India needs 12% growth; if China could do it, why can’t we, asks AM Naik – ET Infra



AM Naik, Group Chairman, L&T, says “the rate of growth has to be in double digits. For 20 years, China has grown in double digits. They may be in single digits now but they have done it. 45 years ago, China was compared with India, today they are competing with the US. That is the power of concentration of what you can achieve in a system which is highly disciplined. It may be called autocratic. In India, the problem is, you move ahead and there are 10 people pulling you down. So, the net improvement is very slow.”

You must be resting very comfortable; you have a great team, you have put an amazing succession in place. When you look back, so many difficulties you had faced building this company at a time when infrastructure and engineering itself was a very foreign concept in India. Today you are competing with all the global companies here and winning hands down.
Also, outside and winning hands down there also.

So, how do you feel looking back?
I feel good. The last six decades have been very satisfying. I have given tremendous importance to succession planning, leader after leader after leader over the benches. I have monitored five generations of leaders over the last 50 years. The latest is now and I am withdrawing. I am going to be still around. Finally, I am the chairman of the L&T Employees Trust, which is the biggest shareholder of L&T.

Yes, you have beaten them in their game in their turf, not only here in India.
And that is a satisfying moment, you know. And by the way, in 2000, we had zero exports. Zero. Today, exports are one third of L&T.

In this period, you have also seen India change its complexion, especially in the last 10-15 years. How are your observations there?
India has changed a lot. But it could have been much faster, much better, much straighter in the sense of there being no malpractices, no corruption and the business done in a very transparent manner. On that front, we need to improve a lot.

Now that we are going towards a $3-6 trillion economy, what are the opportunities?
$5 trillion.

$5 trillion in the next few years. What kind of opportunity do you see in infrastructure, in green hydrogen, where L&T has got a very high degree of interest and other new areas?
The point is, there is a tremendous scope in our country. Any amount of work that you do is not enough because per capita income is very low. We say we will become $5 trillion and we will become the biggest economy, but my point is, what is our economy per capita? When you say we have overtaken the UK, the UK population is 75 million maximum. We are 1.35-1.4 billion. That is 14-15 times that of the UK. So, we have overtaken the UK but our per capita is 1/15th of that of the UK. That is the right way of measuring how the country is moving ahead to give an opportunity and tak, maximum people out of poverty to prosperity. If you become the third largest economy at $5 trillion, that is not enough for 130 billion people.

So, you mean to say, in absolute terms it is not sufficient. We need to also improve in per capita terms.
I think you have to look at only per capita.

And what would it take to get there, to improve the per capita faster?
The rate of growth has to be in double digits. For 20 years, China has grown in double digits. They may be in single digit now but they have done it. 45 years ago, China was compared with India, today they are competing with the US. That is the power of concentration of what you can achieve in a system which is highly disciplined. It may be called autocratic. In India, the problem is, you move ahead and there are 10 people pulling you down. So, the net improvement is very slow.

That is why you see the potential of the growth which we are showing right now, improving going forward?
Double? 12%?

12% from 6 and a half odd?
Yes. If China can do it, why can’t you do it? The point is, are there any growth opportunities? According to me, there are. If you have resources, managerial resources, technical resources and financial resources. Now, if you are a very efficient country, people will look upon you and invest like they invested billions and billions of dollars in China. Now when the world is talking about China plus one, that means alternative to China. China investment is for China, outside China we need another source. It is a golden opportunity for India.

Are we not grabbing it nicely?
Not good enough. That is what I was saying. Vietnam is catching up much faster.

What about the stuff which you have done so far? How do you rate the work done in terms of infra spending?
L&T or country?

No, the country, of course L&T is participating in all the major projects but how do you see the work done on infra and capital spending so far? Do you see momentum continuing?
As I told you, 130 million people need five to six times more than what we are doing now. However, if you look back, the rate of growth and spending in infrastructure and core sector has improved, no doubt. But it can be much more.

Right. So let us come to L&T; the L&T which you have built up for tomorrow. What are the areas where you see the sunrise sectors for opportunities from L&T’s perspective?
So far what we are doing is L&T hydropower green air, nuclear power green air. Then if you do solar power, L&T is putting up the biggest plant and you might be surprised to know we are doing Rs 10,000 crore worth of solar power plant in Saudi outside India. This year our target is Rs 8,000 crore more. So we have 50% outside and 50% within India. In India, the resources are not good enough. The third thing is wind energy. Now we are working on wind energy. According to me, green energy is all these four energies.

All put together.
Wind energy needs a lot of space and that you cannot take away from agriculture. China has three times more landmass; the US has three times more, Canada has nine times more. If you look at per capita, it is much more right. The US has 325 million people, one-fourth, but the landmass is three times more without Alaska. So their landmass per capita is 12 times more than us. So we have a lot to catch up on. And we have to have focus, dynamic, political will and leadership to be able to do it.

How do you rate the current political leadership?
We will come to that later, let me finish the green energy part. When it comes to wind energy, it requires a lot of landmass which is not that much available. Wind farms cannot be put up wherever you want. You will have to see the wind velocity, wind efficiency and when you take all that into account, India does not have too many areas which are also not agriculture friendly or agriculture oriented.

So a lot of wind farms are going to come up in the coastal part that means in the water, in areas where wind energy efficiency will be very high. In the next two decades you will find a lot happening in wind energy as you also will see a lot happening in electrolysers and hydrogen and so on and we are starting on that. We have allocated our design and engineering tieups. We are now waiting for the project to come up to build and projects are still not economically viable right.

The point is, where will you use green energy? The power will be used for driving various kinds of durables. If you look at an electric car, battery is the problem. Basic issue in electric cars is the battery intensity and life so that you can put it over the next 200 to 250 kilometres, so that it does not run out in 50 or 100 kilometres but we will talk about that later.

  • Published On Aug 10, 2023 at 08:12 AM IST

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