There is a lot of buzz around India again as everyone analyses Modi’s first year as Prime Minister and the growth figures look healthier than for most other markets. But, there are, indeed, a lot of other markets – many that are easier to do business in – so what are the big reasons for which any foreign company should go to India? This question is usually also asked along with others like “Why would I go to India instead of China?” and “I have to prioritise because my budget is tight, why should I choose India first?”
At the recent annual India Day conference in Cologne, Germany this question came up a lot – and there were three very clear reasons that speakers talked about:
India is culturally closer to Europe and the US than many other high-growth markets
Most other markets with high growth rates are further East and seem harder to connect with, and many speakers talked about how much easier it is to understand the ways of India than the ways of South-East Asian countries. It’s true that there are many very different aspects about India: the noise and chaos and love of colour of the subcontinent often overwhelm visitors from Europe, whereas the very different concepts regarding time management and planning can be downright frustrating. During the session on cross-cultural communication between India and Europe, Sujata Bannerjee highlighted a number of key areas where communication can break down across cultures; and while the delightfully ambiguous Indianism “Kindly do the needful” can be really confusing to many foreigners. Other places where conversation can go wrong seems to be unclear communication between any two business parties from anywhere in the world – rather than specific to India. In general, it is a good idea to take time to clarify things when doing business with India.
It really is getting easier to do business in India – and more profitable too
With growth forecast at 8%, the Indian markets sound more attractive than most other territories, and a common theme amongst speakers was the impression that Modi’s government is making genuine improvements to the ease of doing business in India and more sectors have been opened to foreign direct investment. Raveesh Kumar, the Consul General of India in Frankfurt, talked passionately of the government’s commitment to improving India’s standing in the international ranking from the current position of 142 (out of 189) to under 100 in the next poll, and within the top 50 in the next few years. It’s an ambitious target, but a very clear vision and at least some of the steps are being taken to make this achievable. Deutsche Bank India CEO, Ravneet Gill set the first 375 days of Modi government in perspective to hands-on initiatives taken on the ground to improve the ease of doing business in India. One advice he shared with foreign investors was to: “take your time to plan your India business – but don’t take too much time till all obstacles are cleared.” Pioneers turn these obstacles into real business opportunities.
Oliver Wack of the VDMA “poured a little water into the wine” by tempering some of the most optimistic predictions of Mohan Murti, Managing Director Europe of Reliance Industries Limited, who passionately spoke of the rise of the middle class and the resulting shift in expectations and demand for good governance and real economic growth. Mr Wack spoke of the high land prices that make it difficult for firms to achieve a return of investment, the complications for companies importing and the need to build skills quickly to fill the demands in both manufacturing and servicing products. Another theme at the India Day was that India is in fact looking comparably better than China, which is facing some serious slow-down, while the other BRICs – Brazil and Russia – are not taking off as predicted back in 2001.
When you succeed in India, you are ready for other emerging markets
This was a strong message in the presentation of Rolf Jenny, Senior Vice President Ammann Group, who spoke of the difference between being a global player and being internationally active. For Mr Jenny, being internationally active meant finding new markets for your existing products at comparable prices – a strategy that he felt would have failed Ammann in the price-sensitive Indian market. Instead Ammann entered India with the intention to modify their products and prices so as to be competitive and successful in India – and they plan to apply these lessons to Africa.