Deloitte finds US firms investing more in India than in China

INTO INDIA has long called for more western investment into the growth story that is modern India.

Now, according to a survey conducted by multinational professional services network, Deloitte, a large proportion of international business leaders remain confident in India’s short- and long-term prospects and are readying plans to make additional and first-time investments in the country.

The India FDI Opportunity survey of September 2021, which questioned 1,200 business leaders of multinational corporations in the U.S., U.K., Japan, and Singapore, found that India remains an attractive destination for investments, scoring highly for its skilled workforce and prospects for economic growth.

  • 44 percent of the 1,200 business leaders surveyed are planning additional or first-time investments in India
  • Nearly two-thirds of first-time investments will be made within the next two years
  • Business perceptions of India are better in the U.S. and UK compared to Singapore and Japan
  • Recent reforms by the Indian government to improve ease of doing business are popular, but awareness of policy improvements remains low

It also said that more business leaders, especially in Japan, are making investments in India for access to the domestic market rather than using India as a springboard for exports.

“India has the strongest positive perception in the U.S. when compared to markets such as China, Brazil, Mexico, and Vietnam. The U.S. and U.K. business leaders expressed greater confidence in India’s stability,” it said.

Investment is always indirectly but powerfully linked with market entry and trade outcomes. INTO INDIA applauds the enthusiasm of the US for India and hope this is also taken up in Australia – where investment funds are high – fourth largest wealth management market in the world.

New “Business Champions” group to provide much needed top level links between India and Australia

Indian Commerce Minister Mr Piyush Goyal

A new “Business Champions” group will lead top level business engagement between India and Australia – and it was launched last week in India.

INTO INDIA welcomes this move to bring the “top end” of both countries together. Business engagement at this level has not worked well in the past. Most of the business councils and chambers have provided lower level SME engagement – important as this is.

“Supply chains” is behind the enthusiasm of India for the new Australia-India Business Champions Group’s role. Mr. Piyush Goyal, Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution, Textiles, Government of India said this when addressing the Inaugural Meeting of the Australia India Business Champions.

The Minister is co-chairing the group with Australian Trade Minister, the Hon Dan Tehan.

“The Australia-India Business Champions Group’s key aim is to liberalise and deepen bilateral trade between both the nations and pave the way for collaborative economic growth.” stated Mr. Dan Tehan MP, Minister of Trade, Tourism and Investment, Government of Australia.

Major business organisations leading the group are the Confederation of Indian Industry (CII) and the Business Council of Australia (BCA). Both represent almost all the major business corporations in both countries.

Mr. Chandrajit Banerjee, Director General, CII, pointed to areas such as mining, education, defence, space and emerging sectors which the group can take forward.

Ms. Jennifer Westacott AO, CEO, BCA, highlighted that we must strengthen and reform regional and global institutions, so they deliver for our citizens.  She said the Business Champions would engage directly with the top tier of Australian and Indian Governments on matters critical to business. 

Other panelists at the meeting included H E Mr. Manpreet Vohra, High Commissioner of India to Australia, H E Mr. Barry O’ Farrell AO, High Commissioner of Australia to India, Dr. Anish Shah, MD & CEO, Mahindra & Mahindra Ltd, Ms. Julie Shuttleworth, CEO, FFI, Mr. Rakesh Bharti Mittal, Vice Chairman, Bharti Enterprises, Mr. Mike Cannon-Brookes, Co-Founder and Co-CEO, Atlassian, Mr. Nitish Jain, President, SP Jain School of Global Management, Ms. Verena Lim, Asia CEO, Macquarie Group, Mr. Girish Ramachandran, President, Tata Consultancy Services Asia Pacific, Professor Duncan Maskell, Vice Chancellor, University of Melbourne.

Tech innovation is not just about tech – it needs a basis of deep understanding of your business

Sundaram Business Services has a deep understanding of Australian business.

Indian firms like Sundaram Business Services in Chennai and Australia should be on your radar for tech innovation – in addition to their tech innovation capabilities, SBS has been active in Australian business for many years and knows the business environment very well.

A KPMG survey ranks India third among countries that show the most promise for tech innovation.

Tech innovation is most successful when the supplier has a deep understanding of your business. This is like a mantra for the SBS group – building innovation on the sound basis of business understanding.

There has to be cross cultural understanding and good communication.

Whether it is Artificial Intelligence, Machine Learning or other innovation, success is gained when the supplier has the capacity to how your business works and what your needs are in the market.

More than 800 industry leaders were surveyed for the report which said 39 per cent believe global ‘hub’ cities such as London, Singapore, and Tel Aviv will continue to play a vital role, enabling talent to coalesce and collaborate in communities with a solid digital infrastructure.

India a prime target for Aussie exports and investment – Austrade

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.

Can trade steer the Indo-Pacific towards recovery?

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.

Or maybe pigs might fly?

What do you think is ahead?

UK and India pragmatic negotiators achieve a trade and investment deal

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.

Flipkart and the amazing growth of Indian startups

Year 2007 saw a landmark event in the history of Indian enterprise – one of many events that mean you should change your strategy for India market entry.

In October 2007, two young Amazon executives – Sachin and Binny Bansal (pictured above) set up an e-commerce website they called Flipkart, India’s most iconic startup story till date.

Flipkart was valued at US$ 21 billion when it was eventually acquired by Walmart in 2018.

Flipkart

The success of the Bansals also inspired many a startup journey in this period. Flipkart was obviously not an isolated event.

More top-notch professionals started sensing lucrative opportunities, leading by example and setting up their own ventures in the 1990’s.  Sanjeev Bikhchandani, Founder & Executive Vice Chairman, Info Edge India Ltd (of Naukri.com fame), and VSS Mani, founder of Justdial, were some notable examples.

Deep Kalra, (pictured below) Founder, Chairman and Group CEO, MakeMyTrip.com, got acquainted with the potential of the internet as an avenue for distribution while working at GE Capital and decided to set up the popular travel portal.

makemytrip

The most significant game changer is the manner in which mobile phones and more specifically smartphones have penetrated the Indian market. The direct implication of this has been that a large majority of Indians have, or are about to access the internet for the first time on their mobile phones.

A report by Kantar-IMRB in March 2019 estimated India’s internet users at 566 million, projected to reach 627 million by the end of the year.

millennialshopping

Around 97% of India’s netizens use mobile as one of the mediums.

This has created new avenues of growth and spurred startups like InMobi, Ola, Zomato, Practo, UrbanClap, BigBasket, Pepperfry and more.

These startups have been fueled by several other factors – increasing affinity towards entrepreneurship, potential of the Indian market, globalization and the resulting interface with other ecosystems (particularly Silicon Valley), rising confidence towards startup funding and facilitating policies.

According to the NASSCOMZinnov Startup Report 2019, the ecosystem added around 1,300 startups in 2019, taking the total to 8,900 tech startups.

India ranks third both in the number of startups and unicorns. The aggregation space has definitely been the beehive for startup innovation. The top ten unicorns of India as on date include 6 aggregators, two fintech firms and one edtech firm.

Investments by VCs have grown by four times during the period, and number of deals increased from 130 in 2013 to 270 in 2017.

India needs more stories like Delhivery (logistics), Vortex (solar ATMs) and Ather Energy (electric mobility).

vortex

A welcome trend is that of well-established corporates engaging with startups to bring greater innovative capabilities in their own DNA. This could be pivotal for India as it seeks to move ahead of the curve in areas like AI and machine learning.

Meantime China is part of this Indian story.

Chinese tech giants Alibaba and Tencent, early-stage investors Hillhouse Capital and CDH Investments, large corporations such as Meituan and Fosun, and smartphone makers Xiaomi and Oppo — a little over 100 Chinese firms have made investments in Indian startups.

Chinese VCs have invested over USD8 billion and hold large stakes in a number of Indian startups, including unicorns and “soonicorns”.

Watch this space…

Thanks to the Trade Promotion Council of India for information for this blog.

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.

MikeMoignard2

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)

billcole2

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?

asiamap8circle

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.

ModiMorrisonSmile2

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?