GE Expects India Business to Grow 15%-20% Despite Slow Economy
02/22/2013| 07:00am US/Eastern
By Santanu Choudhury
NEW DELHI--General Electric Co. (>> General Electric Company) expects its revenue in India to grow by 15% to 20% each year despite the current economic slowdown, Chief Executive Jeff Immelt said Friday.
He added that GE will continue to invest in India because the company -- which began operations here in 1902 by installing a hydropower plant -- is in the country for the long-haul.
"We continue to be optimistic about our technology and products--whether it is the power sector or healthcare, oil and gas, aviation transportation. They continue to be the focus here," Mr. Immelt said at a meeting of editors in New Delhi.
"We continue to be encouraged by our underlying business performance here in India."
He didn't provide any details of GE's revenue in India, or what he expects to drive the 15%-20% revenue rise. But he said that he expects growth in all of GE's India businesses, including healthcare and aviation.
Mr. Immelt, however, expressed concern about a shortfall of gas supply to India's power plants.
"I always think infrastructure is a precursor to more sustainable development. The fact that the country still has a 15-20 gigawatt deficit of power remains a big hindrance to growth," he said.
India is faced with a crippling shortage of power to run its factories and light its homes. Several cities in the country have daily blackouts of up to six hours.
The country faced its worst-ever power outage last July when more than 600 million people went without power for over two days and caused millions of dollars in economic losses.
India, Asia's third-biggest economy, is suffering a major slowdown, hurt by high inflation and wide fiscal and current account deficits.
The economy expanded 6.2% in the fiscal year ended March 31, 2012 -- its slowest pace in a decade.
A government department recently predicted that economic growth would take a further beating and slow to 5% this fiscal year. This is a far cry from several years through 2011, when the economy was growing about 9%.
"I always believed that growth in India has to be greater than 5%. I think the recent reforms announced by the government are steps in the right direction," Mr. Immelt said.
He was referring to the government's recent steps to ease foreign investment restrictions in several sectors such as retail, civil aviation and television broadcasting.
GE has 15,000 employees in India, including about 6,000 engineers at its research and development centers in Bangalore, Hyderabad, Mumbai and Chennai. It also has 13 local manufacturing and service centers in India.
The Bangalore center is GE's largest integrated multidisciplinary research and development facility, and the first outside of the U.S.
Mr. Immelt said, however, that India's recent moves to tax companies retrospectively would affect overseas investor sentiment.
"Retrospective deals are bad, and things that look unfair will discourage investment," he said.
"We think transparency and stability are key to investors because we tend to make investment decisions based on market access and low costs. We don't make it only due to tax rules."
India's recent move to tax Royal Dutch Shell PLC (RDSA) and Nokia Corp. (>> Nokia Oyj), as well as Vodafone Group PLC. (>> Vodafone Group plc) have deepened concerns among foreign investors.
Vodafone, the world's biggest telecommunications company, is fighting a tax case with the Indian government for more than four years now. India says the U.K.-based company should pay a tax on its 2007 majority stake buy in a local telecom company from Hutchison Whampoa Ltd. (0013.HK).
Last January, India's Supreme Court ruled that Vodafone didn't have to pay tax on the transaction, but the Indian government went ahead and amended laws to permit retroactive taxation of deals in which foreign companies buy Indian assets.
The two sides are now trying to sort out the issue.
Mr. Immelt said cases of cyberattacks and commercial thefts at some of the U.S. biggest companies is a "big threat".
"It is something we take very seriously and something we spend our time thinking about," he said.
"Clearly, things like our patents. I think every company needs to be on its best activity in terms of how to protect their assets and how to make sure that they are moving as quickly as the technologies move."
The White House has threatened China and other countries with trade and diplomatic action over corporate espionage cases.
Asked about India's stringent nuclear liability laws, Mr. Immelt said GE "won't take any enterprise risk" because of the laws.
Write to Santanu Choudhury at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires