BT at Davos 2023: It was all about India Shining!

In the search for meaningful answers to some of today’s most pressing questions, the search for food was an equally big concern for those who attended the recent annual gathering of global leaders and business executives at the World Economic Forum (WEF) at Davos, Switzerland.

Seems surprising? Trust me, it isn’t. The WEF is for those who can afford the fees, the overpriced and underserviced hotels, the slippery sidewalks, the freezing cold and the lack of food. Yes, the latter is a challenge—despite the largesse of the India Lounge, which like last year and before, resembled a typical bustling market, especially at mealtimes. The joke, as one of the organisers said, was that the lounge was actually the Davos langar that fed anyone who wandered in over five days of the event. While I mostly missed the dal-chawal-sabzi lunch at the lounge, my evenings were saved by a food truck selling Tibetan momos, and another that dished out a filling Halloumi wrap. The icing on the cake—both had vegetarian options!

Just nine months after it had been held in springtime, the forum convened at the ski resort of Davos from January 16-20 to discuss cooperation in a fragmented world. And while last summer you couldn’t avoid ‘bitcoin’ pizza on the Davos promenade, this time around the collapse in crypto meant that only the underlying technology of blockchain was on display. And while food was hard to come by, Tata Tea served thousands of cups of masala chai and coffee to anyone who cared to stop by at their kiosk. Another winner was Emirati Hot Chocolate—a unique concoction made by pairing green unroasted coffee, Swiss chocolate, flavoured with cardamom and saffron.

While the chai and chocolate warmed many a cold delegate, the air was heavy with concerns over how the global economy will pan out this year. If the leitmotif last year was record optimism, the mood has shifted to record pessimism this year, a reflection of the post-Covid-19 economic challenges that were captured in PwC’s 26th Global CEO Survey.

The survey, which polled 4,410 CEOs in 105 countries and territories, including 68 from India between October and November 2022, says that as many as 73 per cent of chief executive officers around the world believe global economic growth will decline over the next 12 months, the most pessimistic outlook in over a decade.

The sentiment was shared by a majority of the WEF’s community of chief economists, who are expecting a global recession in 2023. In their latest outlook for the year, almost two-thirds of the chief economists believe a global recession is likely this year, with 18 per cent considering it extremely likely. This is more than twice as many as in the previous survey conducted last September. Only a third of the respondents consider a global recession to be unlikely this year, although the survey also points out a number of potential sources of optimism at the start of 2023, including strong household finances and easing inflationary pressures, among others.

India stands apart in this regard, with almost six in 10 Indian CEOs (57 per cent) polled by PwC expressing optimism about the country’s economy over the next 12 months. In comparison, only 37 per cent of Asia Pacific CEOs and 29 per cent of global CEOs expect economic growth to improve in their countries or regions in this period. And even as the captains of western industry seem to be very pessimistic, it was Indian companies, and state and central government ministers, who were out in strength at a time when the Chinese gave the forum a miss, again, and when the Russians are no longer welcome at any global gathering.

Asked about where India stands in the global scheme of things in 2023, PwC Global Chairman Bob Moritz said that while Indian CEOs are pessimistic about the global economy, they are much more optimistic about the local economy, and their ability to raise revenues. “This is a big opportunity for India—it continues to be an asset and a deployment for human capital to the world. If India can also play in the green supply chain, that will be a huge benefit for the world,” he said.

But there is far more about how the India story resonated here. WEF Founder and Executive Chairman Klaus Schwab underlined this when he said that “India remains a bright spot amid global geo-economics and geopolitical crises”.

And as China’s star has dimmed in the recent past, Indian industry is reaching out for the stars.

Industrialist Sajjan Jindal, Chairman and MD of JSW Group, revealed he is working on a made-in-India electric vehicle, just like a Tesla. “I am very passionate about cars, and that has been my childhood passion. I think now is the time to build a very high-quality car in India which could be similar to a Tesla. That is what I am really working on,” he said.

Underlining the global ambitions of Indian industry, Jindal added the idea is to make a car from India that will not only be for the domestic market, but for the global market as well. “We would want the car to be made in the country for Indians, but also such a technology that should sell in Europe and Japan as well,” he said. “I want to make a car that is made in India, sold in India, and also sold in international markets. Instead of us importing [vehicles], other countries should import from us,” Jindal said.

State Bank of India, India’s largest bank, feels an economic slowdown or recession is clearly on the horizon, but it could be restricted only to the first half of 2023, following which robust growth could be expected. Chairman Dinesh Kumar Khara said that his assessment after meeting a lot of CEOs around the globe is that recession may hit certain parts of the world, particularly in the first half of 2023. “But I am getting positive feedback that the second half of the year will be quite robust. That means some major economies like the US might get into some type of shallow recession, but after that, it would be back in action. I would say it is a promising situation,” he said.

The impact of a global recession would be nominal in India as compared to other countries, Khara said, adding that the domestic demand scenario in India is quite encouraging. “Last quarter, we saw demand was as strong as 10 per cent. I expect a similar trend for the quarter ending December. I think our domestic side is doing pretty well. There is some sluggishness on the export side on account of recession fears and a slowdown seen in the developed markets. Once the advanced economies look up, the export lever will also see positive traction,” he added.

The positive view on India’s economic outlook was echoed by the International Monetary Fund’s First Deputy Managing Director Gita Gopinath, who said that India is in a relatively bright spot. “We have a tough year ahead in 2023. But we certainly are seeing signs of resilience around the world. In terms of a global recession, I think we are still a fair bit away from it—there are individual countries that are closer to a recession than others,” she said, adding that compared to other countries, India is in a relatively a bright spot. “I think it is in a good place. And importantly, many countries are looking at India [as an] investment destination at this point, especially as they try to diversify out of other countries, including China.”

It is not just Jindal’s electric ambitions—other Indian companies are also investing and preparing for a new growth cycle. Take for instance the Essar Group—that has been involved in the metals, mining, energy and infrastructure sectors. Having completed what it terms as the largest deleveraging exercise in Indian corporate history, the group is now investing in the same sectors, but with an environmental, social, and governance (ESG) investment mindset, says Prashant Ruia, Director, Essar Capital. “We went through a phase of deleveraging the group and monetising some of our assets. We deleveraged about $25 billion or about Rs 2 lakh crore—which I believe is one of the largest corporate deleveragings in India—in less than five years,” he said.

Having dealt with its mountain of debt, Ruia says the focus around the new investments is around the three themes of decarbonisation, decentralisation and digitisation. “We believe these themes are all going to define our future investments,” he said, adding that he believes India is in a sweet spot right now. “If you look at investment destinations globally, then I would say, India is right at the top. Obviously, China has fallen off a bit. From an international destination perspective, Europe is having a very difficult time because of the war in Ukraine. The Middle-east doesn’t really require significant investment because they are making tonnes of money, so they are making their own investments. So, if you think about the landscape globally, obviously the US remains strong, but within this part of the world, India is in a very sweet spot.”

And when it comes to new investments, India will see a crucial step being taken by the Vedanta-Foxconn combine for its proposed $19.5-billion semiconductor manufacturing plant in Gujarat. Vedanta Chairman Anil Agarwal said the joint venture hoped to break ground for the mega plant in just over a month. “We have all the tie-ups with Inolex, Foxconn and hope that in two and a half years, we will sell chips (semiconductors) to India and the rest of the world,” he said.

And it is not just brick-and-mortar businesses that had a field day at Davos. Fintech behemoth Paytm Founder Vijay Shekhar Sharma said the company, whose share price took a severe beating after going public, would become profitable by the September quarter this year. “I formally put September 2023 as a quarter which is going to be profitable. This [profitability] will happen way earlier than the timeline that I am giving you. We are very proud to say this is happening by not sacrificing any investment that we are making, or any growth that we could have captured,” said Sharma.

Just like the India Lounge brought relief to many a hungry delegate this year, the Indian economy is seen as a ray of hope for the world amid fears of an impending recession.

@Szarabi