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KAUTILYA
NOT JUST IT, IT IS NOW GE
Research's
first century began at Schenectady. The second opens in Bangalore
By
Jairam Ramesh
A
hundred years ago to the month, the world's first industrial research
laboratory was founded in Schenectady near New York by Charles Steinmetz,
that mathematical genius of the early electrical industry. This was the
GE Research Laboratory that transformed America and emerged as the pre-eminent
centre for innovation. A century later, on September 17, 2000, GE unveiled
its second multi-disciplinary technology centre in Bangalore which, by
this time next year, would be the company's largest R&D concentration
globally. This is a landmark, for GE has consistently been ranked as the
most admired company in the world. The centre was opened by and named
after Jack Welch, GE's legendary CEO.
 Welch
first visited India in September 1989. The visit was largely at the prodding
of his deputy Paolo Fresco, who later went on to head Fiat, and Fresco's
friend K.P. Singh, chairman of DLF, the Delhi-based real-estate developer.
Welch's visit was to aggressively market GE's locomotives to the Indian
Railways and its aero engines to Air-India and to explore joint-venture
possibilities in plastics, refrigerators and medical equipment.
Welch sought
to meet Sam Pitroda who was then the prime minister's closest aide and
I was the aide's aide. Both of us were aware of the visitor's truly awesome
reputation and we debated how we could hook the legendary Welch on to
India in some dramatic way. About this time, we had been asked by Rajiv
Gandhi to prepare a strategy for boosting software exports. Texas Instruments
(TI) had opened its software facility in Bangalore, something in which
Rajiv had taken a keen personal interest. Rajiv's directive to Pitroda
was simple-get more TIs. Sensing an opportunity with GE after doing our
homework, we decided to make a pitch to Welch for an India-GE partnership
in software.
A second
idea struck us as we recalled our interactions with R.A. Mashelkar, one
of the world's top chemical technologists and head of the Pune-based National
Chemical Laboratory (NCL). Mashelkar's belief was that we must move from
the "publish or perish" syndrome in Indian science to a "patent
and prosper" mindset. He argued for creating businesses out of knowledge.
Now that Welch was here, we felt why not also make a case for India as
a destination for GE's remarkable research business as well?
The meeting
was held over breakfast at the Chambers in Delhi's Taj Mahal Hotel. Welch,
Fresco, Larry Bossidy and Stephen Brandon were there from GE, apart from
Singh, while from our side Pitroda, Montek Singh Ahluwalia and I were
present. Pitroda made the slick slide presentation in his usual crisp
style. The chemistry between Welch and Pitroda was electric. After an
animated discussion he announced that he would soon send a team to see
how GE could leverage India's software and research capabilities.
No Looking
Back: This team came to India in November 1989 and January 1990. We
fixed up meetings for the team with companies like TCS, Wipro, HCL and
a fledgling unknown called Infosys. Contracts for software development
were then signed. Subsequently, GE and NCL also became partners. From
then on, there was no looking back. Welch returned to India in 1992 and
in 1995 when he was the first to publicly declare that India was a developing
country with the intellectual infrastructure of a developed country. This
year, GE will source about $250 million worth of software from India making
it the single largest buyer. Wipro chief Azim Premji acknowledges that
the initial GE contract opened other doors for him later. The same is
probably true for Infosys as well.
Over the
past decade, GE has built a billion dollar business in India and invested
close to $600 million, making it among the largest foreign investors in
the country. It has 17 legal entities, that is, either wholly owned subsidiaries
or joint ventures across a wide range covering areas like appliances,
medical equipment, lighting, financial services, energy, light engineering
and plastics. To those who argue that MNCS should not acquire existing
companies, GE's takeover of DLF's Faridabad factory should serve as an
example-last year, half a million fractional horsepower electric motors
were shipped from this refurbished plant to the US. The GE-IPCL and GE-BEL
joint ventures are a tribute to the capabilities that reside in our public
sector. In fact, the GE-BEL joint venture along with the GE-Wipro counterpart
will soon emerge as a global centre for the design and manufacture of
an array of medical equipment. To be sure, there have been disappointments
as well. GE's alliance with Godrej is ending in divorce. The power and
locomotive businesses have not grown as expected and this has hurt India
as much as GE, reflecting the way we are managing these sectors. But all
in all, GE's India experience is an exemplary case for a business school
case study and a corporate historian.
(The author is with the Congress party. These are his
personal views.)
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