India focus

How can Australian SMEs make inroads into India? We speak with Austrade’s Senior Trade Commissioner, Peter Linford in New Delhi.

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For businesses wishing to secure a presence in India, there are various options to explore. Austrade’s Senior Trade Commissioner, Peter Linford – who has lived and worked in New Delhi for four years – gives an overview.

India‘s state of play

Just how big is the market? Check out the following pointers…

  • India is the seventh largest country by geographical area and the second most populous country globally, with more than 1.2 billion people.
  • Its economy is the world’s 10th largest by nominal GDP and 4th largest by purchasing power parity.
  • Australian two-way goods and services trade with India totalled $21 billion in 2010-11.
  • The longer term trajectory is positive, with trade having doubled in the five years since 2005-06 to 2010-11 ($10.4 billion to $21 billion).
  • India is Australia’s eighth largest bilateral goods and services trading partner and Australia’s fourth largest goods export market.

A rise in the middle class

There’s a rapid increase in India’s middle class, currently sitting at 200 million-plus. These are people who previously had not bought a car, washing machine, television, education, health insurance, holidays. And now they’re doing those things.

Any Australian business considering an international market, should have a strategy for India. That strategy could be, ‘Indians not for us’, but you should explore one. Don’t try to take on the whole country, though. There are 28 states in India, so pick one or up to three states to focus on. Don’t come to India just because it’s big.

Austrade, which has 11 offices in India, can help assess an Australian organisation’s export readiness, do initial market assessments and business matching. Austrade works in two ways: Australian businesses come to us with something they want to offer. We qualify the suitability and capability, and then try to find buyers for those products and services. Equally, we seek to identify opportunities in the market, which are then qualified and where people are looking to source services, we refer them back to Australian businesses that are interested and capable to meet those requirements.

It’s normal for international companies to first come to New Delhi, Mumbai or Chennai. But we have offices in other places including Ahmedabad, Jaipur,Chandigarh, Pune and Kochi.

Before booking a business trip, do due diligence and credit check organisations you’re interested in working with in India(using Austrade, credit consultancies such as Dun & Bradstreet and Chambers of Commerce). Ensure you understand and have in place secure payment and supply terms before you supply, and ensure after care is covered in contracts. It’s more difficult to get out of trouble than to get into trouble.

Awareness of scale is crucial, too. Mumbai, for instance, has 25 million people so you need to know your business capability. Some Australian businesses tend to overpromise and can’t always deliver. It’s important to have realistic expectations of what you can provide, with solid margins.

Australian SME opportunities in India – Services:

Education, IT, sport, legal, entertainment and tourism sectors represent strong potential for Australian SMEs.

Education: There’s a big push now in commercialisation of education services in India and the provision of vocational “work ready” skills. The Indian government has said that they need to upskill 500 million people by the end of 2012.

IT: International companies are using Indian back office services for their IT support and Indian IT companies, such as Apsom Infotex, are establishing offices in Australia. They do that not only to win business in Australia, but they see it as very important to get ‘mixed minds’ – both Indians and Australians working together to enhance business creativity and problem solving.

Sport: In India, cricket, Formula One car racing, horse racing and hockey provide strong prospects for Australians with experience in sports coaching, management, promotion and psychology.

Legal: Australian companies that want to do business in India need legal advice, and Indian companies that want to do business in Australia need legal advice. Australian legal firms can partner with Indian legal firms to do business in India.

Australian SME opportunities in India – Products:

Strong opportunities in the product sector exist in coal, gold, copper, machinery and green energy. Opportunities also exist in food and beverage as increasing tourism in India, and the growth of hotels, means Australia could supply to the gourmet food sector.

Infrastructure development is also a thriving segment – think building, construction, design consultancy services and engineering.

Another booming area is advanced manufacturing technology – aviation, health and medical, and IT. Also, after-market services are in big demand and many Australians are providing the after-market and after-care services for India’s automotive industry – and they’re doing good business.

NAB opens in India

Earlier this year, NAB opened its first Indian branch in Mumbai. NAB’s presence in India will help customers looking for business opportunities in the region and will support existing Business Banking customers operating in, or trading with, India. NAB’s Mumbai team can help you explore custom-made business opportunities in India by combining local, Australian and global banking experience.

Find out more about NAB’s India branch.

Research India business opportunities at Austrade and the Department of Foreign Affairs and Trade.