New research based on data by Dealroom.co data and analysis by London & Partners – the Mayor of London’s international trade and investment agency – found Bengaluru as the world’s fastest growing tech ecosytem.
Bengaluru, often dubbed the Silicon Valley of India, has firmly cemented its tech credentials. The second Indian city was Mumbai, which made it into the top 10 fast-growing ranking at sixth place.
While Bengaluru, the capital city of the southern Indian state of Karnataka, grew 5.4 times from $1.3 billion in 2016 to $7.2 billion in 2020, the Maharashtra capital of Mumbai grew 1.7 times from $0.7 billion to $1.2 billion in the same period.
Bengaluru is also ranked sixth for the world’s tech venture capitalist (VC) investments, on a global list topped by Beijing and San Francisco, New York, Shanghai and London making up the top five. Mumbai comes in at No. 21 in the worldwide ranking, with Boston and Singapore among the other high-ranking cities.
Bengaluru is dynamic and global in feel, with sleek offices and countless quality bars and restaurants.
It used to be India’s “garden city” but has become a global “tech city”.
For EdTech, MedTech, AgriTech and in fact “any Tech”, Bengaluru is your India starting point.
It is also home to the dynamic Victorian Government Business Office led by Michelle Wade – essential to talk with them about your India entry plans.
Austrade’s Ashley Brosnan puts the case for Australian businesses to quickly get into India:
Australian businesses continue to see opportunities across a range of sectors including education, mining and resources, infrastructure, agri-food, and digital services. Thanks to the steady success of some great Australian brands, Australia is already a trusted supplier and investor.
However, India remains a challenging place do business. Expansion requires a high degree of market literacy and on-the-ground experience. Local partners help exporters and investors to navigate markets and regulation – and these partners can prove invaluable.
Despite this, the Government of India has signalled that India is ‘open for business’. It is emphasising investment and competitiveness as factors that will support the economy and encourage a return to growth.
The effects can be observed already in global rankings. India has moved up 63 places in the World Bank ‘ease of doing business’ rankings in recent years.
Austrade is helping Australian companies to explore India
The Australian Government is investing heavily in developing commercial links between Australia and India. The Australia-India Comprehensive Strategic Partnership agreed by Prime Ministers in June 2020 creates further opportunities for Australian business.
The Partnership seeks to build supply chain resilience between the two countries. It strengthens and diversifies trade and investment links with a focus on education, critical minerals and technology cooperation.
Today, Austrade posts across India are working intensively with Australian businesses to understand market, identify opportunities, make connections and help companies negotiate contracts.
Austrade’s Ashley Brosnan on India’s consumer spending “revolution”:
The biggest revolution taking place is the rapid rise of a huge, diverse and wealthy consumer market. Despite the impacts of the pandemic, domestic demand is likely to be a major driver of recovery and growth over the next decade, making up 60% of the overall economy.
E-commerce is taking off as smartphone usage multiplies. India already has over 1 billion internet users and the digital economy’s contribution to GDP is projected to grow 15–20% by 2024.
Incomes are also rising strongly. India’s median income per household is expected to reach A$13,867 by 2025. The World Economic Forum considers that consumer expenditure in India will grow by a factor of four up to 2030.
This means over 80% of Indian households will be middle-income in 2030 – an increase of 140 million. Another 20 million will be considered high income.
India’s emerging and aspirational middle class is seeking premium food and beverage, healthy lifestyle products, technical infrastructure, quality healthcare and education, entertainment and consumer goods.
Trends in consumer demand are encouraged by a substantial, highly-skilled Indian diaspora in Australia, which is set to number 1.4 million in 2031.
Austrade’s Ashley Brosnan sets out the FDI picture:
Despite the COVID-19 crisis, foreign direct investment (FDI) inflows into India grew 13% in 2020. This is an extraordinary achievement – and a landmark development in a country that has historically proved challenging to foreign investors.
The rapid inflow of investment makes India one of the few countries to experience double digit growth in FDI during 2020. It means India is now a top 10 destination for FDI, and it heralds a sea change in global investment sentiment.
Multinationals are seeking to move their supply chains into the subcontinent. The push factor is a desire to diversify from an over-dependence on China. The principal pull factor is a young, competitive workforce, particularly in the information technology and construction sectors.
FDI flows into India contrast sharply with the global picture. For example, FDI flows into China grew by 4% last year, while FDI flows globally fell 42%. FDI flows into developed economies fell 69%.
Investment in India is likely to grow significantly over the next decade.
Agritech booming in India but be careful about market entry
A recent story in EVOKE, an agritech site, really caught my eye with a piece of sound advice.
It was so good to read the Managing Partner of Omnivore, Mark Kahn, with his greatest piece of advice to those not already there: do not to move to India immediately. Omnivore is the largest and oldest player in the Indian agritech venture scene
“I’ve never seen a foreign startup succeed in India that was selling directly. Sometimes we have very well-meaning people that relocate their lives here and think they’re going to be able to build an organisation from the ground up and the reality is it’s just very difficult.
“The best thing you could do is get some Indian members on your team, co-create solutions that bridge the gap between whatever you’ve developed earlier and whatever our local farmers actually need and find local partners.
“You should be manufacturing in Australia or maybe India, but you don’t want to build a distribution system yourself and even if you try, you’re not very likely to succeed.”
He pointed to agritech related to water and drought resistance as two high priority opportunity areas.
The agritech opportunities are huge, but INTO INDIA has been advising for a long time that you need partners and a collaborative mindset to really succeed in India.
Trade presents as a very mixed story for countries in the Indo-Pacific region – there appears to be both peril and opportunity ahead.
On the peril side – lockdowns, disrupted supply chains, security tension and travel restrictions.
What’s on the opportunity side?
Not much, but we should be optimistic.
The plunge in world trade could be bottoming out. Weak global growth could turn into moderate growth. Closed borders might soon open. And tensions around key areas of trade, technology and security (ie around China) could stop festering.
Two facts demonstrate India’s amazing economic growth:
First, today India is the world’s 6th largest economy.
Second, as soon as 2030, it is likely to be the 3rd largest.
Mugunthan Siva, CEO of India Avenue Investment Management (Sydney and Mumbai) makes a compelling case for India focused, actively managed high conviction funds and the investment themes he likes include technology, manufacturing, construction, rural, real estate, B2B and market share leaders.
INTO INDIA has been advocating for Australia to do what deals can be done with India, and “park” a Free Trade Agreement for later on.
The UK-India Virtual Summit has done just that.
Their newly created Enhanced Trade Partnership (bureaucratic speak for “these are the things we can agree on now) will create immediate opportunities for British businesses in India across industries including food and drink, life sciences and the service sector.
Non-tariff barriers on fruit and medical devices will be lowered, allowing British businesses to export more of their products to India and boosting UK growth and jobs. It also commits both sides to addressing immediate market access barriers as well as continuing to seek further opportunities on the road to an FTA. That is, “parking” the FTA for later on – it is just too hard to achieve.
Prime ministers Narendra Modi and Boris Johnson held their Virtual Summit this week and agreed on a “Comprehensive Strategic Partnership” – the first European country to gain this status.
Australian PM Morrison achieved a CSP with India in 2020 and set out collaboration across science and technology, maritime issues, defence and more.
CSP deals are a sign that India is become more outward looking and – like everyone else – concerned about the behaviour of China.
The trade and investment package unveiled by the British government contains over £533 million of new Indian investment into the UK, covering areas such as healthcare and technology.
British businesses have also secured new export deals with India worth more than £446 million, which is expected to create more than 400 British jobs.
I hope our Australian trade officials are going through all the detail to see if any deals Australia has with India can now be updated on a deal-by-deal basis.
When a company sends a salesperson into the Indian market, the goal is to fill the order book as quickly as possible – there is no time for that person to build ongoing relationships.
The result at best is a quick transaction based on price. It rarely lasts.
India is a country where relationships drive and impact all aspects of business. That is “how they do things there” and expect us to be the same.
Some tips for relationship building in these tough times:
You can build good relationships during Covid by hosting a zoom or similar catchup to see how things are going – no big agenda, just share experiences and listen.
You can join groups and chambers and be seen as a player.
You can accept the intangibility of relationships and give your key executives time and resources to build them.
You can look up Indian culture, architecture and history so you can have informal conversations about things close to their heart.
You will need strong curiosity and listening skills.
Really, decisions about future business with India need to be C-Suite and Boardroom driven, based around a minimum three-year strategy. And giving your people the right to spend time on the intangible of relationships is the best first step.
It is high time the close friendship between the PM’s Modi and Morrison led to an FTA.
It is great to see so much friendship and collaboration between India and Australia – but it is time to go to another level and have a serious shot at getting a free-trade agreement between the two countries.
Here’s 3 reasons why an FTA is now urgent:
India wants greater access to Australia’s resources.
Australia wants alternatives to China for resources and wine.
India wants investment and Australia has huge funds under management.
Patience around the FTA has been a good approach but now we have to step up the pace and get on with it.
We need some form of harvest agreements to take the heat out of agriculture – which is always a super-hot political topic in India.
Also, India seriously wants investment flows and Australia has not been forthcoming. Time for the Australian Government to lead our huge investment funds into India.
The reality is – close relations in trade mostly follow investment, and Australia has not invested heavily in India.
Wine barriers to India are huge – there is a 150% tariff – and yet wines like Orlando Jacob’s Creek have done well there.
One problem for India is they are encouraging their own wine industry, typically at the low end of the market. Perhaps they can free up tariffs on high end wine imports?
The relationship between Prime Ministers Modi and Morrison is close and could be a building block for an FTA.