During what has frankly been an unbelievable chain of events politically and economically in the United Kingdom, many are peering up over the parapet to see what’s next? In my view that question is going to be asked repeatedly for many months and years ahead.
Whilst widespread uncertainty ensues in the UK and negotiations take place with our largest trading partner, the EU, many dynamic companies will recognise this is the time to be looking out far further from their parapets, further than Europe certainly. CEOs and Sales Directors of internationally ambitious companies are now understandably developing a revised focus on long-term growth markets.
One market in particular, which has been talked about a growth rate is now touching 8%, the fastest of any major economy. Home to 1.3 billion consumers, India is benefitting from low oil prices (as it has a large dependency on energy imports), low inflation, a relatively stable currency (particularly compared to other BRICS nations) and most importantly the most pro-business government it has had post independence, led by its dynamic Prime Minister Narendra Modi.
Over the last two years lot already since the Brexit vote, is India.
India’s current GDP under the new government, a series of highly focused initiatives have been launched to create a framework in which India’s economy can flourish. These include:
Make in India – a major national initiative designed to facilitate investment; foster innovation; enhance skill development; protect intellectual property, and build best-in-class manufacturing infrastructure. The program opens India’s doors to foreign manufacturers allowing them to take advantage of attractive labour costs, a strong domestic and regional market and an ability for small and medium sized enterprises to piggy back on the back of the large multibillion dollar infrastructure, energy, defence, pharmaceuticals, transport and logistics investments being made across the country.
Skill India – a program to provide vocational training to over four hundred million workers so that India has the manpower to deliver on Make in India and bring adequately skilled youth into the workforce to replace its increasingly expensive Chinese counterparts.
Digital India – an initiative which recognises the importance of the digital age and the critical need for improved communications, connectivity (locally and globally), governance and of empowering local citizens and in turn creating a new era of local innovation and entrepreneurship. Anyone who has followed Silicon Valley’s success over the years will recognise the leading role Indian born entrepreneurs have played in creating value out of some of the fastest growing tech companies there. An understandable belief stands that in the future a lot of this value can be retained in India itself. The digital modernisation of bureaucratic registrations, applications and mandatory government filings create not only tremendous efficiency, but they also significantly reduce corruption by removing the human interface part of the process.
In mid June, the Indian government unexpectedly announced a large swathe of market reforms aimed at further paving the way for foreign investment and participation in the market. Significant concessions were made to generate further appeal to foreign investors. Foreign retailers now have a three year concession on local sourcing requirements, defence companies can now own 100% local subsidiaries, the e-commerce sector, as well as the railway and civil aviation sector, now also allows 100% foreign investment. The relaxation of these investment parameters creates not only a huge opportunity for large multinationals in India, but also will provide a tremendous platform for British small and medium sized companies, who are part of their supply chain, to come into the Country on their coat tails and then broaden out their own sales, manufacturing and development activities locally. Amazon, GE and IKEA have recently made major multibillion dollar investment commitments to India, and Apple is likely to follow. There are no doubt dozens of their suppliers from Britain and beyond who stand to benefit from extended supply agreements if they enter the market too.
With the Indian government’s laser like focus on economic development and an openness to encourage foreign investment and local participation, what should British businesses be doing to ensure they are part of India’s rising trajectory?
To start with, they shouldn’t be pausing and waiting for the dust to settle on Brexit. Whatever the outcomes are of the countless discussions and negotiations that take place, the sheer complexities of what needs to be dealt with will mean that uncertainty will remain in the EU trading block for the foreseeable future. Companies should be acting now and seeking to enter a market, such as India, which offers long term growth opportunities.
Companies not already aware of the opportunities for their business in India should be doing some research, looking for local distributors and sales channels, and assessing what their potential is in the market. British goods and services just became 10% cheaper because of the pound’s decline. Indian buyers love a deal and have a great affinity for “made in Britain”, so now is a good time to be promoting yourself.
I recently visited a company who said they weren’t having any success with their sales in India. I asked how many times they had visited and how they were interacting with their clients. Their response was “once” and “only by email”. For a £2m average unit product price, what did they expect?! Once you have done your research and have identified and qualified these leads (i.e. delve a bit deeper than “yes, we are interested” before getting too excited), make a trip. Go and visit your potential clients, understand what it is they want and where they see the value in your goods or services, and get to know the market place – the real one – not the proverbial bigger picture. See how consumers buy, question what they buy and on what they look for when buying.
And either commit to the market or make a decision that it’s not for you. Halfhearted attempts at doing business in India never work. Achieving success requires a long term commitment to the market, it involves patience, persistence and as much local visibility and touch points as possible, ideally by visiting the country regularly. Have someone wear your company’s shirt to work and knock on doors with your brochure in his or her hand. You don’t have to set up complicated structures to hire local reps, as platforms exist that enable you to have local sales and business development resources without having to deal with the complexity of establishing and running a local entity.
And finally – get good advice. India is a complex market to foreigners, but by working with those operating on the ground there day in day out, you should aim to have them deal with the administration, enabling you to focus on your business.
With rumours that Britain and India already suggesting a direct trade deal post BREXIT, which would be one of the most significant benefits of leaving the EU, don’t hesitate to seize your place in India’s growth story. Now is exactly the right time to explore enter and expand in India.
The article was written by Adrian Mutton, Founder & Chief Executive
Sannam S4 – International Market Entry, Expansion & Compliance