[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 around the mid-1990s, India has experienced remarkable economic growth. In particular, since the Modi administration took office (2014–), its economic development has often been discussed in terms of "Modinomics." In the 2020s, it will 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 the conversation there. Ms. Nikaido, what are your thoughts?

As Prime Minister Modi emphasizes every time he visits Japan, India has an overwhelmingly large young working generation—the working-age population from 15 to 64. This is the source of low-wage labor and a factor for growth as a market.

In India's case, exports have not been very strong for a long time, so domestic consumption holds the key to growth. I believe that deregulation and the progress of globalization have been factors contributing to this growth.

To make good use of that massive market and labor market, Prime Minister Modi has launched policies such as "Make in India" (manufacturing in India) and "Startup India" to foster venture companies, developing a scheme known as Modinomics.

However, the manufacturing industry has long been subject to regulations dating back to before economic liberalization (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 to lay off workers. Because of this, it was difficult for large manufacturing plants from overseas, such as those from 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 grow.

On the other hand, the service industry, which was not subject to those regulations, has expanded since economic liberalization due to the waves of globalization and IT. 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 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-related laws are not strictly applied to them?

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

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

On the other hand, I think some small businesses have made good use of government policies. Many small and micro-enterprises are not subject to labor-related laws and have relatively free economic activity. In a sense, they have become an informal sector. Therefore, some ambitious people avoid the application of the law by splitting their companies or creating separate companies instead of making 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 subject is small and micro-enterprises in the manufacturing industry, and I lived in Bangalore in 2015 to conduct a survey of female entrepreneurs. I felt that absolute poverty, including in slums, is indeed decreasing, everyone is becoming wealthier, and ownership of consumer durables is increasing.

But as I conducted the survey, I found that while they are earning income, they lack information. When I ask female entrepreneurs, "Where do you want to be in three years?" their response is like, "I haven't thought about it." I think there are probably no problems with their immediate livelihood. Many are self-employed, such as selling food or handicrafts while farming, and because the South in particular is developing, monthly incomes are relatively high.

However, since many people do not keep books in the first place, they do not know how to expand their business. 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 it.

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

After joining Sony, I was involved in computer-related development for a long time. There was a time when I visited 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 took office, 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 felt that English was spoken and costs were low, but now it is by no means subcontracting work; they are starting to do incredibly high-end work. However, many Japanese executives, intellectuals, and IT professionals still have an old image of India, and since they have never been to India, 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 Basing Themselves 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 took office in 2008, it was just when smartphones appeared, and they spread in no time. Young people working for global companies spun off, and a startup boom occurred.

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. In that way, incredible things are happening right before our eyes. Companies known as unicorns (unlisted venture companies established within 10 years with a valuation of $1 billion or more) are appearing one after another.

In the last few years, about 20-some 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 that as long as there are talented people at a low cost, it's fine, and I think they don't understand the level of technology India has acquired at all.

I am sometimes asked by people from Japanese companies stationed in Bangalore, "Mr. Takeyari, where is the Silicon Valley here?" Most of the people stationed there are from sales or manufacturing bases of Japanese companies, and there are very few IT-related people. Therefore, they experience Indian-style hardships 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 great 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 moves to emerging countries, India will undoubtedly 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 developing, what kind of business opportunities are expanding, and what kind of risks exist for the country.

First is the aspect of economic growth. The Indian economy achieved rapid growth 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, touted "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 7–8%.

However, this year, the second term of the Modi administration is starting 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 that 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 think India is fully equipped with the power to become an industrial nation through "Make in India."

In fact, as Mr. Takeyari 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's foundation was solidified 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 abolition of high-denomination banknotes in India in November 2016. Because of this, people involved in small and medium-sized businesses, who had driven economic growth, could no longer settle in cash. This dragged down growth, and the aftermath is said to still remain.

The other 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 states, and furthermore, they had to apply for a refund after paying the tax once. In other words, it took the form of costing money as liquid funds, and furthermore, digitalization and complex accounting procedures became required. This seems to have hit small businesses and the informal sector, hindering growth.

In 2018, the unemployment rate also became high in employment statistics, which led to criticism of the government. However, the Modi administration advertised 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, which serves as the central bank. Generally, in a general election year, fiscal spending is deployed to boost economic growth, but instead, it is down. Furthermore, it is reported that finances are tight and in a difficult state.

What kind of risks can be considered for the future?

Since the international price of the rupee is falling, 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 in the Middle East could decrease significantly.

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

For now, it feels somewhat difficult for the government to restore public trust in its policies. 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 leaving 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 famous Raghuram Rajan served as the Governor of the Reserve Bank of India also increased trust in India. However, Mr. Rajan resigned before the abolition of high-denomination banknotes, 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, and further with the global market, seem to be changing their stance toward the Modi administration.

Finally, regarding the connection with 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 dropping 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 toward the global IT industry in Bangalore?

There is a view that the Indian IT industry has grown basically because the government did not get unnecessarily involved.

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 abolition of high-denomination banknotes in 2016.

There is an architecture called "India Stack," starting with Aadhaar, and platforms using new technologies 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, collaboration with India will be essential, won't it?

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

That's why he dreams of making a cashless society like Northern Europe and abolishes high-denomination banknotes. Conversely, advanced engineers in the IT industry and the Indian Institutes of Technology also love Mr. Modi. Therefore, I think he will continue to place considerable emphasis on IT.

At the time of the abolition of high-denomination banknotes 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 from there, my personal shift to cashless began (laughs).

Immediately after that, I was looking at 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 to digitalize, and in two months, Paytm (Indian electronic payment) became usable.

They couldn't survive otherwise.

Also, ride-hailing apps like Uber and Ola Cab are not something you'd be desperate for in Japan, but in India, they have overwhelming benefits. You don't have to negotiate the price, 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 of Indians. For example, attention is being paid to how far the visas of Indian people in Silicon Valley will be renewed. It is expected 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 expecting India for advanced 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 it comes to where young Indians want to go in the future, it is still overwhelmingly the US. When they go to the US, they become CEOs of Microsoft and Google, or Deans of Harvard Business School, and are active.

Then, if they go to Japan, they can't see the future at all. When I tell Japanese people that, 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 receive Japanese language education at India's top universities, and then ask them to come to Japan.

However, to acquire the technical human resources that Japan needs, it is important to successfully 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 people study in China and Germany, which have language problems similar to Japan. After all, the appeal of Japan is not being communicated to 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 after graduating from MIT.

Chinese universities and research institutions offer huge salaries and research funds based on abundant funds 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. I think there are few young people who have the idea of wanting to work for a major company for a long time, unlike in Japan. Conversely, small and medium-sized enterprises or startup companies with cutting-edge technology might be able to hire excellent Indian talent. However, the moment you say, "I want you to speak Japanese," it becomes difficult.

I believe that whether or not a company can accept top Indian talent will be a litmus test of whether that company intends to compete globally.

When talking about India in Japan, until a little while ago, I think there were quite a few people who held stubborn ideas like, "India is a country where women are raped, it's poor, and there's no way it will develop."

The news about India that flows in Japan also consists only of very good news and very bad news. Since quite biased news comes in, not a few people have a negative impression. I also reflect on whether we haven't been able to communicate enough yet.

After all, I think many people in Japan look at India from a slightly superior perspective. That's why there is an assumption that Indians will come to Japan on their own. 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 identical, aren't they?

Until now, the flow of technology, people, and information was from developed countries to developing ones. But now that is reversing. We have to acknowledge that. It is exactly as Mr. Takeyari wrote in his book: "Because there is so much 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. From that perspective as well, I hope that understanding of India deepens further in Japan.

Even when I am invited to corporate seminars, they don't have much information and are relatively ignorant of basic things. Even though statistics show an increase in companies wanting to expand into India, I feel it is still a distant country to them.

Living in India, there are many inconveniences, so when I occasionally return to Japan on business trips, I feel that Japan is a truly well-functioning society. However, the problem is that while India is constantly changing and developing, Japan is somewhat stagnant and unchanging. I feel it has become a special country that is so wonderful other nations cannot possibly imitate it. However, I worry that if children born in this country grow up thinking this environment is the norm, they won't be able to survive in the global world.

In India, even if you are born into a wealthy family, once you step outside, you are forced to live while being tossed about in chaos. Such 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 for a "Study Japan" tour. We visited several cities like Delhi, Chennai, and Hyderabad, but hardly anyone showed up.

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

That changed under the Modi administration. Recently, many people gather when we hold Japan-related events. Since 2014, the number of Indians wanting to study Japanese has definitely increased.

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

When Indian students stay in Japan for about two months through exchange programs or corporate internships, they understand that Japan is a wonderful country and feel like studying or working here. The challenge for Japan is how to convey that appeal to the youth in India.

Based on the idea that technical colleges supported Japan's economic growth, Japanese companies expanding into India are focusing on human resource development. Major companies like Toyota, Daikin, and Hitachi are participating in the government-promoted "Japan-India Institute for Manufacturing." They are also fulfilling a CSR-like role, which I think is very good.

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, and those with good grades can join Toyota. When I looked at their notebooks, they wrote with surprisingly beautiful handwriting. Even children born into poor families grow tremendously if given a proper education. I was moved when I was told that those people are responsible for producing Toyota cars, and the model I was driving at the time was made by them.

Recently, Indian teams have been doing quite well in internal skills Olympics. Because there is a diverse pool of talent, there are truly excellent people even among the poor. I believe it is 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 the IT industry, how much space is actually provided for women to play an active role?

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. If women go to engineering universities, they have the possibility of getting well-paying jobs in IT companies, so talented individuals, regardless of gender, aim for engineering universities. Within that, I think women work very hard, partly because they have been oppressed in Indian society.

However, the ratio of women in universities like IIT is not that high, at around 10%. But after joining a 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 recently, there was news that a company with a female founder became a unicorn for the first time in India. In Bangalore, there is a world-class biotechnology company called Biocon; it 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 toward women, such as religion, caste, and ethnicity, remain deeply rooted. Conversely, women from high-status, wealthy families have been treated with privilege. 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 academia, working hard to win scholarships, study at universities, and use their abilities to succeed.

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 both women. I don't think a woman has ever become the president of a major bank in Japan. In that respect, India has a progressive side.

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.

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

Nowadays, the gender ratio of those passing university entrance exams is almost equal. There are many talented women who enter at the top of the test scores. However, while it's fine while they are studying, once they graduate, there is pressure for arranged marriages from their families. Even those who received higher education often had to help with housework or marry immediately, so there was an aspect where talent was not being fully utilized.

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 marriage. If they can gain more knowledge and work as professionals, they want to continue working even after marriage. Recently, women may be entering and building continuous careers in professional areas like engineering.

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

That's true. They don't often go into areas involving manual labor or getting their hands dirty, but there are quite a few women in the fields of finance, computers, IT, and management.

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

In post-war Japan, economic growth led to urbanization and nuclear families, 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 could be further advanced in these areas related to daily life.

The burden of domestic labor is the same in both India and Japan. Also, since India will likely follow the same path of aging, it would be great 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 like insurance, pensions, and healthcare, as well as responses to an aging population. Washing machines have also become quite widespread.

Panasonic created one that can remove 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 castes and taken up different jobs. It might also be that caste consciousness has weakened.

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

The giant 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 the Indian market, they have started doing so recently.

Japanese companies have succeeded in the past by having Japanese people discuss among themselves, plan and develop wonderful products and services, and sell them globally. However, this model has reached its limit. Competitors have already established systems in India to develop products for emerging markets. As the center of business shifts from developed countries to emerging markets like India, the Middle East, and Africa, I believe the "how to engage with India" will be the deciding factor. If we hesitate here, global business will be very difficult.

There is such a large 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 was selling televisions in India equipped with batteries that could be used during power outages. I remember thinking that Japan should reverse-import such products.

In Bangalore, there is a hospital famous for heart surgery called Narayana Health, where they perform over 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.

When you combine these, I feel that many things will happen in the medical industry, even more than in the IT industry. In fact, startups in the field called health-tech are increasing.

Japan should definitely collaborate more with India in the development of various solutions and technologies.

Also, entertainment is a massive industry in India; Bollywood is one example, 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 cooperate more and more with Indian companies. Hollywood already uses Bollywood as an outsourcing destination, so they have high-level technology.

Around the time I was posted to India, smartphones began to spread globally. Naturally, this was true in India as well, but you can't gain market share with high-end models like those sold in Japan. I thought we should seriously strengthen the mid-range. Generally, Japanese companies tend to think that high added value is more profitable and 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 in India, a fierce battle is taking place in that price range.

It's certainly not low margin, is it?

Exactly. Since it's a giant market, we must have the recognition that we cannot afford to miss out on this.

What makes India different from Southeast Asia is that there are already local conglomerate companies from long ago, and they become the competitors. In the middle and low-end segments, those local industry brands are strong, and even as people 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 Samsung refrigerators. 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 created a program where I selected about 10 Indian members and brought 10 talented young engineers around 30 years old from Japan to train 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, their Indian colleague was right there; 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, while Japanese tend to listen silently. How to exercise leadership in such an environment is a major challenge.

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

The Indian way of thinking—valuing family, respecting seniors—somewhere retains the parts that used to be good about Japan, and I think they are quite similar in that regard.

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

I stayed 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 much so that I didn't even have time to get homesick (laughs).

They really take care of you, don't they? You get treated like family.

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

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

Some students got upset stomachs, but they were shown waste 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 truly 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 wealthy people and poor people, and they can't find the right answers 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 develop," 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 engagement with India are emerging, beyond just studying abroad during student days to aim for research positions or being stationed in India after finding 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 the arts are also being born.

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