India must not let conglomerates ‘define its destiny’, warns billionaire Uday Kotak

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India must not let a handful of conglomerates “define its destiny”, the billionaire who founded one of the nation’s largest banks has warned, as he urged the country to aim for broader growth with many “winners”.

The comments by Uday Kotak reflect concerns that a handful of tycoons and storied business houses have come to dominate swaths of the economy in India, which overtook China this year to become the world’s most populous country.

“We need to see many flowers bloom. And I’m not a believer that a few companies should define India’s destiny,” said Kotak in an interview with the Financial Times. “We need a broad-based growth of the Indian economy, with many winners.”

India’s 20 biggest companies now make about 80 per cent of the total profits generated by the country’s economy, according to research by Mumbai-based fund manager Marcellus, a figure that has doubled in the past 10 years. Its biggest industrialists include Mukesh Ambani, chair of Reliance Industries and Asia’s richest man.

Kotak became one of the most influential figures in Indian finance after building his bank into the country’s third-largest private sector lender with a market value of about $44bn.

After leading Kotak Mahindra Bank for 38 years, he stepped down as chief executive last month to comply with a 15-year regulatory term limit. He retains a 26 per cent stake in the company and a non-executive board seat. Joint managing director Dipak Gupta will lead the bank until a successor is approved by the Reserve Bank of India.

Kotak said he believed India’s economy needed to expand faster in order to lift millions out of poverty.

The IMF projects that India’s gross domestic product will grow at 6.1 per cent this year.

“I would like to see India grow faster,” Kotak said, “because if India is to transform our destiny for 1.4bn people — we’ve got to get a lot of people out from below the poverty line into the mainstream — India has to aspire to grow at 8 to 9 per cent”.

The billionaire has been at the heart of a financial system in transformation, as India’s economy opened up from the 1990s with New Delhi introducing a series of economic reforms.

“In my career I’ve seen many points of time when India has looked promising. This time the promise is much stronger and more real,” Kotak said.

Kotak clashed with the RBI in a 10-year battle over the size of the Kotak family’s stake in the bank, after the regulator introduced legislation to diversify bank ownership. Ultimately, Kotak managed to retain 26 per cent.

Praising regulators for “protecting and nurturing” banks, Kotak said the financial system could be strengthened through measures including loosening acquisition financing rules for banks and streamlining the bankruptcy process.

“We need to have a vision which enables us to have the capacity and capability to — in the next 20 to 25 years — take us to a $30tn economy,” he said, “so you need a combination of good process, good policy and some bold steps”.