The Great Indian Dream

NYT, March 11, 2004
By THOMAS L. FRIEDMAN

Nine years ago, as Japan was beating America's brains out in the auto industry, I wrote a column about playing a computer geography game with my daughter, then 9 years old. I was trying to help her with a clue that clearly pointed to Detroit, so I asked her, ''Where are cars made?'' And she answered, ''Japan.'' Ouch.

Well, I was reminded of that story while visiting an Indian software design firm in Bangalore, Global Edge. The company's marketing manager, Rajesh Rao, told me he had just made a cold call to the vice president for engineering of a U.S. company, trying to drum up business. As soon as Mr. Rao introduced himself as calling from an Indian software firm, the U.S. executive said to him, ''Namaste'' -- a common Hindi greeting. Said Mr. Rao: ''A few years ago nobody in America wanted to talk to us. Now they are eager.'' And a few even know how to say hi in proper Hindu fashion. So now I wonder: if I have a granddaughter one day, and I tell her I'm going to India, will she say, ''Grandpa, is that where software comes from?''

Driving around Bangalore you might think so. The Pizza Hut billboard shows a steaming pizza under the headline ''Gigabites of Taste!'' Some traffic signs are sponsored by Texas Instruments. And when you tee off on the first hole at Bangalore's KGA golf course, your playing partner points at two new glass-and-steel buildings in the distance and says: ''Aim at either Microsoft or I.B.M.''

How did India, in 15 years, go from being a synonym for massive poverty to the brainy country that is going to take all our best jobs? Answer: good timing, hard work, talent and luck.

The good timing starts with India's decision in 1991 to shuck off decades of socialism and move toward a free-market economy with a focus on foreign trade. This made it possible for Indians who wanted to succeed at innovation to stay at home, not go to the West. This, in turn, enabled India to harvest a lot of its natural assets for the age of globalization.

One such asset was Indian culture's strong emphasis on education and the widely held belief here that the greatest thing any son or daughter could do was to become a doctor or an engineer, which created a huge pool of potential software technicians. Second, by accident of history and the British occupation of India, most of those engineers were educated in English and could easily communicate with Silicon Valley. India was also neatly on the other side of the world from America, so U.S. designers could work during the day and e-mail their output to their Indian subcontractors in the evening. The Indians would then work on it for all of their day and e-mail it back. Presto: the 24-hour workday.

Also, this was the age of globalization, and the countries that succeed best at globalization are those that are best at ''glocalization'' -- taking the best global innovations, styles and practices and melding them with their own culture, so they don't feel overwhelmed. India has been naturally glocalizing for thousands of years.

Then add some luck. The dot-com bubble led to a huge overinvestment in undersea fiber-optic cables, which made it dirt-cheap to transfer data, projects or phone calls to far-flung places like India, where Indian techies could work on them for much lower wages than U.S. workers. Finally, there was Y2K. So many companies feared that their computers would melt down because of the Year 2000 glitch they needed software programmers to go through and recode them. Who had large numbers of programmers to do that cheaply? India. That was how a lot of Indian software firms got their first outsourced jobs.

So if you are worried about outsourcing, I've got good news and bad news. The good news is that a unique techno-cultural-economic perfect storm came together in the early 1990's to make India a formidable competitor and partner for certain U.S. jobs -- and there are not a lot of other Indias out there. The bad news, from a competition point of view, is that there are 555 million Indians under the age of 25, and a lot of them want a piece of ''The Great Indian Dream,'' which is a lot like the American version.

As one Indian exec put it to me: The Americans' self-image that this tech thing was their private preserve is over. This is a wake-up call for U.S. workers to redouble their efforts at education and research. If they do that, he said, it will spur ''a whole new cycle of innovation, and we'll both win. If we each pull down our shutters, we will both lose.''

Bangalore: Hot and Hotter

June 8, 2005
THOMAS L. FRIEDMAN
Bangalore, India

Every time I visit India, Indians always ask me to compare India with China. Lately, I have responded like this: If India and China were both highways, the Chinese highway would be a six-lane, perfectly paved road, but with a huge speed bump off in the distance labeled "Political reform: how in the world do we get from Communism to a more open society?" When 1.3 billion people going 80 miles an hour hit a speed bump, one of two things happens: Either the car flies into the air and slams down, and all the parts hold together and it keeps on moving - or the car flies into the air, slams down and all the wheels fall off. Which it will be with China, I don't know. India, by contrast, is like a highway full of potholes, with no sidewalks and half the streetlamps broken. But off in the distance, the road seems to smooth out, and if it does, this country will be a dynamo. The question is: Is that smoother road in the distance a mirage or the real thing?

At first blush, coming back to Bangalore, India's Silicon Valley, that smoother road seems like a mirage. The infrastructure here is still a total mess. But looks can be deceiving. Beneath the mess, Bangalore is entering a mature new phase as a technology center by starting to produce its own high-tech products, research, venture capital firms and start-ups.

"The ecosystem for innovation is now starting to be created here," said Nandan Nilekani, the C.E.O. of Infosys. For several years now, when venture capitalists funded companies in the U.S., they insisted that the R.&D. for the products be done in India. But now, increasingly, Western companies will come up with a new idea and then tell Infosys, Wipro or Tata, India's premier technology companies, to research, develop and produce the whole thing.

As one Wipro executive put it, "You go from solving my problem to serving my business to knowing my business to being my business." What will be left for the Western companies is the "ideation," the original concept and design of a flagship product (which is a big deal), and then the sales and marketing.

"We're going from a model of doing piecework to where the entire product and entire innovation stream is done by companies here," Mr. Nilekani added. All of this means that innovation will happen faster and cheaper, with much more global collaboration.

The best indication that Bangalore is becoming hot is how many foreign techies - non-Indians - are now coming here to work. P. Anandan, an Indian-American who worked for Microsoft for 28 years in Redmond, Wash., just opened Microsoft's research center in Bangalore, which follows the ones in Redmond, Cambridge and Beijing.

"I have two non-Indians working for me here, one Japanese and one American, and they could work anywhere in the world," Mr. Anandan said. He added that when he got his engineering degree in India 28 years ago, all the competition was to get a job abroad. Now the fiercest competition is to get an I.T. job in India: "It is no longer, 'Well I have to stay here,' but, 'Do I get a chance to stay here?' "

In the past year, Infosys received 9,600 applications from abroad, including from China, France and Germany, for internships, and it accepted 100. I asked one of these interns, Vicki Chen, a Chinese-American business student from the Claremont Colleges, why she came. "All the business is coming to India, and I don't see why I shouldn't follow the business," she said. "If this is where the center of gravity is, you should go check it out, and then you become more valuable."

Even more interesting is how Indian firms are taking the skills they learned from outsourcing and using them to develop low-cost products for the low-wage Indian market: a medical insurance plan for the poor for as little as $10 a year, a $2,000 car, a $200 laptop, supercheap cellphones, a low-fare airline ($75 one-way for the three-hour Bangalore-Delhi flight) that sells tickets from Internet kiosks in gas stations. Indian companies know that if they can make money producing low-cost technology for poor Indians, it gives them an incredible platform to then take these products global. (Imagine the profit potential if they work in the West?) China is doing the exact same thing.

Indeed, I now understand why, when China's prime minister, Wen Jiabao, visited India for the first time last April, he didn't fly into the capital, New Delhi - as foreign leaders usually do. He flew directly from Beijing to Bangalore - for a tech-tour - and then went on to New Delhi.

No U.S. president or vice president has ever visited Bangalore.

Who will make our shirts when China is rich? - THE CLASS STRUGGLE WILL NO LONGER BE OFFSHORED

Left And Right - March To The Big Capital Hegemony

Jean Bricmont
Le Monde diplomatique, September 2007

The defeat of the French left in the presidential and legislative elections was fair punishment for its lack of vision. Social democracy is still based on the exploitation of the third world, with which Europe must now create a new relationship.

This year's catastrophic election results in France destroyed any illusions created by the victory of the no campaign during 2005's referendum on the proposed European Union constitution. The origins of the current crisis of the French left can be traced back to its failure to live up to the commitments it made during the 1981 election. Within two years of victory, the new socialist government abandoned its programme and, with no social or economic policies to pursue, resorted to an unenthusiastic neo-liberalism. Its discourse became purely moralistic, proposing antiracist, feminist andantifascist values in an attempt to distinguish itself from the right.

At a practical level, the left's main initiative was European construction, with the principal effect of ruling out any alternative to neo-liberalism. By encouraging this process in the name of values - especially anti-nationalism - the Socialists and Greens created an institutional mechanism designed to protect them from their own audacity, and that of their rank and file. In a bid to insulate the political process from the influence of the people, they handed over responsibility for as many decisions as possible to an unelected bureaucracy open to the influence of private lobby groups. Elections would continue, but they would be of little importance. And no serious political alternative would be proposed: no New Deal, no structural reform, no common leftwing programme, no Italian road to socialism.

Unsurprisingly, the beneficiary was the hard right, whose very different values - discipline, law and order, the nation - appeal far more powerfully to minorities. Programmes based on values are designed to allow those who support them to sleep with a clear conscience and forget questions about the real balance of power in the world. (Most people find it easier to describe themselves as good citizens than as good antiracists.) The right's economic policies are perfectly consistent with the European structures established by the left and the Greens. On the issues of Europe and values, the right has been victorious on battlefields mostly chosen by the left yet on which the left was bound to lose.

To succeed, political movements must believe what they say. The victors on the right have not been the Keynesian, conservative wets (as Margaret Thatcher called them), but the hardliners. Until the left can come up with something better than moderately rightwing policies, it has no chance of winning. To change that, it must go back to the roots of the conflict between left and right. It must see beyond values, like feminism or antiracism, which the modern right is quite happy to adopt. It must address the fundamental question: who controls the economy?

A belief in socialism

When 18th century liberal thinkers envisaged a society of small independent producers, the idea of a free market and hostility to the power of the feudal state and the church made sense. But the emergence of big business led to the increased socialisation of production and raised questions about the private ownership of the means of that production. The fundamental principle of socialism is that once the process of production has been effectively socialised, its control must also be socialised, if we are to realise the hopes for freedom expressed by classic liberalism.

Once the means of production, and the means of information that emerged during the 20th century, are in private hands, specific individuals possess vast, almost feudal power over the rest of the population. Today the real successors of classic liberals are the proponents of socialism; while those who currently describe themselves as liberals are the supporters of a particular form of tyranny, that of the employers - and, often, of a violent form of state control through US military domination of the rest of the planet.

Socialism, as I describe it here, is a natural response to the problems associated with the development of capitalism. The fact that it is rarely discussed any more is evidence of the effectiveness of the targeted systems of indoctrination known in our societies as education and information. The question of socialism has nothing to do with the crisis of capitalism, the destruction (real or imagined) of nature, or the alleged bourgeoisification of the working class. Because control over one's own existence is a fundamental human aspiration, the question will not go away as living standards rise, and it does not require a catastrophe to bring it to the forefront. The more our survival-related biological needs are met, the more our strictly human needs for autonomy and freedom demand to be satisfied.

It is a mistake to believe that nobody cares about socialism any more. One leftist position that retains its popularity is the defence of public services and workers' rights, now the main areas of struggle against the power of capital. The whole point of European construction is to preserve the appearance of democracy while dismantling the social Eden - social security, mass education and public health care - which is an embryonic form of socialism that remains popular.

Sadly, the near disappearance of a socialist perspective from political discourse affects many aspects of everyday struggle: there is a huge difference between protesting against abuses committed by a power whose legitimacy one acknowledges, and fighting for short term objectives against employers' power that one regards as fundamentally illegitimate. This is exactly the difference in the past between reforming and abolishing slavery, between enlightened monarchy and republicanism, or between colonies run by native collaborators and national independence.

A major transformation

Liberal thinkers deride Marx because the anticipated transition to socialism in developed capitalist countries failed to happen. One response should be that the system under which we live is not just capitalist, but imperialist as well. Europe owes its development to the existence of a vast hinterland. Imagine that Europe was the only landmass on the planet and that all the other continents had never risen from the oceans. There would have been no slave trade, no South American gold, no emigration to North America. What sort of societies would we have built without a constant supply of raw materials, cheap immigrant labour, imports from low-income economies, and a supply of educated people from the developing world to rescue our collapsing education systems? We would have had to save drastically on energy, the balance of power between workers and employers would be radically different, and the leisure society would not exist.

Socialism failed in the 20th century largely because the countries where capitalism generated a degree of cultural and economic development, where the elements of democracy existed and where, consequently, it was possible and necessary to go beyond capitalism, were also the dominant countries in the imperial system. Imperialism has two consequences. Economically it allows dominant nations to delocalise problems to the periphery. Strategically it has a divide and rule effect: western workers have always enjoyed better living conditions than their equivalents in the developing world and acquire a feeling of superiority that helps stabilise the system.

This is why decolonisation was the most significant transformation of the 20th century. It freed hundreds of millions of people in Asia and Africa from a racist form of domination. Its effects will continue into this century and bring a definitive end to the historical period that began with the discovery of America. Europeans will have to adjust to losing the benefits associated with our privileged position in the imperial system. At present the Chinese have to sell us millions of shirts to buy an Airbus; but once they can build their own Airbuses, who will make our shirts?

There is a potential for conflict between the main beneficiaries of globalisation - those whose control of capital enables them to exploit the workforce in Asia - and the huge majority of the population in the West who have no such luck. Because it lives in the developed world, that population finds itself forced to sell its labour power at a price that is no longer competitive in the global marketplace. This implies more exclusion and a crisis for the welfare state; but it could also mean a resumption, in a new form, of the class struggle.

Adapting to decline

The developing world is becoming more autonomous in other respects. The US is bogged down in Iraq, unable to extract itself from an unwinnable war unless it renounces its imperial ambitions. Iran's nuclear programme confronts the West with the choice of backing down or embarking on a catastrophic war. At a more symbolic but significant level, Israel suffered a second military defeat at the hands of Hizbullah in 2006. The political and military victories of Hamas are a sign of the failure of the policy of collaboration with Israel adopted by some members of the Palestinian elite after the Oslo accords. All these unexpected events have provoked a serious crisis of confidence among world leaders.

The main problem facing Europe is to adapt to our decline: not an imaginary decline in relation to the US, but a real decline compared with the developing world. The ruling class of the US is trying to maintain its hegemony by force; its failure can only intensify the Empire's crisis, while the European right still fantasises that we can solve our problems by imitating the US. The radical left generally ignores the question of decline; behind its rhetoric, it continues to defend social democratic, Keynesian policies that globalisation has severely undermined.

The absolute priority is to prevent western populations from falling for US-Israeli fantasies of the war on terror and Islamo-fascism (to which a dangerously large part of the French left have already succumbed). This is symptomatic of the western left's long tradition of incomprehension of peripheral conflicts.

Historically, change has often come from the periphery. The October 1917 revolution and the Soviet Union's role in the victory over the Axis powers had an enormous impact upon decolonisation and upon the possibility of creating a social-democratic Eden in Europe. The victory of the colonised nations led to a number of progressive changes in Europe during the 1960s. If we make the effort to understand and take account of it, the current revolts in Latin America and the Middle East may force radical changes upon the dominant powers. Which may mean a less depressing future for the rest of us.

Jean Bricmont is professor of theoretical physics at the
University of Louvain (Belgium), author of Humanitarian
Imperialism (New York University Press, 2007) and co-editor,
with Julie Franck, of Chomsky (Herne, Paris, 2007)

Translated by Donald Hounam

Heavy industries to south-south cooperation

Kandeh K. Yumkella
The Hindu, 12 February

To the grand scheme of globalisation, what can a multilateral aid agency effectively contribute? UNIDO must target its efforts to issues of proven societal benefit but not enough economic appeal to attract private agents.

FORTY YEARS ago in New York, the General Assembly of the United Nations created the United Nations Industrial Development Organisation (UNIDO). For many developing countries these were the early years of independence, when national authorities regained legitimate control over domestic resources and chartered a new course of economic progress. North-South economic relations subsided against a growing reliance on local assets; manufacturing was seen as a key vehicle of economic development. The transformation of minerals and agricultural crops created value, generated employment and foreign exchange, and supplied local markets with consumer goods. UNIDO's coming of age was timely, and it quickly grew to its current size of 171 members. In 1986 it became a specialised agency of the U.N. system, with its own budget and governance structure.

The launch of UNIDO was also set against a backdrop of global political uncertainty, with the world increasingly divided by the Cold War. For many, a dedicated U.N. Agency represented a unique window of neutral access to foreign technology and know-how, with unrivalled technical competence and global experience.

UNIDO has been active in India from the very outset of its existence; in four decades of operation it has delivered $120 million worth of technical services to a broad range of local partners. In hindsight, the evolving nature of this cooperation mirrors a timeline of parallel mutations in the Indian economy while UNIDO itself was adjusting to the changing demands of the day. The early years of India-UNIDO cooperation saw a strong concentration on heavy industries: steel and alloys, petrochemicals, pesticides, and fertilizers marked India's rapid industrial expansion and supported the Green Revolution.

In the 1970s, the programme gradually moved to light industries and focussed on the creation of employment in agro-based activities such as leather and footwear, or textile and garments.

Alongside interventions in mechanical and automotive industries, UNIDO started working with Indian partners on a range of industry-related services such as metrology, testing and quality control, research and development, marketing and export promotion, and indeed promoted computer applications in industry as early as in 1972. Meanwhile, new initiatives were launched to address the specific needs of small-scale enterprises.

By the middle of the decade, environment considerations entered the arena: first in the form of waste treatment, then waste management, pollution containment, cleaner production, and now, clean technologies. Today, the environmental dimension constitutes a major component of UNIDO's technical cooperation programme in India.

Cooperation in engineering and machine tools, bio-chemicals, polymers and composite materials, semi-conductors and micro-processors, solar cells, fibre optics, and computer-assisted design and manufacturing marked the increased sophistication of Indian industry in the 1980s. Energy-saving technologies and non-renewable energy sources entered UNIDO portfolio in India in the mid-1980s, and took on a growing importance in the organisation's strategic engagement in a fast-growing, energy-hungry economy.

In the wake of India's economic liberalisation, UNIDO introduced in the early 1990s new services to help local authorities promote inflows of foreign direct investment, or to encourage private investment in infrastructure projects through the build-operate-transfer scheme and its variants. As one of the executing agents of multilateral environment agreements such as the Montreal Protocol on the elimination of ozone-depleting substances, UNIDO launched in 1993 a spate of initiatives to assist Indian enterprises in the refrigeration and foam industry reduce their dependence on chlorofluorocarbons (CFCs) in manufacturing processes, an area of cooperation that was later to translate into a number of large-scale projects.

Industrial organisation and market structure were new domains of intervention that in 1997 set another milestone in the growing cooperation between UNIDO and India. Small- and medium-scale enterprises when operating alone typically lack resources to train their labour force, upgrade technology and quality standards, invest in research and development, prospect new markets or cement strategic alliances with partner companies. However, when joining forces through the creation of industrial clusters, they are able to pool resources and reap the economies of scale necessary to realise more effectively their assets, seize new opportunities, and strengthen their competitiveness. This particular phenomenon of economic concentration has strong roots particularly in South Asia. For over a decade, UNIDO has assisted the growth of small enterprise clusters in a number of locations across the country, in partnership with world-class local institutions; cluster-based approaches are today mainstreamed in most small-scale industries promotion programmes countrywide.

At the turn of the new millennium, UNIDO and the Government of India launched in December 2001 a medium-term cooperation strategy focussed on investment promotion, cleaner technology and environment, the competitiveness of small and medium enterprises, and accelerated manufacturing progress in disadvantaged parts of the country. The five-year programme is now completed, and the two parties are engaged in the formulation of a cooperation framework against the backdrop of India's 11th Five Year Plan 2007-2012, and the U.N. Development Assistance Framework 2008-2012.

Adding value

Much has changed, though, since the first programme of UNIDO in India. Forty years on, the emergence of India as a global player with world-class manufacturing capabilities in a spectrum of industries calls for a strategic positioning and clear targeting of UNIDO's programmes, and a redefinition of its relationship with Indian partners, public and private alike. If we are to add value to the wealth of domestic expertise and technological knowledge, we must offer innovative services in sharply focussed areas and bring to bear the essence of lessons learnt through our worldwide operations. If UNIDO as a partner is to remain relevant — and legitimate — in an industry driven by private entrepreneurship, we must target domains of intervention eschewed by market forces due to externalities, barriers to entry, or significant discrepancies between social benefits and market valuation.

While "India Inc." is growing fast and some economists are even anticipating double-digit rates of economic growth, hundreds of millions in rural areas and backward regions are left untouched by economic progress and struggle to make ends meet. Their demands are pressing, their needs are many. Within our domain of competence, UNIDO will work with Indian partners to stimulate entrepreneurship, build up local economic systems and promote investments in disadvantaged regions, building on best practices among the forerunners of industrial progress. "Best practices" will be systematically documented in the fields of technology know-how (including eco-friendly technologies, energy efficiency, and renewable energy sources), skills upgrading, and the industrial organisation of clusters of small and medium-sized enterprises.

At par with the country's increasingly assertive role on the international scene — marked by highly noted interventions in global platforms such as the World Trade Organisation or the World Economic Forum as a leading advocate of the developing south — UNIDO and the Government of India will also launch, on February 15, the Centre for South-South Industrial Cooperation, the first in a global network of such facilities, which are in the process of being established by UNIDO in China, India, Egypt, South Africa, and Brazil.

The concept of South-South cooperation is by no means a new paradigm; indeed, the Indian Economic and Technical Cooperation, a division of the Ministry of External Affairs, is as old as UNIDO itself. What is new, however, is the context in which it is set today: a context of rapid strides in international exchanges and massive flows of cross-border trade and investment — in ways that increasingly challenge historical patterns, as illustrated by the recent consolidation of the global steel industry. To the grand scheme of globalisation, what can a multilateral aid agency effectively contribute?

There also, UNIDO must strategically position its services vis-à-vis the massive flows of private resources — through trade, investment and other exchanges — and target its efforts to issues of proven societal benefit, but insufficient economic appeal to attract private agents. We must also offer differentiated services that will complement the bilateral efforts by the Indian Government: the value addition by UNIDO will stem from a strong anchorage of South-South initiatives in our technical cooperation operations on the ground in more than 100 countries and from the integration of the South-South Centre in India into our global networks of South-South cooperation facilities, field representative offices, cleaner production centres, as well as dedicated investment and technology promotion offices.

The instruments of South-South cooperation we intend to deploy include capacity-building initiatives such as training programmes, replication of best practices, transfer of technology, policy advice, investment promotion services, trade capacity building, and the promotion of small and medium-scale industrial clusters through, inter alia, twinning arrangements. This is no doubt an ambitious programme, and a real challenge for the new South-South centre — to which, I am convinced, it will rise.

In general, to avoid being spread too thin, we will further delineate our scope of intervention and concentrate resources on a selection of industrial sectors where UNIDO and Indian partners have already developed a vibrant cooperation in recent years, such as renewable energy, low-cost housing, food processing, pharmaceuticals, automobile components, and IT applications in industry.

Put in modern terms, our vision is to create in India a "business process outsourcing" of multilateral technical cooperation, an offshore facility that will attract development capital — from UNIDO, the Government of India, and other investors including private ones — combine it with India's vast pool of expertise, and generate a stream of income in the form of technical cooperation extended to other developing countries. It is, in effect, a logical continuation of UNIDO's 40-year investment in India.

The writer is UNIDO Director-General.

Davos 2007: losers feel threatened, winners too are discomfited

Vidya Subrahmaniam
The Hindu, 31 January

The Indian mood alternated between happiness and dread. For the West, it was an unusual feeling — to have to applaud China and India from the sidelines, and accept that its long reign could be coming to an end. Is globalisation a double-edged weapon?

THE CENTRAL Sporthotel in Davos, more commonly known as the `India hub,' was the place for celebrity-watching this past week — as the World Economic Forum got going. Rahul Bajaj, Sunil Bharti Mittal, Jamshyd Godrej, Nandan Nilekani, Malvinder Singh, Neeraj Bajaj, Vinod Mittal, Shiv Nadar, Baba Kalyani, Ajit Gulabchand, not to mention the very, very elderly Thomas J. Bata (born 1914) — name the business tycoon and he was there, either as a boarder or as a lunch invitee or a friend dropping in for a chat by the fireside. For Indian business reporters stalking the hotel, it couldn't get better — all the "who is buying out whom" scoops were happening here live, and even better, the biggest, and the grandest in industry could be buttonholed for an interview or, at the minimum, for a juicy quote.

The mood was buoyant, although the Indian contingent was nowhere near as imposing as it was in 2006 — the year of the swashbuckling "India everywhere" campaign marked by a swanky ad blitz, high-profile events and dazzling Bollywood-Hollywood action. This year Finance Minister P. Chidambaram was conspicuously absent and all three Chief Ministers scheduled to attend dropped out. The India events — a spate of dinners, several Bollywood nights and one fashion show — were hardly the best we could offer; the settings were tacky, the food indifferent, and the foreign presence less than impressive. As a cheeky commentator said, "this time it is `India nowhere'." Yet in the end the glitter and shine, or the lack of them, did not matter. What mattered was that at Davos 2007, India, till recently hyphenated with Pakistan in all international meets, evoked the same breathless admiration — bordering occasionally on fear — as China.

Said Ajay Khanna, former Chief Executive officer of the India Brand Equity Foundation (IBEF), who spearheaded the 2006 campaign jointly with the Confederation of Indian Industry (CII): "Last year we changed the perception that India was slow, bureaucratic and inefficient. Our campaign marketed India as a modern, vibrant democracy, as a brand to watch out for. The result: Davos, which was all about China, China and China, is today speaking of India and China in the same breath. India is going overseas, Indian companies are becoming multinationals. And though we consciously kept a low profile at this year's annual, we were given 51 speaking slots."

CII president R. Seshasayee seconded the opinion: "We have moved from a generic promotional campaign to specifics. Look at how often India popped up in conversations here. India was there within 15 minutes of any discussion, it figured in every one of the key sessions."

So was Davos 2007 a conquest for India? What of the world? At the top of the pops once again were India and China — the new whiz kids, the global winners in a race where the once dominant were losing steam. Yet the celebration and applause might have got just a bit uncomfortable for the Indian team judging by the number of references to poverty by Kamal Nath & Co. The team had much to crow about: India's "superlative" growth trajectory — 8.3 per cent this year, expected to top nine per cent, with some luck even 10 per cent, in the next five years — its growing global appeal, the rush of FDI inflows, Indian industry's multinational ambitions and so forth.

However, the happiness seemed to be tempered by fear of how the Davos triumph will play out at home: The more India was feted in Davos, the Mecca of capitalism, the more brickbats it was likely to get at home, and for proof there were two precedents — Narasimha Rao's 1996 defeat and the "India Shining" disaster. At one India-related session, a prospective investor questioned Mr. Kamal Nath on domestic reaction to Indian reforms. The Industry Minister was candid enough to admit that voters were wary of reforms. "In 1996, all the reformers lost the election.

Three hundred and fifty million Indians earn less than a dollar a day. Reforms can only work if they impact the poor positively. If I tell them I went to Davos to sell reforms, the Indian voter will tell me to go take a walk."

The Indian mantra

Inclusive growth seemed to be the Indian mantra this Davos season. The Ministerial team set store by it as did the flock of businessmen wining and dining the rich and the influential at the WEF's many venues. Even as he sang paeans to the "Spirit of Davos," Mr. Rahul Bajaj admitted that "inequalities are rising among and within nations." Said he, "Forget the NGOs who keep shouting about globalisation. Look at Joseph Stiglitz [participating at the meet], he's completely against it." Mr. Sunil Mittal, co-chair at WEF, expanded on the subject at the opening plenary, following it up with a press meet: "At the upper end, it is a very small pyramid of high growth. We must have inclusive growth, people outside have to be brought in. If the world does not harness this restless pool, we could be looking at trouble."

If the Indian frame of mind alternated between happiness and dread, for the West it was an unusual feeling to have to applaud from the sidelines. Applaud it did but underneath the magnanimity was fear — fear of the unknown with definite signs of a U.S. slowdown, and confirmed news that economic power was inevitably shifting in favour of non-Western players.

Planning Commission Deputy Chairman Montek Singh Ahluwalia summed it up: "There is a clear recognition that the U.S. is not the only locomotive power. The U.S. slowdown is certain, the question is: Will it be a soft or hard landing?

For India, good news came even as the annual got under way with Peter Torreele, WEF Managing Director, announcing to the media that for the first time emerging markets accounted for 50 per cent of the world economy. The theme of the 2007 annual, "The Shifting Power Equation," was the cherry on the cake. The theme was nothing if not an implicit acknowledgement that the monopoly of the West was coming to an end. The German Chancellor, Angela Merkel, set the tone for the annual in a speech remarkable for its candour and introspection: "The world economy is currently undergoing a tremendous process of change. A lot of things have turned upside down which for a long time we had taken to be a given." Ms. Merkel attributed the change to three epoch-making events — the fall of the Berlin wall; the IT and communications technological revolution; and the enormous changes occurring in India and China — "the transformation they have undergone from static command economies to vibrant, market economies." Ms. Merkel noted that one-third of the world's population had suddenly become "not observers but players"; the new players represented "new opportunities" and a "completely new balance of power." Further, "we, the original team, don't find our way about anymore ... old customs, habits, fiefdoms no longer guarantee successes."

The German Chancellor pointed out that in just two years China was poised to become the world's biggest exporter, overtaking the United States and Germany.

The China-India theme song was a constant at the meet. The session on "The Global Economy" saw Laura Tyson, Professor of Economics at Berkeley, forecasting another "goldilocks" year despite the expected U.S. slowdown because of greater Chinese consumption. Jacob A. Frenkel, vice-chairman, American International Group, predicted a future piloted by China and India: "Demographic changes will redistribute economic might to Asia, making the world a very different place within 20 years."

Yet for all the ovation China and India got at Davos, it was clear that the gurus of globalisation were intensely apprehensive about what the emerging equations meant for their own future: Globalisation, which the West foisted on developing nations — and successfully too judging by Davos 2007 — could prove to be a double-edged weapon. E. Neville Isdell, Chairman and Chief Executive Officer, The Coca-Cola Company, U.S., cautioned that even though "globalisation has never been healthier, there is a danger that the challenges of the global economy will lead some societies to look inward and raise barriers." The fears were more explicitly expressed in the session on "Globalisation and the Middle-Class." Lawrence H. Summers, Charles W. Eliot University Professor at Harvard, observed that the "[Western] middle class is nervous — and rightly so." He added that wages were stagnant, and even declining for many who felt their jobs were threatened by overseas competition.

Mr. Stiglitz had the last word. He told The Hindu : "The euphoria is over. The U.S. is entering an era of protectionism, and there are fears that this could threaten globalisation."

The ironies are too large to miss. India is in the global spotlight, yet it cannot bask in the glory for fear of losing out at home. On the other hand, the West is finding that in the game of globalisation it started many years ago, it could end up the loser.