General Electric (GE) India recently saw a change at the top. After 14 years as CEO of GE India, Scott Bayman — one of the longest-serving international CEOs in the country — retired this summer; on June 1, Tejpreet Singh Chopra, an 11-year GE veteran, took charge as the company’s new CEO in India.
Before taking over his present leadership role, Chopra — whom most colleagues call “T.P.” — assumed positions of increasing responsibility at GE since joining the company in 1996. He has worked in marketing, structured finance and risk management at the company’s office in Stamford, Conn., as well as in locations such as Hong Kong. Most recently, Chopra was the president and CEO of GE Commercial Finance in India, before which he headed GE India’s commercial aircraft leasing and financing unit. As senior vice president and country head of GE Commercial Aviation Services (GECAS), Chopra helped arrange financing deals worth more than $1 billion for India’s fast-growing airline industry.
Chopra, who studied economics at St. Stephen’s College in New Delhi and also has an MBA from Cornell University, recently met with India Knowledge at Wharton in the company’s office in New Delhi. In his first interview after becoming GE India’s CEO, he discussed various issues including his top priorities for GE India, the company’s growth strategy in the country, and the changing role that the Indian division now plays in the company’s global operations. An edited version of the conversation follows:
Knowledge at Wharton: On June 1, you took over as president and CEO of General Electric (GE) India. What are your strategic objectives?
Chopra: This is my first interview after taking over as CEO. We are still working on how to articulate what we plan to do, but broadly we have three focus areas. The first is infrastructure; we will concentrate on energy, oil and gas, water, rail and aviation. This is because, if you think about it, those industries need a lot of investment in India at this point in time. Most of our products in these areas are well aligned with the country’s infrastructure needs.
The second major focus area for us is health care — and this, too, coincides with the country’s needs. The third is financial services; one part includes the corporate business, and the other is retail, which further includes our consumer and commercial products. These three will be our major focus areas — and all of them are aligned with where India is now and what the country requires.
Knowledge at Wharton: Scott Bayman, your predecessor who retired recently, has been credited with having increased GE’s revenues from $100 million to $3 billion over 14 years. How did this growth come about?
Chopra: I think you should pose that question to Scott. He would be the right person to answer it, because I was away from India for 15 years and just came back two years ago. All I would say is that during the past couple of years, GE has grown as a result of what’s happening in the Indian economy. India has seen growth in all core industries, and we have ridden that wave of growth. That is what helped us. For example, in the aviation business, where I worked, we saw many airlines come into being. As that happened, we leased and financed large numbers of aircraft. That is one example of how GE has grown in India in recent years.
Knowledge at Wharton: You oversaw almost $1 billion worth of leases in the aviation industry. Who are your competitors for that business and how do you position GE vis-à-vis that competition?
Chopra: Our competitors are all the players with whom we compete globally as well as some smaller players. The big difference that we provided is that we always offer our customers a package solution. We are not just doing a financing deal; we provide a holistic solution that helps them improve their business. It’s about building customer relationships. We look at what our customers need and try to provide products and solutions around those needs. It is not just about a transaction; it is about playing an advisory role to the airline or the promoter or the family that is promoting the airline. We don’t just stick to leasing the aircraft; we provide all the other benefits of working with GE. That is what we try to do. It’s about more than just selling the product.
Knowledge at Wharton: GE India has often publicly said that the company’s goal is to go from $3 billion in revenues now to $8 billion by 2010. This will have to happen on your watch. How will that come about?
Chopra: It goes back to the first question. Our real growth will come from the three sectors I identified — infrastructure, health care, and financial services. If you look at the Indian economy right now, each of these sectors is going through tremendous growth. That will also drive GE’s growth in India.
Knowledge at Wharton: Infrastructure is an important element of your growth strategy. In the power business, nuclear power is a key element of your plans. According to media reports, under the U.S.-India agreement on nuclear power, 40,000 GW of nuclear energy is to be created, with 50% of that going to international firms. What is the status of that project?
Chopra: The bottom line is that the situation will depend on how the India-U.S. nuclear agreement turns out. That’s going to drive the growth of nuclear power. If you take a more macro-level view, most of the power in India is still going to come from coal. Regarding the gas side, nobody really knows. Some huge finds have been located, but I don’t think I can say with any accuracy exactly how big those will be. Over time, we’ll have more clarity. While nuclear power will be an important source of energy for the country, I think it’s a 10- to 12-year project. The success of nuclear power will depend on how these agreements fall into place.
Knowledge at Wharton: Where does GE see potential for growth in the power sector?
Chopra: That’s a good question. It’s going to be in steam, in gas turbines, and in wind-based energy. But over time, the success of what you sell depends on what you have fuel for. That will drive our focus. We know that coal is available in abundance; gas is a question mark; wind energy offers a big opportunity; and we also have hydro [-electric power]. Each of these areas offers potential for growth, but which one will become a bigger focus area for us will depend on the fuel situation in the country at the time.
Other opportunities exist on the financing side. We have a group called Energy Financial Services (EFS) that provides financing to the power sector, but it’s not only the power sector. EFS looks at water, oil and gas and also at core energy power. So, we will plan out a financing solution as well through EFS.
In addition, we have a team that focuses purely on infrastructure financing in various sectors. This ranges from toll roads and power stations to airports, [sea] ports, and other standard infrastructure assets. We will look at providing financing for the whole infrastructure sector as well.
Knowledge at Wharton: Is rural electrification an important part of your plans?
Chopra: It’s still in the early stages. It’s a project we keep looking at very seriously.
Knowledge at Wharton: What opportunities does GE see in working with India’s massive railways? Will that be a priority area for you, since the railways are thinking about upgrading their signaling systems?
Chopra: While I cannot comment on specific projects, I will say that on the whole, the railways are an important area for us. On the locomotive side, we are at the moment talking to the government to set up a locomotive plant in the country. We also see opportunities in signaling systems and rail cars as well. There are huge possibilities here, and that is just on the hardware side. As far as financing goes, we will look at providing financing for rail cars and new rail projects.
Knowledge at Wharton: What are your plans for your commercial aviation services business?
Chopra: Commercial aviation in India has experienced tremendous growth in a very short time. When I moved back here two years ago, that was when most of these start-up airlines were just taking off. As I said earlier, we rode that wave. We brought in a lot of aircraft capacity, and we also financed a lot of the aircraft coming into the country. That has a huge runway still, because if you look at the broad picture, we only have — and these are ballpark figures — [about] 300 aircraft in the country relative to the U.S., which has more than 6,000. China has, I believe, 800 or so aircraft. As a result, we still have a long way to go in aviation. We will keep growing as the market expands and grows.
Most of the airlines have already placed most of their large orders. I don’t see too many new orders in the near term, in the next couple of years. Now the concentration will be on manufacturing and delivering the aircraft to these airlines. We will do some more financing and leasing of aircraft as these get delivered over the next few years.
The bigger focus area for us in our commercial aviation business will be working on the airports on the passenger and cargo side. We will be involved with developing and financing some of these airports.
Knowledge at Wharton: Media reports suggest that plans are afoot to build 35 airports. Is GE involved in these projects?
Chopra: We need to get more clarity from the government as to the various timelines. In infrastructure projects, it’s tough to predict when exactly things will happen. But the answer is yes; we continue to look at these projects and to evaluate them.
Knowledge at Wharton: You have identified health care as one of your top priority areas for growth. What opportunities do you see here?
Chopra: Opportunities in health care have two or three parts. The first involves the medical equipment we manufacture. We will continue to focus on the sale of diagnostic equipment such as ultrasound machines. That is one part of it — the equipment side. The second part is to provide financing for the equipment. As you know, we don’t provide financing only for GE equipment; we provide it for all manufacturers.
The third is what we call the corporate finance space within the health care market, which is basically to provide financing not only for equipment, but also for hospitals that may be coming up. We may invest in hospitals on the equity or the debt side. That is the broad health care focus that we will have, going forward.
Knowledge at Wharton: How do you view the real estate market?
Chopra: Globally, the real estate group is very large within GE. It’s about $56 billionor more in assets. In India we have a team involved purely in real estate. Our strategy will be to focus on most of the asset classes — office buildings, residential real estate, IT space — and get involved with both equity and debt. That is what we are focusing on now. Over the next two or three years, we should have a book of more than $2 billion in just real estate in India.
Knowledge at Wharton: How much do you have now?
Chopra: We can’t disclose how much we have in terms of a particular asset class. But over the next few years we should be there. We are looking at a whole variety of projects in Tier 1 cities as well as in Tier 2 and Tier 3 cities, across all these asset classes.
Down the road, we will look at a far broader base as we keep expanding and looking at other asset classes. As the whole SEZ (special economic zones) story pans out, we will look at SEZs. Hotels are attracting a lot of interest today, and we will also look at such investments. As the market grows, we will be looking at other asset classes. At this point in time, our big focus is on the core commercial and residential space.
Knowledge at Wharton: There has been a lot of discussion lately about rising property prices in India and whether that signals that a bubble might be building. What do you think?
Chopra: I don’t know. It’s a tough question. And the answer is, “It depends.” Real estate is a highly localized market. The value of a property here could be very different from its value 10 kilometers from here. So when people say that real estate in India is heating up, it depends on which little locality you’re talking about in this country. Yes, we are concerned about certain parts of the market; but there are still lots of other parts that are undervalued. That is why no straight-forward answer exists if you look at the whole market.
If the market gets overheated, normal economics will make sure that it gets corrected. That’s what we are seeing in certain parts of the country. In a few localities we are seeing a little bit of a softening. But on the other hand, there are still huge areas where we will see a lot of development going forward. And as that happens, you’re going to see more valuations going up.
Knowledge at Wharton: Does GE have an India strategy, and if so, what is it?
Chopra: You’ve got to remember that GE is a huge conglomerate. There’s no one strategy that fits all, given the fact that each market is so different and unique. The broad strategy, however, is all about growth and meeting our big targets. The strategy revolves around manufacturing and localization. It involves looking at the whole manufacturing sector and figuring out if India can be a global manufacturing center. We need to figure out how to grow the three focus areas I mentioned — and also how to start looking at other opportunities in terms of manufacturing and services.
Knowledge at Wharton: The traditional view is that China dominates in manufacturing while India’s competitive advantage is in services. Can India move forward in manufacturing, too?
Chopra: I wouldn’t be able to do an appropriate comparison with China because I don’t know the details of manufacturing there. But from an Indian perspective, I can tell you I truly believe that there is a huge opportunity for both manufacturing and services. With manufacturing, we have been experiencing 12% to 13% growth. We have the right talent base, the right engineers and world-class systems to establish India as a global manufacturer. We’ve seen a number of success stories in the last few years, with Indian companies excelling in manufacturing. Now they are becoming global names. There are huge opportunities in manufacturing in India going forward. The service industry has improved already in a variety of ways from IT to business process outsourcing, etc. — I think that story is well-written. I believe that over the next couple of years, India will be recognized globally as a manufacturing sector.
Knowledge at Wharton: What could screw up that prediction? What are the risk factors?
Chopra: Some risks today are far less an issue than they may have been 10 years ago. Political risk, for example, is not a big issue any more. I believe that regardless of which government comes to power, the liberalization process is so far down the road that no one will want to turn it back now, so that is not much of a risk.
What I do see as a risk is that as India grows as an emerging market, I think the bigger challenge is to make sure that we have what prime minister [Manmohan Singh] calls “inclusive growth.” That is crucial for the stability of the country. It is important to make sure that the agricultural sector and the poorer classes of the economy start feeling that they are included in the growth process, and they experience some benefits from the growth. This is not a risk, but it is certainly a concern. We need to make sure that this happens in our country. Apart from that, I don’t see any major risk per se. GE has been in India for about 100 years, so we’ve been through it all. Things are only going to get better.
The only other point I would add is that if we want to see the kind of growth targets that the country has set for itself, it is important that the momentum of infrastructure development continues.
Knowledge at Wharton: How does India fit into GE’s global operations? Is India’s role changing in the company’s worldwide activities?
Chopra: It is changing dramatically.
Knowledge at Wharton: How?
Chopra: It is because of the increasing importance that India has in GE’s global strategy. Virtually every business that we are in has changed over time as this country has changed. The financial services sector has grown in the last couple of years, so our focus on that sector is growing every day. [GE CEO] Jeffrey Immelt and other top GE executives have been visiting India at least once a year. There’s a huge push now to use India as a launching platform for most of the industries that I mentioned to you.
But I need to go back to my first point, that all the industries that we are in align themselves well with what the country wants to do. I mean infrastructure and energy, water, oil and gas, and aviation. We make all the stuff that goes into all of these sectors. From that perspective, this is one of the largest opportunities that this company has — to use this country not only as a market but also as a place to manufacture goods.
Knowledge at Wharton: What keeps you up at night?
Chopra: It’s only one thing: People. Growth in this country is not limited by demand; it is limited by talent. We have to ensure that we keep attracting the right kind of talent to execute on our plans. That is going to be the challenge for us in the next couple of years — trying to find the right talent to help us grow.
Knowledge at Wharton: You were away from India for a long time. After studying at St. Stephen’s school in New Delhi, you went to Cornell and then you went to work for GE in Stamford, Connecticut. When you returned to India in 2006, what was your biggest surprise about doing business in India?
Chopra: The good news is that even with my previous job I used to keep coming back home. I would come back often, so there was never any real surprise. I think that in large companies like ours, what is amazing is the fact that you can go to any of one of our offices in the world, and at the end of the day the culture of the company is more or less the same — whether you’re in India, China or in any part of the world.
When you come out to India, it’s not like you’re walking into a different organization. The core values of the company are the same. You will obviously have cultural differences in every country, and that is fine, but the core values are the same. From that perspective, there weren’t really any surprises.
There will always be changes and differences in the way the local environment is structured — local regulations and markets vary from country to country. Every market has its own unique characteristics. But otherwise, today, the good and bad of globalization is the fact that, generally, the whole world is getting so much smaller in terms of business that it’s becoming a global state. Global practices are getting so similar.
Knowledge at Wharton: One last question. Scott Bayman was once asked by a journalist what his India strategy was. His answer was, “Patience and persistence.” What’s your India strategy?
Chopra: I would say that it’s two things: people and execution. If you find the right people then the execution part will happen. I keep reminding people that it’s not about the assets you have, or the buildings you have, or the plants you own. If you find the right people, then you will achieve whatever you want to execute.
Knowledge at Wharton: That’s what Jack Welch — GE’s former CEO — often said. He said his job was getting the right people into the right jobs.
Chopra: GE has spent an incredible amount of time finding, training, attracting and retaining talent. This has been going on for a number of years, and we have refined it to quite an art. That’s what we do. We spend a lot of our time just helping talent grow.