Era of affordable business ahead: ISB Dean

HYDERABAD - The next phase of globalisation is going to be affordable business as it offers enormous economic opportunities in India and other developing countries and ensures inclusive growth, Ajit Rangnekar, the dean of the Indian School of Business (ISB), said here Saturday.

“Globalisation 3.0 is going to be affordable business. It is the business of providing affordable goods and services of high quality to about 450 crore global population,” he said.

He was speaking on ‘Sustaining inclusive growth in a challenging economy’ at the annual meeting of Confederation of Indian Industry’s Andhra Pradesh chapter.

Rangnekar said the first phase of globalisation was when developed countries sold things to the developing world. The second phase was when India, China and others sold to the developed countries. But competition was increasing and the margins were under squeeze.

“We have an enormous opportunity of being the first to come out with solutions which we can prove to be of profitable use not only in India but all over the world,” he said.

“It is not surprising that companies like IBM, Google, Microsoft and Novartis are actively doing research in this area. If global companies are investing so much money and efforts in finding affordable solutions, we can’t afford not to be in this business,” Rangnekar maintained.

The Hyderabad-based ISB has done a lot of research and developed affordable business models which it is ready to share with the industry he said.

There are enormous opportunities in technology, housing, education, healthcare, energy and environment. Rangnekar cited the examples of a hospital and an ambulance service in Mumbai making profits through affordable services.

“There is a shortage of about 2.5 to 3 crore units in low-income housing this country. Why run after luxury apartments which do not get sold anyway? Build apartments for poor and complete the projects in a year,” he advised the real estate sector, pointing out how a developer is expecting a 15 to 30 percent return in one year by building 300 houses costing Rs.2 to Rs.3 lakh each in Gurgaon.

He said 280 million poor students in the country do not get good education. “Our research shows 30 percent of the household income of domestic workers, drivers and others in cities is spent on education of their children. Can you provide them good quality education at an affordable price, possibly using technology?,” he asked.

On the huge opportunities in healthcare sector, he said rural people in India spend more than a quarter of their income on healthcare.

Noting that of India’s 1.2 billion population, only about 25 to 30 percent have actually benefited from the fruits of growth, Rangnekar said: “We have large disparity of income in our country which we have seen in different parts of the country leading to social and political unrest.”

“This will magnify if we do not deal with this issue quickly,” he said, stressing the importance of inclusive growth.”

He also asked the industry to come out with solutions to meet the technology requirements of small and medium industries.