Efficiency and quality are the strengths of foreign players in India
In the coming years, Klaus sees excellent opportunities for high-tech companies developing medical equipment, for example, or products in the renewable energy sector. “In India, there is not only a need for these kinds of products, but the country itself also cannot yet produce them. So it’s a gap in the market. But this should not deter other companies that sell products that India already produces. There’s plenty of possibilities for them to succeed, too.”
And that success, according to Klaus, lies in the fact that most foreign products are more efficient than the versions produced in India. “An example. The tractor industry in India is one of the world’s largest, but there is still a world to be won. Most tractors produced in India have about 40 horsepower, so they’re not that strong. On the other hand, the ploughs needed require a much stronger engine—a mismatch, where there is a great opportunity for an international producer. The example proves that if you know the figures of the market and know what they mean for you as a company, you can succeed in India”.
To sell in India, you need to go online
The same applies to the thriving Indian e-commerce sector. Predicted profits are high, and the corona crisis seems to be accelerating the industry. “Five years ago, everybody paid cash at the door. Now we see that rapidly shifting to online banking. The number of people with an internet connection continues to increase, and COVID-19 is encouraging people to make payments online. But you have to look at these figures in the right perspective because where is this growth? Mostly in the countryside. Then you shouldn’t have high expectations, because your high-end product will never reach those customers”.
For city dwellers, an e-commerce platform is essential. “Indians like to go to the mall in their spare time, but they don’t buy anything in those shops. They mainly want to experience the product there and then buy it online at home on an e-commerce platform, where they can keep the different options side by side. A successful e-commerce platform does not function in India without physical shops and vice versa.
The Indian government also benefits from more international investors.
Finally, Klaus expects that legislation will change a lot in the coming years and will facilitate sales for global companies in India. “The Indian government is still facing a significant challenge: creating jobs for the country’s large group of unemployed young people. For this, it needs foreign investors. India has been very protectionist over the last decade, and the government is keeping the market tight to protect local entrepreneurs from international takeovers.
Because of the corona crisis, we see the interest of international companies in India growing. They want to spread their opportunities, and next to China, India is the smartest move. I, therefore, expect that the Indian government will review the rules for exports to India and relax the strict labour laws somewhat. That will bring not only us, the international entrepreneurs but also India itself many new opportunities”.
Our partner IndiaConnected interviewed Klaus Maier. We translated the article from Dutch.