India should focus on 'World Plus One', not 'China...': Kumar Mangalam Birla as global order changes

Well, I think all of us know that in the last few years the world economy has gone through more than it ever probably has in the past. You've had wars, you've had a pandemic, you've had interest rate hikes, tariff hikes, energy shocks. But despite that, the global economy has grown. In 2026 it was at 3%, projected at 3.4% for this year. So clearly the world economy is growing. Growth has probably slowed down, but it seems to have grown shock absorbers, and all of us, economies, corporations have learned to deal with a lot more stress. And the biggest source of that stress, as we all know, is geopolitics, and there too the global order is changing. There are no more perma friends or perma enemies, there are only perma issues. It's an à la carte way of working. So you choose your partner depending on the issue at hand. You could have a partner on one issue who could be on the other side of the table on another issue. But I think that the way for a business to grow and thrive is to be resilient and also keep growing, be on a track of growth. We have actually played a contrarian view here. We've taken a contrarian view and we've used this period to grow pretty much across the board, across businesses, across our new growth platforms, across our more traditional businesses as well. It's been a two-part strategy so to speak. For our overseas businesses, we've taken the view, and this has been for a few years now, that we want to be, we are a multinational, but we also want to be multi-local. So as opposed to having operations in one or two places, as in manufacturing in one or two places and distributing to the rest of the world, we're now in a situation where we are multi-local, which means that we set up plants for our manufacturing businesses close to our consumers, wherever they are in the world, so that you have supply chain flexibility, you're not impacted by let's say tariff wars for example, or geopolitical vagaries. On the Indian front, our businesses have grown tremendously, and I think the India businesses, whilst they have great teams and have been run with great precision so to speak, I think their performance is really a reflection of what's happening with the Indian economy and the India growth story. I think you need a strong economy to produce strong businesses. So you know, very often people talk about China plus one for India, and whilst that's a convenient shorthand so to speak, I think it's intellectually very lazy. I think what we should be talking about now is the world plus one for India. I think we have all it takes. We've got a track record, and I think that we really can be a growth engine for the entire world in so many different ways.

So I think that the rhetoric here probably lags the actual facts on the ground. The big mega industrial houses have all been investing very hectically. I just read the other day that the latest RBI report says that advances to corporates from banks has gone up by 20% compared to last year in the last couple of months, and that is pretty evenly spread between small and medium enterprises as well. So I think that this is something that's starting to change. I think that there is an aspect about it which I would call capital discipline, where obviously you would take a view on an investment basis, so many factors, returns, volatility, what's happening in the industry in the world. But I don't think we should confuse capital discipline with conviction about India. I find that conviction about India is perhaps the highest I've seen it for a long time.

So like I said, we took a contrarian view in the last three years and actually grew our businesses pretty aggressively. As of now, we have a $30 billion plan that's playing out. So this is not headline farming as one could call it. This is actually money going into the ground or groundbreaking and new teams coming together depending on the business that we're talking about. To give you a rough sense, since you and some people from the audience at least would know our different companies, it's about $10 billion for Hindalco, six for telecom for increasing our network of 4G and 5G. Two billion for, we've just made an acquisition in the renewable space that takes us up the pecking order in that industry by several notches. A billion for green fiber, which is fiber but now made green in terms of the energy that's being used. Another billion for carbon black. Carbon black is a specialty chemical that's used majorly in tires and anything that's black, so say for example ink as well. Interestingly, for carbon black for example, we are investing in increasing capacity in Hungary, in India, and in Thailand, again going back to being close to the consumer and multi-local as opposed to just being multinational. So that's quite a sweep of industries. And I think that that again is reflective of the faith that we have in the Indian economy and its future.

So that's an interesting question, and I'm glad you asked it because every country, every economy has its own issues, has its own pain points, its choking points. We are putting up a large plant in an advanced economy where we were allotted land by the local authorities. We spent six months of intense work, just before we were to break ground, we had to change our site largely because of environmental reasons. So I think that we aren't the only people who have issues like this, issues like land, environment, judicial, local laws, almost across the board. And we have a presence practically across the globe, you will have issues that come up that a lot of the times are of similar nature. Sometimes they're peculiar to the country that we're talking about. So I don't think we should be feeling particularly sort of dejected about ease of doing business. I think that like I said, every country has its own pain points. But having said that, I think in the last decade a lot has been done by the government. Financialization, you talk about tax reforms, so much has happened, digitization, and I think that the ease of doing business in the last decade has gone up tremendously compared to where we were before that.

I think that you're right. Probably that is the intent. But I don't think it works like that. I think companies would have a far more nuanced approach to investing. You can't for example invest in an aluminium facility in the US just because there are tariffs on aluminium exported from India for example. Theoretically, the cost structure is different, the capital required would be different, the kind of people that you require to work in that kind of environment may or may not be there. I don't think that's something that can practically happen. I'm saying this again because it's relevant, I think the route that we have taken, and this kind of predates what's happened in the last few years, of being local for our local customers. And I'll give you two examples. Novelis, which is the largest producer of aluminium rolled products, we are putting up for the North American market a $5 billion greenfield facility in Alabama, in a place called Bay Minette. That is to serve for aluminium rolled product supply for cans as also for auto, auto requires more of lightweighting, and that is being put up only to specifically serve our North American clients. It won't go and sort of move into Europe or into South America. So that's a large investment in a new economy for us relatively. We haven't made a greenfield investment of $5 billion at one location any time in the past. It's normally been more phased out. Another example is carbon black. Like I said a little while ago, we have 16 plants in 12 countries. We've chosen to invest in three. Again, logic being close to customers as opposed to manufacturing in one or two locations and distributing around the world. So that's what our response has been.

So you know, we pulled back the plans at that time because we weren't getting the kind of value discovery that we thought or hoped we would, or we were told we would. And that was the only reason why we might have...

Yeah. Well, I didn't say that. But you know, there was no other reason to want to list. As of now, we are focused on commissioning this large plant I was talking about. $5 billion is a large sum of money. And I think that a lot of the future of the company depends on how fast we can commission and ramp it up and fill up capacity. We have no compulsion to do an IPO. I mean there's no need for us to raise funds. So I don't see that happening now at all.

So you know, we are pretty used to competition. And I'll tell you why. My father went out and made large investments in Southeast Asia. This is large investments on the ground, not trading investments, in Southeast Asia way back in the 70s. And at that time Southeast Asia had every large player across the globe invested and playing in the market there. That gave us exposure to multinational competition, and that has pretty much stayed in the DNA of our company. So competition is not a problem. I mean, part of running a business, an important part, is to compete and compete well. And risk-taking is an important part for business leaders. You might as well not be in business otherwise. So I think our approach has been rather simple. We believe in running our own race. It's always good to have a view on competition only from the rearview mirror. But I think that we have focused on what we know best, which is running plants, which is investing deeply into ecosystems. If you look at the ecosystems in terms of suppliers, dealers, distributors, they're deeply penetrated in these businesses across the country. We have very deep customer relationships. We've increased capacity exponentially. I think that when you've been in industries for a long time, there is an accumulated knowledge that you have the advantage of. You have institutional memory as I would call it. So I think that we pretty much focused on running our own race. There is no business that's a territory of any one player. You know, anyone can make a foray into any business today. And I think that you have to focus on your strengths. And like I said, very deep relationships across the ecosystem, across the length and breadth of the company. My father had said very famously back in 1993, you know, don't be scared of competition. He meant the foreign competition then which was just coming into the country. Don't be afraid of competition. Let the competition be afraid of you. We're not wanting the competition to be afraid of us, but we're certainly not afraid of them.

I think that's a very positive structural change that's happened. It means that domestic investors know and understand India much more and much better, much more deeply than foreign investors is my broad assumption. I think that that's the correct assumption to make. I think that if you don't need to depend on foreign flows and their ebbing out and flowing back in, that's a very advantageous position to be in. Which means a deeper and deeper financial market, and you're sort of self-dependent on institutional investors, retail investors within the country. For foreign investors there are so many other issues at play, valuations, currency, geopolitics, geopolitical issues. I don't think they can be away for too long, and I think that in the medium term they probably will come back into India. There's too much that's happened on the global front just now. But I think this new development or this sort of new positive element of growth in the economy which makes us self-sufficient by having very deep or much deeper financial markets than we did in the past is a very big positive.