India Improves Investor Appeal

You may want to take a fresh look at business opportunities and investments in India, if a new World Bank report is to be believed.

In November 2001, Goldman Sachs published a landmark paper where they identified India, along with Brazil, China, and Russia as the four “BRIC” economies that the world needed to watch. Many companies and investors began investing in these countries.

In 2002, the World Bank launched a project to rank the Ease of Doing Business in countries across the world. For well over a decade, more than 135 countries ranked better than the world’s largest democracy — India continued to be stymied by red tape, limited infrastructure and an army of bureaucrats who seemed to revel in creating complex, conflicting, and even arbitrary rules. India ranked worst among the BRICs and many companies mitigated their enthusiasm for India as a result. Persistent players such as Abbott, Accenture, Boeing, Coca Cola, Cummins, Deloitte, Exxon Mobil, GE, Hewlett Packard, Mylan, Oracle, PepsiCo, Vodafone and Western Union thrived despite some setbacks.

In our consulting, we always advised clients to look at specific Indian states, rather than the entire subcontinent when locating sales offices, subsidiaries, or manufacturing plants; some states welcomed businesses while others did not care. For the first time in India’s 67-year-old democracy, the leader (Chief Minister) of a state was elected as Prime Minister in 2014. One of Prime Minister Narendra Modi’s first goals was to improve India’s business environment.

The latest report from the World Bank, “Doing Business 2018“, published this week, shows that India made important reforms in six of the eight areas that the Bank measures for its report. Small economies can pass reforms relatively easily and it is important to note that Nigeria and India are the only large economies to make significant improvements as shown in this table:

Table

To global companies and investors, it is even more important to note that India jumped by 30 ranks overall to go from 130 to 100 and leapfrogged over Brazil, which is stagnant at 125. Such an improvement in just three years since the new government took over is quite remarkable. The juggernaut of the BRIC countries is China and it is currently ranked at 78. If Modi’s government can keep up the momentum, it is not inconceivable that India might vault ahead of its autocratic neighbor in three to five years.

We often help clients to start a new company or office in India and that process has improved considerably. Getting credit and obtaining construction permits for a business has also become easier according to the World Bank’s research. Minority foreign investors in India felt vulnerable in the past but new procedures protect them a bit better while enforcing contracts might also become easier once the new National Judicial Data Grid starts paying results. Paying taxes electronically is becoming the norm and import of goods is being streamlined with more and more online functions for customs clearance.

Does this mean that India is an easy place to do business now? Not at all. The World Bank only measures a few criteria. Foreign companies have many challenges in India: the weather, the pollution, the current government’s tendency to place non- tariff barriers, even occasional price controls, and most importantly the illusion that they can readily understand India, just because they can understand their Indian-American physician.

Skeptics may ask, will progress continue? What if Modi’s party loses the next general election, scheduled in 2019? One major initiative that cannot be rolled back is that the states of India were encouraged to compete with each other for foreign and domestic investment. State leaders in Andhra Pradesh, Telangana, Maharashtra and at least seven other provinces and territories have led the charge in improving their own attractiveness. This genie cannot be put back in the bottle and we anticipate that up to 20 of India’s 29 states will join the race shortly.

If you have questions about how your company can do better in India or if you want to take a fresh look, Contact Us or drop me a note here on Linked In.

November 2, 2017   No Comments

Dassault Brings Largest Defense FDI to India

Dassault will emerge as the single largest FDI investor in the defense sector. The cumulative FDI in the defense sector in India till date is $6 million,” Rajesh K. Dhingra, president, Reliance Defense & Aerospace, said at an interview with the Economic Times.

France’s Dassault will manufacture a significant part of Rafale aircraft in India. The first tranche of $29 million  intended for the manufacture of aircraft components for global markets is likely to come into the Dassault-Reliance Aerospace Limited joint venture by July. The investment is part of Dassault’s obligations on Make in India commitments against the $9 billion Rafale fighter jet deal.

Rafale Jet

The JV will create infrastructure at the Mihan facility in the state of Maharashtra. The plan is to set up a 100-acre facility that will integrate a supply chain for the Rafale fighter jet in India. The ground breaking ceremony is planned for the end of July.

June 9, 2017   No Comments

‘Make in India’ Attracts Business from Italy

On a three-day business mission to New Delhi, India in April, a delegation led by Italy’s deputy minister for economic development, Ivan Scalfarotto, aimed to strengthen bilateral ties and make the most of the plentiful business opportunities that India has on offer.

The platform, promoted by the Italian Ministries of Economic Development and Foreign Affairs, in partnership with India’s trade bodies FICCI and CII, saw participation by various state representatives, along with 140 big enterprises and SMEs, across varied sectors, from both India and Italy. 80 companies, out of the total industry representation in the forum, in areas such as automotive, healthcare, defense, aviation and railways were from Italy exploring growth opportunities in India.

Ivan Scalfarotto at the India-Italy Business Forum

Ivan Scalfarotto at the Italia-India Meet

Speaking at the event, Scalfarotto said that more than 60 Italian automotive companies were working with 80 manufacturing facilities in India — most of them located in the Maharashtra belt — “and yet keeping an eye on the immense future potential,” reports Autocar Professional.

 

May 12, 2017   No Comments

Smartphones Change Lives of Rural Women in India

28-year old Manisha Badekar runs a design and tailoring shop in Supane, a village in India’s western state of Maharashtra. Though she is well-versed in basic tailoring, Badekar has never been to a design school. Yet, her advanced design learning has been via a smartphone, which she uses to look up designs and re-create them. She is the first both in her family, and among the women in Supane from her generation, to use a smartphone and access the Internet. Badekar also keeps in touch with friends on WhatsApp which she accesses on a 4G connection. She says, “I think everybody should learn how to use the Internet. ”

Another 28-year old from the same region, Monali Shinde, spouse of a soldier in the Indian Army, is excited about the smartphone. Though she doesn’t own one herself, she uses one belonging to Asha Kamle, a well-respected woman in the village who has taught many women how to use smartphones. Shinde is an Arts graduate and a teacher by profession. Interested in design, she learned how to cut fabrics, and paper, and also how to fashion mehendi (henna) designs, and clothes designs. “I used to be so excited, every evening, when I had time for a half hour or an hour, I used to come sit with Tai (Kamle is respectfully referred to as ‘older sister’) and learn,” Shinde says. Aside from learning about possible home businesses, she wants to use the Internet to teach her children. “It is a really a useful way for them to learn, with pictures, and videos,” she says.

Nubia Smartphone

In the same village of Supane, is 33-year old Pallavi Kamble, whose husband is a daily wage earner. She has discovered recipes on the smartphone which she tries out at home to entice her children to eat their vegetables (which they hate)! She doesn’t own a smartphone buts looks forward to a time when smartphones will be available in a range of $38 – $45 so that she can buy one, reports The Hindu.

March 20, 2017   No Comments

Saab Commences Transfer of Missile Technology to India

Sweden‘s Saab Group and India’s Kalyani Strategic Systems Ltd., gear up to win the Indian Army’s $2 billion surface-to-air missile contract. Even though the joint venture between the two companies has not yet been finalized, the transfer of technology has begun for the air defense missile system called the BAMSE SRSAM, an all-weather operational Automatic Command-to-Line-of-Sight missile system with unjammable missile guidance. It is designed for flexible usage both for stand-alone operations as well as in a network with other sensors and weapon systems.

Under this program, 52 Ashok Leyland 8/8 Super Stallion trucks will be fitted with Saab’s Eagle radar that will be used to track enemy radars, while two more such trucks will be mounted with Saab’s Giraffe radar, which has the capability to target and shoot, reports BusinessLine. The production line will likely be set up in Satara, in the western state of Maharashtra.

Saab SRSAM Systems

Bo Almqvist, who heads Saab’s air defense systems, told BusinessLine, We have a long-term commitment based on Make in India for maintenance and research and development of future generations.”

November 6, 2016   No Comments