Sujit Chatterjee, president of Tata Consultancy Services (China) Co Photo: Li Qiaoyi/GT

 Editor's Note:

India is well on track to overtake China in terms of GDP growth rates, and there is increasing interest in the economic rivalry between the world's two most populous nations. To share his thoughts on a range of issues relating to China and India, Sujit Chatterjee (C), president of Tata Consultancy Services (China) Co, spoke with Global Times reporter Li Qiaoyi (GT) on Thursday in an interview on the sidelines of the ongoing Annual Meeting of the New Champions 2015, also known as "Summer Davos," in Dalian.

GT: Amid a slowdown in China's economic growth and brisk growth in India's economy, will India overtake China in terms of its contribution to the world economy?

C: You have to understand that China's economy is still much bigger than India's. Premier Li Keqiang talked about the 7 percent economic growth target for 2015. If you are in the 7 percent range with a $10 trillion economy, it's huge. So while the growth rate in India may be higher, the overall size of China's economy is still greater.

It's normal to look at growth rates from a competitive point of view. But it is also important to look at it from a microeconomic perspective. It's good that Jaguar Land Rover comes to China and sells a lot of cars, as it's a Tata company. It's equally good that Xiaomi goes to India and sells a lot of phones. So I think at the end of the day, we should not be myopic in our view, and we should look at individual companies. We all run businesses, we all need profits, and healthy competition will help drive benefits for end users and the overall economies of the two countries. India can grow on its own, as can China. But we can help each other grow faster.

GT: China's economy is facing continued downward pressure, and is seeing signs of capital outflows. Could this boost India's growth, if India can take advantage of China's soft growth momentum to attract more foreign investment?

C: If there is foreign direct investment (FDI) flowing into China or an outflow, it is mainly due to China's circumstances. Similarly, FDI into or out of India is dependent on the Indian economy's characteristics. If foreign investors think there is a market in India, they will go and invest in the country and vice versa. So I don't think we should restrict our view to saying that there are only 100 dollars available - so yesterday 70 dollars was in China, 30 in India, and today somebody else pulls out some of those 70 dollars and puts them into India. I don't think it's like that.

GT: China is trying to deepen its structural reforms, and the Indian government has also been pushing a set of reforms. How would you compare the two nations' reform efforts?

C: I think the reform process in China started a bit earlier, about three decades back. And it has been a gradual, disciplined reform process. India started its reform process in the 1990s, focusing mainly on fiscal reforms.

China is continuing to pursue its reforms, based on what the economy needs, and India is also pushing its reforms. However, it's not "have you done five, have I done five, are these five the same?" It's not comparable. I think both governments are competent and are doing what is best for their own countries.

GT: Which sectors do you think will be the powerhouses of China's future growth? And what about in India?

C: I'll comment on this more from the IT services point of view, because that's our area of the market. A couple of large, broad macroeconomic factors are there. There has been a big urbanization drive by the government in China in the last decade, as a result of which a large amount of infrastructure has been put into place.

These people who will be connected by the wider infrastructure will need financial services, healthcare, and telecom infrastructure. So we believe financial services will undergo a transformation, including banking and insurance. Healthcare is also a segment that will see progress in China. Innovation-driven technologies like e-commerce will expand and high-tech companies will see a significant amount of growth in the next three to five years.

India is similar in some ways but different in others. The extent of urbanization and infrastructure is very different in India as compared to China. The current government focus is for infrastructure and utilities to see rapid growth, along with e-commerce, because while the physical road will take its route to reach a particular village, e-commerce can reach that village much faster. We have villages and rural areas in India where electricity supply and road infrastructure is not so good, but everybody has a mobile phone.

Also, in India, there is a big emphasis on inclusive growth, and a lot of attention is being paid to banking at a very rural level. So India may see similar growth rates across various sectors, with infrastructure and utilities perhaps taking the lead. But if I compare it to some other countries, financial services will grow at a faster pace in India, because there is lots of potential demand.

GT: China's State Council recently released guidelines for the development of big data. How important do you think the guidelines will be for the transformation of China's IT industry and the overall economy? In terms of big data technology, which of the two nations do you think has taken the lead in this field?

C: If you look at industries across China, digital forces are extremely important. And given the volume of data we are generating, we have to transition from a one-point interface with the customer to an end-to-end experience with the customer.

So if you are a consumer, you go to a shop, and the product vendor should have the ability to know what product you bought last time and what you want to buy the next time. And the relative benefits of the product and the pricing are also important.

Here, technologies like the cloud and big data will play a very large role. We have gathered a lot of information and it cannot be stored in physical devices. It has to be stored in the cloud. And real-time analysis through big data platforms will help tremendously.

China is trying to encourage development of this technology. Of course, we have to see the exact usage and the projects that are planned, but from a policy perspective, the guidelines are very intelligent.

In India, there are a lot of IT services that we have been working on for the past 40 years and there are a lot of people who are interested in it. So to that extent, we believe that there is some technical advantage that India probably has. But China has also pushed innovative applications of these technologies. At the end of the day, when you look at mass deployment, the strength of the two countries has to come together to deliver affordable, quick and reliable big data solutions to the market.

GT: There has been a lot of debate over the wild swings in China's stock market over recent months. Likewise, India's stock market has seen acute volatility recently. What do you think are the core causes for the fluctuations in the two nation's markets? Are uncertainties surrounding the potential rate hike in the US partly to blame?

C: If you look at the data for the fluctuations, it does not always convey a true picture of the economy. Retail investors are driven by sentiment, buying in bulk and selling in bulk, but the fundamentals of the markets remain intact.

As for the impact on both countries' stock markets of the possible tweak in US monetary policy, I think the Chinese economy and the Indian economy have become big enough and sufficiently diversified to be relatively unmoved by uncertainty over whatever decision the US Federal Reserve may make.

The nature of the stock market is that sometimes it is bullish, and sometimes it becomes bearish. Having said that, it depends on what type of investor you are. Are you an investor who buys $100 today and sells $50 tomorrow? Then obviously you will be affected. Your sentiment depends on what's happening. But if you are a 10-year investor, and you think that the sell-off point will be when your stock's face value doubles, then the short-term volatility will not be a concern. By nature, we Asians have a savings mentality. As Premier Li mentioned, we are inherently frugal and we value savings.

As long as the two nations' people, accounting for a third of the world's population, get up in the morning, ready to work hard and be positive, the outlook will always be bullish.