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'If we get our act right, we could become No 1 in 30 to 40 years'

I think India's image has improved very considerably. Five years ago India was considered a basket case with very little capability, very little competitive ability and a continuing expectation of poverty.

I think that has changed very rapidly. Now most people who know and those who still don't know very much think India is moving forward, that its potential to compete is strong, that there is a lot of talent in its people and that it is not going to remain poor for ever.

Do you think India can become an economic powerhouse like China?

If we continue on the path of liberalisation India will definitely become a major power. I think we will overtake the Chinese. If we have really liberal policies we can do that. The base of talent in this country to my mind is certainly better than the Chinese. The base of tolerance and democracy that we have built will help us go much faster than the Chinese.

But we need the right economic policies. Right economic policy is the question of the freedom to operate. The Chinese until twelve years ago had absolutely no freedom, they weren't doing too well. They were a Communist, centrally managed economy. As soon as they decided to open up and decentralise decision making they grew very rapidly.

We have also demonstrated that in the last five years, if we continue on that path, we will grow very rapidly. I think a great advantage we have over the Chinese is that we have a legal system. We have a good accounting system, we have good business practises, we have a history of private business, and above all a facility of the English language.

How soon can we achieve that?

It is already happening. There is growth already. You can see it happening. You can see better products for the consumer. You can see better prices for the consumer. Look at the telephone services and the airline services. Even if you look at things which are still national, the railways for instance, although there is no competition there it is improving. It is already happening and it needs a further boost with more liberalised government policies in other areas.

According to the purchasing power parity calculation, today we are the fifth largest economy in the world. The US is number one, China number two, Japan three, Germany four and India is five, ahead of France and Britain. I think we can become the third biggest power in about fifteen years. In fifteen to twenty years we could overtake Japan. Overtaking China will take much longer because China is also growing extremely rapidly.

In my mind China will overtake the US in 20 to 25 years. I think if we get our act right we could become number three in 15 to 20 years and maybe in 30 to 40 years number one.

Are you satisfied with the amount of foreign investment that India has attracted?

No, not at all. I think it is much less than what is desired. There should be much more. But I think this is because we are not very clear in our policies. We have not defined our policies as clearly as we should. If we do I think we can attract much more. To my mind the minimum level of foreign investment we should get every year is 20 to 30 billion dollars, at least not less than 20 billion dollars. What we have been getting is only five to six billion dollars.

In what areas do we need it most? There has been a great deal of controversy that the foreign investment that has flown in has come in areas like soft drinks and potato chips. Do you agree with this criticism? Do you think we should restrict foreign investment to infrastructure where we need it most?

In all areas. Anywhere. It doesn't matter where.

It is unimportant if it is coming in potato chips and soft drinks or not. I don't think there should be any legislation or restriction on where investment comes. You cannot win investment, you cannot say that investment should come in. That's the decision of the investor. It is not possible for the government to tell you where you should save your money or where you should put your money.

If the government wants more money in the bank rather than the stock market it has to create a situation where more people will invest in the bank than the stock market. So I think it is wrong to dictate where money should come in. That should be decided by the investor, not by the government or by the media.

The other source of worry is that a lot of foreign investment approved by the FIPB has not come in. Why do you think this has happened?

It is always so. For one approval it takes two to three years before the investment materialises. Projects don't come up overnight. When there is a growing curve of investment it is always so. Depending on the policies some may not materialise at all.

We only started opening up three to four years back. People first start looking around, decide whether to come in, then they get the projects approved, they then implement it. So this lag will always be there. Even in China or in Indonesia, the projects approved are always much more than the actual projects that come in.

When the opposite takes place and people are getting out of a country, there will be no projects approved. Because nobody wants to come there. But there will still be some investment coming in because old projects are being implemented. When you are on a downswing, the money coming in is more than the projects approved. When you are on the upswing, the projects approved are much more than the money coming in. That's natural.

Adi Godrej continued ,