India 2025: What kind of superpower?

Thanks to its functional institutions of democracy, India will become a very desirablekind of superpower, free of corruption; entrepreneurial and resource and energyefficient.

Within two decades or less, arapidly rising India will very likely become the world's third largest economy -after China and the US. It would be appropriate to start speculating now on whatkind of a superpower India will be or could be when it becomesone.

Complex adaptive systems cannot change their stripes once theyhave evolved. How a system evolves determines its end-state. In short, how Indiabecomes a superpower will predefine its structure, its mindset and itsbehaviour.

First, India's emergence as a superpower will show that itis possible to lift millions of people out of poverty within one generationwhile embracing pluralism, a free press and a vibrant multiparty democracy. Mostanalysts predict that, over the next two decades, India's GDP will grow at afaster pace than China's. As the world's fastest-growing large economy on asustained basis, India's rise will put to rest the idea that acommand-and-control political system is the only viable route to rapid economicgrowth and that democracy is somehow antithetical to rapid economicgrowth.

Second, India has the potential to serve as a leading exampleof how to combine rapid economic growth with fairness towards and inclusion ofthose at the bottom rungs of the ladder. In a democratic system such as India'swhere even the poorest people exercise their political rights actively, fairnessand inclusion will be even more critical for social stability than in China. Asit becomes a great power, these values will likely become an enduring part ofthe country's DNA.

Third, the prospects are high that, by 2025, Indiawill likely emerge as one of the world's least corrupt developing economies.While widespread corruption is a reality in almost all developing economies (aswell as some of the developed ones), India is one of the very few developingeconomies with a free press that continues to be vigilant and merciless inexposing the corruption. It is very likely that a vigilant and free press willensure that the likelihood of getting away with corruption will decline rapidly- with salutary deterrent effects.

Fourth, India will likely emergeas one of the world's leaders in leveraging information technology (IT) to boostthe effectiveness and efficiency of its institutions - the corporations, thegovernment and as well as civil society organisations. As 3G and 4G wirelessconnectivity becomes widespread over the next five years, it is a near-certaintythat we'll see a rapid diffusion of low-cost tablet computers along with free ornear-free applications aimed at self-learning, mobile banking as well ascommercial productivity. India in 2025 could well emerge as one of the world'smost connected and IT-savvy societies.

Fifth, India will almostcertainly become a leading example of efficient resource utilisation, especiallyin energy. India relies on imports for a bigger proportion of its oil & gasneeds than any other large emerging economy. The situation is likely to getworse, with sustained growth. The consequences are clear. One possible outcomeis that India hits a resource-scarcity wall and economic growth comes to ascreeching halt.
Analternative scenario is that the country's industry, government and consumerswill respond vigorously to the imperative for ever-greater resource efficiencyand the development of renewable energy sources. Given the ambitions andingenuity of its people, I am inclined to bet on the latter scenario. In theprocess, efficient resource utilisation is likely to become an embedded part ofthe country's psyche and behaviour.

Sixth, India is likely to emergeas one of the world's leaders in market-driven innovation. Adversity combinedwith ingenuity has always been the mother of innovation. Think of how Japanemerged as the world's leader in lean manufacturing. Given very high populationdensity and thus scarcity of land, companies such as Toyota could not afford tobuild Detroit-style automobile plants.

In response, what Toyota didwas to invent just-in-time inventory management, total quality management,long-term partnerships with suppliers and other complementary processes thatenabled the near-complete elimination of wasteful space.

Think nowabout the fact that even as India grows to become the world's third largesteconomy, it will still be one of the world's poorest countries (in per capitaterms) for the next two to three decades. Low income levels will continue toprovide a very large opportunity to India's entrepreneurs to emerge as theworld's leaders in frugal innovation i.e., the design, production, and deliveryof products and services that are ultra low-cost. Virtually all of thisinnovation will be market- rather than technology-driven and is likely to becomean integral part of the country's corporate DNA.

Last but not least,India in 2025 is also likely to emerge as one of the world's mostentrepreneurial societies. Given a culture of individualism, Indians are "born"entrepreneurs. They also benefit from the fact that, relative to China, India'seconomy depends far more on pure private sector enterprises than on state-ledones. These entrepreneurs will not only serve as the engines for the country'srapid economic growth but will also benefit from the vast new opportunities thata larger economy will open up for them - domestically within India as well asglobally.

India will not emerge as a superpower unless it is smartabout managing the evolutionary process of getting from here to there. The seedsfor the tree that India as a superpower will be are being planted rightnow.

(The authoris Michael Dingman Chair in Global Strategy & Entrepreneurship, Smith Schoolof Business, University of Maryland)