'While we acquired land for major industrial units earlier, we made it a point to offer jobs to the owners of the land. I think what lacked in recent acquisition for SEZs (special economic zones) was lack of a clear-cut policy that could have made the process simple,' he said.

The management guru added that it was difficult to reverse the flow of migration from rural to urban areas.

'We need 300 to 400 new cities. But despite all this 40 percent of India's population would remain in villages,' he added.

Prahalad is a professor at the Ross School of Business, University of Michigan in the US and has written several well-known books on corporate strategy.