General Electric Chief Remains Cautiously Optimistic About India

Brendan Hoffman/Getty Images Jeffrey R. Immelt, chairman and chief executive officer of General Electric, in Washington D.C., in this Oct. 7, 2011, photo.

NEW DELHI - On a visit to India, the head of one of the world’s largest companies painted a fairly optimistic portrait of India’s growth prospects, although he hinted that Indian policy makers had reasons for concern.

Jeffrey R. Immelt, the chairman and chief executive of General Electric, said Friday that G.E. was investing nearly $200 million in a manufacturing facility in Pune and another $75 million in a research and development site in Bangalore. He said hat he expected both facilities to grow smartly in the coming years.

“We think Pune could be a big facility because the demand here is so big,” he said. “Our revenue here should grow between 15 and 20 percent annually on a sustainable basis.”

He said he was very optimistic about the company’s medical products business in India.

“The doctors here are driving us to be innovative,” he said. “Every doctor in India is an entrepreneur. You have an incredibly entrepreneurial medical culture here because the system has grown up in a different way.”

But if India is to experience the kind of economic growth that has propelled China over the past two decades, it is likely to need large manufacturers like General Electric to use its operations in India to make products not just for the domestic market but for buyers around the globe. And on that score, Mr. Immelt was far from encouraging.

“If we manufacture something here, we manufact! ure it because it could be used in South Asia,” he said. “The United States is very competitive today.”

He went on to say that when it comes to costs, “everyone has to be a little paranoid because the absolute difference becomes narrower everywhere.”

India’s relatively low labor costs are becoming less strategically important from a business investment standpoint, he said. Labor costs play a fairly minor role in the overall production costs for most of General Electric’s products, he said, and power costs have dropped sharply in the United States in recent years.

Mr. Immelt said he was not overly concerned about recent tax-law changes, worries over India’s fiscal deficit or what he termed “a steady drumbeat of what I would say was some fairly negative news” about India. He complimented Finance Minister Palaniappan Chidambaram as “being known to all of us around the world, and he’s quite well-respected.”

“I already see signs of a correction,” he said. “rogress will be made. Maybe not in a straight-line fashion, but it will be made.”