---- by Diane Tonge ----

As the economic downturn takes hold in the United States and Europe, the Indian government is frantically trying to keep its economy from stalling, while trying to calm the nerves of foreign investors following the Mumbai terror attacks.

A general election must be held by May, and the government had been hoping that the nation would be insulated from the problems of the global economy.

But as the global economic woes deepen, India’s economy is currently expected to see slower growth of around seven per cent during the 2008/09 fiscal year from nine per cent last year. One major factor is that more than half of India’s services and merchandise exports go to the United States.

Sir Martin Sorrell, who founded the world’s second-largest advertising and marketing services group WPP in 1985, told the Next Generation India Summit in London recently that he is confident his business in India will continue to grow.

His group has acquired just over half of the Indian advertising and services market and Sorrell reckons it is expanding at the rate of at least twice the GDP growth figure.

Retaining employees has been a challenge, he admits, and there are also concerns about inflation, property prices and the economic slowdown.

“I don’t buy the argument that the world is de-coupled,” he says, “And if the American economy is slowing, which it is, and if the Western European economies are slowing, which they are, then I think this is naturally going to have an impact on India and China.”

India’s advantages

Among India’s many positive points, he cites its massive population, with its youth and diversity.

He says his Indian employees are probably the best in his organisation. Well-trained staff, he argues, can lead to the top people from India taking on good positions in successful companies elsewhere in the world.

Sorrell also advises entrepreneurs to think of India not as one country, but as a number of individual states and apply the same idea when dealing with China and its provinces.

The downside

But while there are many positive points, Sorrell also warns companies within India, China and other countries against becoming overconfident. 

“There is a danger that when you become a little bit arrogant when you become confident and I think you have to be careful about that and not end up taking too much on.”

India is still a country of extreme polarisation between the rich and the poor, which brings with it political stresses and strains. The nation has a significant five-year growth plan, but nevertheless the polarisation in India remains pretty critical, Sorrell maintains.

It lacks the massive infrastructure projects that have been undertaken in China like Beijing airport.

Another major issue for India is protectionism. Sorrell believes this will continue to pose a threat. “Protectionism and popularism has its roots in countries such as India, and that is a worry.”

‘A no-brainer’

But despite the challenges and obstacles, India is definitely the place every big business should have on their agenda, especially if they’re looking for growth. “To my mind, it’s an absolute no-brainer in terms of economic development and therefore development for us!” he asserts.

Sir Martin Sorrell, CEO of  WPP;  Manoj Badale, Chairman of the Rajasthan Royals; Ian Woodcock, Chairman of Ultra Motor; the Olympian sailor, Dr Malav Shroff,  Co-Founder of Ocean Blue; and  Matthew Scott, Co-Founder of  Cosmos Ignite Innovations, took part in the Next Generation India Summit in London organised by the UK India Business Council.