Headlines tell story of a land on the rise

You can feel it when you pick up any Indian newspaper. In the news, the sport and business sections, even in the Bollywood gossip liftouts, it's there.

A pulsing energy, self-assured, the heartbeat of modern India. Money is pouring in to the country. Hundreds of cranes protrude from city skylines, standing above new flyovers, glittering glass buildings, and billboards advertising luxury watches.

India is on the rise. Its destiny, as most Indians see it, is clear. The country will be an economic superpower in just a few short years, matching and then surpassing the United States, Europe and Japan.

India is the world's 10th largest economy, and on track to become the fourth by 2020. Its success stems from economic reforms which started in the early 1990s and began to open the market to imports and foreign investment.

It is now reaping the rewards of that policy. With more than 9 per cent annual growth, a gross domestic product of US$3.7 million (NZ$4.7 million), and a growing middle class that numbers more than 200 million eager to express their newfound wealth, Western firms are falling over themselves to get a piece of it.

In the two weeks I was there, the business news was full of stories of India's rise: Chevron announced it was paying US$6 billion to up its stake in Indian oil giant Reliance Petro, Indian construction firm Larsen and Toubro revealed plans to raise US$1 billion in six months, and Mumbai's Sensex stock index soared through 20,000, having doubled in 18 months.

Western companies are keen to grab a slice of the subcontinent. The Indian government has relaxed rules on foreign investment in the retail sector, estimated to be worth about US$770 billion annually, prompting companies like Wal-Mart and Carrefour to make deals with Indian companies that will allow them access to the market.

But they will face stiff competition from Indian firms that are also investing heavily, building supermarkets and other large stores to sell goods that appeal to the growing middle class.

Reliance, one of India's big conglomerates, is spending billions to open 5000 new retail stores, putting pressure on the millions of small shops that make up 95 per cent of Indian retail trade.

Headlines in India are dominated by big companies such as Reliance and Tata. These industrial conglomerates dominate many aspects of India's retail life, doing everything from petrol stations to internet connections.

The Tata group, for example, has subsidiaries that produce watches, Tetley Tea, salt, cars and insurance. It is also India's largest internet service provider and its biggest information technology firm by revenue.

India's business headlines are not all positive though. The rupee has risen 11 per cent against the US dollar since January last year, putting pressure on exporters, especially the IT firms that have contributed so much to India's rapid growth.

Despite the country's population and widespread unemployment, there is also a shortage of skilled workers, particularly in the booming IT industry.

Wages are on the rise, as are land values for call centres and offices (parts of Mumbai are said to be as expensive as Manhattan for office space).

This puts Indian firms whose chief advantage is their highly skilled but relatively low-paid workforce in a difficult spot, having to fend off competition from the likes of China and Vietnam.

These pressures mean it has been a tough year so far for Indian IT companies.

The Sensex index may have risen 32 per cent in the past nine months, but in the same period the IT index on the Bombay Stock Exchange has fallen 13 per cent. IT companies are still making billions of dollars in profit, but investors have scaled back their enthusiasm for the sector.

Other sections in Indian newspapers are also gloomy. India has more than 1 billion people, but only about 20 per cent are the educated middle class that fuels so much of its growth.

Walk through a city and you will see the other India, complete with lepers and beggars, hundreds of millions of people who live on less than US$2 a day.

India is very much a developing country and there is a serious lack of good infrastructure. Roads are often patchy and crumbling, electricity supply is subject to brownouts outside big cities, and the government can do little about widespread poverty and growing discontent. Pollution is everywhere and clean water at a premium.

Trade and investment barriers have been lifted, but successive governments have had to walk a difficult line, allowing economic growth without angering the urban poor or the two-thirds of India's population who live outside the cities, both at risk of being left behind.

It's easy to see the gloomy side of all this, but the country is optimistic. Indians are convinced their country can rise to the challenge.

After two weeks immersed in the good and the bad with India's ambition, growth and determination to succeed, you will feel the same.

* Reuben Schwarz travelled to India as the recipient of the NZTE Qantas Media Award.

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