Let me ask a question first.
What type of economic strength is preferable to India?
A) A strong Indian economy fueled by its cheap labor due to a weaker rupee against dollar, where the Indians end up working in shifts, late nights, whole nights and what not only doing low profile jobs which foreign companies want to offload to India, so that they can concentrate on high end works and become even better. For instance in IT field, providing BPO services, support and maintenance work for products
B) A strong Indian economy fueled by its strong innovations and products, no matter whether the rupee is strong or weak against dollar.. where Indians work only in regular office hours of 9 to 6, developing cutting edge technologies and solutions, selling our world class products both inside and outside India. For instance in IT field, imagine operating systems, compilers, databases etc all coming out of India..
I do not deny the fact that the IT boom in India came to a large extent because of (A). Well and good, we have had the benefits of our cost being cheap in western markets due to a weak rupee against dollar.. We have had our share because of this advantage in the past 2 decades..
But at the same time doesn’t it make sense to move towards (B), instead of crying foul against rupee becoming stronger against dollar?
What a pity! Indian IT companies are feeling bad because rupee is becoming stronger against dollar! Reason, their profits will go down when the value of rupee is stronger, as every single dollar that comes into their account now means lesser rupee than earlier..(if for instance earlier they used to get 47 rupees for every dollar that comes in, but today its about 40!)
But isn’t this a matter of celebration? Our rupee is gaining importance internationally and is becoming stronger again.. How many of us know that in 1947 when India got independence 1 Rupee was 1.2 US dollars?
These Indian IT companies instead of relying on a weaker rupee for their profit should now look at coming out with innovative products and technical solutions. What have these companies done in the arena of core system products? Why don’t we have any operating systems, compilers, database systems, development platforms etc coming out of India? Why don’t we develop tools like photoshop or flash? We have talent, but they all are working in American companies on these products.. Cannot our Indian IT companies setup at least small teams to develop such products?
Instead they are planning to make their employees work on saturdays too ! So that their profits can increase due to extra hours the employees put in.. As if India doesnt have any other option other than cheap labour, workaholic labor!! Are there no brains in India who can setup companies developing products and make money just by printing out more serial numbers and burning their product DVDs?
If Indian companies continue to depend on its weak currency, then how would Indian economy survive in a world where all currencies have equal value? Survival of the fittest.. Only greater innovation can help us in that case..
We need to have knowledge and technological advantage if India wants to become a superpower, not low cost based cheap labor advantage! Let the Chinese do it..
I hope that rupee becomes more and more stronger so that Indians are forced to use their brains and come up with innovative products and next generation technologies, than to provide low end services
We need to create a situation where other countries line up to buy our F-16s, to buy our operating systems, to buy our mobile phones and I-pods, to buy our Boeing, to buy our Mercedes
A stronger rupee means we can easily afford foreign trips! This is what I wrote in one of my earlier blogs
A stronger rupee means Indians can buy things anywhere in the world on par with developed economies! We dont have to spend crores of rupees then to buy a Boeing! We don’t have to pay tens of thousands of rupees for international air travels! A stronger rupee means greater international exposure! There wont be a difference between buying a Maruti and buying a Mercedes! One can go on a trip to the Grand Canyon just like the way one goes to Ladakh or Nepal ! How do you think american citizens are able to tour all over the world? Because they earn more? No. But because their currency USD is stronger.. and this is where a strong rupee will lead us to!
I am not saying providing low end services is wrong .. It gave us a very good start in the 90s. But that should definitely not be the bread and butter fueling our economic boom indefinitely in the future.. For the simple reason that it can’t continue to do so any longer.. other low cost destinations, cheaper than India are already coming up in the world Let us move ahead become more innovative.. the journey has just started This is just the beginning of all the beginnings