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QRs: In 2000, Commerce Minister Murasoli Maran declared emphatically that he ''would not sit on the ash-hill of domestic industry, wearing the crown of globalisation''. In 2001, he proved true to his words. The expected deluge of foreign items ranging from cold cuts of exotic meats to second-hand cars, from fertilisers to well-known liquor brands, has just not happened, even though nine months have passed since quantitative restrictions (QRs) on the last 715 items kept under the reserved list, were removed. On the contrary, import growth has actually declined after the flood gates were opened. In the first quarter (April-June 2001) the import of 300 sensitive items-items that are most likely to be imported and hence are on the radar screen of the government-showed a negative growth rate of 4.5 per cent compared to the corresponding period last year. However, the April to September figures show that there has been positive growth of 9 per cent in imports from the corresponding period last year, with numbers jumping from Rs 5,551 crore to Rs 6,040 crore. Maybe, that's because most of the 715 items need an acquired taste. -Ashish Gupta
QUAKE: Corporate India woke up to 2001, literally with a shock. The quake (intensity-7.9 richter) that rocked the city of Bhuj early morning on January 26, had a far-reaching effect on infrastructure and the cost of doing business. Reliance Industries had to shut down its Jamnagar facility for eight hours after the quake; state-owned fertiliser corporation, IFFCO suffered damage; and even soft-drink major Pepsi had to temporarily suspend its bottling operations at Bharuch, Naroda, and Rajkot. The quake claimed 25,000 lives, and cost business losses estimated at Rs 30,000 crore. The cost of civil reconstruction in Ahmedabad alone was estimated at Rs 500 crore, and repairing the damage at Kandla Port cost another Rs 2,500-3,000 crore. The Central government stepped in with a Rs 500 crore relief package, and another Rs 1,500 crore was expected from the mp Local Area Development Scheme. But all that wasn't enough to put one of India's richest and most entrepreneurial states back on its feet. Even today, some residents of Bhuj haven't been fully rehabilitated. -Vijayalakshmi Varadan
QUALITY: With toplines stagnating or shrinking, companies had to go back to the shopfloor to eke out profits. No cost was too small to be pruned, including telecom and travel, although the biggest gains typically came from manufacturing processes. The high point of the year was the Chennai-based Sundaram Brake Linings bagging the prestigious Japanese award for quality, the Deming Award. A practitioner of 'lean' manufacturing, SBL had begun its quality journey way back in the late eighties, and this year became the only brake lining manufacturer in the world to win the Deming Award. Two years ago, group company Sundaram-Clayton became the first Indian company to win the Deming Award. Some other component manufacturers too seemed determined to reach global quality standards. The Automotive Component Manufacturers Association (ACMA) along with the Confederation of Indian Industry (CII) stepped up its three-year project aimed at boosting quality levels at mid-sized vendors. ACMA's Centre for Technology (act) also decided to expand its parallel project from West to South India. It takes between 8 and 10 years for a company to achieve world-class quality. But unfortunately total quality still wasn't an area of priority for the most companies in India. May be a shakeout will force companies to focus on the inevitable. -Nitya Varadarajan
REGULATORS: With the exception of the RBI, India's top regulators ended up embarrassing themselves this year. SEBI's head honcho, D.R. Mehta, was probably the worst off. In the wake of the Ketan Parekh scam early this year, Mehta launched an investigation into the so-called 'K-10' scrips. But after much ado, nothing came of Mehta's probe. The story was repeated when SEBI came down hard on the Bombay Stock Exchange board, including its President Anand Rathi, for allegedly profiting from information available to them by virtue of their post. Then again, in the third week of October, when SEBI told a Joint Parliamentary Committee that it suspected price manipulation in 60 of the 200 stocks that it had been asked to probe, the JPC hauled SEBI over coals for not acting earlier. A small consolation for Mehta: the other big regulator, the Telecom Regulatory Authority of India (TRAI) fared no better. Although the new TRAI chairman, M.S. Verma, took charge in late February, it took him eight months to hold the first round of meetings with prospective foreign investors in the sector. Hope 2002 is better for them. -Roshni Jayakar RETAIL: The industry's equivalent of the big bang happened this year. Hypermarkets, gigantic stores between 50,000 sq ft and 1.2-lakh sq ft in size, hit the scene. Globally discount stores account for 60 per cent of retail sales. But in India, where the industry is highly fragmented, the hypermarketers are counting on their ability to drive hard bargains with manufacturers and thus offer products significantly cheaper. Those who unveiled their hypermarkets included RPG, Pantaloon, The Home Store, and Metro AG (See The Hyper Rush).
Their aim is to draw more and more people to organised retail. Guesstimates put the total retail market upwars of Rs 5,00,000 crore, of which only Rs 10,000 crore or so is organised retail. Interestingly, though, India has the highest number of outlets per 1,000 citizens, simply because there are some 6 million outlets, according to KSA-Technopak estimates. However, a small store is limited by its ability to offer product choice and also bargains. It is here that the hypermarkets plan to score over the kirana stores. Another area where retailers came in 2001, was sports goods. Royal Sporting and PlanetSports were two recent entrants in this segment. The latter has already set up six stores at a cost of Rs 1 crore each. But good quality real estate and outdated regulations continued to stand in the way of the industry's growth. -Seema Shukla
SEPTEMBER 11: If there is a watershed date for global polity and economy, it has to be September 11, 2001. The day-when America's twin-symbol of capitalism, the World Trade Centers, fell-changed the course of global events. The US economy, which had been playing blind to its first recession in 10 years, woke up to it with a jolt. So did the Indian economy. The Bombay Sensex dropped from 3,150 to 2,830 on the news. The tourism and airline industries went into a tailspin, and software companies cut their export projection from Rs 40,000 crore to Rs 37,000 crore for the year. Other exporters also warned of lower revenues because of the attacks. Indian companies like IPCL and Reliance, which sought to renew their insurance cover, found their premia shoot up because of the terrorist threat. Suddenly, nobody anywhere in the world was safe. But 9-11's worst impact seemed to be on globalisation, with countries clamping down on free trade. -Ashutosh Sinha
REVIVAL: Even as the year came to an end, there were no signs of an economic revival. On the contrary, an Ascon-CII survey of manufacturing and services sector found that an upturn may be long way off. That despite the Reserve Bank of India cutting interest rates twice. The problem? Unlike previous recessions, which were demand-led, the current slowdown reflects a credit and investment bust, which will take longer to work through the system. The answer, most economists points out, lies in pump-priming the economy-even at the risk of higher fiscal deficit. Points out D.H. Pai Panandikar, Advisor, RPG Group: ''If the government were to get on with its policy initiatives already made, the economy could get back on the rails.'' With that hope, corporates will begin the new calendar. -Ashish Gupta SOFTWARE: For an industry that grew at a pace of over 40 per cent every year throughout the 1990s, 2001 was certainly annus horribilis. Post Y2K, onsite projects had been drying up. The dotcom bust, and the resultant impact on telecom and software made things worse. To cap it all, 9-11 attacks made corporates worldwide even more jittery, and it spends were being cut back. That a wisened software market in the US would impact India was confirmed when Nasscom revised the year's software export target from Rs 40,000 crore to Rs 37,000 crore. The first half export figures, however, were very much on course to meet the revised numbers at Rs 17,500 crore. ''Big boys will play with big boys,'' said Phiroz Vandrewala, Chairman, Nasscom, emphasising that the bigger companies will ride through the tech slowdown while the smaller companies, which did not enjoy a brand name, will take the big hit. By then, dozens of others IT companies were already biting the dust. Mastek saw its revenues fall from Rs 25.21 crore in June 2000, to Rs 19.29 crore a year later and pat from Rs 11.08 crore to Rs 4.72 crore during the same period. With stock prices stumbling, a number of acquisition plans announced by smaller companies fell through. For example, Mascon Global's proposed acquisition of Chennai-based Maars Software and klg Systel's proposed acquisition of US-based Engineering Physics software fell through. While the outlook for the next year is not yet buoyant, one bright spot should be the birth of India's first $1-billion (Rs 4,700 crore) it services company, when TCS crosses that mark during the next financial year. Next year promises to be interesting: Infosys has already signalled its ambitions to follow the Accenture model. And the two other biggies, Wipro and HCL Tech will continue to focus on technology services (with a little side-bet on it-enabled services in both cases). But the days of fantastic growth seem over for the Indian it industry. -Ashutosh Sinha
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