‘India is still the most difficult place in the world to do business’

•Unni Rajen Shanker:  We’ve seen 15-16 years of economic liberalisation. What still needs to be changed?

Lord Swraj Paul: There are obstructions in politics here and obstructions in business as well. They have one set of rules and values when they want to go outside India and another when they want people to come to India as investors or when they want a partnership with them. The experience of people all over the world is that partnerships in India are amongst the most difficult ones.

•Manish Chibber: Do you think that the Indian legal system and laws come in the way of a proper business environment?

Lord Swraj Paul: We have a good judicial system here and most of the judges are honest and decent people. Although it may take 25 years, a case is decided on merit. But the process is very difficult and nobody living abroad can spend that much time on a legal wrangle.

•Coomi Kapoor: In retrospect, don’t you think DCM and Escorts would have been wiser to accept your takeover offers?

Lord Swraj Paul: The shareholders would have been better off had they accepted the offers. The companies would have survived. We have taken the Caparo Group from a turnover of 14,000 pounds in 1968 to over a billion pounds this year. I don’t run the business anymore, my children run it. I get the glory — that is a marvelous position to be in.

•Dhiraj Nayyar: What is your view on the flamboyance of the new Indian businessman? Also, why is it that they do so little in terms of philanthropy?

Lord Swraj Paul: First of all, there are some who can afford flamboyance. I don’t have the money for it. The taxi is a luxury for me. I use a bus pass and that’s free because of my age. The tube is my preferred mode of transportation. I am perfectly happy to use a taxi or a chauffeur-driven car because I no longer drive myself. To me, that’s not a way to impress anyone. It’s just making life convenient. On the second question: I am nobody to talk about the philanthropy of Indian business. That’s their problem. As for myself, when we started Caparo we decided that a part of our profits, every year, would go to a charitable fund. Since 1996 when I retired, I have wanted to devote my time to issues which have been close to my heart — children’s issues and women for there is far too much injustice towards them. We should be proud that we had, in my view, one of the greatest PMs in the world — Indira Gandhi. But at the same time, we have women being abused and mistreated and that is an unacceptable face of humanity.

•Coomi Kapoor: You had a very close relationship with Indira Gandhi. What about with the Gandhi family now?

Lord Swraj Paul: I think when you are in politics in another country, you need to continue to have a relationship with leaders of every party here. I have a very cordial relationship with the present Government. I had a cordial relationship with the previous government. Mr Vajpayee was an excellent PM and Dr Manmohan Singh is marvelous.

•Dhiraj Nayyar:  How do you view philanthropy’s role in capitalism?

Lord Swraj Paul: Philanthropy is from your heart. Let us not confuse philanthropy with money. As the PM, Mr Vajpayee made education a fundamental right, but there has been no delivery ever since. Governments all over the world are poor in delivery, but we’re especially poor at it in this country. There is more poverty for 300 million people in this country than even in some of the poorest countries in Africa.

•Devesh Srivastava: What is Caparo’s investment plans for India?

Lord Swraj Paul: Caparo has built 32 plants in India in the last three years. We employ 3,000-3,500 people here. We run small units for automobile components. It is very difficult, even today, to have bigger plants in this country for a person who doesn’t want to get into any shenanigans. So, we avoid situations where we will get into shenanigans. But within the scope of what we are able to do, we are very bullish about India. We think India can be the only competitor to China in the manufacturing segment. But if India wants to compete with China, it needs to overcome this obstructionist attitude that come from politicians. Wherever we do business, we are ahead of our competitors. We believe in innovation. There has been a lot of talk about climate change and we thought that if we could find a way to reduce the weight of a vehicle, we could reduce its fuel consumption too. We developed a racing car with carbon fibres and called it Caparo T1. It is the fastest car in the world and the weight to speed ratio is very, very low. It is not a mass car, but for those who can afford it, it is a good car.

•Coomi Kapoor: Do you feel there is any scope for hybrid cars in India?

Lord Swraj Paul: We are developing a passenger car for exactly the same reason. I think climate change is a big issue. The hybrid car is one solution to the problem. It’s been fairly successful so far and India can make use of it.

•D K Singh: What is your take on the Left parties in India?

Lord Swraj Paul: I am not one for blaming everything on the Left. I think they are very bright people and if you are in a coalition, you have to listen to the other partners. The fundamental problem in this country is that people are afraid to take a decision. A leader has to take decisions. Even in business, you have to decide what to do and then have the courage to accept the consequences whatever they may be.

•Shekhar Gupta: You’ve seen the Labour change in Britain. Do you think the Left has not changed enough, that it should have changed more or that they are doing the right thing by not changing?

Lord Swraj Paul: I am a free market socialist. You might think it’s a contradictory term, but I think it’s very valid. Governments cannot run enterprises. The only way you can judge performance is if it makes a profit. The more profit you make, the more efficient is your performance. Let the assets be used by people who are prepared to produce the profits. Since governments everywhere in the world have failed to run enterprises, they shouldn’t be in the business of running enterprises and wasting money. That is the thinking which we arrived at in the Labour Government and we started changing. I don’t think the Left parties here are against progress.

•Gayatri Verma: As a global businessman and a global citizen, who would you hold responsible for the present inflation crisis?

Lord Swraj Paul: This global crisis is mostly man-made. We were too euphoric over the markets and believed they would never crash. Personally, I like recession once in a while, because a slowdown is good. It’s painful but it is the only time to tighten your belt. Make this an opportunity, instead of complaining about it. People complain far too much in life. Just get on with life. Once at MIT — my university in Boston — I was asked for advice by a graduating student. I told him, grow up, make your mistakes and start admitting your mistakes to yourself and learn from them. You learn in difficult times. When things are good everyone thinks he is a genius.

•Gayatri Verma: But do you think there is a particular interest group that is more to blame than other people?

Lord Swraj Paul: You can keep blaming everybody. But if you are determined to succeed, nobody can stop you. We all make mistakes. God has been very kind to me. Most of you know I had to completely rebuild my life in Britain. I maybe the only immigrant in London who went there not for work but because I stopped working. I am the most immobile man in Britain. I live in the same flat that I have occupied since 1966, because I wanted to be where my daughter had died. For one year after her death, all I did was meditate. I got the courage after a year to start a business with 500 pounds.

•Ashok Kumar: What bothers you most about India?

Lord Swraj Paul: When are we going to believe that all 1.2 billion people are the same? India cannot call itself a developed country till we do that.

•Manish Chibber: There is a race to immigrate from India, especially among the Punjabis. Does that amaze you given the kind of opportunities that are now prevalent here?

Lord Swraj Paul: This should be an individual decision. I am in favour of movement of people because I think it’s good for the world. We need a mixture of ideas, we need a mixture of cultures — no country has a monopoly on ideas, nor on ability.

•Shubhomoy Bhattacharjee: Is it possible to set up a unit without corruption?

Lord Swraj Paul: We will not pay a penny to set up anything. That is an instruction that is communicated to every manager in Caparo. That is why we have not tried to establish a big plant. To be fair, all the states where we have built facilities — Madhya Pradesh, Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, Haryana, Rajasthan, Jharkhand, and West Bengal — till today no one has asked us for a penny.

•Dhiraj Nayyar: Speaking of the immigrant community in Britain in the context of the war on terror and the attacks in London, there is obviously an alienation of the Muslim community. At what level will this be solved?

Lord Swraj Paul: Ninety nine per cent of the Muslim community is against terrorism. There will always be people who, unfortunately, get into it. But 99 per cent of the Muslim community is law-abiding and fiercely loyal to Britain. I don’t think we can condemn the community.

•Dhiraj Nayyar: But there is a certain ghettoisation in certain parts?

Lord Swraj Paul: Whenever a terrorist attack occurs, everyone gets very worked up. But then it dies out. It’s impossible to control terrorism easily. When people are prepared to die, controlling terrorism is a very difficult job.

•Dhiraj Nayyar: But has your party — the Labour Party — lost a lot of support because of the war on Iraq and the foreign policy positions the Labour government has taken? And do you see an Asian PM of Britain in the near future?

Lord Swraj Paul: Personally, I was against war on Iraq. A lot of us in the party felt it was unfortunate that it happened. I don’t think in Britain an Asian will be barred from becoming the PM.

•Dhiraj Nayyar: What’s the future of family controlled businesses in an era of globalisation?

Lord Swraj Paul: The world over, family businesses are adding more value to their assets than public companies. Splits in family businesses are very sad. Just because two or three members of the family don’t get along, you cannot split the business. You’ve got to think of the people working for you and the damage it causes them. In our case, nobody can break Caparo. Those who want to work will work and those who don’t, can go and start whatever else they like. No one can say I own 25 or 30 per cent share and break the company. Nobody in my company, neither me nor my children, draws anything other than our salaries. They cannot take one penny out as superfluous expenses.

•Shekhar Gupta: Is your company the exception to the rule or the rule?

Lord Swraj Paul: I think most are like this. If the top steals, the bottom will steal whether you like it or not. You have to live by example. You cannot live by sermons.

Transcribed by Gayatri Verma