Via Venkig (on our spiffy new News Tab), I see that the Indian car company Mahindra & Mahindra will soon be selling a line of SUVs and pickup trucks in the U.S. Though Mahindra is already well-established in the U.S. as a seller of tractors, there’s a fair amount of skepticism as to whether the company can break into what is already a pretty crowded market:

Mahindra & Mahindra, a conglomerate based in Mumbai, intends to find out. In spring, 2009, the company plans to launch two- and four-door pickups and a sport-utility vehicle in the U.S. This trio of diesel-powered trucks will compete against a big pack of aggressively promoted offerings from General Motors, Ford, Dodge, Nissan, and Toyota. All of these manufacturers have been warring over a domestic pickup market that is shrinking and a SUV market that’s overcrowded.

Skepticism abounds. Trucks in the U.S. are sold with imagery of waving flags, macho companionship, and brawny workers showing off feats of towing strength to the sound of John Mellencamp anthems. Buyers tend to be loyal, practical traditionalists. (link)

The reasons Mahindra trucks might have a chance are 1) they’re aiming pretty low initially, and will come in with a small number of trucks and a modest marketing budget; and 2) gas mileage:

But at a time of soaring gas prices, Mahindra’s vehicles are going to have one big thing in their favor: superior fuel economy. Despite diesel’s historic brown image, it is emerging as a green technology. New low-sulfur fuel, federally mandated in 2006, can produce mileage figures that nearly equal those of more fashionable hybrids. Mahindra estimates that its compact SUV, the Scorpio, and pickups, one of which will be called the Appalachian, will get about 30 miles per gallon in the city and as much as 37 on the highway. That compares with 30 city/34 highway for the $27,000 Ford Escape SUV hybrid and 21 city/27 highway for the gas-powered $23,000 Toyota RAV4. (link)

A cheap SUV that gets 30 miles per gallon city? Sign me up! That appeals to me economically as well as environmentally. (I’m now an official member of the rather absurd class of people who want an SUV for practical reasons — try stuffing a jogger stroller into the trunk of a mid-size sedan — but is ambivalent about actually buying one because of the low gas mileage.)

What do you think, does Mahindra have a shot at selling pickup trucks and SUVs in the American market? Would you consider buying a “Mahindra Appalachian”?

(For readers in India, does anyone have a Mahindra Scorpio? How is it?) Continue reading →

As loathe as I am to admit it, jobs in finance look very sexy on paper. Managing a small business involves running to OfficeMax, the post office, or the bank – nothing that will grab one’s attention. There are no million dollar deals, or headlines in the newspaper announcing the bonus levels of other office managers. During a lunch break, I’ll come across a story about some new merger, or read those stories about the year-end bonuses that will exceed my salary by several degrees. Being a good capitalist, I understand the role that a vibrant financial sector plays in a modern market – allocating capital efficiently, allowing entrepreneurs a new source of investment funds, and rewarding investors who are taking risks with their money.

What I’ve always wondered though, is how prominent should finance be in a nation’s economic profile? You can even go down to the city level – how much role should Wall Street play in New York’s local economy? What role do the futures exchanges play in Chicago today, and what role will they play 20 years from now? For a developing nation like India, how prominent a role can financial firms play? Should the rules governing their behavior be different than in a developed country? Continue reading →

Religion and politics in India make for a combustible combination, but a recent article in The Wall Street Journal on Azim Premi entitled Secular Engineer: How a Muslim Billionaire Thrives in Hindu India raises the matter of religion and economic advancement. The article profiles Premji, and gives a brief history of Wipro – transforming it from a seller of vegetable oil to the IT powerhouse of today.

A couple of things about the article rubbed me the wrong way. Part of it was the mention of religion in the title. Does anyone know of the religious background of billionaires from China, Japan, or Western nations? Only recently did I find out the owner of the Marriott hotel chain is a Mormon.

The article repeats one of the standard explanations of why Indian Muslims are under-performing their neighbors – that after partition, the best and brightest Muslims left for Pakistan. If that is the case, then Pakistan should be further along the development path than India, and there should be a number of world-beating Pakistani (or Bangladeshi) companies. Such is not the case – while both nations certainly have wealthy families, they are more likely to have garnered that wealth through methods usually seen in many developing nations – graft, monopolized markets, government favors, feudal relationships, etc. Continue reading →

We’re heading into an election year in the U.S., which means facts are largely going to be irrelevant to most public discussions of issues for the next fourteen months. Instead, we’ll be treated to spin, counterspin, and more spin. The big Indian software & services companies realize this, and the Times reports that they’ve decided to hire lobbyists to counterspin the inevitable protectionist rhetoric (the original spin, as it were) that “outsourcing is costing America jobs.”

The economic impact of outsourcing is complicated, far too complicated to be given justice in a 30 second ad or crowd-pleasing stump speech. While it’s hard to argue that no jobs have been lost to outsourcing, there’s no reliable number on how many jobs are actually being lost (it’s certainly nowhere near 3.3 million, as was predicted earlier). There’s also some evidence that “insourcing” creates far more jobs than outsourcing takes away (the U.S. remains a net exporter of business services, for instance). And yes, some Indian companies are now opening up decent-sized offices in the U.S., and hiring American workers. (As you’ll recall, this came up back in June, with the infamous Obama campaign memo on Hillary Clinton’s purported connections to India.) See the conservative Heritage Foundation for more; and see this article at IHT for why it may not matter anyway.

The lobbyists quoted in the Times article are even adding some new arguments and approaches to their arsenal:

But the core of the Indian vendors’ new strategy appears to be removing themselves from the limelight. Outsourcing is not about us, goes the new pitch to lawmakers, it benefits Americans, including ones in your district.

The Washington lobbyist who asked not to be identified said that a focus of the campaign was to collect data on Indian companies’ investments in the United States and then to lobby members of Congress from districts where those investments have created jobs.

For example, a lawmaker from Washington State might be told something like this: Indian outsourcing companies may funnel some Seattle-area technology jobs to India, but with the affluence that creates in India, more and more Indians are flying. That has made India a huge buyer of Boeing aircraft and thus a creator of jobs in the Seattle area, where Boeing does much of its manufacturing.(link)

I don’t know — the tradeoff described here seems awfully indirect, and I’m not sure a politican could really sell the rising Indian middle class as a positive to an American middle class that’s currently dealing with economic uncertainty. Readers, do you buy the argument above? Can people think of other instances where the trade-off works this way? What about cases where it doesn’t? Continue reading →