Last week, the annual mecca for global businesses took place at Davos. As has been the norm, India had strong representation, with multiple states putting up lounges to attract global investor attention. In fact, some lounges on the promenade gave one the impression of walking in Delhi on a chilly morning. GoI’s strong presence also helped in showcasing the country’s potential to visitors to this Swiss ski resort.
India was certainly flavour of the week. Whether it was geopolitics, geo-economics or the two hot topics, sustainability and tech disruptions caused by generative AI, India scored well. PwC’s 27th Annual Global CEO Survey launched at the forum highlighted how Indian CEOs are more buoyant about their growth prospects in 2024. 85% believe they would show revenue growth over the next 12 months, as opposed to 69% globally.
The survey also revealed that global CEOs are more hopeful of global GDP growth this year, with 38% indicating a possible improvement, as opposed to 18% last year. However, this confidence is fragile. 45% global CEOs expect their businesses not to survive in the next 10 years if they run them ‘as is’. For India, too, this number is high at 38%. This number goes up further for relatively smaller businesses.
This shows the need for business-model reinvention as leaders grapple with evolving disruptions stemming from technology, climate, supply chains and demographics. The higher confidence in India could be attributed to the progress being made on several fronts, including a few standouts:
Investments made in recent years in creating RE capacity have translated into significant outcomes, with India becoming the third-largest producer of RE in the world. 40% of its installed electricity capacity comes from non-fossil fuel sources. Apart from ranking fourth globally for total renewable power capacity additions, India has the fourth-largest installed wind as well as solar energy capacity.
Development of India Stack, with its inclusive impact, resonated across fora in Davos. The question being asked repeatedly was how it could be leveraged more widely. This is a fantastic example of public sector-led development enabling the private sector to drive disruptively efficient outcomes for both society and businesses together.
Another great example of how India’s global positioning is being cemented is the PLI-led focus on manufacturing, which is leading to import substitution and creating possibilities to export. This, along with India’s simultaneous efforts to sign FTAs with multiple countries, would help elevate the country on the global stage. Confidence of Indian CEOs in this regard was evident at Davos.
So, if Indian CEOs must sustain the optimism they expressed at Davos, what are the key areas to watch out for?
Generative AI A significant number of CEOs said they have already adopted generative AI. Even more believe the tech will raise the quality of their products and services, and enhance their ability to build trust with stakeholders. But regulation and cyberthreats are concerns, and leaders need to be alert and balance enthusiasm with caution. This also applies to growing fear of job losses, making it imperative for CEOs to make communication around generative AI and technology at large more inclusive and transparent.
Climate challenge This was palpably underlined by the almost 10° C difference between temperatures last Tuesday and Wednesday at Davos. Decarbonisation efforts are welcome. But they have just begun. The focus has to match that of our response to Covid — that is, nobody is safe unless everybody is safe.
To conform to regulatory requirements and our own individual carbon-neutral aspirations, CEOs will have to work with their supply chains and help them curate mutually effective and responsible solutions to drive long-term sustainable growth.
Tech-enabled, human-led future This requires an overzealous focus on upskilling teams. For Indian CEOs, quality of talent they hire, upskilling they undertake and temperament they display in the face of disruption will be the crucial difference between thriving and becoming obsolete. Investing in all these aspects is paramount. It is not just about having a great strategy but also about operationalising it.
Potential rise in interest rates Businesses globally, as well as in India, have, over the years and especially after the global financial crises of 2009, been used to ‘lower’ interest-rate regimes. This helped businesses sustain higher valuations and growth. However, with an increase in interest rates, burden of debt obligation has had a multiplier impact on some businesses.
While there may be some interest-rate softening in the near term, it will be a new ball game. Businesses would need to be more thorough in their evaluations and prioritise investments in areas of strength and focus.
One is confident that Indian businesses will continue to demonstrate resilience and adaptability to navigate this scenario well. Prioritising the long-term over the short-term may be considered unpopular, but it is an existential necessity.
Much of what CEOs need to do as they reinvent their business models to face disruptions lies within their control. Whether it is focusing on workforce upskilling, enhancing horizontal depth in organisations, reducing bureaucracy, driving stakeholder and board support, or allocating adequate resources for the future even as they monitor the near term, India CEOs have plenty to do as they seek to drive the nation’s aspirations.
By Sanjeev Krishan
https://economictimes.indiatimes.com/epaper/delhicapital/2024/jan/23/et-edit/getting-downndesi-in-davos/articleshow/107063044.cms
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