India’s airlines are really hurting during this Coronavirus pandemic

SpiceJet’s chairman Ajay Singh is spending a lot of time in Delhi in front of civil aviation secretary Pradeep Singh Kharola.

The coronavirus has rattled India’s airlines, a big change from their New Year optimism. Many of them do not have deep pockets so are vulnerable.

In January, the industry was happy with fare discipline, controlled capacity addition, the absence of rival Jet Airways, and a slow but gradual demand recovery.

On Wednesday, IndiGo told the stock market that its earnings would be materially impacted because of the disruption, and domestic bookings had fallen 15%-20%.

The airlines’ anxiety comes from their weak balance sheets.

Those in the know say Singh is lobbying with the government to bring jet fuel under GST – such a reform could bring a windfall in reduced taxation of jet fuel.

Perhaps also on the cards is flexibility in payments to oil companies.

IndiGo has a fleet of 255 planes and money in the bank. The Tata Group backs Vistara and AirAsia India, while the Wadia Group owns Britannia and Bombay Dyeing, runs GoAir.

Government help or not, Indian airline execs are preparing for the worst – and some without money in the bank or big owners. Changes ahead?

India – how Australia’s trade will change and how we should communicate

In the 1990’s, Australia sold India coal and LNG. We also sent over copper, lead and gold, along with unprocessed foods such as chickpeas, lentils, almonds and oils.

According to India veteran Michael Moignard (pictured) of East West Advisers, it was the beginning of our trade relationship with India – so that makes it very recent.

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In the 2000’s our trade has shifted – uranium is in there but taking the prize has been education in the form of fee-paying students in Australia. Along with this has been IT and processed foods, with wine and packaged goods finding a market. Finally, Indians discovered Australia as a tourist destination.

So, what will the 2020’s look like?

Michael Moignard was our Senior Trade Commissioner in Delhi for 7 years, so it was good that he gazed into the crystal ball at a recent India seminar at BDO. This is what he saw:

“Sustainability” will become a big theme, covering services and products around water, waste, renewables and smart cities. That’s a big shift.

Education will continue to dominate but with a move to skilling India’s workforce – in India. And IT will blossom into IoT, Ai and more.

Continuing strong will be wine, packaged goods and tourism.

In short – it’s a good picture for Australia. Hope you are ready to participate!

Mike’s advice on how to approach India:

  • Don’t just think about selling your product and services to India (just sales and profits should not be the only motive)
  • Work together to create relationships, trust and mutual value (Indians value trust and personal relationships)
  • Ensure Indian counterparts understand you are there for the long haul…and not just for short-term profits
  • Don’t give the impression that your India strategy is just a diversification from China (and India is definitely not the next China)

Oh, and his final tip, use the phone much more and the emails much less.

 

These India numbers will boggle your mind but the future is more exciting

Here are some India and Australia numbers to contemplate:

(Thanks to Bill Cole, Partner International, BDO, pictured below, for some of this data)

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AUSTRALIA

  • Population: 24.6 million
  • GDP: USD 1.3 trillion
  • Top 5 Imports: Personal travel services, motor vehicles, refined petroleum and ships
  • Top 5 Exports: Iron ore, Coal, Education travel services, natural gas and personal travel services

INDIA

  • Population: 1.339 billion
  • GDP: USD 2.5 trillion
  • Top 5 Imports: Petroleum products, gems, electronics, chemicals and machinery
  • Top 5 Exports: Textiles, Gems, Chemicals, Products and Agricultural products

Top Trading Partners

Australia’s top 3 trading partners are China, Japan and the USA.

India comes in at number 7.

India’s top trading partners are China, USA and UAE, with Australia coming in at number 20.

So, what about the future?

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Australia’s India Economic Strategy to 2035 Report:

  • Recommends that by 2035 Australia lift India into our top three export markets, make India the third largest destination in Asia for Australian outward investment and bring India into the inner circle of Australia’s strategic partnerships
  • Identifies 10 sectors where strengths of Australian businesses match India’s needs:
    • Education (flagship)
    • Agribusiness, resources and tourism (lead)
    • Energy, health, infrastructure, financial services, sport, science and innovation (promising)

It is sure a “big picture” report – but with the right approach it can be achieved.

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Seems PM Modi and PM Morrison are getting on well – so time for business, investment and education to pick up the baton and run with India. Ready?

7 strategies for India market entry 2020

  1. Find the affluent millennials

India is home to the world’s largest population of millennials—typically defined as those aged 18-35. At 450 million, these millennials are influencing the way Indians eat, shop, commute and buy, much like their global counterparts. They are the first upwardly mobile group in recent history of India – and will have an impact very like the way western baby boomers changed most things.

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According to Santosh Desai, managing director of Indian Brand Advisory Group Futurebrands, Indians used to be “born something” but now can “become something”.

  1. Drill down to the real middle-class market

We know India has 1.3 billion people, but if you think too much about this you will get nowhere. Drill down to find your market.

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For example, some estimate the “middle class” as high as 300 million. For me, this is way too high. Austrade takes a dimmer view – it estimates that there are approximately 30 – 80 million people in our target demographic, many of whom live outside Tier 1 cities. That’s a big range from 30 to 80, which shows that we just do not know. But for me Austrade’s numbers are too low.

Austrade looks for consumers that:

  1. can afford international travel to destinations, like Australia;
  2. can afford to send their children for study abroad; and
  3. can afford to eat at high-end restaurants and hotels or eat significant amounts of imported food and wine at home
  1. Think of India as many markets

Thinking of India as “one market” will slow down your impact and waste your marketing efforts. First, there is the divide between north, south, east and west. Then there are big metropolises (8-10) and hundreds of tier two cities (around one million plus). Then there are over 26 different languages, multiple food cultures, differing beliefs and interests. It is complex, so build that into your “many markets” strategy.

  1. Consumerism is changing in India

India had just 9 Shopping Malls in 2007. There are over 350 Shopping Malls in 2019. Plus 85 new Shopping Malls will be built in the next 5 years = 435 Shopping Malls in 2025.

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Add to this that online retail is taking off, with Amazon and the local Flipkart leading the way – Indian consumers use cell phones for online access.

Dr Mark Morley Trade Commissioner India Government of Australia makes a key point about opportunities for us: “Australia is well positioned with the Indian consumer. Across India, we have a great reputation for clean, safe and reliable supply. We are well known as a premium supplier of produce, and we have a global reputation for our quality brands.”

  1. Thinking local is a good way to start

Especially for those in food, beverages, education and fashion, your beginnings for India can start right here in Australia.

About 650,000 Australians claim Indian ancestry, and we have over 65,000 Indian students here, which means a significant local market spending money. Add to that the growth in Indian tourists – up to over 300,000 per year and growing at around 15%. This gives you a good market testing opportunity.

  1. Collaboration is the new relationship

If you just want to “sell” to India, sharpen your pencil and think short term – sooner rather than later, India will find an alternative to you.

To be in India for the long term, seek genuine opportunities to collaborate with Indians – once you and Indian collaborators are working together, your future is more secure. This is how Indians prefer to operate, so drop “transactional” thinking and focus on “collaboration” – it is the new relationship.

  1. Give India the time it needs

Cultures based on relationship (collaboration) are slower to move, so give India at least three years. You might “sell” sooner, but for most this is a very short-term market entry approach.

 

10 reasons to look again at India in 2020

Dr Mark Morley is an Australian Trade Commissioner in India. In the last twelve months, like many of us, he has changed his view of Australia’s prospects in India. Why?

Here are 10 reasons to change – taken from his writings:

  1. Indian tourists coming to Australia has for the first time beaten the number of Aussies going to India – there were about 350,000 and each of them sees “clean and green” and innovative Australia first-hand. Plus, more than 700,000 Indians live down under.
  2. Across India, Australia has a great reputation for clean, safe and reliable supply. We are well known as a premium supplier of produce, and we have a global reputation for our quality brands.
  3. India’s ease of doing business and transparency has improved, its regional infrastructure – including roads and airports, as well as its cold chain – is improving, it now has a national GST alongside unified regulations around food importation and labelling, and a hungry entrepreneurial scene that is looking for international brands.
  4. Most importantly, and this is the game-changer for Australian FMCG producers, it has unified, national (or near national) platforms for Australian companies to connect their products with consumers. Can you believe this change? India now has a platform for Australian companies to connect their products directly with consumers.
  5. Amazon, as well as other platforms such as FlipKart and niche online marketplaces such as NetMeds, have turned the retail environment on its head.
  6. The scale and scope of the opportunity in India is now hard to ignore: Amazon India can deliver to 50% of all postcodes in India within 3 days of order, and 100% within 5 days.
  7. The Amazon platform is currently adding 200k+ Stock Keeping Units (SKU) every day, joining the 170 million SKUs already present on the site.
  8. With the cheapest mobile data accessibility in the world, 85% of Indians access online platforms via their mobile devices. This has huge implications for a market of more than 1.3b people.millennialsphones
  9. Mobile accessibility has meant that the modern retail format in India has been largely leap-frogged. Greater connectivity, greater receptivity to international brands, and greater opportunity for Australian exporters.
  10. India is a global player. But it’s not China (and that’s important for many of you with lots of eggs in the one basket). So, hasten slowly.

I would add to this list that India has 450 million millennials (those aged around 21 to 37), more than any other country and they will not live, learn, watch, listen, consume, travel, drive or behave like the previous generation.

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Why not start a conversation with Mark? Email  mark.morley@austrade.gov.au

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Is India really growing? Hyatt Hotels think so, adding 11 new hotels in 2020

Hyatt Hotels is bullish on India and plans to open 11 new hotels across India by the end of 2020.

Hyatt now has 32 hotels across 20 destinations under its eight brands in India – I recently stayed at Hyatt Regency in Chandigarh and it was an outstanding hotel – well located, good food and beverage service and everything went smoothly.

The hotels at Thrissur, Kochi, Jaipur, Dehradun, Trivandrum and Udaipur will be under the Hyatt Regency brand.

India is a very important market for Hyatt. It is one of the top three global growth markets for the company after the US and China and there is a huge scope of growth as the demand still exceeds the supply.

So, for Hyatt, in 2020 India is a growth story.

Anil Wadhwa could be reviving Australia-India trade relations – Lowy Institute – but health, agri and sport could be the key

So good to read on the Lowy Institute daily publication “The Interpreter” that India is doing something unusual in response to Australia’s Peter Varghese report – it is responding with an Australian Economic Strategy (AES). By the way, well done Lowy Institute for powering this and other national discussions.

The AES is led by former Ambassador and Secretary (East) in the Ministry of External Affairs in India, Anil Wadhwa (pictured).

Let’s not get bogged down on the failed Free Trade Agreement with India – let’s not wait forever, and, by the way, trade is progressing without it. We would prefer to have one, but we can make mutual gains without it.

The key is that the AES from India means for the first time we will have a blueprint for economic engagement with another nation – this is the view of Mukund Narayanamurthy and Danielle Rajendram writing for Lowy Institute. Well done to you both!

They point out that unlike India’s engagement with the US, Canada, UK, and Japan, our relative size means that it is highly unlikely that Australia will have a similar scale of engagement with India. So, they say the crux of the relationship, certainly from a materiality perspective for both sides, will lie in mining, energy, infrastructure, education, and tourism.

This where I differ. They see healthcare, agribusiness, and sport having relevance but “may not be as material in absolute dollar terms” – my view is that these could be the areas that unlock the “India code” and get Australia into the big game with India.