“I’ve been criticised for being an eternal optimist”, says Mahindra group chairman, Anand Mahindra, and he sees no reason why that reputation should change when it comes to his comments on India’s economy. “We’re destined to be the next growth engine of the world,” he declares in an interview with BusinessLine at Detroit where the group, on Monday, opened a manufacturing facility to produce off-highway vehicles. Excerpts:

I would like to understand your strategy for Mahindra’s US business. Where does the inauguration of Mahindra Automotive North America’s plant fit into this?

I wish I could say we had a grand battle plan about how we’re going to conquer America... ( laughs ). People would love to think that Columbus had that plan too…he was actually lost! I’m not saying that we’re lost…it is not like we were searching for India and found America but there was no grand plan. The way the Mahindra group is run as an autonomous federation of self-driven companies, there is no one boardroom that decides how Mahindra will plant its flag here.

We’re clear that strategy is what should dictate where we go. If your strategy calls for you to be in America then you will go into America. If your strategy calls for you to be in M&A, then you’ll do an acquisition. You usually acquire a company to acquire technology, geographic advantage, etc. Similarly, geographic expansion is very much like M&A. It’s done to advance a strategy. Now, why’re we here in tractors? Well, this happened to be one of the world’s largest markets for tractors.

Secondly, this was the market where the technology was driving us to improving our own products back home. There’s this old Frank Sinatra song “If you can make it here, you can make it anywhere”…that song was about New York but it applies to America. People know that if you make it in America you can make it anywhere and that is both in terms of sophistication and customer satisfaction. That is why we looked at America.

It has taken us a long time, we’ve been here a couple of decades. If you look at how we came in, there’s a wonderful man called Rip Evan who’s now retired from Mahindra USA. He actually predates me in M&M. He used to load up a tractor on the back of his pick-up truck and wander around Texas trying to evangelise the sale of Mahindra tractors. He’s part of our history and folklore. He was our first sales guy and that’s how Mahindra started in the US. It’s take a long time and tough work to build up our business in tractors here.

The auto business had pretty much the same kind of objective which is how you get a foothold in what till recently was the world’s largest market, now the second-largest. That’s how we got into the pick-up trucks business here and we pulled out due to regulatory and market-timing reasons. But we still retain our ambitions that at some stage we will be producing on-road products here. It is very likely that it will be from our Ssangyong stable. Americans have already understood the value of the Korean brand thanks to Hyundai and Kia. But again, as per our federation structure, one has to look at Ssangyong and ask if it is right for them to come to America from every point of view. So, there’s no one blueprint saying that you’ve got to be in America.

Each of them has its own strategy. For Tech Mahindra, half its business comes from the US, so it makes sense for them to expand. Just a week ago we reached $1 billion in assets for Mahindra Finance and they finance largely our tractors and dealers and they’ve reached this milestone in six years. It’s become a major business, profitable from the word go. Like this, I foresee many companies having their own logic for coming to the world’s largest economy. There are some who may not. Real estate, for example, is a very local business and Mahindra Lifespaces has not so far found any interest in doing business here but who knows in the future.

You have an understanding with Ford Motor on electric vehicles...

No, we don’t have any understanding as of now. We’ve entered a dialogue and all we’re saying about it is that the dialogue will continue. There’s an understanding that over a three-year period, we’ll be looking at a variety of possible areas of cooperation including sourcing, technology, and shared mobility and electrification are on the anvil as well. We’re still in the exploratory stage and discussions are on and proceeding very well but there has been concrete understanding reached as yet.

There are teams working together to see how the companies can work together in certain number of areas and there are no sub-goals or deadlines set apart from the overall one of three years. In today’s world most car companies are facing a very unpredictable future and so two heads are better than one sometimes.

We’ve had our share of half-life alliances with Ford and Renault but when we went in to those alliances a long time ago, they were specific. Renault, for example, was just to make the Logan and Ford was to help the company to come in to India and set up manufacturing and for us to learn. So they had a natural half-life.

So, the way to look at alliances between two large companies is not like “and they lived happily ever after”. The way to look at them is, if they can serve a purpose, meet their objectives and can conclude that particular phase, then there could be another phase for another essential objective.

Is there a possibility that this discussion can extend into conventional cars?

The whole discussion right now is about conventional cars too. Electrification and shared mobility have been thrown in but the bulk of the discussion is on conventional cars. It is actually about how Mahindra and Ford, first in India, can look at ways of working together.

Is there a chance that you could acquire an interest in the Chennai plant of Ford?

We’re not commenting right now simply because discussions are on. If I say anything right now it will be taken in the wrong spirit.

Talking about electrification, do you think India should jump straight to electric cars or first move into hybrids and then move to electric cars?

I presume that you’re asking from the technology point of view because from the need viewpoint all you need to do is stand in Delhi for an hour to understand why we need electric vehicles. From the technology viewpoint, this is a debate that is not settled yet and I think there are still some car companies that claim that hybrids are the natural intermediate route. I’m on record saying that the jump will be direct to plug-in electrics. And there’s been debate about this. I remember there was an MNC in India that openly contradicted me and said that it doesn’t agree with me on this.

That’s fine. They’re entitled to their opinion. We made a bet that India will leapfrog just as in mobile phones into plug in EVs. Elon Musk has the same view; he doesn’t believe that there is an intermediate stage.

By the way, we were the first non-Japanese Asian auto company to showcase a hybrid prototype. It’s not that we don’t know how to do it. It’s just that our bet is on plug-in EVs because of battery technology changing dramatically for the better and cheaper. We’re better off going the whole hog into electric.

For a country like India where tremendous investment has gone into conventional car-making which could face job losses, the vastness and need to set up charging points all over... whether hybrids will cushion the shock?

I don’t know the answer and I don’t think anybody does. That’s one of the unpredictable aspects of the auto industry. The thing is that technology is surprising everyone. Just the other day Elon Musk announced both a truck and another car that can go for what he claims a 1,000 miles in one charge. So the question is: will charging points be the bottleneck.

Who knows, maybe they won’t. Either because there will be batteries that will have much longer life or cars that will have much longer runtime. Or there could even be wireless charging. There could be induction charging as you’re on the road. People are not taking into account the rapid development in technology. That what we consider an impediment will no longer be one simply because of technology.

What’s your take on the Indian economy at this point in time?

I’ve been criticised for being an eternal optimist and I’ve no reason so far to change my reputation! The answers are very clichéd to be honest. They are about demographics, they are about the size of the economy. Where will the world look for growth? It has to look at India.

The question about India really is that whether we ever shoot ourselves in the foot and prevent ourselves from becoming the next growth engine of the world. We’re destined to be the next growth engine of the world. And we have nothing to fear but ourselves.

Happily, Moody’s seems to share this view now and any setbacks to GDP have been hopefully the kind where you take one step backward to take two steps forward. My feeling is next year will be the real tipping point for the country. I’m a little troubled by oil prices because I thought that when they fell below $50 it was an enormous bonanza; it allowed the government fiscal headroom.

You do business in India and now you’re doing business in the US. What are the perceptible differences in the ease of doing business in the two places?

India is getting much, much better. I was on the advisory board of the Ease of Doing Business report when Kaushik Basu was doing it. So, I understand the process and know how much progress we have made, which is real. The report is a bit shallow because it considers just two metros. It is possibly getting easier to do business in the metros where the evaluation takes place. We must ensure the ease of doing business in a much wider sense. In the US it has always been easy to do business. The point is that the very ease of doing business is also because it is murderously difficult to succeed because the competitiveness here is so high. So, the ease of getting into business is offset by the difficulty of surviving in it! That’s the challenge in America.

The correspondent was in Detroit at the invitation of M&M

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