Doing Business – Page 25

Austrade provides great insights into India opportunities

Austrade’s Senior Trade and Investment Commissioner in India, Dr Matthew Durban, (pictured below) analyses opportunities presented by India in this article for Austrade’s Insights. (Extracts)

With trade wars, powerful neighbours, and the odds on a recession narrowing within the next two years, considering Indian market entry has never been more mission-critical for Australian business.

In 2018, Australia’s total exports to India grew 10% to A$22.3 billion. India ranked number five in Australia’s export destinations.
Two-way trade increased by a similar percentage to A$30.4 billion, making India Australia’s sixth largest two-way trade partner.¹
Australian investment in India increased almost 12% to A$15.6 billion, slightly ahead of India’s investment in Australia at A$15.1 billion.²

However, according to the Australian Bureau of Statistics, in 2016–17 (the latest year for which there is data), only 2,087 exporters engaged with India, compared to 7,214 for China.³

Opportunities for Australian business

The election was largely fought on national security and rural support. However, Austrade has extrapolated opportunities for Australia business from past performance and Austrade’s Indian post network.

Mining equipment, technology and services (METS)

Minerals and fuels already account for almost A$13 billion or 75% of Australia’s total merchandise exports to India. Industry sources suggest the new government will restart the auction of currently moribund coal mines and allow 100% foreign direct investment.

The government is under pressure to meet projected energy demands and accelerate electrification. According to the BP Energy Outlook 2019, coal’s share in India’s primary energy consumption will decline from 56% in 2017 to 48% in 2040.⁷ But that is still nearly half of the total energy mix and way ahead of any other source of energy.

This will create ongoing demand for Australian METS, two-way mining investment in strategic minerals (this includes coking coal, rare earths and battery minerals), and trade in renewable technologies as well as smart infrastructure.

Food and agriculture

Demand for safe, reliable and quality Australian foods will continue in light of India’s projected population growth.

India’s already very large population will surpass China’s within the next decade. Population growth, currently at 1.1%, is expected to continue until mid-century, reaching an estimated 1.68 billion in the 2050s.⁸ Though the number of children has peaked, the workforce will continue to expand. According to Bain & Co, the growth of the Indian middle class will lift nearly 25 million households out of poverty. In addition, India will have 700 million millennials and Gen Z (those born between 1995 and 2009) consumers, who have grown up in a more open and confident country.⁹

The retail landscape in rural regions is developing, with large retailers such as Future Group opening supermarkets in tier-two and -three cities to cater to the nearby regions. Government support in establishing infrastructure facilities, such as cold storage, rural electrification and the internet, is likely to further drive further growth.¹⁰

The growth in modern retail opens up opportunities for Australian businesses to supply healthy, high-quality and nutritious packaged goods. Eighteen Australian brands are currently active in the market and there is room for many more.

Education and training

According to India’s human resource development ministry, the Modi Government will focus on setting up teacher training centres and increasing the intake capacity of Indian institutes in engineering, management, science and law by 50% over the next five years.

Telecommunications

Indian telecommunication companies are set to push ahead with investment in broadband infrastructure.¹¹ The advent of 5G, autonomous technologies, edge computing and a digital marketplace for services will need to be balanced with the government’s desire to champion low-cost access, data localisation and e-commerce regulation.

Mitigating the risks with a tailored strategy

Execution remains the single largest risk for India. Doing business in India takes time. India is a diverse country, with 29 states and seven union territories, 22 official languages and innumerable dialects.

Local representation and careful location selection are essential to bridging gaps in understanding and miscommunication. And Australia can start from a position of strength. People-to-people ties are strong and growing. Around one in 50 Australians today (2.4%) were born in India¹² and more than 108,000 Indian students enrolled to study in Australia at the end of 2018 – a 20% increase on 2017.¹³

For the Australian Government’s part, Peter Varghese’s India Economic Strategy lays out the opportunity by sector and geography to 2035. This has been well received by the Indian Government, and the Indian response – an economic strategy for Australia – is expected in the second half of 2019.

Austrade has been operating across India for more than 30 years and has experienced commercial representatives in six major hubs: Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore. Contact any of our team in-market to learn more.

Dr Matthew Durban is Austrade’s Senior Trade & Investment Commissioner in India with responsibility for Austrade Posts in Mumbai, Bengaluru, Hyderabad and the in-market Resources & Energy industry team. He has almost 30 years’ commercial experience across five countries.

Delhi’s Connaught Place 9th “most expensive” for offices

New Delhi’s Connaught Place is the ninth most expensive office location in the world with an annual rent of nearly USD 144 per sq ft, according to property consultant CBRE.

CP is located in the heart of India’s national capital.

In its annual Global Prime Office Occupancy Costs survey, CBRE tracks the cost of leasing prime office space globally.

For the second year, Hong Kong’s Central district retained the top spot as the world’s most expensive market for prime office rents, with the prime occupancy costs valued at USD 322 per sq.ft.

Mumbai’s Bandra Kurla Complex and Nariman Point CBD slipped to 27th and 40th positions.

India – have a go! Some “quick tips” for those thinking of doing business with India

Have a go! India is already a large market and growing fast – with a massive young population driving future demand. Interest is growing in “all things western” and demand in many sectors (IT, education, resources) is just so big it cannot be satisfied locally.

Do your homework! Failures are many and most can be traced back to lack of research or inability to adapt to the local market. Factors such as cultural differences, consumer trends and what the market wants have to be identified.

Above Australian PM Morrison and Indian PM Modi hit it off at a recent meeting

Use our reputation! Australia is generally well thought of in India – those who come here are amazed at the quality of our cities. Use this for brand advantage and to open doors.

Choose the right channel. Distribution, e-commerce choices and so on will be make or break for you if consumers are your target. Aussie firm COTTON ON recently set up and online sales entry into India, the first step towards a physical presence.

India is a “relationship” culture – meaning they want to get to know you first. It might take several visits for you to create the connection. Otherwise you get a short term transaction this year that might not be there next.

Indians can help you! Finding local Indian talent has been a big success factor for so many global companies, large and small. If you cannot afford to establish a local team then perhaps you cannot afford to do business there.

Adapt to culture – get some training to understand how to behave and how your Indian counterpart might think. We are different! If you are culturally adaptive you can succeed and enjoy the difference.

Have both short term and long-term goals – and long term with India means committing to this venture for at least three years.

But above all – have a go!

Australian firm MoooFarm wins award for work in India

MoooFarm, co-founded by Australian Indian impact entrepreneur Param Singh (pictured below) has been awarded a winning prize of $30,000 for their breakthrough technology of ‘Facial Recognition of Cattle’ in the Agriculture Insuretech Innovation Challenge organised by the World Bank Global Index Insurance Facility.

MoooFarm is an award-winning initiative that aims to increase income of 75 million small dairy farmers through capacity building, last mile extension and transfer of technology. Through its unique approach, MoooFarm addresses United Nation’s Sustainable Development Goals toward Gender Equality, Poverty and Responsible Production and Consumption.

MoooFarm, bagged a winning price of USD 30,000 by The World Bank Group in Data Analytics category for their unique solution of ’Facial Recognition of cattle’.

With an accuracy of 95.7%, MoooFarm was able to test the facial recognition model using deep learning technology. In the coming weeks, this breakthrough technology will reach each and every small-holder farmer via MoooFarm’s mobile based application and its network of Village level Entrepreneurs.

According to The World Bank Group, the Global Index Insurance Facility (GIIF), “helps smallholder farmers and micro-entrepreneurs gain better access to finance, manage financial losses, and protect their livelihoods against more frequent and more severe weather events…since 2009 it has facilitated more than 4.6 million contracts, covering over 23 million beneficiaries and $730 million in agricultural investments insured in more than 30 developing countries.”

Australia could benefit from Trump’s trade war with China

They are talking fast, negotiating hard and could come up with a sweeping deal this year that reduces the need for direct talks on an Australia-India FTA.

Australian PM Morrison (left) and Indian PM Modi – pretty happy about the future

RCEP will have the potential to deliver significant opportunities to Australian businesses and consumers. RCEP will cover ten of Australia’s top 15 trading partners, and collectively RCEP participating countries will account for a combined GDP of US$23.8 trillion (2016). These countries account for almost 60 per cent of Australia’s total two way trade, and over 65 per cent of our exports.

Thanks Donald.

Aussie firm Atlassian sets up base in Bengaluru, India

Australian IT firm Atlassian, which provides its technology to customers such a NASA, Spotify and Lyft, has set up its global R&D Centre in Bengaluru and plans to hire 300 people.

This move by the Australian software developer firm shows it is betting big on the India market and its tech ecosystem. The company provides team collaboration and productivity software.

Mike Cannon-Brookes, (pictured) co-founder and co-chief executive of Atlassian, said in an interview. “It (India) is a big part of our growth plans as the company continues to grow very rapidly. We always try to build well-balanced R&D teams not just on the software side of the things but also design, product management, security and all the aspects that go into making great software products.

“One of the big advantages Bengaluru has is (the availability) of great talent in all those areas in one spot,” he added.

Indian budget to be presented today showing the way for Modi 2.0

The India Budget 2019 is due to be presented today by Finance Minister Nirmala Sitharaman (pictured).

This will be one of the most crucial Budgets for Modi 2.0 as it will become a guide for upcoming reforms and policies in the next five years of his government.

Come and learn more at our FREE Melbourne seminar (copy this and paste into your browser):

https://www.eventbrite.com/e/modi-20-journey-towards-greater-india-tickets-64489650280

Let’s hope PM Modi and PM Morrison meet lots and do deals

Now, this is the kind of photo I would like to see a lot more of.

Australian PM Scott Morrison (left) and Indian PM Narendra Modi in discussions.

This is vital for Indian Ocean strategic issues plus our trade and investment relations.

Here’s a very nice irony – Australia and India have really struggled to agree a Free Trade Agreement but one outcome of the Trump trade war on China is that the 15 countries in the Regional Comprehensive Economic Partnership (Including Australia and India) are now motivated to do a deal – they are talking fast, negotiating hard and could come up with a sweeping deal this year that reduces the need for direct talks on an Australia-India FTA.

Thanks Donald.

My interview with His Excellency Dr A.M. Gondane, High Commissioner of India to Australia – first extract “tariffs and trade”

One 12 June, I had the privilege of a one-on-one interview in Canberra with the Indian High Commssioner, Dr AM Gondane. Here is the first of a series of short extracts from that interview:

Dr Gondane: “Australian tariff rates are low and ours are at a higher level. There are differences and we know that Australia is a very open economy. It is natural for Australia to desire Indian tariffs to match the Australian model, but this will take time. We have actually made a lot of progress and opened more than 90% of our tariff lines for restarting the negotiations.

“There are some sticking points, but I think, with careful negotiation and goodwill, the free trade agreement could be reached. Because India’s tariffs are higher it will naturally take longer to get them down.

“Both Australia and India are negotiating the Regional Comprehensive Economic Partnership (RCEP) forum (meeting in Melbourne this week) which could be another avenue for increased trade.

“The RCEP provides good scope for commonality and the opening up of India and Australia economies – both are active in the RCEP,” the High Commissioner said.

The 15 Member countries of RCEP are Australia, India, China, Japan, Republic of Korea, Singapore, New Zealand, Malaysia, Indonesia, Brunei, Cambodia, Laos, Myanmar, Vietnam, Philippines. They are meeting in Melbourne this week.

Dr Gondane concluded with a wide ranging comment about the Indian Ocean region and pointed to Prime Minister Modi’s vision for the Indo-Pacific:

“The period of doubling of Indian economy has reduced and we can reach US $ 5 trillion within the next few years. We are already the fifth largest economy in nominal terms and third largest in purchasing power parity. That is why the Indian Prime Minister has elaborated on what is our conception of the Indo-Pacific. Australia is an important partner in the Indian Ocean. These two powers will be of great consequence in the next twenty years.”

India-Australia trade relations set to grow at critical time

Many of us have championed closer economic ties between Australia and India. It is now more important than ever to get closer to India.

As Austrade expresses it – “With trade wars, powerful neighbours, and the odds on a recession narrowing within the next two years, considering Indian market entry has never been more mission-critical for Australian business.”

Some key statistics:

•In 2018, Australia’s total exports to India grew 10% to A$22.3 billion. India ranked number five in Australia’s export destinations.

•Two-way trade increased by a similar percentage to A$30.4 billion, making India Australia’s sixth largest two-way trade partner.1

•Australian investment in India increased almost 12% to A$15.6 billion, slightly ahead of India’s investment in Australia at A$15.1 billion.

However – and here is why Australia needs to balance trade – according to the Australian Bureau of Statistics, in 2016–17 (the latest year for which there is data), only 2,087 exporters engaged with India, compared to 7,214 for China.

Time to think India.