with Bollywood movies, and fighting tooth and nail for the right to host stars like Shah Rukh Khan and Amitabh Bachchan for the Indian International Film Awards.

The reason is simple. Despite the downturn, India's travel market is still growing. According to the Pacific Asia Travel Association, more than 800,000 Indians are expected to visit Singapore this year, more than 669,000 Indians are expected to visit the U.S. and more than 625,000 are expected to visit Malaysia. Moreover, PATA expects the number of Indian visitors to Singapore, Malaysia and the U.S. to continue to grow rapidly through 2011.

“Since the economic crisis began, there has been a reduction in travel, but the reduction in travel by Indians has been very low compared to any other country,” said Gupta. “Indians are still traveling a lot. Maybe some people have downgraded, by say, instead of going to the U.S. traveling closer to home, but they're still traveling abroad.”

Many of these Indian travelers, of course, are erudite, suave, charming, or simply humble and polite — it's just that nobody remembers them. For every passenger aboard Cathay's Delhi-Bangkok run with his finger on the call button, there were three or four who were fast asleep, mummified in blankets, or peacefully guffawing at the mindless in-flight movies.

Most problems result from simple misunderstandings, explained Thomas Thottathil, spokesman for Cox & Kings, one of India's largest tour companies. “We sensitize our customers, our tour guides, and we also explain to our suppliers overseas — the hotels or whatever — that Indian travelers have their own needs, their own particular habits.” Because of that effort, Thottathil said his firm has not faced anything more serious than the occasional complaint that a hotel didn't provide dinner after 9:30 p.m.

Thottathil may well be onto something. A quick lesson about Indians' love of thrift, for instance, might ease international tensions in the air. What's the multicultural secret to a tranquil flight, you ask?

Five dollar whiskeys.

Monday, August 03, 2009

the stones of srinagar

On the streets of this political hotspot, chucking rocks at the police is the most cherished form of free speech.

By Jason Overdorf - GlobalPost
Published: August 3, 2009 06:43 ET

SRINAGAR, India — In Srinagar's Lal Chowk, or “red corner,” a hotbed of social unrest in a city that many residents believe to be occupied by a hostile Indian military, 26-year-old “Mohammad” is primed for the next call to action.

A handsome, muscular youth with a beard that would pass muster in Kabul and incongruously gelled hair, he has been a stone pelter — what locals here call the young men who engage in rock-chunking skirmishes with the police and security forces nearly every Friday — since he was 15 years old.

“I saw so many young boys had been killed by the security forces, so I said, 'Let me join this protest also,'” Mohammad says.

The protests that Mohammad — who did not want to reveal his real name for fear of retribution — is talking about have become part of daily life in Srinagar, the center of political life in the Indian part of Kashmir. Marches and the inevitable skirmishes that follow them are so common that the shopkeepers in Lal Chowk have grown accustomed to a three- or four-day work week. And stone pelting has become so inseparable from political demonstrations that the police themselves carry slingshots for firing back. The government even employs a special brigade of street cleaners to make sure that the pavement is cleared of ammunition.

To be sure, Kashmir is a state still reeling under insurgency, where militants strike at the government and melt back into the forest, and these angry, habitual protesters tell only their side of the story. But a talk with the proverbial man on the street shows that there's more to Srinagar's stone battles than simple hooliganism.

Despite India's claims to have won the hearts and minds of Kashmiris since the armed rebellion by militant separatists that raged from 1989 to 2003 declined to a simmer, the anger over what locals term the Indian occupation — and hatred for the police and the army — still run hot and deep.

“I became a stone thrower in 2004,” says 24-year-old Imran (also using a pseudonym). Dressed in a white Oxford-style shirt, he looks more like a middle class college student than a street thug. “That day, the troops had pulled some women out of their houses in my neighborhood and beat them up. So when the boys came out onto the streets, I joined them.” Since then, he's only grown more committed. “A boy I know is in a coma because he was hit in the head by a teargas shell,” he says.

From Delhi, the complex mire that is called “the Kashmir conflict” looks very different. The days when newspapers chastised the Indian army for human rights abuses and cataloged the long roster of “disappeared persons” are over. Today those reports have been replaced by repeated claims that “peace has returned to the valley,” premature announcements that Kashmir tourism is on the verge of bouncing back, and patriotic paeans to the ordinary soldier. Last year's election, in which voter turnout was high for the first time in many years, was also interpreted as a sign that the people were ready to accept India's dominion.

On the ground, though, Kashmir looks and sounds more like a territory already under occupation than one besieged by a foreign power. For one thing, the Indian army — some 600,000 soldiers, nearly one soldier for every ten civilians — is everywhere, not just on the border with Pakistan. For another, nobody here considers India's troops to be heroes. “If you talk to the people,” said Sajaad Hussain, an activist who heads an NGO called the J&K Research Development Trust, “You'll find 80 percent want independence. Maybe 20 percent want to go with Pakistan. Nobody is for India.”

That's likely an exaggeration. But in my brief wanderings, I wasn't able to turn up a single person who had good things to say about the Indian government. Almost everyone said they wanted Kashmir to be independent. Some of the more practical Kashmiris demanded autonomy — both political and economic — since that is a measure India has at least declared itself willing to consider. And others, still more jaded, simply hoped for demilitarization. This was not at all what I had expected. But in some ways, it made perfect sense.

For many years, watchdog groups like Amnesty International and Human Rights Watch have condemned the Indian army for human rights violations in Kashmir, where the Armed Forces Special Powers Act gives the military the right to arrest civilians, seize property and shoot to kill and the Public Safety Act allows security forces to detain suspects for as long as two years without any sanction from the court.

In Srinagar, the security presence is unmistakable. Armed soldiers direct traffic at intersections. Flak-jacketed mine sweeping units patrol the roadside with sniffer dogs. Bunkers built from sandbags and razor wire blanket the city at strategic corners. And the stone pelters of Lal Chowk say they abuse these powers — storming into homes, beating protesters, and threatening activists with arbitrary detention under the Public Safety Act — to crush independence activists' freedom of expression. From that enforced silence, they say, comes the stone.

For 45 days prior to my visit, Kashmir had been rocked by protests over the alleged rape and murder of two young women from Shopian, a town located about 50 kilometers from Srinagar. Initially, local police and government officials, including the state's fresh-faced chief minister, Omar Abdullah, dismissed the case as an ordinary drowning. But the people of Shopian alleged that the two women had been raped and murdered — which was later confirmed after the protests forced the administration to conduct an autopsy — and claimed that the police forces had conspired to cover up the crime. After a month and a half of protests that stopped all economic activity in the area, four police officials were arrested for allegedly suppressing evidence.

Nothing has been proven in the Shopian case yet. “There have been some unfortunate incidents in the past, in some cases action was taken promptly and in one or two cases there is a perception of avoidable delay,” Home Minister P. Chidambaram has told the press. “Our intentions are good and there will be proper action. The state government will to go through investigations and punish the guilty.”

But for the disgusted local populace, no further investigation is necessary. Over the 20-odd years since militancy began, during which the army and police have enjoyed almost absolute power in Kashmir, these kinds of allegations are so common, one local resident told me, that for every one that makes news there are another dozen that never make national headlines. “Even the Shopian story took a week to come into the national papers,” explains Parvaiz Bukhari, a local journalist.

All of the young men I interviewed say that police officers have come to their homes and threatened to arrest them under the public safety act, under which alleged offenders can be jailed for as long as two years without formal charges.

“We say, 'Give us freedom,' and they say, 'You are a terrorist.'” said Aftab, another youth. “But we have no guns. Only stones.”