Stepping up to the plate: India’s young business leaders take charge

Arvind Singhal Takes the Helm as Chairman of Technopak Advisors in New Delhi.

As the business landscape in India evolves, a new philosophy has emerged that is gaining traction among entrepreneurs. This approach advocates for setting ambitious goals from the outset, with the aim of dominating a particular market. Instead of simply aiming for a significant share of a targeted market, proponents of this philosophy aim to capture virtually the entire market opportunity. This approach requires a bold and aggressive strategy, but it has proven to be successful for many businesses in India in recent years.

The two most prominent proponents of this school of thought are Mukesh Ambani’s Reliance Industries and Gautam Adani’s Adani Group.

Under Ambani, the exceptionally ambitious and extraordinarily brilliant son of pathbreaking first-generation entrepreneur Dhirubhai Ambani, Reliance already accounts for about 3.3% of India’s gross domestic product and about 8.9% of the total market capitalization of all listed companies in the country.

Adani Group, led by its audacious founder, is a relatively late starter in the Indian conglomerate game but the pace at which its revenues have been growing could bring it into sight of Reliance within the next few years.

But more than just the scale of their revenues or the market capitalization of their listed units, it is the sheer dominance that Reliance and Adani Group are striving to achieve in the sectors they operate in that really stands out.

Reliance is already by far the biggest player in India’s telecommunications sector, by far the biggest in retail, by far the biggest in petrochemicals and by the end of this decade, likely to be by far the biggest in clean energy.

Adani Group already is the biggest operator of airports in India and it is very rapidly expanding its presence in a wide range of core industries including power and gas distribution, cement, ports and edible oils, to list a few.

The rapid rise in the scale and the fortunes of Reliance and the Adani Group is unsurprisingly shaking up other traditional Indian business groups, such as the venerable Tata Group, Aditya Birla Group, Mahindra Group and a host of others that are now recalibrating their growth mindset and rewriting their business strategies.

This is what sets the new thinking apart from that of yesteryears: The leaders of today’s business groups are often seeking dominance in whichever sector they currently or intend to operate in — not just in India but increasingly on a global scale.

They are obviously cognizant of current and potential competition, but their strategies seem to be more influenced by the overall market opportunity and making the best out of it than by rivals.

This fundamental shift in mindset may have been directly or subliminally influenced by Narendra Modi, India’s indefatigable prime minister.

Not shy of using hyperbole in his countless speeches to audiences in India or to ethnic Indians overseas during his eight years in power, Modi has consistently exhorted the masses that this century is that of India. His message is that the current and coming decades are the time for India to catch up with its past, an implicit reference to when the nation accounted for nearly 25% of global GDP four centuries ago.

This rhetoric has been matched by some of the most audacious public programs the country has seen, including a nearly universal biometric identity system, expansion of banking accounts to reach more than 90% of the populace and a $210 billion effort to bring good-quality tap water connections to nearly 90 million households.

One of the newest efforts, an exciting digital e-commerce platform called the Open Network for Digital Commerce, will potentially bring just about every micro-, small and medium-sized business in the country into a digital ecosystem that is currently being piloted and is visualized as a public utility that will involve minimal transaction costs for both sellers and buyers.

Interestingly, there seems no great risk of monopolies or oligopolies emerging despite the very rapid scaling up of the country’s business groups. Most of them are banking upon a steady growth in the size of the opportunity itself.

By many estimates, India’s GDP could reach almost $7.5 trillion by 2032, or 134% above current levels. In absolute terms, this will provide enough headroom for most business sectors and most companies to grow manifold in the areas they target. Groups such as Reliance, Adani and Tata are also expecting to steadily take market share from informal businesses in a number of sectors.

The risk of a few business groups growing into unhealthy dominance of the Indian economy may also be mitigated by global companies putting more focus on India in the coming years.

Hyperscale investments by ambitious Indian business groups and perhaps some of their foreign peers, meanwhile, will benefit hundreds of millions of lower-income Indians. The large, new modern retail businesses of Reliance and others have already helped moderate consumer price inflation for Indian consumers by eking out more efficiencies from supply chains.

We are already seeing benefits from a much more efficient financial system that has not only brought the cost of transactions down to an absolute minimum but has also facilitated the creation of an exciting pan-Indian commercial ecosystem. The public and private sectors in India are at last working in sync to power the economy forward.