May 2018 – Into India

Real leadership to boost Indonesia and India trade

The leaders of Indonesia and India have shown how to lead on trade – committing to boost bilateral trade to USD 50 billion by 2025, from around USD 18 billion this year. India’s Prime Minister Narendra Modi and Indonesian President Joko Widodo made the announcement during talks this week.

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The boost follows a defence agreement earlier this month for an Indian port and base on an Indonesian island at the northern tip of Sumatra. The deals are confirmation of India’s active “look east” policy and signal a shift which will impact ASEAN.

This leadership is in contrast to Australia’s relationship with India, with trade stuck on around A$18 billion compared to over A$180 billion with China.

India’s Media & Entertainment growing rapidly – hungry for content and investment

The Indian media and entertainment (M&E) industry grew at an average annual rate of 18.55 per cent from 2011-2017; and is expected to grow at 13.9 per cent to touch US$37.55 billion by 2021.

Entertainment

The next 5 years will see digital technologies increase their influence across the industry leading to a sea change in consumer behaviour across all segments.

The entertainment industry is projected to be more than US$62.2 billion by FY25.

The industry provides employment to 3.5-4 million people.

The entertainment industry continues to be dominated by the television segment, with the segment accounting for 44.24 per cent of revenue share in 2016, which is expected to grow further to 48.18 per cent by 2021.

Google’s video platform, YouTube, plans to increase its user base in India to 400 million, as rising internet penetration in the rural areas will enable consumers to access videos on their smartphones.

I expect personal video messages to be a massive growth area – with Indian creativity being stretched to supply this sector.

India is one of the highest spending and fastest growing advertising markets globally. The country’s expenditure on advertising is expected to grow at 12.1 per cent to US$10.59 billion by the end of 2018.

If you are an investor or content provider, India should be on your radar.

Put Indore and MP on your India trade mission list

Indore is the largest city in the Indian state of Madhya Pradesh and for the second year in a row has won the Swachh Survekshan Survey as India’s cleanest city.

Indore is the financial capital of MP, is an education and mineral resources hub and the state has a major agribusiness economy. In addition, India’s IT giants such as Infosys and TCS are setting up major centres there – Infosys is locating an IT development centre in Indore which will employ about 13,000 and TCS is building a campus there.

The State of Madhya Pradesh has 75 million people.

Indore holds a highly successful “Global Investors Summit” each year.

Definitely another one of India’s “tier 2” cities worth putting on your trade and investment mission list.

India and Indonesia deal signals major shift in Indian Ocean response to China

Indonesia has agreed to give India economic and military access to the strategic island of Sabang at the northern tip of Sumatra and close to the Malacca Strait, an Indonesian minister said last week.

In a typically low profile way, both countries have done the deal in response to China’s Belt and Road Initiative and it signals a major shift in the attitude of Indonesia – it now wants to provide some “balance” to the China move.

Luhut Pandjaitan, Indonesia’s coordinating minister for maritime affairs and a former military officer, said India will invest in the port and economic zone of Sabang and build a hospital. He noted the port’s 40-metre depth is good for all types of vessels, “including submarines”. In time, he said, the coast guards of the two countries could also work together.

India’s Prime Minister Narendra Modi will visit Indonesia on May 31 and no doubt will announce more extensions to his “Act East” strategy.

An Indonesian official accompanying Pandjaitan said his understanding was that besides development of the port, Indian naval ships would be allowed to visit Sabang under the understanding.

The Malacca Strait is considered one of six choke points, or narrow channels, along widely used global sea routes. They are critical for global energy security because of the high volume of oil transported through narrow straits. At least 15 million bpd of oil flows through the Malacca Strait from West Asia and West Africa.

Pandjaitan outlined the reasons for closer bilateral cooperation. He was critical of China’s Belt and Road Initiative, saying: “We do not want to be controlled by BRI.” He also questioned China’s unilateral claims on the South China Sea, noting this includes parts of Indonesia’s maritime exclusive economic zone.

Indonesia had positioned a plan called the “global maritime fulcrum” that is “designed to balance the BRI”, he said. Indonesia and India are big enough that “we don’t have to lean towards any superpower, and this makes India a sensible partner for Indonesia”, he added.

This marks a major shift in Indonesia’s attitude towards China and India. Until recently, Jakarta had been reluctant to seek strategic alignment with New Delhi and was in two minds about Beijing’s role in the region.

More to come…

Mumbai’s BKC increases city profile as financial capital of Asia

Bain & Company, Boston Consulting Group (BCG) and Amazon – just some of the global businesses choosing office space in the new Bandra Kurla Complex (BKC) in Mumbai, adding to Mumbai’s reputation as Asia’s financial capital.

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Bain & Company took space in the Capital Building which has attracted large numbers of banking, insurance and consulting companies.

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Others with significant offices in BKC include India’s Reliance Industries, Canada’s CPPIB, Singapore-based GIC and Australia’s Macquarie. The rents there are some of the highest in Mumbai.

According to the Business Standard, BKC continues to be the most sought-after micro market for BFSI (banking, financial services, and insurance) tenants. BKC2

The Bandra Kurla area is mid-Mumbai with good access to the airport – and this massive redevelopment at BKC is becoming a hub with outstanding retail, good coffee and so much more.

Like most “new” areas in India, it has a youthful vibe – which you would expect in a country where 600 million people are under the age of 25. All of which means Mumbai will go from strength to strength.

Mumbai is a “must visit” if you are planning on business or investing in India. Big, bold, fast, a dynamic 24/7 city.

Mumbai is the financial, commercial and entertainment capital of India. It is also one of the world’s top ten centres of commerce in terms of global financial flow, generating 6.16% of India’s GDP and accounting for 25% of industrial output, 70% of maritime trade in India and 70% of capital transactions to India’s economy.

It houses the Reserve Bank of India, the Bombay Stock Exchange and the National Stock Exchange. It is also home to some of India’s premier scientific and nuclear institutes. The city also houses India’s Hindi (Bollywood) and Marathi cinema industries.

Why doing business in India takes time

Doing business with India is more time consuming. Why? It is mostly because of what researchers call a “diffuse” culture, which is characterized by being indirect.

Most westerners come from “specific” cultures which are very direct in communication and expect absolute clarity in all of their dealings.

You can see that diffuse and specific do not mix that well.

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If you rush a meeting in India, you will almost certainly leave with a “yes we can do business and looking forward to it” but then nothing will happen. So, plan for long meetings, do not rush away, make large breaks between appointments so you can go with the flow. Diffuse takes time.

Diffuse cultures prefer to take time, to work around issues, and they link every part of life – work and private, formal and social, all mix together. In specific cultures, everyone rushes from one specific thing to another, they get to the point and keep most parts of their lives (such as work and private) separate.

HOW DIFFUSE WORKS

Your social outing with Indian colleagues might go very late – evening meal might not start until 9pm or 10pm
Indians will rarely say “no” – preferring “I will try…”
You can easily make appointments on the weekend with many contacts
A good sign is when your contact introduces you to someone senior to them – which often comes right at the end of a very long meeting…

Of course, for every cultural generalization there are exceptions. And when we talk about culture, it is not about which is better or worse, it is about gaining insight and understanding.