India can’t become global economic giant until domestic multinationals flourish

Observers who are interested in comparing the growth prospects of China and India often cite the large pool of MBA talent as one of India’s major strengths, but the jobs these graduates do ironically reflects the weakness of the economy.

It is true that MBA courses have been very popular in India in recent decades, resulting in a huge pool of high-level business management talent. While recent media reports have said that an increasing number of the MBA graduates in India can’t find jobs, high-level talent remains exactly a key driver of a country’s growth potential.

It should be noted that most of the Indian MBA graduates don’t work for domestic companies; instead, they are employed by multinationals. There are many well-educated Indians who hold high level managerial positions in firms in Silicon Valley and it is urgent for India to ramp up efforts to attract talent back. It is actually disturbing to think that so many high-level technical and management staff are working and creating great value for foreign companies.

Some Indian media reports have claimed that India’s GDP growth rate will soon overtake that of China to be the fastest among developing economies. Some reports say the country is on track to catch up to and even surpass China economically. These reports don’t specify how India will do these things, but there is no way that MBA talent working at foreign companies can help with this process.

To accelerate its economic growth, India needs its own high-quality companies, and to have its own top-tier multinationals, India needs to cultivate a more open environment for entrepreneurship.

The same logic also applies to India’s efforts to attract foreign investment. Since last year, the Modi administration has gradually relaxed restrictions for foreign investors in most sectors, aiming to lure investment from abroad as part of its ambitious economic reforms. But if India cannot provide a good environment for its own businesses to develop, how can it ensure a good environment for foreign investors?

At the beginning of China’s reform and opening-up, many people in the country went into business, contributing to the prosperity of the market economy and laying the foundation for the later economic takeoff.

India still needs to work in a down-to-earth manner and start by creating the conditions for the development of its own companies.