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'We are not in India for low-cost labour'

ABB Global CEO Joseph Hogan, 54, credited with increasing GE Healthcare's revenues by $11 billion in the seven years, spoke to BT during his recent visit to India. Edited excerpts:

KR Balasubramanyam        Last Updated: October 13, 2011  | 18:09 IST

ABB Global CEO Joseph Hogan, 54, credited with increasing GE Healthcare's revenues by $11 billion in the seven years, spoke to BT during his recent visit to India. Edited excerpts:

What advantages does ABB see in India compared to other emerging markets?

We find here a real commitment to economic growth. This country is making investments towards that. Also,  the size of the population, and more importantly its demography - a young generation with strong technical capabilities. Strong economy, good demographics, and smart and technically sound people provide a strong foundation for ABB to grow. We are excited about the Indian economy. We have a good foundation here because of the history of our investment in India. India is very important to us. The best indication of that is $1 billion we spent last year to buy back a 23 per cent stake.

What kind of investment are you planning here?
We are investing $24 million in a miniature circuit breaker facility, and also in our turbocharger and vacuum tube business. In power and automation, we are moving towards more assembly and engineering. I can't give you an exact figure on investments, but India is a priority area for investment.

What are your concerns about India?
How to move fast. This market is changing extremely quickly, and has its own needs and specifications.

What about economic uncertainties?
There is uncertainty all over the world. There is, of course, one certainty about India which is that it's going to grow. How fast that expansion can happen can be debated. But right now, in the developed world, there is a recession again. Despite the inflation and interest rates here, we see strong opportunities, and I think it will continue.

Where do you see growth - China or India?
We have strong momentum in both countries. They have different demographics and technical concerns. We see opportunities in both. I would not say China is better than India, or India is better than China. We have equal opportunities to grow.

What is the idea behind localising product design and manufacture?
It is to be more competitive in the Indian and global marketplace. That is the strategy. We want to be as close to our customer as possible, in both manufacturing and in design. We have not come to India for labour arbitrage. We are not here for low-cost labour. We are here for the Indian marketplace. We want to make sure we manufacture competitively, around the specifications and domains for the Indian economy and consumer base. We call it 'in India, for India'.

Do you have a revenue target for your Indian business?
Yes, but we don't share that.

What kind of growth target are you aiming at?
We are looking at double-digit growth in India - something like 10 per cent. We have aggressive plans for India as part of our five-year strategic plan.

What are the growth areas for ABB in India?
Anything to do with energy efficiency and the capability around it, like services and systems. Also infrastructure related to power grids, such as smart grids, and projects such as the transmission of hydro power from the northeast to different parts of India. These are the types of large infrastructure projects that ABB is good at.

Which achievement in India are you especially proud of?
We have our medium voltage switchgear, which is a world-class operation in India. The miniature circuit breaker plant, on which we have spent $24 million, in Bangalore, is incredible. And we have nearly 1,000 engineers in Chennai working on process automation for applications not just for India but for countries around the world. That is not a product, but it is a knowledge base that helps ABB design products for India and for export.

Where do you see export opportunities?
Across the broad aspects of our business - power and automation. We see significant export opportunities, not necessarily to Europe or the US, but to Africa, West Asia, and other parts of the world where these products will be competitive.
In services and software, we are very excited about data centres. We see significant growth there, as more and more data centres are built here. We have competency in direct-current data centres. Then there are substations, transmission lines, metros - all these infrastructure projects are great growth opportunities for India and ABB.

Can you say a little more about the direct-current data centres?
There will be AC and DC data centres. DC is more energy-efficient, as servers run on DC. We can save a lot of energy by omitting conversion if we operate the data centre on DC. There is also a substantial space saving, as we don't need the same number of converters. Lastly, less conversion means that less cooling is required. Cooling is a substantial source of energy demand in data centres.

Will you buy out more companies to expand your footprint?

First we look to grow organically. We have significant organic investments in India. As for acquisition, we will see that it makes sense strategically.

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