Indian industry needs to transit from relative protection to tomorrow’s global market. That calls for a major change in mindset and skills.

Y. C. Deveshwar, Chairman ITC

A consistent growth rate of 9 to 10 per cent per annum needs to be sustained over many years before millions of our disadvantaged countrymen can hope to gain access to a minimum standard of living and dignified existence. It is impossible to realise such a challenging vision of growth with social equity without fashioning an effective development and growth strategy for rural India. Growth in rural incomes is both a means and an end of India’s economic development. The slowdown of industrial growth has highlighted even more starkly the vital need to sustain rural demand. One of the key objectives of second-generation reforms should be to create a climate that enables the corporate sector to pursue its objective of creating shareholder value more readily by contributing to the prosperity of the Indian farmer.

In this context, the criticality of accelerating the reform process cannot be overstated. The fundamental purpose of reform is to create a climate in which investments in India can become productive and internationally competitive. It must create robust market institutions that foster investor confidence, upgrade social and physical infrastructure and mobilise even higher rates of private, public and international savings. Purposeful channelisation of savings would entail a fundamental re-ordering and rationalisation of the terms of tax assignment between the Centre and the states to align the structure of responsibility in a manner that promotes fiscal discipline, expands the tax base, and unlocks the potential of a larger Indian common market. The reform process must extend to financial markets, labour markets, environment, public health and education systems, the legal framework and much more. Acceleration of reforms can sustainably come about only through a growing political consensus on the fundamentals of a long-term growth strategy that cuts across ideologies and short-term sectarian interests.

The Indian corporate sector bears a critical responsibility, particularly in the context of the internal and external challenges confronting the Indian industry. The priority for Indian industry should be the rapid attainment of international competitiveness by successfully transiting from an era of relative protection to the fully globalised markets of tomorrow.

Global competitiveness demands a major change in mindset. It also calls for organisational vitality, backed by substantial investments in modernisation, scaling up and skills upgradation. Such strategic investments would naturally entail gestation drags that would severely test managements for their staying power and commitment to their businesses. Business portfolios would need to be rationalised and restructured for focussed attention, so that the deployment of scarce resources is confined to those areas that best match organisational capability with market opportunity. It is, therefore, imperative for business to shed preoccupation with the mere maximisation of tactical financial results, and instead focus on building strategic capabilities. A wholesome balance will have to be struck between the short, medium and long terms.

Frustrations arising from a slow pace of reforms, together with competitive pressures generated by the fast pace of trade liberalisation arising from the WTO time-table are severely testing the resourcefulness of Indian companies and their commitment to the Indian economy. In this context, I would like to draw a distinction between an "Indian’ company and a company operating in India. The difference lies in the depth of commitment to the Indian economy. An ‘Indian’ enterprise would, given its fundamental orientation, favour value chains within India by supporting their competitiveness wherever feasible. On the other hand, any other enterprise would not necessarily demonstrate such a commitment in pursuit of shareholder value. An "Indian’ company, while recognising the need to create a fair reward for shareholders, would go the extra mile in partnership with other participants in the economy to create conductive conditions in which Indian value chains can become internationally competitive. Thus an ‘Indian’ enterprise is borne out by its commitment to the Indian economy rather than by the source of its capital.

Anecdotal evidence appears to suggest that hitherto well established manufacturing companies are now increasingly looking for sources of supply from outside India to service the Indian market. This downgrading of focus from "leadership to dealership" does not augur well for the ambitious growth agenda of the Indian economy. "Dealership" will only serve to exploit the Indian market to create economic surpluses for value chains residing outside India. This phenomenon underscores the need for an even closer and deeper spirit of partnership within the Indian economy in shaping and effectively executing the reform agenda, so as to create and capture the lion’s share of value creation within the Indian economy.

ITC is inspired by the vision of enlarging its contribution to the Indian economy. It is ITC’s belief that creation of shareholder value provides the only basis for sustainable contribution to the superordinate goal of creating national value. ITC practices this philosophy by not only driving each of the businesses towards international competitiveness, but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part. `e-Choupal’, ITC’s high-potential internet-based intervention in rural India, is a powerful example of the practice of this precept. It has already begun to make a significant contribution towards enhancing farm productivity and rural incomes.

ITC’s mission is to enhance the wealth-generating capability of our company. Fundamental to creating such capability is organisational vitality, market-standing and profitability. ITC’s corporate strategy aims at exploiting market opportunities thrown up by the emerging nature of the Indian economy to create multiple centres of growth by harnessing and blending its unique and diverse core competencies residing in its various businesses. Over time, these blended competencies will, in turn, spawn newer capabilities thereby imparting a multiplier effect to its growth strategies.

ITC’s vision, therefore, is to create and sustain a special position for ITC as one of the most valuable contributors to the Indian economy through world-class competitive performance, creating growing value for the Indian economy and superior value for the company’s shareholders. Team ITC aspires to make its name synonymous with creating "enduring value".