Japanese conglomerate Hitachi has been doing business in India for nearly a century, making it the company’s oldest foreign presence. From pioneering contributions in railway locomotives and telephone exchanges to powering critical infrastructure like the Bhakra Nangal dam, Hitachi has been an integral part of India’s growth story. Over the decades, this collaboration has expanded across key sectors, including manufacturing, infrastructure, and the digital economy. As the company approaches its 100-year milestone in India, Bharat Kaushal, MD, Hitachi India, and Sanjeev Krishan, Chairperson of PwC in India, sat down with Siddharth Zarabi, Editor of Business Today, to discuss Hitachi’s business, the state of manufacturing and the India growth story. Edited excerpts:
SZ: How do you describe the state of manufacturing in India, particularly after the policy push over the past 10 years?
SK: Manufacturing has received a lot of attention in India in the last 10 years. First, the world economy was looking for other alternatives to China with the ‘China plus one’ strategy, and India was also looking at it as a generator of employment. But in the manufacturing space, the Chinese, South Koreans and many Southeast Asian economies had built capacities even in 1985 for six, seven billion people and amortised costs over high-margin Western economies with their competitiveness. They could very easily question the competitiveness of manufacturing in India. And the other big change in the landscape of manufacturing globally was the introduction of robotics, which meant that assisted intelligence was going to augmented intelligence, which was going to autonomous intelligence. The new manufacturing requirement was a blend of operating technologies, IT solutions, and a new society that is transforming with a new sense of empowerment and entitlement. When we look at which industries to focus on, capital goods remains very important in a large economy. And we have now become the world’s biggest rail company and the biggest energy transmission company, with many new companies joining the Hitachi fold. And that itself has been a big turning point for our manufacturing base in India. It’s not just about making in India for India, which is a very large market and can pay for better quality now. And it’s no longer like what our competitors did 10, 15 years ago, that is, low-cost, low-margin, work. Competitiveness with higher quality has been the bedrock on which all these new policy frameworks have been built.
SZ: Do Indian companies meet the high-quality parameters Japanese firms are used to?
BK: I won’t use one scale for all because there are many Indias in India. Here industry 1.0 and 2.0 exist in certain areas and 3.0 and 4.0 in others. There is more technology intervention required in certain cases.
In India, the championship position we’ve taken in 10 years in digital has suddenly made society more empowered. And there is a reverse engineering from demand learnings. In today’s India, the stakeholder has gone beyond the customer to the user. If you imagine an economic value chain to do business in India competitively, then you look at energy as a service, mobility as a service, infrastructure as a service. I may be a big player, but all these things must finally go to the user. It is not just a good solution; it must also be a good experience. There is a kind of connected society challenge of both centripetally reaching out to the end user and centrifugally enabling them to go out from a human-centric perspective. That’s why we have the payment business, the education business, where all Kendriya Vidyalayas or full states are on our platform. We are the largest issuers in the private sector of Ayushman Bharat identity documents ; doctor training, nurse training and AIIMS are also on Hitachi’s platform.
SZ: How does a corporation manage to do so many things?
SK: Of course, we know that Japan has always been at the cutting edge of technology, innovation and R&D. And it’s always been driven by two factors: One is capital availability. That is, when you can monetise your ideas, innovation and technology, you generate more capital. And Japan has been funding a lot of infrastructure development and various projects in India. And partly that’s got to do with the very strong government-to-government connect that India has had with Japan.
The other I would say is the fact that Japan has been agile to embrace shifts in technology. It has adapted very, very quickly. There are many nations that have not adapted to change, particularly technological change, as quickly as many Asian countries have.
SK: The big Japanese corporations continue to do very well in India. But smaller Japanese companies still find it difficult to come to India. Is there anything India can do more?
BK: When a Virgin Atlantic or a British Airways looks at the Indian market, they look at a middle class of 150-200 million, but a consumer company like Panasonic or Hitachi may look at a middle class of 500 million, and a Japanese ramen company may look like Pepsi at a billion people. There are multiple definitions, and this is what is unique about India. How do you get the right market within India? Because it presents itself as a market for everything. So, you don’t look at it as one country and replicate an outside solution-that is one part. But Japanese trading companies are huge umbrellas that bring their own supply chain. It’s about better stakeholder management.
SZ: How does the company manage the natural friction that would arise from this?
BK: Japanese companies in India have sometimes been found to be slower and more expensive. However, there is trust and reliability of technology. Change management meant that as more Japanese giants became global, they needed to draw up a new list to protect image and reputation, which is bigger than what any other mechanism of brand value can create.
SZ: But isn’t that the trend, that when Japanese companies come, they create clusters? For instance, there are dedicated hotels, etc. Has that changed?
BK: A lot has changed. The younger Japanese are bringing their families, their children are going to school here. You know, it’s the familiarity of the language, the understanding of the culture. There are nearly 2,000 Indian restaurants in Japan, I think 1,200 in Tokyo alone. That means the familiarity has increased.
SK: Do you think India could have done anything else to make sure that Hitachi is more excited?
BK: It’s worked differently in different industries. In some cases, where we see that India can take one of the top three leadership positions, the push is seen very differently and the coming together of Japanese technology is encouraged. In still others, because we are also a noisy democracy, and I say this with a lot of respect for all our processes, but sometimes when it was only a price bid, Japanese companies would be outsmarted 35% on an average. It’s only later when there was a life cycle cost that they started finding favour.
SK: How does Hitachi look at sustainability?
BK: Japan was the first to raise the bar without making any noise on environment and sustainability when everything was understood as one. And the Japanese financial institutions, government finance, were always linked to this. Today’s conundrum is that the benchmarks are not defined. The hesitation of capacity building vis-à-vis the experimentation that is required makes you focus either on foundational technologies, which will be a new source right from the input all the way to the delivery, or on transitional technologies where the existing assets are getting smarter and greener. The focus in Japan was always on existing assets, because then the transition is better understood. Today, including in artificial intelligence, you have humongous responsibility, and we are talking everywhere about data free flow with trust. This is transformative. It’s bigger than splitting the atom, or the invention of internet.
SZ: What is your company doing about AI in India?
BK: Like any major transformational change, AI is a reality. It has been unleashed, and you can’t stop it, you must ride it. And you must embrace it with that earnestness and commitment, as a policy, as a business, as an end user. However, at some point, there must be responsibility to protect against what mustn’t happen. That’s a very difficult and big challenge today.
For instance, 500 million people have Ayushman Bharat IDs in India. And there is a huge demand and supply gap between healthcare facilities and the entitlement of healthcare. Do you really get AI in clinical treatment? There is this genuine challenge. We have a global centre for AI in Bengaluru, and we are doing solutions from biodiversity to energy, rail, education, agriculture, all the way to the metaverse. It predicted when people should move out during the Californian fires, because of wind direction, etc. And then there is more mundane stuff for day-to-day efficiencies in business models. But you must think how much of it, and at what speed, should I adopt so that the whole system is in consonance.
But the speed with which AI can deliver human completeness, physical, social or psychological, as an experience, has a limitless potential. It cannot be matched by anything else. Ultimately, in a connected society, a business strategy is evergreen. Technologies will come and go.
@szarabi
