#29 The World's Most Complex Market?: Understanding Consumer India with Rama Bijapurkar

In this episode of the Business and Society podcast, Senthil delves into the complexities of the Indian consumer market with renowned market expert and author Rama Bijapurkar. Drawing from four decades of research, Rama outlines the transformational journey of India's consumer economy—from pre-liberalization austerity to the explosion of choices and rising competition after 1991. The discussion highlights the unique nature of the Indian market, the enduring relevance of kirana (mom-and-pop) stores despite predictions of modern retail dominance, and the myth of the middle class. Rama explains why Western business models often fail in India, the nuanced urban-rural divide, women's evolving roles in consumption, and the impact of digital technology. Tangible insights for entrepreneurs abound, stressing the necessity of careful segmentation and understanding local market logic. The episode closes with practical advice for business leaders and personal reflections on books and learning, making it essential listening for anyone interested in India's consumer landscape.

You can learn more about Rama's work by visiting her website: www.ramabijapurkar.com.

Please visit our website, www.businessandsociety.net, for more inspiration.

Transcript

Senthil (00:01)
Welcome to the Business and Society podcast. I'm your host, Senthil. Every fortnight, I take a topic and discuss it with influential thinkers and practitioners. Today, we'll be discussing the Indian consumer market. With 1.4 billion people and 2.4 trillion US dollars in consumer spending, many businesses see India as the next frontier for growth.

I planned this episode particularly for aspiring entrepreneurs and businesses who are keen to learn about Indian consumer economy and succeed in their ventures. And I cannot think of a better person to talk the subject than Rama Bijapurkar. Rama is widely recognized for her unparalleled understanding of the Indian consumer market. She is the author of several acclaimed books on the subject, including Lilliput Land, and We are like that only.

Rama, welcome to the show and delight to have you with me today.

Rama Bijapurkar (00:59)
Well, thank you, Senthil Pleasure to be here.

Senthil (01:04)
It's what you have been studying this space for about four decades or so. The consumer India as you call it.

Rama Bijapurkar (01:12)
Particularly since liberalization, didn't really need to study it as much prior to 1991.

Senthil (01:19)
Wow. Look, for someone who don't know much about the trajectory of the Indian consumer market, tell us the journey it went through from the beginning, even pre-liberalization, when you started studying this field. And also highlight some of the pivotal moments which you saw and thought, wow, this has changed the narrative about India. And I'm sure you have observed a few.

Rama Bijapurkar (01:44)
So ⁓ from the late 70s when I started looking at this market, at that time, ⁓ your listeners may or may not know, India was a proudly socialist country, which meant that consumption of many things was a sin, so to speak. And every year in February or March, when the government would put out its budget for the year,

They would tax whatever they considered was luxury consumption, which included lipsticks, shampoos, air conditioners, and practically everything else, certain kinds of packaged consumer goods, high-end toilet soap, and they would say these are luxuries and we have to tax them 100 % or 150 % or 80 % so that people don't consume as much.

And I used to work in a market research agency. And at that time, the big boys were Unilever. There was BAT, the cigarette company, and its Indian company. There was ⁓ maybe the precursor to Gillette. can't remember. And there were very few other companies. There were a few foreign brands, but... ⁓

That was basically that. And so we did a lot of work starting with consumer. Actually, we had a lot of fun looking at developing market research methods and techniques for rural consumers, for those in India that were, it was mostly urban consumption really. And that's what we tracked. And suddenly came 1991, which when we decided that it was the market capitalism that India would embrace.

for a variety of reasons and that was really really a dramatic shift in consumption because suddenly from consumption being bad you actually had the finance minister in mid 90s come on TV and say please consume it's good for the economy please consume and so in the 1990s that's when we discovered foreign direct investment we discovered the power of our consumer market we

thought about the great Indian middle class that was a mistake at that time because we thought it was greater and richer than it actually turned out to be. So a lot of companies did quite badly at that time. But even so, really, the consumers as well as those of us watching consumers understood what consumption really could be. And suddenly there was around that time, there were all kinds of people who wanted to come and look at the Indian market.

And we actually, as a market research industry, made a lot of money just explaining to people like Clorox that the idea of, you dry your clothes in the sun was an idea we didn't understand, because where else would you dry your clothes other than in the sun? And ⁓ similarly, I remember as early as around the 1990s or before that, we actually did

piece of work for Mars that at that time wanted to come in with pet food. They finally came in 30 years later. And at that time, it was really hard to try and explain to them why dogs were vegetarian on certain days, because those were days when the household went vegetarian and so on and so forth. And so there was at that time a lot of action. And we in between actually pre 1991, a lot of foreign brands have been kicked out of the country.

⁓ because the government had said to them that you either have to decrease, ⁓ you either have to get off minority control or you have to go to the poor sector. And many of them like the Coca-Cola corporation just chose to leave. So the 1990s also saw the ginger coming back of them. And even so when Pepsi came, I remember the cabinet of India got together and decided that Pepsi had to be renamed Leher Pepsi.

I don't know if it was a cabinet or a subcommittee of the government or something like that. So we had a lot of, some of 1990s were also interesting times for, I'm going to describe the consumer journey a little bit. Until that time, there were monopolies, there were queues, you stood in line for months together if you wanted a two wheeler or a car. You had a lot of rationing on a lot of counts.

And suddenly there was more competition that came in and suddenly the taxes started getting rolled back. And so the Indian consumer was in heaven because the prices of everything came down and competition actually got the prices further down. So that same luxury air conditioner you could get for, you know, instead of maybe a hundred thousand rupees for 30,000 rupees and you could get

You could buy a car, you could buy a two-wheeler, you didn't have to wait for a long time. You actually got loans for consumption. So the consumer was really quite amazed. And from there, it has been a journey of reducing prices and increasing quality, which is why I call our consumers monster consumers, because they're so used to this. When cell phones came in, it was 16 rupees a minute. Now we have the cheapest cell phone rates. It's a couple of cents, I think, for data as well as for voices.

mostly free. So that was really what took us to the year 2000. From 2000 onwards, it was a steady improvement. And then we had ⁓ China that came in and started showing us how cheap Chinese goods could be and how wonderful they could be. And I remember in my mother's prayer room, there was actually a China made lamp where instead of the oil wicks in the lamp, there were little little bulbs and we had never seen stuff like that.

We had never seen footwear like that. We had never seen saris that came in, which were so cheap. so that was the whole China showed us stuff that we, wasn't great quality. You dropped the charger and it packed up, but it was also cheap and so exciting. And then came Amazon. And then the Indian consumer had another round of, we actually could return things for the first time in our lives. The modern shopping environment hadn't taken off.

And so from there, now ⁓ we are at Lilliput land where the small suppliers have got their act together. They're really quite interesting. And consumption, as I often say, is now the new God in our pantheon. As you know, Indians have many gods in their pantheon and consumption is now ⁓ one of them. excuse me, I live on a street where I have the temple of shopping, then I have the temple of Hindus, and then I have the temple of Muslims.

A little further down I have a church and during festival time all temples are in overdrive.

Senthil (08:59)
Lovely. That's a beautiful summary. ⁓ Reading your work, particularly your books, there is one underlying narrative which I found across, which is you have been steadfast in saying from the beginning that Indian market is different. In fact, you wrote one story that you were about to get fired ⁓ by your boss but it seems you still stood your ground.

Finally, it seems you had your last laugh. So tell us, when did you realize that this market is not going to evolve in a similar way where Western economies evolved?

Rama Bijapurkar (09:39)
So you have to understand that many people in my generation had absolutely no exposure to overseas markets. So when the big three or four management consultants came in, I now understand that it was good strategy for them to say that we've seen it before in 30 other countries and we will see it in this country as well. And India will evolve in exactly the same pattern. And all my research, my understanding of consumers, ⁓

told me that that wasn't so. So yes, I had, used to work for one of the top consulting firms of the world and So I had ⁓ a person who was a partner in the firm who was Dutch Brit and he used to say to me that, why do you Indians think you're different? Do you wear your noses on your ears? Does water flow uphill in India?

And I would tell him maybe it does. And he would say to me, for example, that by 2000, and this was in 1990s, by 2000 ⁓ or so, he wrote out a report called The Dawn of the Super Retailer. And he said we would have a lot of organized retail ⁓ coming into India. And when I saw my local, what is pejoratively called mom and pop, but we call them kirana, the kirana store,

I thought no way he is going to, that the supermarkets are going to deliver incremental value. For example, when my daughter went to college, it was in 2003, ⁓ he called me within three months of her going to college and he said, are you buying from someone else? And I said, why do you say so? And he named the five items that she consumed, Maggie noodles, ketchup, cheese, jam, something and something. And I had not realized the change in my consumption patterns, but he had done it.

I don't think the supermarket down the road with sophisticated CRM systems cared. He would stock two items of a particular brand because I wanted it. The supermarket would not do that for me. One day remember I had no money and I wanted something before I went home. And so I popped into his shop and I said, I have no money and I bought something worth 70 rupees. And he gave me back 30 rupees. And I said, what's that? He said, just go upstairs and send 100 rupees note to me.

So here I am asking for credit and he makes me feel good. And also I realized that the whole supermarket or the big store revolution in America was because ⁓ the roads were good and cars were there and people could locate these guys outside the periphery of towns and make economics work. But in India, the central nervous system by then was already the cell phone. It was not the road and it was not the car.

And so it was quite clear that the economics wanted to work and every 10 kilometers because of diversity, we consume different kinds of rice, different kinds of oil. So the whole economics of modern retailing, which was build scale, buy cheap, sell cheaper, wasn't going to work. So we could see evidence of this again and again and again. I had an interview in a...

one of the leading US papers and it said chant the mantra India is different at the same time when they were saying we've been there done that. So I actually went to war against thinking where you had a graph like this and on one axis you had per capita income and on the other axis you had per capita consumption of everything. And I would say that just because our incomes increased, we're not going to give our children more Coca-Cola because the per capita toilets.

per population on the streets or on long distance journeys are so few and far between that we're not going to take the risk. And then maybe our stomachs are different or maybe we have different priorities. And that was really the battle we had. As a result of continuing this battle for a long time, that was why my first book was called, We Are Like That Only. ⁓ Subtitle was understanding the logic of consumer India.

And we are like that only is Indian English for it is what it is, suck it up, deal with it. And interestingly, my international publisher called it Winning in the Indian market and the Indian edition is called We are like that only. And so I always say that that's the Western paradigm of conquest and this is the Indian paradigm of surrender. So that's and over time and now when I see reports from the same consulting firms and several others.

They're all saying, you know, India's evolved differently. India's leapfrogged differently. So where I come from, which is the people view of consumption, it seems hard for me to understand why people will make the same choices today at a per capita income that a developed country achieved 30 years ago. You know, when things are different, the environment is different. We now know what's for our children, what's bad for them. So it is about people and the choices.

I had a very big luxury goods firm and they came and asked me, when will Indians get ready to spend 200,000 rupees on a handbag? And I thought about it and I thought about myself and I said, after we have paid for our children to go to Harvard, I mean, know, we are like that only. the idea is to understand the logic from within. think that's the point about being different.

Senthil (14:56)
Yeah.

Interesting. Let's talk about that retailer bit, Rama. So because when I was growing up, there was a overarching narrative and almost everyone agreed that modern retail is going to come and destroy mom and pop stores. Why those predictions turned out to be a

false one.

Rama Bijapurkar (15:23)
important quest point is that if you look at the details of business economics, which is how do you build, I mean, the core of the business model of modern retail was that you could build scale, buy cheap and sell cheap. Build scale, use that scale to buy cheap and therefore sell cheaper than the moment. But if every time you expanded your geographical footprint, you had to do a different portfolio.

by the time you build scale, you would have to have lost a lot of money. So I think God was in the detail. In fact, I almost call Lilliput land God is in the detail because if you had understood the assortment before you put into your spreadsheet purchasing power, you would have known that the model was unsustainable. Or for example, and

So one part of it was that they did not understand it's what I call value arrogance is a deadly sin. They did not understand the value. The minute you call them mom and pop stores, you're automatically devaluing them and diminishing the value that you add. And it's true that mom and pop stores used to cheat you on a daily basis, but they were transactionally unfaithful to you. But in the relationship, they were very faithful to you indeed.

Right? And so it's interesting now that quick commerce that's coming is to me where you have guys who are delivering to your doorstep is exactly what the kirana store used to do for me. If I was in the middle of cooking and I didn't have coconut milk, I would just send someone or call him and say, can you send someone with two jars of coconut milk? Today I can call Zepto, I can call quick commerce. So it's kind of back to the future.

So, and I think supermarkets thought that we will come in and transplant the model as it is. And that is, think the larger narrative of multinationals that you say, I will come, I will see, will transplant or translate my model. I will not make for India, but India is, you know, as the same ⁓ business partner used to tell me, people don't know what they don't know. But you know, there's a difference between

shoving things down people's throats and giving them solutions to problems they don't have versus delivering value. So I think it's a combination of things. think, ⁓ and that is why today ⁓ the modern retail era has kind of been jumped by the e-commerce era. It's been leapfrog, India leapfrogs and the quick commerce is back to the Kirana stores.

So Kirana stores are dying out today, but for a different set of reasons, I think their economics is not working also because their economics worked when the whole family worked in the business. And as my Kirana said to me of his son, one day he was really upset and he said, I said, where's your son? And he said, wifeko Bangkok leke jaana. He wants to take his wife to Bangkok. Imagine that. He doesn't want to sit in the shop all evening. Wifeko movie dekhana hai. He wants to take his wife to a movie.

So the minute the family next generation doesn't want to sit in the shop, your business economics also go to hell. And in the city centers with real estate being what it is, the combination is knocking them out. But on the other hand, there are aggregators who are aggregating them.

And so we are seeing that they survive regardless, but in different forms. They're very good at morphing also. They're very good at it. now the world and his wife is helping them manage their portfolios. The entire IT brigade is working with them to make them more efficient. ⁓ Even big companies like Unilever want these channels to work so that too much supply by a part of concentrated in the hands of the commerce guys.

Senthil (19:22)
Interesting. So let me put a hypothetical question now. Let's suppose I'm an aspiring entrepreneur. I want to launch a consumer product called X. Which of these channels should I explore, should be my priority? Is it the small neighborhood retail stores or supermarkets or the e-commerce, quick commerce? Now it gets even more complicated, it seems.

Rama Bijapurkar (19:45)
It depends on your pain and gain. And I think a lot of entrepreneurs want quick gains with minimum pain. I think they don't necessarily want to own the consumer and build a brand that last 100 years. And I think the Kirana stores are a difficult proposition. It's an expensive proposition. There is a lot of, I mean, we are very good at logistics in this country.

you know, there are whatever six million little stores spread all over the country and the head of any consumer goods company on her phone will get secondary sales, not just sell into the retail, but sell out of the retail because that's how the digital environment works. So that's there but you need to distribute to a lot of places and a lot of these people to build any kind of scale.

So I think you have to sit and say, is my pain and gain? So a lot of small entrepreneurs opt for platforms like Amazon. And that gives you footprint, it gives you market. It also brings with it ⁓ a set of rules and regulations and so on and so forth. Quick commerce demands very high margin. So we find that a lot of the newer age consumer brands

actually want to go the quick commerce route because they are willing to pay the margins because they're not spending on any other form of distribution. But then if somebody else comes and pays a slightly better margin, I mean, there is no question of loyalty. So I think it depends on what pain gain transactions you have. So it would be, I guess, a phased out route in some way. So to add a layer of complexity, there are companies, I know one, it's called Bizom for example. They will have a

let's say a million retail outlets in their fold. And that million is their universe. So you can go to them and say, all right, I buy into your universe. Please do this for me. And they will. So decide pain gain, ambition levels, what your long-term gain is. If you just want to do something to sell it to another big guy, then just make sure you have the route that gets you enough demonstrated, loyal consumer basis so that you can make money. And sell.

Senthil (22:06)
Interesting. You talked about the limitations of transplanting solutions from Western nations to markets like India. One of the examples which I saw repeatedly in your writings is Kellogg's, the breakfast stuff, which is very close to all of us. I also want to ask you, some of the products like say Colgate toothpaste or I grew up in a small village, the first brand I saw was Lifebuoy soap. ⁓ These are basically transplanted, isn't it? These are not

Rama Bijapurkar (22:21)
Thanks.

Senthil (22:36)
made for India, or am I wrong? precisely what I'm trying to understand is would transplanted solutions never work? Or if it worked, there examples or stories you can tell us?

Rama Bijapurkar (22:50)
So the stories of Lifebuoy so Unilever, Hindustan Lever as we know it, and then it became Assam Hindustan Unilever has been an Indian company in soul and spirit. It created for India. was the first, they were the first people to show us everything from hydrogenated fat instead of ghee. They were the ones who really popularized the shampoo sachet.

so that everybody could occasionally, regularly use shampoo once in a while, depending on your affordability. Lifebuoy, because of the distribution, I remember the chairman of Levers at that time telling me that if I raise the price of a Lifebuoy tablet by five Pesce, that's five cents, five Indian cents, tablet, I can pay for 100 management trainings like you.

So that's the kind of scale they managed to achieve. At a time when there was no census of India, Hindustan Unilever, when the villages were not completely detailed in the census, Hindustan Unilever developed its own census of villages. I how cool is that? They supported literally every activity. So I think they're a very, very special company. Now they may have changed a little bit of character.

But so I think they did not ⁓ transplant, even if they borrowed certain things, they engineered it, they used, they did what I think is best, they used competencies that were existing in the system and made and tailored them for India. They also built a whole lot of new competencies in India. So for example, the whole low cost business model of detergents ⁓ and so on and so forth, which they've exported to other Unilever countries.

very much what they didn't learn in India. I think they're a separate lot. ⁓ you know, Samsung and Panasonic and people and LG, the Koreans, these are people, Samsung in particular, who are now the big winners here. So yes, they have transplanted the products that they have, but they picked the portfolio that's right for India.

Similarly, we have the Suzuki company here. So they have picked the portfolio that's right for India and done all the other, the go-to-market, all the support and everything that is required for India. So you have to look at Indian needs. ⁓ So the famous story of one of the Hyundai brands is how it was actually tweaked to be made for India. ⁓

At a time when they were frost free refrigerators, were big refrigerators or the direct cold refrigerators with the small ones, LG came and said, I get your pain. You're a rich person. You have a small family. I will give you a frost free small refrigerator. So is the product transplanted? Yes, parts of it may be made there. on the other hand, Johnson & Johnson

brought in whatever it brought in and manufactured in India, but they were not willing to sacrifice their margin. So you sit in a country with 21 million babies and you have such a small baby market. ⁓ And at those prices, in fact, one of the big questions we used to keep getting asked is, how do you get the second baby in a household where the first baby used J &J products, how do you get the second baby to use it? Because by then parents have figured out that babies are hardened creatures, they're manipulative.

Nothing goes wrong with them. So had the prices been right, they would have stuck to it. So I think there are enough examples where the products have come in directly where, so do they sell? They will sell. If you come in with a margin gate that's that high, you're saying to the Indian consumer that this is my cost. If you can afford above that, if you earn above that, then please come and you are my customer. If you don't, I don't need you.

So yeah, transplants work up to a particular point. They don't afterwards. The airline industry buys Boeing and Airbus over time.

Senthil (26:53)
Got you. Rama let's unpack the consumer India a bit. I'm using your term. I changed from Indian consumer to consumer India for this interview. One of the things which really surprised me is again, this book I think you wrote in 2008. We all like that only. You call this middle-class myth. If I go and speak to anyone and ask them, give me some advice. to launch a consumer product in India. The next answer you get is target middle-class.

So I want to ask you, is that myth of middle class still holds? If yes or no, why? And did anything change from the time you argued this idea and like 15 years now?

Rama Bijapurkar (27:34)
So even today in the business standard, have a piece called the Tired, T-I-R-E-D and the Tired, T-I-E-R-E-D middle class where I'm saying, you know, guys, if we must hold on to our definitions of middle class because we like the numbers that it throws up and FT has quoted our numbers and everybody else in the world believes them, then let's at least segment this middle class, you know, into what is I call a genuine middle class, which I will explain in a minute and have purchasing power at the moment middle class.

which is volatile in nature. So let me talk a little bit about it. So yes, in the 1990s, we had the great Indian middle class. think there the myth was that we sort of we and everybody else assumed that the middle class in India had as much purchasing power as the middle class everywhere else. But even India's upper class is below the poverty line of America at certain points in time.

So India's middle class is a large volume, which is the other reason why business economics transplanted don't work, because we're a large volume with razor thin margins. India's economy is a large economy made up of lots and lots of modest income people. So we are ranked 150 in per capita income, but we are ranked four in total size of the economy, four, five, three, depending on exchange rates.

So the middle class in the 1990s, the idea of how much money the middle class actually had, and merely because you carry the label, you suddenly don't have middle classes like everywhere else in the world, was I think the mistake we made. ⁓ Subsequently, we have been saying that the middle class is anybody who earns between X and Y, and you keep expanding the X and Y definition, even if you take World Bank definitions and you say,

between let's say 10 and 100. That is a factor of 10. It takes into account an MBA from a top business school at entry level and my driver and his wife who works as a maid in a large city who together make the lower end of that amount of money. So this catch-all phrase of the middle class is what I keep cautioning about. And off late, I have been writing a lot with a colleague of mine from

he's Canadian, his name is Yuwa Hedrick Wong, he's an economist. And I sat down and I said, let's look at why a middle classes are important to a country. One part of it, of course, is people with purchasing power. But that is a function of what price and performance you do. If you're a Hindustan Unilever, you have taken detergent to every single person, no matter what the income or poverty levels are, right, and toilets open, so on and so forth. Today, the digital

industry that we have, which I guess we talk about the Unified payment interface, which is virtually free, has everybody using it, right? You don't need to be middle class to use it. You have to be the poor vendor on the street who's selling one banana at a time. even beggars in the street will have a GPAY and say you transfer to a GPAY if you don't have the money. So the idea of a middle class then and why it's so important,

is that these are people who will provide stability to the economy. These are people who have enough money, enough surplus money to invest in their children, in social mobility, and they have the resilience in good times and bad. And in Lilliput land, I've shown this with data, they have the resilience in good times and in bad times to be able to come back up, dust themselves off, and not collapse under the weight of any economic volatility.

There are also people by definition who have a line of work. They have skills, they have an education, they have a line of work. So even if you're a carpenter, a plumber, an electrician, an actuary, a small entrepreneur who has a particular skill in hand, you are middle class, but you have a means how you earn the money you spend is not blowing in the wind, is not dependent on what

what the economy is doing at the moment and what is available at the moment. You're not a freelance in search of work today, construction, labor, tomorrow, swiggy delivery boy, whatever it is. So the idea of a genuine middle class once you apply all these filters is only the top 20 % of the country actually. So our upper class is actually what in our heads we think is our middle class. And there has been a lot of work also done to show that the top is all right because

It's the market economy. They have skills. They know how to earn. The quality of earning that defines the quality of spending is quite good. The lower end is the welfare state. They're also doing quite okay, thank you. But it's this middle India that we really confuse for the middle class, which is problematic. It is volatile. They're construction laborers, agricultural laborers. ⁓

one third of Indian households actually earns its cheap wage earner is dependent on construction labor. So when COVID happens, you'll be shocked at how many people actually have a formal job, ⁓ which includes an employment contract a day off in a week, forget about social security. So I think there are lots of criteria where you have to, so my statement in today's paper in my column was,

that let's divide up the middle class into the genuine middle class and the consuming class. The consuming class who for today has consumption and a good time, but be prepared for volatility. We'll be prepared that tomorrow may not be as good as today and then don't say, hey, what happened to the market? The market's vaporized for a while.

Senthil (33:29)
So there's no one middle class and you got to segment it further. If you ask me what's one takeaway from reading your work a bit intensely over the past few days is if you ever want to succeed in India, you got to segment the market carefully. Is that a reasonable observation?

Rama Bijapurkar (33:48)
Yes, ⁓ it is, as I always say, the language of India's it's never all. And yeah, to your point about the middle class as well, earlier, the feeder to the middle class was government service, government servants, sector. Now that's actually decreasing. So the feeders to the middle class are all kinds of people. I've actually had multinational and I've had many run-ins with many multinational companies that come to look at India.

And one of them said to me, this was many years ago, that why do I need a Rolls-Royce approach to segment a market as small as this? And I thought about it and I said at that time it was much smaller, at least today we're bigger, at least we now sort of manage in an aggregate level the size that is respectable. ⁓ But I remember thinking that the complexity, this market demands far more strategic complexity than it is worth at the moment.

And that's because we live over four centuries. We have from the richest to make it to anywhere in the world, anywhere in the world, rich people who happen to live in India, who happen to maybe live elsewhere, but have homes in India, whatever it might be, all the way down to the same people I'm telling you about, the construction laborer who has a cell phone. So it is segment and it is choose ⁓ And if you stop smoking, if you're...

If you stop smoking dope about what you believe the income levels should be and you start looking at it with an open mind, I think you will be able to sort out for yourself, how do I solve the cost of complexity? so for example, rich people in India are all over the country. So if you say metro is equal to rich, rural area is equal to poor, half of India is rich, actually are rural and they don't pay income tax.

So company like LG gets it very well. So they look for pockets of rich people. they've geographically gone and segmented in terms of looking for islands of value. And they will mop it up, whatever it is. So they understand second home areas. They understand a lot of stuff like that. So yes, I think segment to say which India is my India, which India do I want to target? What is the pain and gain of this India?

Senthil (35:47)
Mm.

Rama Bijapurkar (36:05)
So in We're Like That Only, I quote a story from the times of the British Raj, guess, where an Irishman was asked, and this came in somebody's book, I forget whose, that an Irishman was asked, are trousers singular or plural And he said, singular and top and plural at the bottom. And the person who wrote this story then said that it's.

unlike the Indian dhoti, which is plural on top and many, many, many folds underneath. So, ⁓ yes. So I wear saris. My daughter will wear a mini skirt. My daughter will wear a sari when she has something important even at work to do. I see people in the temple next door and now jeans and tops are absolutely fine in temples. You don't have to wear Indian clothes or ethnic clothes. Even if you're doing...

The very same rituals the Lord will understand. So it's fluid. That is the nature of this country.

Senthil (37:05)
Interesting. Rama, would you talk about rural-urban? Like we talked about middle class and if you go to any other so-called consumer market expert, they see these two things, right? the massive middle class is a big market, then rural-urban. They say if you want to sell luxury product, go to urban centers. know, rural, you go far, bottom of the pyramid or whatever. Your book

broke a lot of myth. Give us some perspective about this rural urban market.

Rama Bijapurkar (37:35)
First thing I think we need to know that the rural urban construct in India is also a function of how the government describes it. So a lot of numbers that you see. it has to do with, without meaning to be too technical, it has to do with what percentage of the male, it has to do with defining urban India and saying one minus that is rural. So 75 % of the male workforce should be engaged in agriculture, should not be engaged in agriculture.

Now, lot of those are things of the past, even in villages not engaged, know, agricultural, as you know, the share of agriculture and the economy is dropping. Similarly, they say you should have a municipal body. If you don't have an urban municipal body, then you are not, you are rural, provided you fulfill all the other criteria. So in the 2011, which is the last census we had, there a lot of so-called urbanization came from what

the census labeled as census towns. Census towns are neither fish nor fowl. ⁓ They are sort of overgrown villages that don't qualify for the village definition because of the nature of agricultural non-employment of the workforce. They don't qualify as urban because they don't have municipal bodies, urban municipal bodies that run them. And a lot of the growth in urbanization came from census towns.

So if you talk to any business in India, they don't say rural and urban. They say peri-urban, semi-urban, urban, because rural has kind of morphed into almost urban-like. And there are, for example, little villages that surround very large developments like Gurgaon in Delhi. And they are to all event and purpose if you're surrounded by.

all the urban centers you are open the way you are. So the first point is that rural and in my new book as well I say rural urban now continue. In fact, rural roads are sometimes better than the roads in Marine Drive in Bombay where I live. They have less potholes than newer. Cell signals work extremely well in most places in the country. So they also watch the same things. have access to the same.

of entertainment ⁓ if you are and there are a lot of very regional vernacular local stuff that happens so I think in the minds and in the heads they're pretty much the same it is a fact that half of the rich in India live in rural India by the definition of government it is also a fact that most of poor India the lowest quintile of income most of them do live in rural India as well

So rural is so big that again, a small percentage of the middle of rural India in terms of income would actually be larger than a large percentage of the cream of the urban because that's the Indian number trick as I call it. The small percentage of a large number is a large number. So everyone in rural India moved at a particular, got let's say, moved at a particular skill base. That force of change would be many times larger than all of urban India going to college.

So rural and urban, there are income differences. Obviously, there are some differences in infrastructure in some states more than other states. But if you go to many of the more developed states, if you go to the southern states, it's very hard to see the difference. So I am now saying that we at last have a mass market in the middle.

And honestly, if you do not, if you're coming into India or you are in India and you don't target the rural economy, rural India has half of India's income, half of India's expenditure, over half of India's GDP. So you're going to sit out of half of this country. That doesn't make sense.

And there are as many urban poor. know, inside 25 % according to the 2011 census, 25 % of urban India are slums.

Senthil (41:34)
interesting.

Rama Bijapurkar (41:45)
So we're waiting for the new census to see where we get to.

Senthil (41:51)
How easy is to reach these rural consumers?

Rama Bijapurkar (41:56)
⁓ very easy the problem is not because as I explained to you even FMCG companies are distributed everywhere you will get the distribution system is very well set okay you also have ⁓ below the nose of a fairly deep distribution system you have people like Unilever who have groups of women who are going to be distributing for you and doing the last mile

⁓ We also have a very interesting startup that I've written about in my book who below the nose of the distribution system, which was fairly deep, he has created an urban elastic run. called a he created an urban, he created an Uber like last mile transportation model. So you can log on to the to this platform if you want work for a few days and do your distribution and come back. So

So it's really quite interesting. And the small retailers in the villages are sometimes under service. They don't get the stuff that they want. But I think this is best told by a story a friend of mine in Hindustan, Unilever used to tell me, where they used to pay money to their dealer and give them a van to be able to take the goods and distribute them in deep rural. And what this guy was doing was taking it in the public transport bus.

and throwing it out of the window and dumping it on the side of the road where the retailer would come and get it and he was pocketing the bad money. So I think rural distribution is like everything in India, it is easy but not simple. It's easy to do but you need to sweat a little bit. But now there are lots of people who will do it for you.

Senthil (43:44)
Let's talk a bit about sustainability. My podcast is not a pure business podcast. That's why I named it as Business and Society. Let's start with gender. Out of all this renaissance we are seeing, India becoming a superpower, big consumer economy.

Rama Bijapurkar (43:48)
Thank

Senthil (44:03)
How are women setting into these things? What kind of gender dynamics you're seeing? And if I'm correct that you are one of the few females who went to one of the prestigious management schools, that you're one of the six or seven in the entire cohort. ⁓ So talk us a bit about women and gender.

Rama Bijapurkar (44:23)
At a very macro level, ⁓ we have what we always call a 21st century economy with an 18th century society. So there are a lot of gender issues at home. ⁓ For everybody who is well educated in the workplace, to do what they want, free to marry who you want, empowered to spend your own money, there is somebody next door who is not so.

So Indian society is patriarchal or is it changing? Today I was just looking at some data there, the gender gap in enrollment in colleges has decreased. In fact, there are likely to be more women enrolled than there are men. know, another question that we constantly ask is why is female labor force participation so low?

And I think a lot of it is also to do with the structure of society, the structure of childcare, looking after all the people. If you go to a company that, let's say, manufactures apparel for exporting, it's mostly women who are working there, at any point in time, absenteeism will be 20%, 25%, because every time there's a crisis, it will be with the stay home and manage the crisis.

So for every segment that moves forward, there is a segment that doesn't. But what Indian women are very good at is negotiating. So they will try and negotiate the space. It does take a little bit of understanding on the outside to see where that negotiating is ⁓ actually taking you in terms of empowerment.

So yeah, that is an issue. mean, we still do have, we have enough. mean, the other day there was someone who came, she's a mother, cleans houses in a small town, but she's now a police constable. Okay, now the fat will hit the fire when she wants to get married, you know, what are they going to do? On the other hand, there is another girl in UP who I've helped educate and she's now getting married and

father still had to spend 200,000 rupees on her dowry and I said to her that, you know, why are you even letting it happen? And she said, otherwise I won't get married. I need to get married inside the community. So I want to get married. On yet another hand, the total number of years of schooling is I've been writing for women as there are a few things that are changing. There's reservations for women, which are working quite well in municipal bodies and politics and now even in corporate boardrooms.

⁓ There are changes in the law. took us a long time to even recognize domestic violence as an issue, as a criminal offense, and we now do. There is always going to be family pressure saying, don't do this, don't blacken the family name, don't complain. I guess that is so elsewhere in the world, much more so here. But so the framework is there. It will take some time. It will take more generations. But it is also true that women are working

few years outside the home before they get married and may not be allowed to work outside the home after that. But if you have tasted blood, as I always say, the worm has turned, then you are going to be a little more assertive, hopefully, in your home. And so I think change in India is, as I've always said, that the force of change in physics is mass into acceleration. The force of change in India will be a large mass of women moving with a little bit of acceleration. there are now more

girl children getting educated. think that the education gap is closing and so let's see where goes from there. But yeah, sometimes I even wonder about my own default conditioning options. Why did my daughter not get married? my god, she's getting older, she needs to get married. And then I have to sit down and say, really, does she? mean, does her life depend on that? But it's conditioning, it's automatic.

Yeah, we have issues working on them. They get better. They get better in some pockets. They don't seem to get better in others. But I think we're all seized on it. And there are more women in my class in Ahmedabad today than I had.

Senthil (48:53)
That's great to hear. What's

the kind of influence they have in household consumption?

Rama Bijapurkar (49:00)
So again, which India? If you take perhaps the more traditional parts of Northern India, it's the men who do the buying and the men who do the deciding. ⁓ But if you take most other places, the logistics of living and earning for the man are so difficult that the women tend to do what they call more outdoor work. So they've kind of, in a sense, taken the role of being

I wouldn't say CEOs because then you get more power. I would say the chief operating officer of the household. So I think you would get to, they do get to make a lot more decisions. But do they get to spend their own personal income the way they choose to spend it and so on and so forth? The answer is often no.

Senthil (49:36)
interesting.

Rama Bijapurkar (49:45)
A lot of women hand over their salaries to husbands, mothers-in-law,

Senthil (49:53)
Rama let's talk a bit about sustainability. if you, again, you may blame me for following the western archetype. The consumption pattern moves as such that once people got satiated with needs, they go for ethical products, recyclable, whatnot. Do you see the Indian consumers are ready for sustainable consumption if yes how big is the market or you wrote about value obsession of Indian consumers. Does value obsession goes with

sustainability

Rama Bijapurkar (50:23)
Yeah, I always struggled with this one. I mean, on the one hand, we always joke that the last thing the Indians voluntarily threw out was the British. We recycle everything. If you look at my household, and I'm an upper income household, if I use plastic, I never throw away a plastic bag. In many parts of the country, plastic is banned, so you don't use it. Here as well, it's not.

We recycle newspapers, we recycle old bottles. ⁓ We don't throw anything away in that sense. Would you ask me to pay more for what is ethically produced? I don't know, I am kind of conflicted out. First you give me such, I mean, when I look at the packaging that Amazon sends me, I'm horrified. You know what I do with the blister packs, with the blister wrapping that comes?

Senthil (51:15)
Yeah, yeah, yeah.

Rama Bijapurkar (51:16)
My

housekeeper cuts it into small squares and I put those squares into small pouches so that I can carry my jewelry when I travel. Because I'm just so shocked that they sent me so much bubble wrap and I'm so excited that there is so much bubble wrap coming into the household. I never throw it away. I wish I could show it to you. so that's what I do. But I'm surprised that when I order one little deodorant it comes wrapped in such a big cardboard bag.

Senthil (51:24)
I'm

Rama Bijapurkar (51:44)
I keep many of the cardboard cartons so that I can recycle them if I have to give somebody something, I have to send something somewhere. But why in the first place do you insist that shower gel is a higher order form of soap, but by the time you wash off that shower gel, it takes forever, right? yeah, I don't know about paying more for something that we were taught to consume in the first place.

I don't know why I should do that. ⁓ If you make a detergent that consumes less water, and I know companies working on it that consume less water when it gets washed out, that's okay. for example, the whole firecrackers at Diwali have gone away because children in schools have been told that this is made with child labor, don't do it. So now you have to be really stubborn and really tone deaf to have.

You have more silent Diwali's, have loud noise and music with the firecrackers, no? The rest of the stuff, if you're talking about electricity, electricity consumption, so on and so forth, mean, the electricity goes off so often in so much of the country that I think we're just under consuming even by normal standards. So I'm not even sure, I know it's a horrible thing to say, but I'm not even sure I understand the question, I understand the issue. Because we are...

Conservers, my housekeeper who comes to work cannot work for me all night and there's a labor productivity issue if I'm out of town and I say, will you stay the night with the dog and I'll pay you more because the water comes at 5.30 in the morning and it only comes for a few hours and so she has to fill it and she has to be careful with it. So I feel that when you see such extremes in resources, you...

arguably would tend to be more careful, but to tell everybody to pay more because somebody has spent a lot more money doing something that is ethically sustainable. don't I wouldn't do it. And it's completely the wrong answer and I'd probably get crucified for it. please audit it so that I don't come across any which way, but seriously, no. Yeah, all the plastic and the filth is coming from the lays and those kinds of packaging, right?

Senthil (53:45)
I hear you.

Ha ha ha.

Yeah. Another controversial question. You may get crucified for this. You wrote, ⁓ again, and we are like that only, you wrote that you talked about pragmatism versus nationalism, right? ⁓ You write that and I quote, ⁓ public and private life in India is now marked with opportunity and pragmatism. The world we live in now, there's definitely a rising sentiment for nationalism across. ⁓

Rama Bijapurkar (54:05)
⁓ good Lord!

Senthil (54:29)
And we often read in media that, yeah, India takes a lot of pride. You know, there's a sense of nationalism. How does all these forces affecting consumption in India? My question is just what you wrote in 2008 still holds or you say no, that has changed.

Rama Bijapurkar (54:44)
So often when I'm asked this question, I just want to point out to people that Sonia Gandhi of Italian origin, haven't seen on anything but a sari in a long time. The pizza that we have, if you look at the toppings, they are 100 % Indian toppings. We tend to Indianize whatever we want to. But that aside, I think what the point I was making then is that merely because something comes carrying a foreign brand label doesn't give it premiumness. We are pragmatic as in if it gives us value, we will buy.

Samsung, will buy Chinese One plus, will buy LG, we will buy whatever we want to. And we will not think twice about the fact that it's Korean or not. Okay, yes, there was a movement that said we don't want to Chinese goods because we think badly about it. Once that moment passed, I think now we're saying, yeah, okay, it's fine. So what I mean by pragmatic is that where we can Indianize we Indianize if a company has spent

has spent time, effort and energy in terms of making for us. We don't particularly care where that origin comes from. But merely because something is a symbol of America doesn't mean it's going to work here. So if you're getting knockoff jeans, jeans knocked off on the pavement with some random brand, ⁓ which is maybe sourced from Thailand, maybe made in India. ⁓

you will still have as much of a market for it. So that's what I mean, that if it gives value, you will buy it and not worry too much about where it comes from or what its origin is. So rising nationalism, course, of course, we're very proud of what we have. But going back to the street vendor, even five years ago, I asked someone, it was a monsoon and I picked up an umbrella and I asked him, is this from China? And he said, do you think Chinese have rain like this? He said, do you think a Chinese umbrella is?

is going to withstand this kind of rain. He said it's 100 % made in Bombay. you know, it doesn't matter. Does it withstand rain? Does it not withstand rain? A lot of the clothes, in fact, I often say that if you stop Chinese goods, a lot of our lower income consumption will collapse. My maids are wearing saris, have bigger wardrobes than ever before because the...

because nylon or whatever model or whatever synthetic fabric they're is cheap. And earlier China used to make maybe for somebody else, now they make for India. I asked my weaver in a small town in Hyderabad, Nahanlum weaver, I said, where were you all these days? And he said, I went to China. And I said, who took you to China? And he said, they wanted, they took a bunch of us, we were there for 45 days, they wanted to study, they meaning must be some mill or something, they want to study our patterns.

so that they can print those patterns instead of being woven. So you see what my household help is wearing. And for the first time, are there. Every time I say my saree, she says I bought it for 100 rupees, 200 rupees. The flip side, I wear cotton, I wear silk, I wear khadi. I have nobody to give these sarees to because they're costly to maintain, they're pain in the ass to store. So there we go. So I think the pragmatism continues.

It is a pragmatic, gives me value, doesn't give me value, and we don't particularly worry about where it came from. Except that obviously there are points in time when if it's coming from somewhere which you feel is been harmful to you or your country, you will... I think there is a sentiment that says, not that.

In fact, ⁓ on this, I want to tell you a story, it's a column I wrote in the Times of India about Amazon, right? So at that time, there was a statement from somewhere in government that said, so Amazon is a touchy topic because it attacks the kiranas and the kiranas is a big both bank. And there was a WhatsApp joke, which I wrote about. ⁓ And ⁓ there's this man who says to his wife, can you get this for me?

And she says, go and ask Amma Jan. Amma Jan, mother dear. And he again asked her the same thing, something else. She says, go and ask Amma Jan. And finally the fourth time, he's very irritated. And he says, why are you my mother into everything? And she means Amazon. So now if Amazon is actually giving me more Indian goods because they have the smaller Indian retailers than anybody else, know, eight varieties of cow dung packaged.

Senthil (58:52)
All right.

Rama Bijapurkar (59:17)
I wonder where people use it. Apparently you use it for certain prayer rituals. And ⁓ they are our beloved Amma Jaan. So I mean, you you really don't care where they come from.

Senthil (59:29)
I that. Thanks for sharing. Could you also talk about digital? What you're seeing across the world, particularly emerging economies like China, digital is profoundly reshaping how people consume. Say, for example, I work in coffee a lot. So I saw farmers selling roasted bean from their farm, live streaming and selling in thousands of kilos. Do you see such phenomenon evolving in India?

Rama Bijapurkar (59:52)
Yes,

Yes, in fact, a lot of the supply chains, the ability to commodity trade and so on and so forth. So I think the way to think about it is digital is your central nervous system. So it will permeate all parts of life. ⁓ So and also the main reason why digital works for us and works so well is digital has the ability of crashing costs.

And the reason it also aggregates, digital has the ability to seamlessly aggregate small units into big scale. So even if you're an aggregator from a bunch of small farmers and a cooperative that come together, a farmer producer organization, and there is enough scale then for you to have some power when you sell. They also aggregate customers, they aggregate suppliers, and they crash operating costs. And that's why digital is so important to us.

So for example, a lot of our new economy startups are able to crash the price performance profit problem we have. We have monster consumers who want performance. They don't are willing to pay the price. Companies want to profit. And digital is able to crash costs, aggregate suppliers, aggregate users, mimic scale without changing the fundamental nature.

That's why I call it Liniput land because Liniputs can take on Gulliver. So I think digital is ubiquitous to everything. mean, the old story that my teacher C.K. Prahlad used to tell of fishermen who would use their cell phones to figure out on which dock to arrive where the prices were higher. You have a lot of remote sensing of soil for this, for...

mitigation of problems you have. So I think a lot of the rural and the agricultural, in fact, I always say that the new NGO person doesn't have an earlier, we used to call it the jolla, the bag that was a cloth bag on the shoulder was the whole mouth of someone who was in the NGO sector. Now they have a laptop and they're all over the villages. So that's where it is.

So even if you look at our banking, for example, our rural banking, earlier banks hated it because cost income ratios didn't work. We created solar ATMs that could work, stuff like that. But now you don't have a bank branch. You have a roving banking correspondent. He comes to you. You're in a village. You put your biometric. It pings the Aadhaar database, which is linked to your bank account. And he can be the human ATM for you. So no one's complaining about cost income ratios.

So when the way of serving the consumer changes because the supplier has driven that change and the supplier has driven that change because it works for his economics, then the middleman sophisticates everybody sophisticates. By the minute railway tickets went online, it was a done deal. Prayer my God. Today I can get online blessings from any temple in the country at any point in time. And we don't think it's odd.

Senthil (1:03:07)
I see. Okay, so you can log in and do prayers.

Rama Bijapurkar (1:03:11)
in at the right time or you can specifically ask for prayers to be done. I can log in when the, so my mother's having a prayer and nobody in the house, none of her children really want to show up for it. At the appropriate time, she will say, all right, I'm streaming it now. The blessings are on, so please be there. I can get that done in the temple. During COVID time, we needed an OTP to join the queue to go to the temple because there were limited numbers of people. So everyone learned.

Senthil (1:03:41)
That's very impressive. Rama, we'll move to the final section. we call the section, How I Did It. I ask all my guests three standard questions just to learn from their experience and wisdom. How do you handle differences of opinion? For example, if somebody comes to you and say, India is not a Lilliput land, but it's one big market. How would you approach?

someone who disagrees with you.

Rama Bijapurkar (1:04:08)
Yeah, a friend of mine said to me the other day, hasn't someone called you out on this yet, should I? And I was like, no. I think it is a little bit like the Lord's Prayer, right? God grant me the courage to stand the course. So if someone doesn't agree, I think you can put a point of view across. But the question is that if you're saying something that is flying in the face of conventionally accepted argument, that's a much bigger problem for me. Then

To what extent do you hang in there? And I think you have to hang in there based on God give me the courage to hang in there and persevere where I have conviction that I am correct. You know, God give me humility to and good sense to be able to quickly change my view if I'm indeed proved, if something in me tells me either that this is battle not worth fighting, it's never gonna change.

or that in fact there are holes in what I think and the wisdom to know the difference.

Senthil (1:05:08)
What are some of the essential skills that business leaders must have today?

Rama Bijapurkar (1:05:19)
first of all, learnability, I think huge amounts of learnability, ⁓ because if you don't know how to learn, then every time the environment changes, you're going to collapse. So you have to have learnability. And secondly, I think you have to have the ability to sense, the sensing ability, I mean, to sense the environment, whether it's customer environment, the regulatory environment, the global environment, your own office environment. I think sensing is very, very important.

I often worry when I see so many engineers in my class that somewhere they lost the ability to sense. And that's why try and teach them anthropology sometimes, so that they sense. But I think sensing is important. And I think the ability to fail fast but succeed slowly. So know when to dump something that isn't working and do it quickly.

Senthil (1:06:13)
What is one book you loved and you go back and reread it and which you want to recommend to others?

Rama Bijapurkar (1:06:27)
Very old book is a book by Kenny Chioamai, it's called The Mind of the Strategist. And there's a sister article of that, I think he wrote about with Business Tribune. Yeah, which is a constant reminder that strategy is not about beating the competitor, but about adding value to the consumer, he says, and avoiding the competitive battle altogether. So I just love that book and that article.

⁓ Otherwise, I read whatever is obsessing me at the moment. So at the moment, I'm obsessed with the idea that the two ideas, one that we don't have that the economist understanding of the middle class is profoundly different from the sociologist understanding of the middle class. So I'm trying to read. So to the point of why is middle class important, I need to read sociology. I've studied physics, I've had to struggle to learn the social sciences, but I think that's one of the where I'm hunting for books to read on that.

And the other is this whole question of whether India can save itself without ⁓ large-scale manufacturing. And there's a very nice ⁓ book by Robert Lawrence of the Kennedy School. ⁓ It's called Behind the Curve, where he is making the point that that ship has sailed. So these are the two that I'm obsessed with. Otherwise, I read fiction more than anything else.

Senthil (1:07:54)
lovely, okay,

that's very interesting that you read fiction.

Rama Bijapurkar (1:07:56)
Yeah, love fiction.

rest of this I read on pain. It's fiction I love.

Senthil (1:08:04)
Are there any fiction books you are currently reading?

Rama Bijapurkar (1:08:07)
Yeah, actually now I've discovered the joy of audible, of reading, e-reading, reading audible. And so I'm rediscovering the classics. So actually reading George Eliot, Oscar Wilde, Somerset Maugham, there are dramatized versions available with absolutely top-notch readers. And you begin to feel the nuances of the deliciousness of the written word and their style, which

I somehow missed, I mean, I remember the middle march by George Eliot is to wonder why do people say that this is one of the most important books of the century, yawn, yawn, I slept through it. But when I heard the 14 hours of it, it was just completely fascinating.

Senthil (1:08:54)
Lovely.

Rama, what a pleasure and honor talking to you today. I've been, I told you before our recording, your work profoundly influenced me. your writing has appeared in most of the newspapers and people like me from small towns and villages read and benefited. it's really great to get the opportunity to sit with you and discuss some of your ideas today.

Thank you so much for all the work you are doing and thanks for your time today.

Rama Bijapurkar (1:09:19)
That is very sweet and very kind of you. Thank you for having me. Thank you.