My columns are about finance, but today I am tweaking my subject a bit. This week the world has been talking about Nvidia, a chip manufacturer from California, US, that has become the world’s largest company. It has surpassed all the leading companies like Microsoft and Apple with a market capital of $3 trillion. Nvidia is the world leader in the chips used for Artificial Intelligence, specifically for Generative AI. The Graphic Processing Units (GPUs) and the chips used for high-performance computing are designed and manufactured only by Nvidia.
Just a few years back, Nvidia was in the same league as Microsoft, Google and Intel, in terms of market cap and business. But today, it has not only achieved a gigantic scale but it’s bigger than the GDP of many countries.
After reading this news, a thought came to my mind, why doesn’t India have any such company? Where is India’s Nvidia? Shouldn’t India aim to have such a company? If India could produce CEOs who are heading global companies then why doesn’t India have a company in the topmost league?
Of course, it’s an unimaginable dream. Nvidia’s market cap is 75% of India’s GDP. Currently, Reliance Industries is India’s largest company with a market capitalisation of slightly less than Rs 20 lakh crore followed by TCS with a market cap of around Rs 14 lakh crore and HDFC Bank with Rs 12 lakh crore. We are miles away from building a company equivalent to Nvidia. But my question is, are we thinking about it? Do we have a thought process or any plans? I haven’t heard anyone talking about even building a trillion-dollar company. Well, it’s a gigantic proposition but shouldn’t India think about it? Why can’t the fastest growing economy, the largest democracy, and the most populous country with a big market, think about it?
India’s rally
In the last decade India has sharpened its mettle. The digital growth story has rebranded India. Domestic FinTechs and startups have raised billions of dollars in the last 10 years. Newly listed Jio Financial Services has achieved a market capital of Rs 2 lakh crore in no time. We have several unicorns and diverse companies but the scale is limited.
When India has produced dozens of CEOs who are leading big global companies and software designed by India’s engineers is fuelling bank systems all over the world, why doesn’t India have a company among the biggest? Among all the companies today that are household names globally such as Meta, Microsoft, Apple or X, there is none from India.
After the merger, HDFC’s market cap increased, but it’s still the sixth-largest bank in the world.
Why is India not on the list?
What could be the reasons? I have my observations. I somehow don’t think funding is an issue. Even before the Independence we had royal kings and princely states who would own Rolls-Royces and spend diamonds and gold on the family dogs’ weddings. (Read Freedom at Midnight).
While corporations and industries in the last few decades highlighted credit gaps, the banks’ written-off loans tell a different story. Last year the government said Indian banks have written off more than Rs 10 lakh crore of loans in the last five years. If we could calculate the total loans written off by banks in the last 20 years, I am sure it would have been bigger than the market cap of any company in India today. How much funds banks actually recovered out of these written-off accounts is a mystery.
Industries took funds for granted
I feel we lack the mentality of building large companies, of course, there were and are large industries which have strengthened India. But many of the corporations also took bank funds for granted and business was based on arbitrage, commonly known as jugaadin India. Such activities were also supported by politicians, else the country which was once the largest textile manufacturer in the world, wouldn’t have been the largest importer today, with not one brand that will rival a foreign one. Even today, we don’t have more than 5 leading companies in any sector for a population of 140 crore. Not more than 3 companies with a market cap of Rs 10 lakh crore.
Policy and will
I learned that when India got freedom we were not manufacturing much. But similar is the case with many countries doing much better today. South Korea is a great example, it has ascended quite fast and has companies like LG and Samsung that are omnipresent. In fact, South Korea’s Hyundai is going to list in India soon, which will be the largest IPO in the country.
I strongly feel India needs policies and willpower. India certainly has potential, we manufactured PPE kits during the pandemic and in no time became one of the largest exporters too. India can be an alternative to China and a supplier to the world but we need policies that will not change with every election and party. The challenge in India is we have different states adopting different policies based on political rivalries. When one party starts a project another party scraps it when it comes into power. The West Bengal government which is now pitching industries to set up shop forced Tatas to move out of Singur. We need to have defined policies and political will.
I think the time is ripe now. Digital Public Infrastructure (DPI) has created an exceptionally remarkable identity for India. With the China factor diminishing, global investors are looking at India. The country’s taxation reforms and a majorly young population provide a big edge. If we take this opportunity India will be in the big league. We need to onboard the reform express and throw away the traditional mentality. It’s okay for now that we don’t have Nvidia or a company at the top… But it won’t be okay in the future. For which we have to sow the seeds now.
(Editor’s Note is a column written by Amol Dethe, Editor, ET CFO. Click here to read more of his articles exploring several buzzing topics)
