Indian business must engage with the Trump administration: KPMG chief

Interview with John Veihmeyer

John Veihmeyer, chairman of the $25.4billion-professional services major KPMG International – one of the ‘Big Four’ - was in India last week to introduce Arun M Kumar, the recently appointed head of KPMG in India, to employees and key clients. In an interaction with Sudipto Dey, Veihmeyer shares insights on the firm’s India strategy and his take on recent economic and political developments, such as demonetisation, GST, Brexit, the Trump presidency, for businesses in India. Edited excerpts:

You have a new leader in KPMG India amidst a churn in the organisation. What is the agenda for the new leadership?

One of the reasons why I am here is to spend some time with the new leader, Arun Kumar, be in town halls with our people and meet a number of our clients, along with Arun.

It is fantastic for us that we have been able to identify a leader like Arun to step in at this point of time. India has been the fastest growing practice within KPMG for several years. Arun would be focussed on continuing with that kind of success in the firm. But the market place is changing and we need to change with it.

One of the things that Arun brings to this role – apart from lot of experience with KPMG in the United States – is his three-year stint in the Department of Commerce in the Obama administration. At a time when there are (mandatory auditor) rotation requirements in India and opportunities are large when companies are changing their service providers, for audit and non-audit services, this is a period of significant change for professional services firms in India. Arun has deep relationships with some of the key business leaders of India and that would serve us well when there is a disruption in the market.

Given the disruption in the market would there be any change in India strategy for KPMG?

We have a very strong and consistent global strategy and vision of what the firm wants to achieve. That has to be adapted to unique circumstances in each market. What each of the senior partner in large member firms needs to do is to take our global strategy and fit it into the local circumstances. That’s what Arun would be focussed on.

One interesting thing Arun feels very strongly about - and so do I – is that India is an unusual market in many respect.

We are in many countries around the world where the opportunities are greater than the indigenous talent pool available to meet those opportunities. India is a market where there are more talent available than we can hire to meet our needs in India. Arun is committed to make India a talent source for KPMG globally. We would like to capitalise on the talent pool in India for some of the emerging trade corridors, such as the Middle East or the ASEAN.

Was that one of the messages that you gave out in your town hall meetings with the employees?

We did town halls in Mumbai and Delhi. We talked specifically about how this will create opportunities for people here. One of the great things about (working for) KPMG is that you could have twenty different careers and never change your business card. The vision that we have for India is to become a talent hub globally, and that translates into new opportunities for people here. This is going to ensure that KPMG continues to remain a magnet for talent and employer of choice in India.

Did this move to de-monetise high value currency notes take you by surprise?

I think it surprised everyone, frankly. Having said that, while we saw some impact in the short term and some pull back in activity, the good news is that we are almost back to business as usual. The long-term benefits that demonetisations will provide to the economy will far outweigh the short-term disruptions that happened for couple of months.

Coming to our business, I expect our practice in India to be the fastest growing this year too.

How disruptive will be the introduction of GST in the current business environment?

To achieve long-term benefits for the economy, it is important to go through some disruptions. GST will require change and companies have to do lot more to be GST-ready. There will be some disruption but it is important for creating a common market within India. There is still some way to go for the legislation to be ready for companies to finalise their plans. Larger companies are more active but many small and medium-sized companies have lot of work to do.

What is your take on the Trump effect on global business environment? 

I am very optimistic that a number of things that the business community has been talking about – a fair tax system and a smarter regulatory environment – this administration will be responsive to them. I believe tax reforms in the US will create a more level playing field for multinationals based in that country.

There are some open questions around issues like global trade and immigration that are important from a business stand point. I am optimistic that the government will work with business to craft solutions that will lead to growth in the economy.

What will be your advice to Indian business while dealing with the new administration on issues around immigration, access to talent, etc?

It will be important for this administration to hear from businesses that invest in the US. I think President Trump is looking for fair trade, smart regulation and an environment that is conducive to growth. There are large numbers of India-based companies that are creating jobs in a very rapid pace in the US. My suggestion to them is: Get engaged with this administration. It is important for this administration to get aware of the positive impact on US jobs and investment that some of the India-based companies are creating.

The immigration issue is a concern not only among Indian companies but globally and also within businesses in the US. Businesses as a group are working to make the administration aware of their concerns around ability of the US companies to innovate and grow.

Do you see Trump’s America First programme and Modi’s Make in India policy countering each other at some point of time and impacting the growth of US-India business?

Every country is concerned about the health and growth of its economy. There is nothing inconsistent about Make in India and America First. They both are consistent with responsibilities of leaders to make sure employment and health of their economies is conducive to successful outcomes for their people.

Having said that, we are in a global economy. Nothing is going to derail the reality of business being done in a global market place. There is always going to be the need for US-based companies to create jobs and manufacturing base near their customer base. This means US-based companies will continue to make investments outside of the US. Same thing will be true for India-based companies. Avery simple reality for a US-based company – an MNC – is that that 95% of the customers do not stay in the US. This is a global economy and it will continue to be a global market place for companies.

What in your view on India’s unfinished reforms agenda?

Digitalisation is very important for India as a destination of foreign investment going forward. There is an opportunity for India to leapfrog many other countries through an aggressive path of digitisation of the economy. The reforms around corruption are also very important and I know will continue. These are all challenging issues and will take time to solve. 

I serve in the US-India Business Council in the US. There is tremendous optimism outside India about the reforms that Prime Minister Modi has initiated. There is also recognition that you cannot implement these reforms overnight. Some patience will be required when it comes to Ease of Doing Business reforms.

What are the top two-three things that come to your mind when it comes to improving India’s ease of doing business ranking?

One is about tax. Companies look for consistency and certainty in tax regimes. Secondly, the regulatory environment – there is need to streamline and speed-up the approval process to get things done.

Finally, one of the most important aspects of a company doing business in India is still tied to infrastructure. There is need for continued reforms in the power sector, access to all aspects of infrastructure that are critical for doing business in a location. 

Is the worst of Brexit – in terms of its impact on global economy – yet to come?

Brexit had an immediate impact for two or three months when there was a slowdown in activity, but it got back to normal fairly quickly. The real impact of Brexit on the economy will be a year and a half to two years down the road. Depending on the shape that Brexit will take it will have an impact perhaps greater than what we saw immediately after the vote.