“[We] have been involved in starting a transformation.” – Ratan Tata on the creation of sister Tata Centers at MIT and IIT Bombay.
In February, Ratan Tata, Chairman Emeritus of Tata Sons, sat down with US Secretary of Energy Ernest Moniz at the ARPA-E Summit in Washington, DC for a candid conversation about the enormous challenges and opportunities that India presents to entrepreneurs and policy makers. (Complete video here.)
With Moniz, former director of the MIT Energy Initiative, acting as interviewer, the conversation ranged from the MIT-India relationship to tackling energy deficits in rural communities to the entrepreneurial lessons Tata gleaned from building the Tata Nano automobile. Here are some of Mr. Tata’s most illuminating quotes:
On the MIT Tata Center
“You and I [Tata and Moniz] have been involved in starting a transformation, when MIT joined hands with us in looking at creating an innovation center in India and in Cambridge. The best thing that could happen in India is for Indian institutes to embrace innovation from outside and participate in it. That is, in many ways, yet to happen. That’s what would make the country move forward.”
“I think having institutes like MIT [and] the joint venture that we’ve formed in India to address low-cost problems, rural problems, with new technology is really the way to go. If we open people’s eyes to the fact that [sophisticated technology] is not beyond the reach of the common man, we will be opening a new era in the developing world.”
On rural electrification
“The one thing that’s going to hold [India] back is the inadequacy of energy. All of India today has a deficit of energy, and most of rural India needs energy for raising water in agriculture, and also getting light in the villages in the evening. What a revelation that would be if a village could get light in the night, or did not have to fight for energy to raise water for agriculture.” Tata said that unless that was addressed, “growth is never going to happen.”
“What a revelation that would be if a village could get light in the night…”
“Maybe big power plants are not the future of electrifying rural India, it needs a new paradigm of microgrids and smartgrids and energy efficient machines.” He said that energy innovation and openness to unique ideas is “extremely important for developing countries.”
“What normally happens in developing countries, is one considers new technologies to be too sophisticated to be applied…but today new technologies permit things to happen that could not happen with traditional technologies. The time has come when countries like India need to recognize that application of current technologies can solve some of the age-old problems.”
On the Tata Nano
One of Ratan Tata’s great experiments as chairman of Tata Sons was the Tata Nano. Priced at $1500, it was the world’s cheapest car–a safe, efficient alternative to the two-wheel scooters that can be seen across India, sometimes carrying as many as four or five people at a time. Tata was advised that he was embarking on an impossible project. But it was a problem he could not ignore: “It would be great if India could produce a people’s car that could hold a family of four of five.”
“If we open people’s eyes to the fact that [technology] is not beyond the reach of the common man, we will be opening a new era in the developing world.”
The initial interest exceeded his expectations, but “a series of unfortunate events” caused disappointing sales. The biggest problem, he said, was a “dichotomy in terms of what the car stands for. The consumer doesn’t want to be seen in the cheapest car, because it offends his status.”
What lessons did Tata learn? First: “You can produce a $1500 car when the gurus of the industry say you cannot.” Second: “I often wonder if whether we had launched the Nano in Indonesia or Africa, would we have had a different response.” He wondered if the societal response to the car was uniquely Indian, and if they might have encountered a different mentality in other countries.
The United States, he noted, is known for “giving a chance to something that’s new.”
On India’s changing business landscape
Tata gave the audience a brief history lesson. “In India, we have had 50 odd years of post-independence protection. Indian industry has had the luxury of being protected and therefore less exposed to the competitiveness of world products. All this changed in 1990, when India finally opened up.”
Rather than following many business leaders, who sought to extend the protectionist regime, Tata embraced the global business landscape, and was one of the first Indian executives to aggressively acquire Western companies. “The gutsiest moves we made were acquiring companies overseas, such as Jaguar Land Rover.”
On Prime Minister Modi and President Obama’s recent visit
“We’ve been ruled by the Congress Party for several decades, and this last election showed that the country was eager to see change. Mr. Modi led the BJP to a landslide victory,” giving India it’s first majority government in over 30 years. Tata described Modi as a “charismatic leader.”
“He has everything going on his side, but with very high expectations from the people, who want to see change. The people of India will be watching with great aspiration. The potential in India is enormous; it’s the policies in India that stifle development.”
“The country is very entrepreneurial. Everybody wants to do something.”
Tata highlighted India’s young, driven workforce. “There are many, many pluses to what could be done in India. The country is very entrepreneurial. Everybody wants to do something, so the potential for foreign investment to come in and incentivize that is very high.”
“The recent visit of President Obama to India was very much a landmark second visit, because the President and Prime Minister covered a lot of ground…with a very open sense of friendship. The President announced a collaboration on energy.”
“I think we can do much more together…we could be on the threshold of a new era of Indo-US relations.”
Final thoughts
Seemingly on a whim, Moniz tossed out the notion of holding an ARPA-E Summit in India. Tata immediately latched onto the idea: “Believe me, if you did something like this in India, it would be swamped. People are hungry for ideas.”
Photo courtesy of the Department of Energy.