Entrepreneur of the Year India, 27 years celebrating shapers of India's future. Thank you all so much for so graciously being here on stage. And to moderate this discussion, we have the very sharp, the very incisive managing editor, CNBC TV18, Miss 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. Ladies and gentlemen, it's wonderful to be back here at the EVI Entrepreneur of the Year Awards. And 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 Millennia 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, and 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 the 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, it will change, 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 as wisdom. There is as 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 that Sam Altman has sent out. I was talking to some youngsters and they said Sam Altman looks a little old. But you know, and I agree with you by the way, 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 you know this business of the fact that 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 that it's going to get worse before it gets better?
So if you look at all the research which is coming out, whether it's Citrine, as well as what came out from an Indian serial entrepreneur from Singapore called Ajay Sharma, essentially what they are saying is in the software services sector, in that context, one is AI is on the rising curve. So it's in the early stage of what is known as Brahma-Vishnu-Mahesh cycle. So it is really in the Brahma space and therefore has a significant road to go ahead. And then 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 is where probably they may have moved into the Mahesh phase. This is what they say. Now 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, biggest pressure will be on things like BPOs because they will be completely automated out or replaced by chatbots or whatever else it is. 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 in 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 and 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 unfortunate.
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. For that, I'm very clear that what AI or these new dark factories and stuff like that, 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, in the world. And the world, which is today at whatever $110 trillion, probably would become $200 trillion because of... So what the computers did in the 80s, probably the AI will do now to take to the next level.
What will happen to the cost of manufacturing when we talk about this ushering in an era or an age 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?
No. 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?
Yeah, 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. Right? So for example, I'll give you some context, and I was sharing some of those stories outside. Our mission is how do we really democratize internet commerce for everyone, right? Like consumers, businesses. And 10 years ago when we started this company, we used to see that there was a big digital divide that is there in offline and online. Like when I go offline, I want to buy a shirt, I don't need to basically read something, know English, understand like what is ratings and reviews. I go and speak to a shopkeeper, say, 'Hey, I want a shirt in this particular range.' That person shows you certain options, you make a transaction, you go away. In the online world, you are somehow supposed to know that how should you basically like sign up on an app, how should you search, how should you figure out what does the cart button mean, add to cart mean, how should you figure out like ratings, reviews, so many things. And we somehow believe like that that will now go away. Like we recently launched a voice agent for a customer who can come and speak in their own native language. Never ever they have to read on the app anything. They just speak to the agent, see photographs, make the transaction happen. Right? So that digital divide that we saw 10 years ago basically goes away. So I feel like the opportunities of like the role that AI will play in democratization of access to internet services, software, so many things is like massive. Everyone who has been left behind so far, they will find it much easier to catch up because you will have these agentic layers like augmenting some of what the gaps are, helping people move forward. So I would say like the stage at which we are in and where we are investing in, we are very, very excited about the potential opportunities that come with AI, especially in a country like India, and especially around voice. Like I believe like a lot can be done.
You know, 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. Like I think it will. And like to me, like what will AI do at the end of the day? AI is going to expand the market size in India, right? Like AI will expand the market size. Like every single technology cycle, the markets of what we thought was possible in India suddenly becomes much, much larger. Like 10, 15, 20 years ago, could you basically build retail for 250 million customers transacting online or transacting like annually? The answer was no. But that market finally happened because of the internet technology and mobile. Now I believe this opportunity will be much, much larger because of AI. So I feel as such as the market gets larger, profit pools would get larger. And I think it's for everyone. And I think that's what we're working towards. Like we have seen, for example, we have upgraded most of our models, including in advertising, in the last one year to the transformer architecture. And we have seen like so many gains because you get much better in targeting, you deliver much better returns on ad spend to our sellers, they end up spending more in the platform. That loop starts to happen which basically, I mean, the profit pool expands. So I believe there's a lot that will happen because of AI in monetization, in profitability, and generally making like online profit pools much bigger than what you saw in the last 10 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 that 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 banking in India 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 turning around cost is 50 basis points. The Indian banking has a very, 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 at much lower intermediation costs than what we have seen. And the question which I have, and I'm seeing Sema and Piyush Goyal here, they've just entered so welcome to them, but I'm just wanting to make sure that we collectively, and 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 which is US and China. And India should not be left behind in that game and should never face the risk of colonization. That's very, 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, research? We should be 10% of the budgets. And India has financialized too early. We are too much focused at quarter say quarter. Put out money with a five, seven, 10-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 10 percentage points. And how do you make the... 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?
No, so first point is what are they saying that we as Indian industry, we don't, we are not spending enough money on R&D. That's very clear. I told you just outside the same point that we, because we are living quarter say 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, but 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, I mean we certainly want shareholders to be happy. So the environment is such that if we start to make money then, you know, Piyush will say that you're making too much money. So therefore there is, you know, 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 the colonization on us. We as an industry, we have to grow. We have to... 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 here. You'll hear of course 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, and 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?
So there are two ways. One is that we have to learn from China because, you know, 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 try to learn from 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 10, 12 years we are building the bullet train which is right in front of my office. I think we are still four, five years away from the first time that bullet train will move. And it happens to be prime minister's pet program, the bullet train, right? So it's a very high-profile program but still we can't execute that program and you go to China you see like thousands and thousands of kilometers of bullet train running across cities. So we have to learn from a country like China which is building the economy at a fraction of the cost of, let's say, us because we are taking technology from, you know, smaller countries 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. It's 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 road.
