The move by the Tata group to conduct an audit of its top 50 companies for WTO preparedness is in the right direction. More so, when the group has decided to invest as much as Rs 9,000 crore a year in its top six companies that contribute nearly 90 per cent of revenues. As the WTO dateline draws near, Indian businesses had better learn to fly, having taken long to come out of their cocoons. The knowledge-based sectors such as IT, biotech or the BPO segments have shown that Indian companies can take on the best in the world. We also have some of the most cost-efficient, quality conscious brick and mortar companies which can withstand global competition. The quality of manpower matters too. Moreover, market subverting distortions by way of subsidies no longer inhibit market-based pricing by India Inc. Tata Steel is, in fact, the lowest cost manufacturer of steel in the world. Tata Motors turned around from a massive Rs 500 crore loss in 2000 to march right into the heart of UK with its Indicas. Ranbaxy, which intends to join the billionaires club by 2004 is cost competitive in molecules. RIL’s diversification from textiles and petrochemicals into a global telecom giant showcases the strong sinews of Indian companies. So does Sterlite’s emergence as a global metal powerhouse. The advent of Indian MNCs which, just a decade ago, seemed an outrageous proposition, thus is a reality now. 


Therefore it is time India Inc took note of the WTO dateline. There is no doubt that in the future WTO will bring about a trade regime free of quota restrictions, tariffs and other forms of non-tariff restrictions. The Indian manufacturing sector will have to gear up to face this regime. However, India still has QRs on imports and exports. Transaction costs continue to be high and so far there have only been procedural improvements. The liberalisation-in-enclaves mentality continues to dog certain sectors. Indian industry must realise that world class efficiency and protectionism do not go hand in hand. The infotech sector does not hanker after protection, in sharp contrast to the automobile industry which still wants import protection despite its transition from a seller’s market to a buyer’s one. Second, the research-to-execution cycle must come down. Third, safeguarding know-how through patenting is critical once the industry is exposed to product and process ideas in their move up the value chain after they acquire scale and location-based efficiencies. Lastly, these gains must be consolidated through technological upgradation by investing in R&D and customisation as indigenous research and development will become increasingly critical in view of the acute competition.