2010: Why isn't Berkshire investing in India?

AUDIENCE MEMBER: Good morning, Warren and Uncle Charlie. I have to call you Uncle because my parents are from India and we call anybody older than us Uncle or Auntie.

WARREN BUFFETT: You may have to call us great uncle. (Laughter)

SABRINA CHOOG: I’m Sabrina Choog (PH) from Los Angeles and I’m 12 years old.

My mom owns a bunch of Berkies, which obviously I’m gonna get one day. (Laughter)

My question is, 17 percent of the world is Indian. That’s one of six people in the world.

India’s economy has been growing at 7-8 percent per year. At this rate, it will surpass total U.S. GDP in 2043.

Can you please tell me why aren’t you investing in India?

WARREN BUFFETT: Well, it’s a good question — (applause) — and we have connections there, obviously.

But it hasn’t — in the insurance field, there have been very distinct limitations on what a non-Indian company — a non-Indian-owned company — can do.

We’ve looked a lot, mostly through Ajit. We’ve looked a lot at the possibility of being in the insurance business there.

And actually, as of yesterday, I agreed next March to go to India because our ISCAR business — (applause) — is doing very well there.

But, I don’t know what they think I can do additionally, but in any event they said, “Come on to India in March and see if we can’t expand it substantially.”

India is going to grow dramatically, and ISCAR belongs in every industrial country in the world. I mean, we are very basic to industry, and we’ve done wonders for our customers all over the world.

And we have a good-sized operation in India. But ISCAR management hopes that if we take a trip over there in March, we might land a few more accounts.

We do not rule out India, believe me, in looking at either direct investments or marketable securities.

In fact, POSCO, Charlie can describe the POSCO situation better than I, but they have big plans for India.

Charlie?

CHARLIE MUNGER: Yeah, the one trouble that India presents is that its governments tend to have a fair amount of paralysis, endless due process, endless objection. Zoning is hard, planning permissions are hard, et cetera.

And that has caused the very wise founder of modern Singapore to say that China is going to grow much faster than India, because their government causes less paralysis.

So these countries are different in the opportunities they present.

But of course we like India, and we — kind of admire the democracy that causes the paralysis, but we still don’t like the paralysis.

WARREN BUFFETT: It’s not ordained, however. You know, if you’d looked at China 40 years ago, you wouldn’t have dreamt of what would happen.

So countries do learn from each other, I mean, and they should. I mean, I think they’ve learned many things from the U.S. that they adapt — I’m not talking about India specifically, I’m talking about other countries generally.

They don’t take on everything we have. But if you looked at a country that was as successful as this country has been over a couple hundred years, you might figure that there could be a few good ideas you could steal.

And I think that you’re seeing that around the world, and maybe they can improve on us.

So I don’t think I would feel that any impediments to growth that existed now are necessarily ones that have to be permanent. Indian — we ought to figure out a lot of ways to do business in those countries.

My preference is, obviously, in something like insurance, which I understand, and where we’ve got terrific people. Both China and India do limit us right now quite significantly in what we can own of a company.

And I really hate to take some of our managerial talent and put them to work for something we only own 25 percent of. I’d rather have them working on something we own 100 percent of.

So it will depend on the laws. But people in India are going to be living a lot better 20 years from now than they are now, as they are in China, and as they are in the United States.