Though a self-proclaimed distant observer, Dr Frank Jurgen Richter maintains a sharp focus on India. That’s because India is considered one of the key emerging markets by Horasis, the independent think tank he established in 2005. A junior league World Economic Forum of sorts, Horasis works as a bridge for cooperation and knowledge-sharing between corporations, governments and organisations of developed countries and emerging markets.
Richter believes the current government has not been in power long enough for its behaviour-changing initiatives to be suitably evaluated, but has managed to build a strong global clout. However, much of what Horasis prescribes for India is visible in the swathe of initiatives that’s currently underway. In an exclusive interaction with Sourcing Hardware, he shared his understanding of how India is poised and the imperatives she is faced with, going forward.
India has made clear that it stands firm on its commitments at Paris irrespective of what happens in the rest of the world. What according to you has been the progress on its commitment and what has been the impact on industry?
A major commitment by India has been to increase its renewable energy production. Of course the whole planet is moving to this form of electricity generation and ‘records’ are broken monthly, but at one stage India had three of the world’s largest solar parks: at Kamuthi, Tamil Nadu; Kurnool Ultra Mega Solar Park associated with a hydro-power balancing act with the Longyangxia Dam; and Shakti Sthala in Karnataka. These commitments, with a greater emphasis also on wind power, help reduce India’s dependence on fossil fuels, especially coal, of which it has abundance. In fact, Coal India Ltd is a Maharatna company and is possibly the 8th most valuable company in India. Of course, they don’t wish to lose their status, but India wishes to use less coal, one of the dirtiest polluting fuels. Meanwhile, the National Electricity Plan (NEP) is to reduce fossil-fueled generation by 40% through 2019, well ahead of the NDC goals targeted at 2030. It is a big balancing act – to reduce coal dependency versus increasing electricity generation for increased industrial innovation.
We have to remember that while governments have committed to the Paris Accord of 2015 it is ordinary people who have to cope. And a rapidly developing India needs ever larger electrical supply and sadly, coal generators are easy to commission. For millennia we have seen our energy needs increase with our GDP and rising general well-being. Sadly, the International Energy Association predicts India’s use of coal to rise through 2022 (while China, it says, is strongly reducing its coal share of the energy market, though it still has 55% of the energy market). It is of note that clean-coal technology to extract CO2 at the power stations and to sequestrate it, or use it as a feedstock chemical, is a technology that is almost commercial and India is embracing that.
India has a national electricity grid, but as it rapidly expands its economy the grid needs to be enhanced with more inter-region exchange for two reasons: the locations of renewable sources of electricity do not always match demand areas, and now that the GST is in place regional marketing has become less complex. Further, as I mentioned, it is the consumers who drive the supply mode: the government is planning to better target subsidies, free renewable energy from licensing requirements for generation and supply, and promote retail competition through the NEP. Such changes will increase competition, reduce prices and permit users of energy to find the best reliable supplier for their needs.
What in particular can the Indian real estate industry do to help the government meet its NDCs?
The real estate sector is a global phenomenon comprising housing, retail, hospitality and commercial premises. In India a combination of government reforms, falling demand, and bad loans is hurting the real estate sector even while construction is booming. I think the main useful pressure is to ensure construction meets carbon-neutral performance standards. Construction firms worldwide understand these criteria but tend to skimp thus lower costs. In India, with a massive rural to urban migration about to begin, new housing standards need to be enforced. Commercial properties should have features that make them greener, such as more solar panels, in-built windmills and vertical gardens, and sensitive users of water/drainage systems. In a word, ensure they are ‘smart’.
How can the government use its flagship programme ‘Housing for All’ to usher in the cause of greenness and resource efficiency, thereby contributing to its COP commitments?
The Pradhan Mantri Awas Yojana is quite positive and has gone a long way to giving better housing to urban slum dwellers, but their numbers will accelerate. The UN estimates 75% of people will live in cities by 2050, so it is imperative that India creates vast plans to cope.
It is underhand to quote China’s model, but it is relevant. They are in the middle of a migration of 400 million persons from rural to urban city life, and at one time it was forecast that they would flock to prosperous coastal high-tech cities searching for work that was being replaced by robotics. Their government built 200 cities scattered over all regions, capable of housing up to a million persons each, and these will become relatively smart cities able to offer good housing and good social/work support for residents. Thus the cities ‘capture’ migrants inland before they have travelled too far from their villages and reduce pollution. They also reduce further pollution as their buildings are built to green standards.
We must give time for India’s government to engage in all its reforms to benefit its citizens as well as meet international commitments – there are naturally many who resist change.
What do you see as some of the most disruptive technologies likely to emerge in the next five years, and how can world leaders utilise these technologies for social good?
Clearly the ‘Digitisation of India’ will lead to many disruptive technologies, as will Artificial Intelligence (AI). For instance, if a village has a soil testing kit delivered, it may transmit the results via the Internet, and via AI it will be able to receive the best knowledge about the need for fertilisers and seed mixtures, together with any government regulations or subsidies for crops. That will revolutionise rural agriculture. Growing crops sustainably is another example – having all the
correct equipment in place so that ripe crops can be taken quickly to market at a good price (guided by a blockchain); this will reduce India’s massive food loss during field to fork. Substituting
polluting fuels for renewables is also a disruption, in so far as reduced reliance on fossil fuels will, in the aggregate, reduce India’s need to import, making it richer and more able to offer social support to the needy.
As for the world’s leaders, I think they are working together but the so-called Trade Wars initiated by President Trump derail the leaders’ progress. As a consequence, global growth is reducing and all CEOs are hesitant to increase their capital expenditure on new equipment and new staff training – often because there is too much uncertainty about the US Administration’s reaction to ‘my’ supply chain if it reaches to China, Iran or Russia (all nations suffering economic sanctions).
Lack of skilled workforce is a challenge being faced by many industry segments. While the government has initiated a mega skill drive, what are the bottlenecks that you feel are stopping the country from being a manufacturing hub? What solutions do you suggest?
There are several factors at play here. One is transportation infrastructures – without good road and rail access to ports firms cannot get their goods to market. The GST has helped when the firms wish to move the goods over a province boundary, but overall lesser paperwork is needed with greater digitization, which is not just a copy of the paper trail but a truly new design. It is hopeless if a computer system still has an operator in-line who demands corroborative paperwork – yet it is understandable that system redesign will inevitably remove staff roles thus firms must create new, positive roles for redundant staff. Thus, there should be a concentration also on the human resource function – in firms, and along the aisles of government.
And I cannot emphasise enough that education reform is needed. There are good schools, universities and major Institutes, but it is well understood that too many graduates have inadequate knowledge of their chosen subject. The whole of the structure, its training methods and its teaching staff, needs to be evaluated against the question – is it fit for purpose? And that target will require some debate, as well as wish to know ‘fit for what purpose?’
Ultimately the STEM subjects (science, technology, engineering and mathematics) need to be supported and given an Indian flavour. The ministries need to evaluate what education is needed in India’s future and ensure there are well-educated graduates in academic subjects as well as graduates in skill-based subjects (for which manufacturers need to proclaim their future needs). I realise of course, there are many sub-sections under STEM that must be supported, and that subjects need to be altered as the globe develops.
What according to you has been the impact of government initiatives such as Swachhata Abhiyan, Ujjwala Yojna, Power for All, Housing for All, Jan Dhan and the more recent Aayushman Bharat? How are these programmes helping build a New India?
This is an unfair question to me, an observer of India from afar. Yet for instance, the street cleaning program, apart from giving work to many people, is good for the environment as cleaning away noxious substances must be of benefit. Another is the PMUY program reorganising household fuel use by moving from the burning of unsanitary materials and wood in a low-temperature stove. That creates across India too many chronic diseases and early deaths, which have high actual as well as social costs. Moving to LPG for home heating and cooking, apart from health benefits, is a good idea as it increases jobs directly and indirectly in the making of cylinders, gas stoves and so on.
I will suggest that all these reforms bring both India’s rural and slum dwellers up to date in various ways. Reforms take time to discuss and enact, then more time to persuade the population of their benefits. This government has not been in power long enough for us to evaluate all changes, but they must imbue all Indians with a greater sense of vigour and pride in their country.