Agribusiness – Into India

6 big changes in India – and 5 reasons growth will boom

Only 8% of Indian households own a car – so big growth is ahead

INTO INDIA has consistently said India is the growth story of this century.

Now Anish Mathew, CEO and CIO of the very successful Sundaram Asset Management Singapore Pte Ltd, has found a unique way to describe why India is indeed THE growth story.

6 big changes in India

The number of income tax filers has increased by 57.5% between FY15 and FY21. This is obviously the impact of the growing use of Aadhar (biometric unique identity card) as the preferred KYC document and the implementation of GST, both of which is pushing up the tax compliance in the country.

Indirect (GST) tax base stood at 14mn in November 2022, a 2.3x increase from mid 2017.

Number of PAN cards (unique tax identity number issued by the Income Tax Department) allotted has increased by 2.5x in the last 7 years.

80% of the railway tracks were electrified as of end FY22 as compared to 31% in FY11.

Road infrastructure measured in number of kilometres has increased by 36.6% in the last 11 years.

Major port capacity has nearly doubled in the last 8 years.

5 reasons growth will boom

Only 8% of the households owned a car, 24% an air conditioner and 38% a refrigerator.

Only 1% of Indians account for 45% of all flights.

Only 3% of Indians make up all unique card holders.

Only 2.6% of Indians invest in mutual funds.

The Indian diaspora remitted USD 100bn into the country in 2022, eclipsing the gross FDI flow during the same period.

Mathew advises that the three big growth drivers for the next decade are consumption (driven by the Demographic Dividend and rising incomes); manufacturing, and; digitisation (which is the formalisation of the Indian economy)

He makes a powerful case for investment and trade with India.

Vital connectivity for India depends on progress in the “north east states” region

India’s “north east region” has long been neglected and is little known among western leaders – but it has a crucial future because of the role it can play in India’s strategic and commercial connectivity in the surrounding region.

The role of China in the Indo-Pacific increases the focus on this sensitive region.

India is now giving the NER priority – there are around 30 major road and highway links under construction, a complex process when border crossings are involved. There are also around 10 major railway construction projects including bridges and new lines.

This has been so well described by Sreeparna Banerjee and Ambar Kumar Ghosh, “India’s Northeast: Gateway to Connectivity with Eastern Neighbours,” ORF Occasional Paper No. 395, March 2023, Observer Research Foundation.

India’s Northeast: Gateway to Connectivity with Eastern Neighbours

India’s northeast consists of eight states—Arunachal Pradesh, Assam, Manipur, Tripura, Sikkim, Mizoram, Meghalaya, and Nagaland. It shares 5,812 km of international boundaries with the neighbouring countries of Myanmar, China, Bangladesh, Nepal, and Bhutan. It is landlocked; seven of the eight states are linked to the rest of India only through the Siliguri Corridor in North Bengal—a narrow strip of land (22-km wide) that is also called the ‘Chicken’s Neck’. The corridor is flanked by Nepal in the north and Bangladesh in the south.

This region can serve as a pivotal connecting space between India and its neighbours to the east in South Asia, as well as to East and Southeast Asia and beyond, enhancing the country’s diplomatic, infrastructural, and commercial engagements.

India’s foreign policy priorities, reflected in its ‘Act East’ and ‘Neighbourhood First’ policies, also bring the northeast into focus as a connectivity gateway to the wider Indo-Pacific.

Japan, with its long-standing expertise in the infrastructure sector, continues to play a significant role in developing physical connectivity projects within and across the northeast.

Australia shares many of the strategic goals of India, and now through the QUAD (India, Australia, Japan and USA) the countries are closer together through their commitment to democracy, open and free cultures and more.

The focus on this region will continue – India is crucially positioned within South Asia and in the broader Bay of Bengal region. It needs to play a more vibrant role in the region, and to do so, must engage more strongly with its East and Southeast Asian neighbours.

Watch this space…

Australian Vintage Ltd needs to rethink India strategy – it is not “just like China”

Craig Garvin, CEO, Australian Vintage, is right to enter the India market but needs to find the right way

The company behind McGuigan, Tempus Two and Nepenethe wines has set its sights set on affluent Indian consumers – but it might need to take a second look.

Australian Vintage Limited chief executive Craig Garvin believes the world’s second-most populous country, is “just like China”.

Yes, he is right that there are a million millionaires in Delhi and Mumbai – but does that equate to your market? These are the established wealthy, mainly male, and many are set in their ways.

Is a better market for Australian wines the young emerging wealthy of the future?

India is not “like China” – the Chinese population is much older and India has the youngest population on earth. Millennials and Gen Z are said to amount to around 750 million of India’s population. Known in India as the “demographic dividend”, this young population is the key to market entry for products like wine.

Already we know that sales of red wine are up in major urban centres, driven by demand from young women, educated and in the ranks of professionals and executives.

What distinguishes India for “premium” consumer products is that the market is young, it is emerging, it is a generation that instead of being “born someone” want to “become someone” and females are leading much of the consumer preferences of this young group. That is, it is ripe for change.

There is probably no other market like it in the world.

Other than its four main wine brands McGuigan, Tempus Two, Nepenethe and Barossa Valley Wine Company, Australian Vintage Limited also produces ready-made cocktail mixes under its Mr Stubbs brand, a range of gins under its Tempus Two brand, and a juice concentrate called Austflavour.

Australian Vintage is a strong company with some fabulous brands which will be just right for India – so long as the thinking and strategy is right.

INTO INDIA wishes them every success.

What a year! ECTA the radical change in relations between India and Australia

As this year comes to a close, INTO INDIA reflects on the game changer – the Economic Cooperation and Trade Agreement.

It surprised us all. Many did not expect it to be signed. Nobody expected it to be so vast in potential impact.

ECTA will save Australian exporters around $2 billion a year in tariffs, while consumers and business will save around $500 million in tariffs on imports of finished goods, and inputs to our manufacturing sector.

The tariff commitments provided by India in the agreement will open up access for Australia’s exporters of products including critical minerals, pharmaceuticals, cosmetics, lentils, seafood, sheepmeat, horticulture and wine.  

Australian service suppliers will benefit from full or partial access across more than 85 Indian services sectors and subsectors. Australian suppliers across 31 sectors and subsectors will be guaranteed the highest standard of treatment that India grants to any future free trade agreement partner. 

Australian services sectors to benefit include higher education and adult education, as well as business services such as tax, architecture and urban planning.

ECTA will support tourism and workforce needs in regional Australia by making 1000 Work and Holiday Program places available to young adventurous Indians. It maintains opportunities for Indian students graduating in Australia to undertake post-study work, with a bonus year of stay for high-performing STEM graduates.

Really looking forward to 2023!

Reade more here…

Trade deal to kicks off Dec 29th saving Aussie exporters to India $2b a year in tariffs

India’s YOUTH BOOM will reshape the world

These are the priorities of Indian Gen Z and Millennials.

Most of the world’s young people live in India.

And India next month becomes the most populous nation on earth, passing China.

India’s YOUTH BOOM looks like this:

440 million Millennials (born between 1981 and 1996)

375 million Gen Z (born between 1997 and 2012)

There are two things we need to know about these generations.

First, they are hard working and earning better than their elders. A high percentage of them have a second job.

Second, they are big spenders, so their capacity to shape and influence us all is enormous.

So, getting your product or service into India right now would make great business sense.

And countries, like Australia, are busy building closer political and strategic ties with India. Makes sense – it will be the economic (and therefore cultural etc) driver of the future.

Time for Australian business and education to find a way to increase trade with India

Dr Ashok Sharma has written about the increasingly close relations of India and Australia – for example, we are now the number 2 education market behind the USA and just ahead of the UK. Dr Sharma pointed to the Comprehensive Strategic Partnership and the New Education Policy which should “bring the current education partnership to the next level”.

Indian Foreign Minister’s Visit to Australia Strengthens Strategic Convergence, Trust, and Continuity in the Comprehensive Strategic Partnership

But what about other areas of trade?

We know that the increasing activity in education has many spin offs – increased tourism, professional exchanges and more.

Education might be the “trade flagship” that drags other industries into the trade mix.

But we cannot be sure.

It is time for a new national conversation about Australia-India trade, with a close examination on what blockages might exist and what steps would increase two-way trade.

India’s External Affairs Minister Dr. S. Jaishankar (pictured with Acting Prime Minister Richard Marles) came to Australia in October for the annual Foreign Ministers’ Framework Dialogue – where these matters were discussed.

The two foreign ministers discussed “accelerating and deepening economic ties, including through our Economic Cooperation and Trade Agreement.”

Sounds good.

But what is next?

Can the Australian Trade Minister, the Hon Don Farrell, bring business and education at all levels together in a national dialogue?

Remember – India is not just the second most populous nation on earth, it is also the YOUNGEST – which makes it the global growth centre. We cannot afford to miss this opportunity.

We have to find a way.

6 tips for doing business with India

You have to establish a presence to do well in India

Be There

Fly in Fly Out does not work long term in India – naturally, Indians like to see that you are serious and that means having a local presence. Does not have to be big, but it has to be local.

Be Indian

As soon as you can, find a local Indian leader or team that can do two things – work with you plus take you into the Indian market.

Blend with Indian culture

We all love our “corporate culture”, but you might need to bend a little, blend a little to produce something right for India.

“Indianise” your product or service

Innovate, repackage, find new markets for what you do, accept technical innovations from within India – “Indianise”.

Be a Presence

Participate in local chambers and industry groups – the collective is so much more important in India and you need to find a way to “be a presence”.

Get support in India

Australia has some of the best people ready to help you – State Government Business Offices, Austrade – start talking to them early and keep the links going. They can be your best resource.

India and China – a simple comparison

The Indian economy is expected to grow by 7.3% in the current fiscal year, which ends in March.

China is expected to grow by 2%.

Population of China is 1.4 billion (approx), ageing and declining.

Population of India is 1.4 billion (approx), young and growing.

Indian economy is driven by supplying local demand as the youthful population and middle class growth increase demand.

Chinese economic growth has largely been driven by making and exporting.

India as a domestic demand-driven economy – is less sensitive to global downturns.

China is an export driven economy – highly sensitive to global downturns.

And we have not even got onto world’s largest democracy, innovative driven, attracting and welcoming western investment and more…

Compare the two – what do you think?

India agricultural, processed food products exports up 30% to US$ 9.6 billion in April-July

INTO INDIA has written regularly on agribusiness growth in India – and the opportunities this presents. The story is gathering pace…

India’s exports of processed food and agricultural products increased by 30% to US$ 9.6 billion from April-July of this fiscal year. Fruit and vegetable exports increased by 4% during the time period, according to data from the Directorate General of Commercial Intelligence and Statistics (DGCI&S).

According to a statement released by the Ministry of Commerce & Industry, an export goal of US$ 23.56 billion has been set for the basket of agricultural and processed food goods for 2022–2023.

The first four months of the current fiscal saw a growth of 61.91% in the export of dairy products, reaching US$ 247 million. Basmati rice exports climbed by 29.13%, rising from US$ 1.21 billion in April–July 2021 to US$ 1.56 billion in April–July 2022. Non-Basmati rice exports increased by 9.24% to US$ 2.08 billion in the same time period.

There is a lot happening in the agriculture sector in India – time for you to upgrade your India engagement strategy?

Indian consumers are optimistic, even during Covid – McKinsey

A McKinsey survey has found that nearly three-quarters of India’s consumers are optimistic about economic recovery, and net intent to spend is growing and positive across many categories.

Omnichannel usage continues across the majority of categories.

Social-media influence is high, especially for Gen Z and millennials. More than 90 percent are engaging in social media and entertainment platforms.

There is an upward trend for new technology, such as crypto and augmented reality/virtual reality, and consumers intend to continue digital activities as the COVID-19 crisis subsides.

About 40 percent of consumers are engaging in out-of-home activities, especially among the vaccinated segment.

Most consumers have tried new shopping behaviours’ such as new retail outlets and new brands.

https://www.mckinsey.com/business-functions/growth-marketing-and-sales/our-insights/survey-indian-consumer-sentiment-during-the-coronavirus-crisis