But is there a possibility of Xi facing a political backlash. “Anything is possible. Take India where prime minister Narendra Modi and his very astute finance minister Arun Jaitley want to make a religion of ‘no favours taken, no favours given.’ But then they are let down by a senior member of the government. I have been a relentless campaigner against corruption and distribution of favours by the government. During the United Progressive Alliance (UPA) regime preceding Modi’s coming to power, there were many cases of wrongful allocation of frequencies to telephony companies and natural resources like coal and iron ore to producers of power and steel. Some favoured companies made huge wrongful gains. Indian people took their revenge by voting UPA out of power in 2014 May elections. A triumph for democracy that was.A cosy relationship between some business houses and the government eats into the vitals of the economy denying the masses the chance to benefit from growth. It will be good to remember what Nobel laureate Indian national poet Rabindranath Tagore wrote over a century ago, that he who does the wrong and he who allows that to happen are partners in crime deserve to be burnt like weeds,” says Lord Paul. His observation in 1983 that “companies are poor but their owners are rich” has become part of Indian business folklore.
It is commonly believed that India has potential to grow at a much higher rate than 7.3% in 2014/15 or 7% as forecast by Moody’s Investors Services for the current year because of deficit monsoon. Lord Paul has no doubt that “India has the capacity to grow at double-digit rate, provided corruption is fought with energy, an environment is created for the genius of all entrepreneurs and not just a small coterie of businessmen to come into play and banks with perilously growing NPAs stop playing footsie. But if growth fails to lift the poor, then it will be something I shall not be proud of. Indian leaders need to introspect why growth benefits are not trickling down to the bottom of population pyramid,” says Lord Paul.
In the past decade and a half, he has built a string of automotive components factories in a number of Indian states in sync with the country’s growing automobile industry (2014/15 Indian vehicles production was nearly 2.34m). How does productivity in Caparo’s Indian factories compare with units in the UK or the US? “Oh, there is much scope for improvement in India,” he says. How did some IT companies in India manage to make a mark on the world stage when the environment was not supportive of new entrepreneurs? “What helped these companies to prosper was the absence of government controls on the IT sector. Moreover, they were not in need of much bank finance. Their capital was brains and creative minds,” says Lord Paul.
Not very long ago when big mining groups swore by “never- ending China growth,” the likes of BHP Billiton, Rio Tinto and Anglo American invested many extra billions of dollar in mines capacity expansion. Now they are finding their margins coming under increasing pressure due to prices of iron ore, bauxite and copper ore collapsing on oversupply and poor demand growth. So Rio without Alcan and Anglo American without iron ore assets of Minas Rios, all bought at market highs would have done better now. Wisdom has finally dawned on miners to cut capital and exploration expenditure. “What you are saying is not an industrialist’s point of view. You have to see an acquisition, a takeover in the context of the time it happened. A takeover is based on due diligence and the best commercial decision of the day. Leave it to history to do the post-mortem.” But what about a few big-ticket purchases ahead of the 2008 financial crisis when claimants of trophies egged on by ‘egos’ were engaged in rounds of ferocious bidding? “In a free market, people are prone to making mistakes. That’s the law of the market,” he says. Having experienced now fewer than ten business cycles in his long, eventful career, his mantra is “when the chips are down, you keep your nerves up and when the going is good you cut costs.”