[Feature: The Changing India and Japan] Roundtable: How to Engage with India as it Becomes a Major Power

Today, I would like to discuss India with experts active in their respective fields.

Since the mid-1990s, India has experienced remarkable economic growth. Particularly since the Modhi administration took office in 2014, this economic development has often been discussed using the term "Modinomics." In the 2020s, India is set to become a superpower, surpassing China to become the world's most populous nation. On the other hand, social changes are striking, and I believe there are issues regarding economic and regional disparities.

First, since I believe readers are most interested in the economy, I would like to start there. Ms. Nikaido, what are your thoughts?

As Prime Minister Modi emphasizes every time he visits Japan, India has an overwhelmingly large working-age population (ages 15 to 64). This serves as a source of low-wage labor and is also a factor for growth as a market.

In India's case, exports have historically not been very strong, so domestic consumption holds the key to growth. I believe that deregulation and the progress of globalization have become factors driving that growth.

To effectively utilize that massive market and labor force, Prime Minister Modi has launched policies such as "Make in India" (manufacturing in India) and "Startup India" to foster venture companies, deploying a scheme known as Modinomics.

However, the manufacturing industry has long been subject to regulations dating back to before economic liberalization in 1991. For example, labor-related laws include the Industrial Disputes Act, which requires establishments employing 100 or more people to obtain permission from the state government before laying off workers. Because of this, it was difficult for large overseas manufacturing plants, like those in China, to expand into India.

In an era of globalization, the inability to adjust the workforce according to economic conditions is tough in terms of export competitiveness. Additionally, the lack of infrastructure, such as electricity, was a major negative factor. These issues made it difficult for a large industrial sector to develop.

On the other hand, the service industry, which was not subject to these regulations, has expanded since economic liberalization due to the waves of globalization and IT integration. I believe the service industry can be cited as a source of growth on the supply side. Of course, the rapidly growing IT industry is the same.

There is also an argument that small and micro-scale factories in India generate significant income and employment, supporting the Indian economy since at least the 1950s.

Do these small factories operate flexibly because labor laws and other regulations are not strictly applied to them?

It is said that over 90% of all companies are small or micro-enterprises. India currently faces a situation called the "missing middle," where there is no medium size—only large or small. Small and micro-enterprises have received preferential government policies since the 1950s.

The government has provided support for the sake of job creation and balanced growth without regional disparities. However, because these support policies lasted so long and were too protectionist, they lacked export competitiveness even after economic liberalization. This is different from China and is the reason why it was difficult for Japanese companies to utilize local small and micro-enterprises.

On the other hand, I believe some small businesses have used government policies to their advantage. Many small and micro-enterprises are not subject to labor laws and have relatively free economic activity. In a sense, they have become an informal sector. Therefore, some savvy entrepreneurs avoid the application of the law by splitting their companies or creating separate entities instead of growing them larger.

The existence of such benefits is also a factor in why large companies are not being born. I believe the government is currently moving forward with reforms to labor-related bills, but since it is under joint jurisdiction with the states, there seem to be difficult circumstances.

Overall, the poverty rate has decreased, and I believe the economy is improving. Do you have the impression that wealth is reaching many people?

My research focus is on small and micro-enterprises in the manufacturing industry, and in 2015, I lived in Bangalore to conduct a survey on female entrepreneurs. I felt that absolute poverty, including in slums, is indeed decreasing, everyone is becoming wealthier, and ownership of consumer durables is increasing.

However, as I conducted the survey, I found that while they are earning income, they lack information. When I asked female entrepreneurs, "Where do you want to be in three years?" the response was often, "I haven't thought about it." They probably have no problems with their immediate livelihood. Many are self-employed, such as selling food or handicrafts while farming, and because the South is particularly developed, their monthly income is relatively high.

However, since many people do not keep books in the first place, they do not know how to expand their businesses. Currently, the government is working on fostering ventures, and the number of small and micro-enterprises is increasing, but support after starting a business is insufficient. I think it has become easier to start a business, but some say it is quite difficult to sustain one.

Speaking of Bangalore, it is the center of the Indian IT industry. I imagine the people in Bangalore that Mr. Takemari has seen probably have a different aspect altogether.

After joining Sony, I was involved in computer-related development for a long time. There was a time when I traveled to Silicon Valley almost every month, and I thought the United States was overwhelmingly the center of the world. However, from October 2008, I was assigned to the "Silicon Valley of India," namely Bangalore, and as a result, I was stationed there for seven years.

Sony had a development base there, and the number of employees, which was about 600 when I arrived, grew to about 1,800 at its peak. However, global companies from the US, Europe, China, and South Korea have much larger bases in Bangalore.

Initially, the industry started because developed countries like the US saw it as a place where English is spoken and costs are low, but now they are starting to do incredibly high-end work, not just subcontracting. However, many Japanese executives, intellectuals, and IT professionals still have an old image of India, and since they have never been there, they know almost nothing about the changes in India or the latest situation in the IT industry.

Therefore, to explain why global companies from all over the world are concentrating their massive bases in India, especially Bangalore, I published a book last year titled "India Shift: Why the World's Top Companies are Setting Up Bases in Bangalore?" The blurb on the book band is: "Japanese companies go to Silicon Valley. Silicon Valley companies go to India."

Silicon Valley companies are expanding their bases in India. Right now, American companies like GAFA, Microsoft, and Intel, as well as German companies like Bosch, Siemens, and SAP, have massive bases in Bangalore and are developing new technologies in India. As technological innovation progresses globally, India is rapidly gaining strength in new technology fields.

This "India Shift" does not mean "Let's go to India because the Indian market is large." It means that if a company intends to survive globally, regardless of the Indian market, how it strategically collaborates with India has become extremely important.

The growth of venture companies also seems to have incredible momentum.

Recently, startups related to new technologies such as AI, IoT, and blockchain have been increasing. When I arrived in 2008, it was just when smartphones appeared. They spread in no time, and young people working for global companies spun off, leading to a startup boom.

A company started by two young men who worked for Amazon India was right in front of my house. It was a company called Flipkart, which quickly grew into a company with a market capitalization of 2 trillion yen and was eventually acquired by Walmart last year. Incredible things like that are happening right before our eyes. Companies known as unicorns (unlisted venture companies less than 10 years old with a valuation of $1 billion or more) are appearing one after another.

In the last few years, about 20 unicorn companies have been born in India, while in Japan, there are only one or two. In particular, Indian venture capitalists with experience in Silicon Valley are now returning to India to provide support, so some startups target the US market from the beginning. Surprising things like that are happening more and more.

Looking at the world from the Indian IT industry, 90% is the US and Europe, and the portion for Japan is less than 1%, which is a very small market. Japanese people seem to think it's enough if there are talented people at a low cost, and I think they completely fail to understand the level of technology India has acquired.

I am sometimes asked by people from Japanese companies stationed in Bangalore, "Mr. Takemari, where exactly is the Silicon Valley here?" Most of those stationed there are from sales or manufacturing bases of Japanese companies, and there are very few IT-related people. Consequently, they experience Indian-style struggles in their daily lives and business, and the reality is that they know almost nothing about the IT industry in Bangalore.

The Indian IT industry has a scale of 4 million people, which is only about 0.3% of the population. Yet it has a huge influence on the world, has grown about 20 times in size over the last 20 years, and is growing overwhelmingly. Structurally speaking, as technological innovation progresses and the center of business shifts to emerging countries, I have no doubt that India will become the center and play a leading role in global business.

Now, I would like to ask Ms. Takenaka how she views current India from the perspective of political science.

The Modi administration entered its second term this year. I would like to talk about what kind of policies they are deploying, what kind of business opportunities are expanding, and what kind of risks exist for the country.

First, regarding economic growth. The Indian economy achieved rapid growth starting around the beginning of the 21st century, but it stagnated after the Lehman shock, foreign capital fled, and it became a difficult era. The Modi administration, established in 2014, proclaimed "10% economic growth." The global market welcomed this, and during the first term of the Modi administration, partly because the cooperative relationship between Japan and India was good, there was a very strong atmosphere of "India is a buy, let's invest." In fact, economic growth reached 7 to 8%.

However, this year, the second term of the Modi administration has started with quite severe forecasts. Since around last year, people have been saying, "Is the growth rate actually not this high?" but the government continued to claim it was maintaining a high growth rate of over 7%. However, recent government announcements have revised that downward, and according to the IMF and OECD, it is now said to be in the 5% range rather than the 6% range. One Indian economist points out it might even be in the 4% range.

Nevertheless, there are many growth factors. As Ms. Nikaido mentioned, there is a thick population volume with an average age in the mid-20s, and furthermore, Indian Institutes of Technology (IIT) are being expanded, producing many engineers. Therefore, as Prime Minister Modi says, I believe India is fully equipped with the power to become an industrial nation through "Make in India."

In fact, as Mr. Takemari mentioned, IT, telecommunications, computers, and Bollywood (the film industry in Mumbai, India) have great momentum. Media, service sectors, and outsourcing linked to these can be expected to see significant growth in the future.

On the other hand, the manufacturing industry and general service sectors employ millions of people. Therefore, if these sectors incur losses and layoffs continue, I believe politics will also become unstable.

What kind of policies will the Modi administration take from now on?

In the first term, economic growth was prioritized above all else, but since the administration solidified its base in the second term, it appears that the administration's goal is shifting from economic growth toward creating a "Great Power India"—that is, expanding military power, strengthening foreign policy, and strengthening domestic political control.

One of the factors that caused the current economic stagnation lay in the policies of the first term. First was the sudden demonetization of high-value banknotes in India in November 2016. Because of this, people running small and medium-sized businesses, who had driven economic growth, could no longer settle transactions in cash. This dragged down growth, and the aftermath is said to still remain.

Another factor was the introduction of a nationally unified tax called the Goods & Services Tax (GST) in July 2017. This was praised by former Prime Minister Manmohan Singh, and foreign companies, including Japanese ones, welcomed it as making it easier to invest in India. Therefore, it was thought that Indian stocks would rise.

However, when small businesses and people in the informal sector buy and sell, procedures became necessary for transactions across state lines, and furthermore, they had to file for a refund after paying the tax once. In other words, it took the form of costing money as liquid funds, and additionally, digitalization and complex accounting processes were required. This seems to have hit small businesses and the informal sector, hindering growth.

In 2018, the unemployment rate also rose in employment statistics, leading to criticism of the government. However, the Modi administration campaigned that neither employment nor GDP had fallen that much and weathered the 2019 general election with strong political power.

However, the government's financial resources seem to be running low. It is reported that they are getting by while borrowing money from the Reserve Bank of India, the central bank. Generally, in a general election year, fiscal spending occurs to boost economic growth, but instead, it is down. Furthermore, it is reported that finances are tight and in a severe state.

What kind of risks can be considered for the future?

The international price of the rupee is falling, so if the situation in the Middle East becomes unstable and an oil shock occurs, oil prices will rise, which will have a negative impact on India, which buys oil. If a war were to break out in the Middle East, remittances to the home country from Indian immigrants working there could decrease significantly.

Another concern is that an increasing number of citizens feel distrust toward the economic policies of the second Modi administration. First are the general public. For people whose lives have become difficult and who are forced to live in fear of restructuring, no matter how good the statistical figures the government announces, they will not easily believe them.

For now, restoring public trust in the government's policies seems somewhat difficult. If regulations on the media and other areas are strengthened to reverse the situation, I think it will also be disadvantageous for foreign investors.

Next is the possibility that economic experts are distancing themselves from the Modi administration. In the first term, researchers from MIT, Harvard, and other institutions active in the US were welcomed as policy brains. The fact that the renowned Raghuram Rajan served as the Governor of the Reserve Bank of India also increased trust in India. However, Mr. Rajan resigned before the demonetization, and a person said to be close to the Prime Minister was appointed as Governor. This person also quit at the end of last year.

In other words, the economic policy experts who were trying to successfully link and operate the Indian economy with the economies of Silicon Valley and the US, as well as the global market, seem to be changing their stance toward the Modi administration.

Finally, regarding Japan, Maruti Suzuki India, a joint venture between India and Japan that holds more than half the share of the Indian automobile market, saw its profits drop by 36% this year. It is reported that they cut 3,000 jobs and temporarily closed two factories. In other words, cars are not selling in the Indian domestic market. Since Suzuki, which leads the way, is like that, others are down even more.

These figures from companies that have employed many people and driven economic growth indicate the fact that economic growth is slowing down. Can the Modi administration bring about a recovery from here? That is what is being questioned.

What is the Modi administration's stance on the global IT industry in Bangalore?

There is a view that the Indian IT industry grew basically because the government did not interfere unnecessarily.

During the previous Congress Party administration, the UIDAI (Unique Identification Authority of India) introduced a national identification system called Aadhaar, which identifies citizens by taking their fingerprints and iris scans. Now, more than 1.2 billion out of India's 1.3 billion people have registered their irises and fingerprints and receive various services. It is a very well-designed architecture, and the Modi administration has not rejected the previous administration's policy but has accepted and promoted it.

Originally, many people in India did not have bank accounts, but as a result of the introduction, the number of people with bank accounts has increased, and the shift to cashless is also progressing rapidly. Until around 2015 when I lived in India, I was still living with cash, but when I ask Indian acquaintances recently, they say they have hardly used cash since the demonetization in 2016.

There is an architecture called "India Stack," starting with Aadhaar, and platforms using new technology that have not even been realized in Japan are being utilized. To me, Indian society appears to be changing rapidly.

I also believe that the IT field will continue to be the greatest strength of the Indian economy. In the future, if Japan aims for technological breakthroughs in 5G or supercomputers, wouldn't collaboration with India be essential?

Mr. Modi loves things like smart cities and digitalization. He comes from a merchant background and the story of him being a chaiwala (tea seller) since he was a child is famous, but he probably doesn't like things that are messy and look poor (laughs).

That's why he dreams of making a cashless society like Northern Europe and does things like demonetizing high-value banknotes. Conversely, cutting-edge engineers in the IT industry and IIT also love Mr. Modi. Therefore, I think he will continue to place considerable emphasis on IT.

At the time of the demonetization in November 2016, I was in a place called Cherrapunji in Meghalaya state in the northeast, which is the rainiest place in the world. When I came down to the plains, I was shocked to find that cash could no longer be used, and that's where my personal shift to cashless began (laughs).

Immediately after that, I was browsing materials at a certain bank in Kolkata. While the ATM inside the bank would dispense the now-rare 100-rupee notes, if you lined up outside, only the new 2,000-rupee notes would come out. Since I happened to be inside the bank, I benefited greatly, just like the bank employees. People outside were forming long lines.

I lined up too.

With 2,000 rupees, you're told "there's no change," and you can't use it, right? I became unable to buy things at the greengrocer where I usually shop. Then, that greengrocer also started digitizing, and in two months, Paytm (an Indian electronic payment system) became usable.

They couldn't survive otherwise.

Also, ride-hailing apps like Uber and Ola Cab are not something you'd be troubled without in Japan, but in India, they have overwhelming benefits. You don't have to negotiate prices, and you can communicate your destination even if you don't speak the language, so it's revolutionary.

I think the existence of Uber and Ola Cab has also made it much easier for women to move around. Since the route is displayed on the smartphone, you can see everything, including whether they are taking a different road.

Amidst various movements, the strict immigration policies of the US Trump administration might bring about unexpected movements from Indians. For example, attention is being paid to how far the visas of Indian people in Silicon Valley will be renewed. It is predicted that not a few people will leave the US. Conversely, it might become a golden business opportunity to invite such people to Japan.

Furthermore, as the US and China clash in a trade war and it becomes difficult to rely on Chinese products, voices wanting to look to India for cutting-edge software development and factory production are growing stronger.

It is true that if US visas become stricter, it's an opportunity for Japan. However, when you ask where young Indians want to go in the future, it is still overwhelmingly the United States. When they go to the US, they become CEOs of Microsoft and Google, or deans of Harvard Business School, and are active.

On the other hand, if they go to Japan, they can't see the future at all. When I tell Japanese people this, they suggest, "Then let's build a Japanese language school at an IIT in India." The Japanese way of thinking is to view India the same as Southeast Asia, have them provide Japanese language education at India's top universities, and ask them to come to Japan.

However, to acquire the technical talent that Japan needs, it is important to effectively appeal how attractive Japan is as a country and that various technical fields, not just IT, are advanced.

In fact, while the total number of Indian students studying in the US is over 100,000, in Japan it is about 1,000, which is exactly less than 1%. More than 10,000 students study in China and Germany, which have language issues similar to Japan. Clearly, the appeal of Japan is not reaching young Indians.

My view is that unless the Japanese side feels a sense of crisis and moves more proactively, nothing will happen.

When trying to welcome excellent global talent to Japan, the difficulty seems to be on the salary side. Japanese universities, research institutions, and Japanese companies cannot employ researchers who earn an annual income of 40 to 50 million yen even right out of MIT.

Chinese universities and research institutions offer huge salaries and research funds based on abundant capital to hire excellent foreigners. Unique culture and language are also cited as reasons, but above all, it is pointed out that Japanese-style organizations, salary systems, and the scale and nature of research funds are not attractive to foreigners. This point is very serious.

They are, after all, career-oriented and think about what they can learn and how they can grow. Unlike in Japan, I think there are few young people who have the idea of wanting to work for a major company for a long time. Conversely, small and medium-sized enterprises or startups with sharp technology might be able to hire excellent Indian talent. However, the moment you say, "I want you to speak Japanese," it becomes difficult.

Whether or not they can accept top Indian talent will surely be a litmus test for whether that company intends to compete globally.

When talking about India in Japan, until recently, I think there were quite a few people with stubborn ideas like, "India is a country where women are raped, it's poor, and there's no way it can develop."

The news about India that flows into Japan consists only of very good news and very bad news. Because such highly biased news comes in, many people have a negative impression. I also reflect on this, thinking that perhaps we haven't been able to communicate enough yet.

As I thought, there seem to be many people in Japan who look down on India a bit. Therefore, there is an assumption that Indians will naturally come to Japan. On the other hand, SoftBank was quick to invest in Indian unicorn companies and is using that technology to develop OYO LIFE and PayPay.

The screens for PayPay and India's Paytm are the same, aren't they?

Until now, the flow of technology for goods and information, as well as people, was from developed countries to developing countries. But now it's becoming the opposite. We have to acknowledge that. I think it's exactly what was in Mr. Takeyari's book: "Because there is a lot of diversity and difficulty, there is a foundation for generating innovation."

I think the idea of using IT and fintech to improve a difficult society is unique to India. I believe the problems India faces are also global challenges. In that sense, I hope that understanding of India deepens more in Japan.

Even when I'm invited to corporate seminars, they don't have much information and are relatively ignorant of basic things. So even though the number of companies wanting to expand into India is increasing in statistics, I feel it's still a distant country.

Living in India, there are many inconveniences, so when I occasionally return on a business trip, I think Japan is a truly well-made society. However, the problem is that while India is constantly changing and developing, Japan is somehow stagnant and lacks change. I feel it has become a wonderful, special country that other countries simply cannot imitate. However, in the future, if children born in this country grow up thinking this environment is normal, I worry they won't be able to go out into the world.

In India, even if you are born into a wealthy family, once you step out of the house, you have no choice but to live while being tossed about in chaos. Those people can survive anywhere, including America. I feel that the aggressiveness of the youth raised in India and their ability to manage their environment is overwhelmingly strong.

Seven or eight years ago, several Japanese universities jointly went to India on a "Study Japan Tour." We visited several cities like Delhi, Chennai, and Hyderabad, but really, no one came.

When I asked the people who did come why they wanted to study in Japan, 80% answered that it was because they heard it was safe. It was a bit of a shock that only the safety was known.

That changed under the Modi administration. Recently, many people gather when we hold Japan-related events. Since 2014, the number of Indians who want to study Japanese has certainly been increasing.

Sony headquarters also recruits from IIT, and if you have them study Japanese intensively for about two months after the job offer is decided, they become able to speak it reasonably well. Since they already speak English, Hindi, and even local Indian languages, there are many talented people who can quickly overcome the Japanese language barrier if they put their minds to it.

If you have Indian students stay in Japan for about two months through exchange programs or corporate internship systems, they understand that Japan is a wonderful country and feel like studying or working in Japan. But how to convey that charm to the youth in India? I think that is the challenge for Japan.

Based on the idea that technical colleges supported the growth of the Japanese economy, Japanese companies expanding into India are focusing on human resource development. Major companies such as Toyota, Daikin, and Hitachi are participating in the "Japan-India Institute for Manufacturing" promoted by the government. It also plays a CSR-like role, which I think is a very good thing.

Toyota has a production base in Bangalore, and next to it is the Toyota Technical Training Institute. I heard they recruit about 60 poor children from Karnataka state every year. They undergo three years of training there, and those with good grades can join Toyota. When I was shown their notebooks, they wrote in surprisingly beautiful handwriting. Even children born into poor families grow tremendously if given proper education. Those people are responsible for the production of Toyota cars, and I was moved when told that the model I was driving at the time was made by them.

Recently, Indian teams have been doing quite well in internal skills competitions. Because there are diverse human resources, there are truly talented people even among the poor. I think it's also important to support such people.

Ms. Nikaido mentioned she is researching female entrepreneurs; what is the situation regarding the advancement of women in India? In reality, how much space is provided for women to be active in the IT industry?

At the Sony India Software Centre, we recruited 50 to 60 people from Indian universities every year, and 20% to 30% of them were women. Even for women, if they go to an engineering university, there is a possibility of getting a job with good conditions at an IT company, so talented people, regardless of gender, aim for engineering universities. Among them, I think women work very hard, partly because they have been oppressed in Indian society.

However, the ratio of women in universities is not that high, around 10% even at IIT. But after joining the company, while men sometimes change jobs one after another for better conditions, women have a good retention rate and rarely move once they get married. Because of that, I have the impression that women are quite active in the IT industry.

The number of female founders of IT startups in India is also increasing. Just the other day, there was a story about a company with a female founder becoming a unicorn for the first time in India. In Bangalore, there is a world-class biotechnology company called Biocon, which was founded by a woman who is still active at the top. I think there are more women starting businesses and succeeding than in Japan.

In India, old norms and customs that are harsh on women, such as religion, caste, and ethnicity, remain deeply rooted. Conversely, women from high-status, wealthy families have been given privileged treatment. Indira Gandhi, the only daughter of Jawaharlal Nehru, became Prime Minister, and some women inherit large companies from their fathers.

That said, today, even women born into poor families are appearing in various fields such as economy, politics, and universities, working hard to win scholarships, study at universities, and use their abilities to be active.

Until recently, the president of FICCI (Federation of Indian Chambers of Commerce & Industry) and the CEO of ICICI Bank, India's second-largest bank, were also women. I don't think a woman has ever become the president of a major bank in Japan. In that respect, India has a sense of advancement.

A few years ago, the Chief Technology Officer (CTO) of Cisco, a global telecommunications equipment manufacturer, was an Indian woman. Later, she also served as the Chief Strategy Officer (CSO). I thought this was amazing.

Until last year, the CEO of PepsiCo was also an Indian woman, and recently an Indian woman became the Chief Economist of the IMF. They are truly going out into the world in surprising numbers.

The Companies Act in India was completely revised six years ago, and it is mandatory to have at least one woman on the board of directors.

Now, looking at the ratio of men and women passing university entrance exams, it's the same. There are many talented women who enter at the top of the tests. However, while it's fine while they are studying, once they graduate, there is pressure for arranged marriages from home. So even those who have received higher education have to help with housework or get married immediately, and I think there was an aspect where human resources were not being utilized much.

In Indian MBA graduate schools, the number of women in commerce, finance, and accounting is increasing, and one reason behind this is the desire to delay the timing of marriage. Furthermore, if they can gain knowledge and work as professionals, they want to work even after marriage. Recently, in professional areas like engineering, women may also be advancing and continuing to build their careers.

Until about 10 years ago, engineers were overwhelmingly male students. Women were in the humanities, or there were an unusually large number of women in mathematics departments.

That's right. They don't really go into areas like manual labor where they get their hands dirty, but I think there are quite a lot of women in the fields of finance, computers, IT, and management.

Against the backdrop of rural poverty, people who came from the countryside to the cities to work as migrant laborers worked for low wages. Such a society changed with high growth, and as better employment opportunities increased for migrant workers, it became impossible to secure domestic workers unless one was quite wealthy. Middle-class families are now performing much of the housework themselves. Insurance and healthcare are also becoming necessary.

In post-war Japan, urbanization and the shift to nuclear families progressed due to economic growth, and domestic labor was supplemented by the spread of electrical appliances and the enhancement of social services. I believe that win-win cooperation between Japan and India can be further advanced in such areas related to daily life.

The burden of domestic labor is the same in India and Japan. Also, since the aging of the population is expected to follow a similar path, it would be good if we could create something that utilizes Japan's experience and India's technology.

I think Japan has strengths not only in household appliances but also in social services such as insurance, pensions, and healthcare, as well as responding to an aging population. Washing machines have also become quite widespread.

Panasonic made one that removes curry stains, didn't they?

I want them to sell that in Japan too (laughs).

I think it means that people who used to make a living from laundry have left their traditional caste and taken up different jobs. It might also be that caste consciousness has faded.

If you're going to do a business closely tied to daily life, the model of traveling from Japan to India, conducting market research, and planning and developing centered on Japan is becoming unsustainable. I think we must build a team rooted in India, including Indians, and think with those people at the center.

The huge bases of global companies that are competitors for Japanese companies are in India, and they are involved in high-end R&D, software development, and product development. And while they originally didn't target India, they have started doing so recently.

Japanese companies have succeeded in the past by having Japanese people discuss among themselves, planning and developing wonderful products and services, and selling them globally. However, this model has reached its limit. Competitors are already building systems in India to develop products for emerging countries. As the center of business shifts from developed countries to emerging countries such as India, the Middle East, and Africa, I believe the key is "how to engage with India." If we hesitate here, global business will be quite tough.

There is such a market and labor force. In the recent typhoon, many power outages occurred in the Kanto region, but I remember seeing news a few years ago that Toshiba would sell televisions in India equipped with batteries that can be used even during power outages. I remember thinking that Japan should also reverse-import such products.

In Bangalore, there is a hospital famous for heart surgery called Narayana Health, where they perform more than 30 heart surgeries a day. That's more than 10 times the number in Japan. A massive amount of data is collected through the overwhelming number of patients and their treatment experiences. And they have the power to utilize IT technology.

Combining these, I feel that various things will happen in the medical industry even more than in the IT industry. In fact, startups in the field called health-tech are also increasing.

I think Japan should definitely collaborate more with India in the development of technologies such as various solutions.

Also, entertainment is a huge industry in India; Bollywood is one thing, but Netflix and others are also of a high standard.

Japan also has things that Indians are interested in, such as animation. In the field of entertainment, I want representative Japanese companies like Sony and Nikkatsu to collaborate more and more with Indian companies. Hollywood already uses Bollywood as an outsourcing destination, so they have a high level of technology.

Around the time I was appointed to India, smartphones began to spread globally. Naturally, this was the case in India too, but you can't get market share with high-end models like those sold in Japan. I thought we should seriously strengthen the mid-range. Generally, Japanese companies think high value-added is more profitable and tend to go for the high-end in difficult markets. However, in India, you can't win unless you focus on the mid-range to low-end for the exploding market. Korean and Chinese companies are focusing there.

Japanese people say India is difficult because of low margins and high volumes, but a huge battle is taking place in that price range in India.

It's certainly not low margin, is it?

That's right. Since it's a giant market, I think we must have the recognition that we cannot afford to miss this.

What makes India different from Southeast Asia is that there have already been conglomerate companies as local firms for a long time, and they become the competitors. In the middle and low-end segments, the brands of those local industries are strong, and even when they become wealthy, they use products from places like Tata and Reliance.

The fact that Korean companies are attacking from the low-end to the middle means that even if consumers move to the high-end, they will buy a Samsung refrigerator. What's innovative about Samsung and LG refrigerators is that they have locks. This is not for children, but to prevent maids from opening them without permission. They are sold relatively stylishly and at low prices.

When I was in India, I selected about 10 Indian members and brought 10 talented young engineers around 30 years old from Japan to create a program where they trained together in India for three weeks. And during the training, I had a Japanese person and an Indian person share a room.

When they woke up in the morning, an Indian colleague was next to them, they went to the classroom together, had various discussions in English, and at night, they split into teams to discuss Sony's emerging market strategy.

I thought the process of colleagues of the same generation from Japan and India sharing their respective experiences and knowledge on equal terms while putting together a strategy was extremely important. Indians talk a lot, but Japanese people tend to listen silently. How to exercise leadership in such a situation is a major challenge.

When you study in the US, Canada, Australia, etc., there are many Indian students, and many people share rooms with Indians in student dormitories. But surprisingly, they seem to get along well, perhaps because they are fellow Asians.

The way Indians think—valuing family, respecting seniors—is somewhat similar to the good parts of old Japan, and I think they are quite alike in that regard.

I was studying at a Research Centers and Institutes in Mumbai established by the central bank. It was 2002, and due to India-Pakistan tensions, Japanese companies had evacuated, and there were almost no Japanese people in Mumbai at the time.

I was in a private guesthouse for six months, and perhaps because a Japanese student was rare, someone would come to talk to me every day so that I wouldn't get homesick (laughs).

They take good care of you, don't they? Treating you like family.

Through the network from my time studying abroad, I am still doing research together with them, and since everyone is scattered all over the world, I benefit a lot. I feel that once you build a bond, it is very strong.

This August, I took students to Kolkata. Kolkata has a deep relationship with Japan, many intellectuals, and is a region that has produced Nobel laureates.

Some students got upset stomachs, but they were shown garbage disposal sites and solar power warehouses, interacted with students at Jadavpur University, visited the Japanese-affiliated Tata Hitachi, and heard from the Consul General; I could really see the students growing every day.

When they came back and I asked how it was, the answer was, "It was a mess and I didn't know what was what." There are rich people and poor people, and they can't find the right answer easily, but it seems their horizons have truly broadened.

American universities, research institutions, and international organizations like the IMF and World Bank also have many Indian economists. India is increasing its global presence.

From a political science perspective, the comment would be, "The future of the Modi administration is somewhat unclear, so let's watch how things go," but India will become an indispensable presence for Japan and the world in the future. I hope more people will open up the relationship between Japan and India.

A graduate of my seminar worked for several Japanese companies for a few years after graduation, then took the plunge and is now studying hard to obtain an MBA in India. It seems that new forms of involvement with India are emerging, not just studying abroad during student days to aim for research positions or being stationed in India after getting a job. The number of young people choosing it as a destination for language study also seems to be increasing, and although we couldn't talk about it today, various channels for exchange in culture and art are also being born.

We have significantly exceeded the scheduled time. Is the fact that the talk never ends also part of India's charm? Thank you very much for today.