Exclusive interview: Mahindra World City Jaipur supercharges UK firms’ route to India
Mahindra is one of the world’s most successful companies. Founded in India in 1945 as a steel trading company, the Mahindra Group has diversified into a glittering array of sectors generating a turnover of $17.8 bn. Passionate about its Indian roots, and an engineering company at heart, its Executive Chairman Anand Mahindra is a vocal champion of easing the huge pressure on India's infrastructure with its innovative Mahindra World City (MWC) developments. IndiaGBnews’ Ben Pinnington visited MWC Jaipur to hear about how it can help UK firms enter the Indian market and how it is already attracting some of the world’s biggest engineering companies including British powerbrand JCB.
When IndiaGB arrives in Delhi the city is choked with smog. Even before we step off the aircraft the smell of smoke is so strong it is like there is a bonfire on the runway. Over the next day or so it is impossible to see much more than 50 metres ahead; such is the thickness of the fog-like pollution. Statistically the average particulate matter touched 837.7 micrograms per cubic meters, as against the permissible levels of 60 micrograms per cubic meter. Mercifully, three days into the visit the cloud begins to dissipate and we are allowed to admire the awesome nature of Delhi, beneath the giant glowing orb of the unmistakable sub-continent sun.
Delhi, we are told, is the most organised, best laid-out capital, in the world. Standing near Rashtrapati Bhawan, the Presidential Palace, formerly the Viceroy’s House, it is a reminder of the greatness of India, as a cradle of humanity, culture and religion. Its British architect, probably the highest regarded of the last century, Edwin Lutyens, had to design New Delhi in a style fitting to the scale, history and magnificence of India. This he achieved and it is no exaggeration to say that New Delhi ranks alongside Red Square, St Peter’s Square, Westminster and Manhattan as one of the finest city sights in the world. It is a source of great pride for any Briton to see this influence on a country and culture far bigger and older than our own.
Four days later after attending the India UK Tech Summit where the British Prime Minister Theresa May made a serious play for Mr. Modi’s commercial affections, we arrive in Jaipur, a dramatically smaller and less polluted city to Delhi. With the Delhi experience fresh on our minds it is instructive to meet the thoughtful, innovative and focused team behind Mahindra World City, (MWC) Jaipur, who have a vision that captures the best of India, while trying to solve some of its greatest urban challenges.
Mahindra was founded by brothers JC Mahindra and KC Mahindra and is primarily known as a vehicle manufacturer; its cars and tractors are ubiquitous on India’s sprawling chaotic roads. Success has seen Mahindra diversify and its website proudly announces its presence in 20 industries ranging from IT to real estate to aircraft, and military vehicles to green energy. This 'federation' of companies headquartered in Mumbai now operates in 100 countries and employs a staggering 200,000 people.
Mahindra is a poster boy for India’s potential, having blazed a trail since independence in 1947. If ever a company reflected what India is capable of it is Mahindra. And today's leaders of Mahindra including its Executive Chairman Anand Mahindra, grandson of JC Mahindra, are like modern day business Buddhas unleashing brilliant commercial creeds to ameliorate India’s chronic growth pains, currently groaning under the weight of population explosion that has doubled to 1.3 billion since 1947. That weight is piling pressure on cities, infrastructure, and basic human necessities like Delhi’s atrocious air quality. Anand’s chapter in McKinsey's celebrated collection of essays: 'Reimagining India' reveals how Mahindra is taking on the daunting challenge of wrestling the King Kong of modern economies.
He writes: "India cannot afford to grow like China. In authoritarian tightly controlled China the costs of that head long economic expansion are obvious. Unbreathable air and undrinkable milk, slick palmed officials and oppressive factory bosses." Anand argues in a society as diverse as India's, those kind of tensions could erupt into violence. Instead he says the answers lie in each Indian State selling themselves on their own strengths. India is too diverse to sell itself as one coherent economic entity.
Anand Mahindra says India's biggest long term challenge is to work out how to urbanize a population of a billion people. "Millions have migrated to the cities and tens of millions will follow. We cannot hope to stem this flow. Nor should we want to – urban societies produce positive outcomes from higher literacy rates and lower infant mortality. At the same time if we do not slow the influx of migrants to a dozen key urban areas our already volatile and overburdened cities will collapse under the strain. India needs to find a new way to distribute growth to create new urban hubs all over the country that can attract talent and money. We need to develop hundreds if not thousands of cities around the country where the problems of water, transit, power and governance can be negotiated at local levels."
It is with these concepts very much in mind that we sit down to meet one of Mahindra’s most innovative companies and concepts – ‘Mahindra World City’ (MWC) Jaipur. The team which meet me are Sanjay Srivastava – Business Head, MWC Jaipur, Anuj Bindal – the considered head of Business Development and energetic former army officer Sunil Kurian Ipe – Head of Operations. Sanjay leads the conversation and is a carefully spoken, experienced senior executive having worked at Tata and Accenture before joining one of Mahindra’s flagship projects. He also brings an academic’s attention to detail when explaining the background to the MWC concept. Sanjay says the first MWC was started in Chennai 15 years ago, before expanding to Jaipur in 2006 with a 3000 acre site, another smaller scale industrial park in North Chennai is now in the planning phase, proving Mahindra likes to put its money where its mouth is. In essence, the MWCs are built around the philosophy of creating a sustainable eco friendly cities around the pillars of livelihood living and life.
"We think if we create a planned city you can create a better quality of life for people living there and you can also support the Government by taking the pressure off infrastructure,” he says. "Otherwise hubs get created like Delhi or Bangalore and people are spending four hours of their day commuting, you create employment but it is a very tough life. Our city is built around convenience. We have planned for thousands of people to work in the city while a significant number will live here . What is most important is that you create livelihood in a structured manner. If you look at the numbers in Jaipur, people coming here looking for work, this can serve as a model for Government and other cities to replicate. Identify a cluster that can be a nucleus of planned and smart development and once you get that you reform the city around that cluster. What is the core competency, identify that as cluster, say for example tourism and education learning. This business develops as a hub; people start moving there and then the pressure reduces on the old city and then you can revamp it.
"You can see here how MWC Jaipur has positively impacted our surrounding communities by generating skills, employment and business opportunities. And that is fundamental, MWC Jaipur is committed to driving industrial advancement and economic growth in Rajasthan, while ensuring its growth is inclusive and holistic."
Sanjay: "Yes that is how the city is designed. So Chennai, for example is a big automotive hub. It started by ensuring that IT and automotive is big for Chennai and then we got a set of clients who could leverage that. We have over 38,000 people working there, out of which Infosys itself has 18,000 people working in Chennai on a daily basis in IT. Renault Nissan has its Asia Pacific R & D hub there, Mahindra's own R & D hub called Mahindra Research Valley is based there and all the BMW cars in India are assembled at the BMW plant at MWC Chennai. So, a lot of automotive companies have come and we have built an eco-system.
"Learning from Chennai we identified what is really crucial to Rajasthan. Why look at Rajasthan? The location is strategic. There is a huge industrial corridor planned between Delhi and Mumbai called the Delhi Mumbai Industrial Corridor and we are in the centre of it. 40 pc of the DMIC corridor is going to pass through Rajasthan connecting north and west markets and 60 pc of Rajasthan is within influence zone. So, we looked at it from a good position from our strategic location, skills base availability and manpower at the right cost, enabled by right policies of investment promotion from the state government. You develop high quality infrastructure like that and then a JCB would be willing to come."
What are your USPs for British companies? Why should businesses come here as opposed to Vietnam or a China?
Sanjay: "If you look at a country perspective, India is one of the fastest growing countries for consumption of engineering and manufacturing goods and services. Here in MWC Jaipur, JCB has built its second largest plant in the world with investments of more than £60m, where it will be producing six lines of equipment for export to 80 countries. In a nutshell, the main USP for MWC is ease of doing business. We enable all the factors that are required for a company to get the business running so they can focus on achieving their set up and go to market faster. We ensure 100 pc land which has clean titles, complete clarity; our customers are assured of professional operations and maintenance so all services are running efficiently."
For engineering companies back home the big challenge is skills, do you have the skills base here?
Anuj: "We have skills training here on site developed on a Swiss training model, the Switzerland Skill Development Centre. So if companies like JCB need skilled or semi-skilled workers the SSDC can customise a bespoke programme to develop the engineers."
Sanjay: "We have a good pool of good quality engineers available, because Rajasthan has a good quality and quantity of universities. Plus there are enough forums and platforms available to upgrade skills. We are looking to engage with skill development colleges in the UK and around the world to run dedicated skills courses, like our Swiss partner here, which is flourishing in the high end engineering space. There are 126 engineering colleges here that are looking to develop niches of mutual interest. We have an abundance of skilled talent in Rajasthan. A lot of people want jobs in engineering. People here are historically craftsman. If you look at JCB, one female staff member from Jaipur plant has been named the best welder in the world, which reflects the skills available here in Rajasthan. We are the platform for creating an eco-system and then the companies come and grow the skill sets to the next level by providing in-house training. We already have 8000 people working here and 21,000 indirectly employed. So with close to 30,000 people employed here that sends a strong message to the public to encourage people to work here for the likes of JCB."
India is sometimes seen as difficult place to do business in Britain. How does MWC make it easier for UK firms?
Anuj: "In terms of other reasons for British companies to come here, it is important to emphasize how business friendly Rajasthan is. We have 98 pc compliance in terms of ease of doing business, a bundle which includes policy, skills and the overall eco system. It is a complete package. Policy incentives are there."
Sanjay: "Another policy is the 'Rajasthan Investment Promotion Scheme' – a horizontal scheme wherein even a small business can get waivers on certain duties. They have also created a vertical framework – so for high priority industries like solar and auto-engineering, they have created a customised set of incentive packages. And that is why Rajasthan is among the top ten states in India in the ease of doing business.
"Rajasthan is one of the few states that has come up with a dedicated single clearance system where it has integrated close to 14 departments which need statutory approval. Now you do not need to submit a physical file; if a department does not respond, it is deemed 'approved' and automatically proceeds to the next step. Bureaucracy has become more efficient and aligned to industry need. The clearance should be within six weeks; Rajasthan is the first state to introduce labour reforms where it has defined a minimum threshold and only above that can you have a union and where you cannot have political strikes."
What can businesses get here at MWC in terms of utilities and services that they cannot get elsewhere?
Anuj: "We have a large bank here with a big data centre. It is critical for power and internet connectivity to work here and it has been successfully running for three years. Power sufficiency and availability and power source is very good here."
Sanjay: "Rajasthan is one of the top two states in India in using renewable power;23 pc of its power is generated by green means – solar and wind. With most, two thirds coming from solar. We have a lot of arid land so it is perfect for solar energy. Agricultural land is available for long term lease which makes the business case for solar power much more attractive.
"One of the most important points to make is our huge focus on sustainability. That is how we differentiate ourselves. MWC Jaipur is the world’s largest project to receive Climate Positive Development Stage 2 Certification from the C40 Cities Climate Leadership Group, a global network of large cities taking action to address climate change. We have therefore not just created a road map, but it has been independently approved and last year (June 2015) on World Environment Day, Michael Bloomberg, who is chairman of the C40 Cities, presented this to Anand Mahindra. We are the only SEZ with pre certification for green; since Rajasthan is an industrial state we have planned it so 66 pc of the water we consume is recycled. We focus on inclusive development. We don’t see development and the economy as an either or; it is an ‘and’. How can we transform and help Rajasthan establish as a new business destination? It is already known for its tourism but how can I aid it to become a place for business. At the same time how can we do it and ensure we take care of all the stakeholders and the environment. Stakeholders have to buy into this ethos. No red level polluting industries are allowed here. We continuously get feedback from clients who view our commitment to the environment as a key differentiator, that policy of having good responsible neighbours. So it is also a credit for businesses to be based here it reflects high standards towards sustainability. It is prestigious to be located out of MWC Jaipur."
Is there a waiting list of businesses wanting to move here or are you out there business developing?
Sanjay: "The truth is in between. Just yesterday we announced that the first phase of the Domestic Tariff Area is filled up and a new phase of domestic tariff development. So the fact that 26 clients have taken up the complete package in phase one gives us the confidence that the demand is still there."
What type of businesses are you most wanting to attract here?
Sanjay: "We would look at broadly two areas. One cluster is manufacturing and the second is services and skills development. Manufacturing brings the world class, high investment and high technology businesses such as automobile or even foods and food processing. We already have four food clients working here. We have a couple of countries who want to bring a mini dedicated food cluster to serve the Indian market. IT services and skill development meanwhile will create substantial employment. In terms of engineering, we are targeting a very broad range of clients. If you look at our clients, we have the aforementioned JCB, a heavy equipment builder and then you have Rexam, another British company which is a drinks can manufacturer, recently signed up. Then there isPerto, a Brazilian ATM manufacturer. These are all high-end engineering companies. Other big names include: Deutsche Bank, Genpact, Infosys, Mahindra & Mahindra and MetLife.
"In addition, we have space in the SEZ for SMEs which want to be part of the supply chain to our bigger stakeholders like JCB or perhaps they want to go global themselves and want to be part of a world-class infrastructure. When you become part of the supply chain you can supply quicker and at a better cost. We have businesses here making wiring cables, transformers, batteries and concrete – all products that can be consumed here and exported out. We want to create an eco-system where one customer supports another . For example, we have a knitting needle manufacturer here, Knitpro, that has grown into one of the biggest companies in the world, in its space. It is important to emphasize we offer bespoke packages where businesses have a choice of flexi formats of developed land parcels for independent campuses and plug & play infrastructure for faster go-to-market.
So the sky really is the limit for any company coming here to catapult themselves into not just the fast growing Indian market, but also global markets."