After the 2008 recession and Eurozone crisis, it became evident to Jeff Immelt, Chairman and CEO of General Electric, that business growth in the next few decades would not come from developed markets but from emerging markets in Asia, Africa and Latin America. With an aim to capture those markets, Immelt, 54, has decided to make India the focus of a turnaround at GE. In an interview with Chaitanya Kalbag and Josey Puliyenthuruthel, Immelt explains the rationale for the change and how the ambitious India-centred model change GE for the next few decade. Edited excerpts:
You are on President Barack Obama's economic recovery advisory board. How does the US economy look from where you sit?
Things are getting better in the United States. Across most businesses I look at, most things are improving. It's a slow recovery and some of that is based on how steep the crisis was, on consumer deleveraging and the savings rate going up. GDP growth hasn't been robust, but I see things steadily improving in the U.S. The thing that doesn't always get effect is that corporations have a lot of cash - probably more than any time in their history. That gives them lots of financial flexibility to continue to invest and that's typically a good sign.
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You spoke up recently about manufacturing in China, is it a big concern....
Well, China is a very important market to GE as is India and we have made big investments in China. We stand for free and fair open trade.
How free is it in India?
I think India is, by and large, fair and free. You could have more of reform in markets like financial services but GE feels we can do almost anything here. We can grow our health care business; we can grow our energy business. We are welcome amongst our customers, welcome with the government and so I think the progress in India has been fantastic.
Can you elaborate more on what the US needs to do repurpose itself on technology and manufacturing. If you were running the show in Washington, what would be the areas of focus?
Well. If you were a student of last 30 years, you'll certain good things have happened to the US in the area of productivity, the birth of information technology sector.... But there was underspending on R&D and in 30 years we went from having a trade surplus to having a trillion dollar trade deficit, that's not consistent with a wealthy country. So, I think we need to have more engineers, we have to have more focus on developing patents and intellectual property.
This notion that the US can be a service economy is just completely wrong. We need to have more of a focus on R&D, manufacturing and exports. If you look at R&D spending as a percentage of GDP in the US it has basically shrunk every year for the past 25 years. It's just not sustainable. It's not that every country has to do everything, but there are certain things that create wealth in any country and technology is at the heart of it...