Welcome to the Entrepreneur of the Year India awards, celebrating 27 years of shapers of India's future. Thank you all so much for being here. To moderate this discussion, we have the sharp and incisive managing editor of CNBC TV18, Shireen Bhan. Over to you, Shireen.
Good evening, ladies and gentlemen. Rajiv Mimmani, I'm going to protest — I think I've done about 20 out of 27 of these awards, so I think I deserve an award myself. But it's great to be here. It's wonderful to be back at the EOY Entrepreneur of the Year Awards. Before I get started, now that you are up on stage — Mr. Kotak, ladies and gentlemen, a big round of applause for the winner, the special winner this evening. Mr. Kotak, what an absolute honor it is to have you here with us. Mr. Jindal, always a pleasure. Wonderful to see you here this evening. I have a confession to make — as I was flying into Delhi, I had the good fortune of chatting with Harsh Mariwala. He's right there on that front table, and he said, 'Boring mat karna, ask them fun questions.' So with that pressure on Mr. Kotak, have you watched the Millennium movie?
Shireen, since you have watched it, can you tell us the summary?
I actually haven't. But on to serious things, Mr. Kotak. Let's start with what everybody's been talking about and what has captured headlines and imagination the past few weeks — that is AI. I want to start by understanding from you what you make of this AI trade, or the AI reverse trade that's impacting Indian stock markets. Do you believe it's overdone? Do you believe the markets have overplayed the fears at this point in time, or do you believe the worst is yet to come?
I think AI is for real. We can debate on the time and the speed of change and disruption, and that's where the debate is. But I want to turn this subject a little further — as we talk about AI, artificial intelligence will change how we live. But we're going to come to a stage where what is going to be even more important is what I call wisdom. There is so far no concept of AW, which is artificial wisdom. For human beings, finally we'll have a role because wisdom will remain HW even as AI takes more and more of our lives.
I don't know if you've seen what Sam Altman had to say to students at IIT. He said, 'Don't listen to old people.' That is the message Sam Altman has sent out. I was talking to some youngsters and they said Sam Altman looks a little old. But I agree with you that wisdom is what we should bank on, and that will perhaps be the collective moat for each one of us. But how do you look at how this is going to play out for India, sir? Because we've now got chatbots that are going to disrupt Indian IT services. We've seen the massive erosion that these companies have suffered since the 6th of February — almost three lakh crore rupees in market cap wiped out. Do you believe it's going to get worse before it gets better?
If you look at all the research which is coming out — whether it's from Citrine, as well as what came out from an Indian serial entrepreneur from Singapore called Ajay Sharma — essentially what they are saying in the software services sector is: AI is on the rising curve, so it's in the early stage of what is known as the Brahma-Vishnu-Mahesh cycle. It is really in the Brahma space and therefore has a significant road to go ahead. Some of these articles say that the SaaS companies, which is your Adobes and Salesforces and others, they are right now in the Vishnu phase, therefore they still have some more time. But the software application companies are where they may have moved into the Mahesh phase. The speed at which it happens, how much it happens — but it's clear that you have to move away from low-end jobs. And frankly, the biggest pressure will be on things like BPOs, because they will be completely automated out or replaced by chatbots or whatever else it is. The pressure is real, and India has a very large number of jobs linked to software services, probably more at the lower end.
I'll come back to you in a second on that issue. But Mr. Jindal, in many ways, are you relieved that you're old economy and not in the SaaS business today, sir? And you don't have to deal with some of the issues that Mr. Kotak just spoke of?
No, I'm actually very fortunate that I'm in the brick and mortar industry, and I have nothing to do with AI. Nothing to do — as in, my companies, yes, we use AI and we will increasingly use it, but there is no disruption in my business. So that's fortunate.
No disruption just yet. We don't know what's going to happen. But on the factory floor, what are you seeing? I mean, again, I go back to what we're hearing from tech leaders at this point in time, saying that robots are going to take over, humanoids are going to take over, you're going to have factories without people. Do you believe that we're at a point, at least as far as Indian factories are concerned, of even looking at that possibility?
No, no. I'm very clear — what AI or these new dark factories and robots in the factories — this is only going to improve the productivity of the business, and this will only create more economic value in the country and the world, which is today at whatever $110 trillion, probably would become $200 trillion. So what the computers did in the 80s, probably AI will do now to take things to the next level.
What will happen to the cost of manufacturing when we talk about this ushering in an era of abundance? The question then is what happens to the cost of manufacturing, this big productivity uplift that people are talking about? What will that eventually translate to as far as the consumer is concerned? Do you expect a massive reduction in the cost of manufacturing itself?
So if the productivity improves, if there is more value add, then automatically the cost will come down. So it is going to be tremendously beneficial for the consumers, for sure. There's absolutely no question about it.
Okay, I'll come back to you in just a second. But Vidit, let's understand from you — how are you looking at this AI wave? How are you looking at the AI disruption? How AI-ready is Meesho? How AI-ready are you likely to be in the next 12 to 18 months?
I think the stage at which we are in, and I'm also there in terms of the mindset, is we are right now very excited about the new possibilities with AI. Our mission is how do we really democratize internet commerce for everyone — consumers, businesses. Ten years ago when we started this company, we used to see that there was a big digital divide between offline and online. When I go offline to buy a shirt, I don't need to read something, know English, understand ratings and reviews — I go and speak to a shopkeeper, say I want a shirt in this range, that person shows you options, you make a transaction, you go away. In the online world, you are somehow supposed to know how to sign up on an app, how to search, what does the cart button mean, add to cart, how to figure out ratings, reviews — so many things. And we somehow believe that will now go away. We recently launched a voice agent for a customer who can come and speak in their own native language. They never have to read anything on the app — they just speak to the agent, see photographs, make the transaction happen. So that digital divide we saw 10 years ago basically goes away. The opportunities and the role that AI will play in democratization of access to internet services, software, so many things is massive. Everyone who has been left behind so far will find it much easier to catch up because you will have these agentic layers augmenting the gaps, helping people move forward. We are very excited about the potential opportunities that come with AI, especially in a country like India, and especially around voice — I believe a lot can be done.
Speaking of possibilities, you're a newly listed entity in the Indian stock markets as well, so your shareholders would like to know — will AI solve for profitability?
I think it will. What will AI do at the end of the day? AI is going to expand the market size in India. Every single technology cycle, the markets of what we thought was possible in India suddenly becomes much, much larger. Ten, fifteen, twenty years ago, could you build retail for 250 million customers transacting online or annually? The answer was no. But that market finally happened because of internet technology and mobile. Now I believe this opportunity will be much, much larger because of AI. As the market gets larger, profit pools would get larger. We have upgraded most of our models, including in advertising, in the last one year to the transformer architecture, and we have seen so many gains — you get much better targeting, you deliver much better returns on ad spend to our sellers, they end up spending more on the platform, that loop starts to happen, the profit pool expands. So I believe there's a lot that will happen because of AI in monetization, in profitability, and generally making online profit pools much bigger than what you saw in the last ten years.
Okay, well that's good to hear, and let's see whether that in fact pans out as you point out. But Mr. Kotak, I want to wrap up the AI story before I move to the next issue by putting this in the context of what you said to me. You said that if you could start over, you would want to be a digital evangelist. And I wanted to link this to another comment you made — that the Goldilocks era for Indian banking is over. What happens to Indian banking now in an AI era?
I think Indian banking has to embrace — my personal view is the cost to serve banking intermediation is extremely high. If you look at an average bank in India, it has an intermediation cost in the range of about 250 basis points. Instead of that, if you put money in a debt mutual fund, your transaction cost is 50 basis points. Indian banking has a very significant need to get to significantly lower operating costs. Second, I think there is very high historical costs for regulation — like CRR, SLR, priority sector lending. I respect priority sector norms, but the world has changed and how are we changing our priorities on priority sector? So all these intermediation costs make the cost of intermediation of Indian banking extremely high. And in this changing world, we have to move to much lower intermediation costs than what we have seen. And the question which I have — and I'm seeing Seema and Piyush Goyal here, they've just entered, so welcome to them — but I'm wanting to make sure that we collectively, that is Indian business and Indian policy together, have to take the challenge more than anything else: that this time we will not allow certain companies and countries, like history, to colonize the world. We must make sure India is able to avoid colonization because of dominance coming through huge investments made by, frankly, two superpowers — the US and China. India should not be left behind in that game and should never face the risk of colonization. That's very important.
What is the prescription then to avert that, to avoid that?
I think it is something we have to — my friend is here and there are many other businessmen here. Why are we in business not putting serious money into technology innovation and research? It should be 10% of the budgets. And India has financialized too early. We are too much focused quarter to quarter. Put out money with a five, seven, ten-year vision and have the ability to withstand the shocks. And Indian business is not — partly because of stock markets and analysts who say your quarterly earnings are off by five basis points, I'm going to punish you ten percentage points. I believe India has financialized too early for the challenges which we face today.
Okay, financialized too early. I'm going to throw the gauntlet your way, Mr. Jindal. As Mr. Kotak pointed out, we need to invest far more on R&D. This has been something that we've spoken of ad nauseam. Why aren't we, and what will it take for us to get there?
First point is, what are they saying? That we as Indian industry are not spending enough money on R&D — that's very clear. I told you just outside the same point, that because we are living quarter to quarter, that point is also correct.
Is that really the fear holding you back? Is that really the fear that's holding everybody back?
Not really. Not quarterly to quarterly — we are not making enough money to invest in R&D. The industry — Indian, I mean I'm talking generally for most of the industry — we are not making enough money. And our shareholders — we certainly want shareholders to be happy. So the environment is such that if we start to make money, then Piyush Goyal will say that you're making too much money. So there is always this dichotomy that we have. But R&D — we have to spend. The industry will have to spend on R&D if we have to, as you said, stave off colonization on us. We as an industry have to grow. A few industries are investing money in R&D, but generally we are not investing enough.
Let me also welcome the Honorable Commerce Minister, Mr. Piyush Goyal, who joins us here. Thank you very much, sir, for joining us. You'll hear from him very shortly. But I want to come back to the point on R&D and technology, and let me get you to comment on that. The approach to China — you've changed your approach to China as well, Mr. Jindal. You're now partnering with Chinese companies to try and bring technology to India to power your electric mobility ambitions. So how should we deal with China at this point in time? Collaborators, competitors — what should the approach be?
There are two ways. One is that we have to learn from China, because my belief is that China is a country which is as large as India, given their population, very similar to India. If we try to learn from Japan or Germany, which are relatively smaller countries, we will not be able to really do what we need to do as an economy. We need to learn the way China has expanded. If you look at their bullet train program — I mean, we are, for the last ten to twelve years, building the bullet train which is right in front of my office. I think we are still four to five years away from the first time that bullet train will move. And it happens to be the prime minister's pet program, the bullet train — so it's a very high-profile program, but still we can't execute that program. And you go to China, you see thousands and thousands of kilometers of bullet trains running across cities. So we have to learn from a country like China which is building the economy at a fraction of the cost, because we are taking technology from smaller and more expensive countries. We have to learn from China. Now, how can we collaborate with China? That's a question which is not for me to decide — the government has to decide that. But if we have to expand and take our economy to a different level, we have to build bridges with China, we have to take our relationship with China to a different level.
When are we going to see your first car hit the Indian road, sir?
So MG is already on the road.
No, your car — your JSW car?
JSW Motors, hopefully before Diwali.
