Why is it important?

India is one of the fastest growing economies in the world, and this growth has seen the emergence of a very fertile export market.

Research organisation McKinseys forecasts that India is set to become the world’s third largest economy by 2025. As part of the BRIC (Brazil, Russia, India, China) community, India is already the second largest growing economy behind China.

What is fuelling much of this growth is the country’s leadership in IT and Business Process Outsourcing. India’s manufacturing base – an important component of the country’s economy ensuring cheap labour for exported goods – is growing at 10% per year. 

Opportunities for Australian companies continue to emerge in the niche technology products, mining technologies/products, resources, food and beverages, IT, financial, insurance, education, professional services, biotechnology, infrastructure, tourism, health and film sectors.

The benefits of exporting to India

• The Indian government has continued to slash custom duties dramatically. In 2005, the peak rate was reduced to 20% from 40% four years earlier.
• The Indian Government has continuously revamped its foreign direct investment policy to encourage foreign investment, which is now permitted in most sectors including services. The government is offering attractive incentives for developing, maintaining and operating infrastructure facilities; and significant tax exemptions have also been established.
• India has a current growth outlook that overshadows most Asian markets.

Opportunities

Virtually all sectors of India have become receptive to exports. Sectors of potential significance in India include:

• biotechnology & pharmaceuticals
• chemicals
• communications
• creative Industries & media
• IT
• manufacturing textiles
• education & training
• environment
• financial services
• fire, police & security
• healthcare & medical
• metallurgical processing
• mining
• ports & logistics
• power
• retailing
• franchising

When choosing a sector in which to produce, consider that between 2005 and 2006 the major Australian exports to India were (A$m):

• non-monetary gold                  2,774
• coal                                      2,541
• copper ores                              850
• wool                                        156

What to do

There are several characteristics that a business must take into account when exporting products and services to India. Throughout the country, there is a commonality in the legal business environment and a general language friendliness.

Things to remember

Family is held in high regard

Indian society has very strong belief systems based on the family and these beliefs extend into business. Up to 70% of businesses in India are controlled by family-owned organisations and within organisations it is very common for key positions to be held by family members.

The organisation structure is also based on family – for example, the CEO holds a paternal role and is looked up to and highly respected by all staff. Staff members themselves will have very close relationships and work together almost as a family. In developing a new business partnership, Indians see it as welcoming a new member to the family. It is important that you reciprocate such sentiment.

Personal relationships are important

When conducting business with an Indian business partner, you need to construct your professional relationship on a strong foundation of personal relationship. This may take time to develop and build on. You may need to travel to India and spend a few days getting to know your potential business partner. During your first meeting you may not speak of business and in subsequent meetings do not rush – always begin by discussing topics such as the weather or cricket before turning to business.

Food is integral to Indian business culture

Indians are very hospitable and want to be good hosts. It is customary for them to take you for meals and much of your business will be conducted over lunch or afternoon drinks.  These invitations are used to strengthen the personal relationship between you and your Indian business partner. They may even extend to an invitation to a meal at the family home and though Indian business people understand this is not part of Australian business culture, they will appreciate a similar treatment if and when they visit you in Australia.

Indian business partners can appear laid back

After you have established a business relationship, Indian business people can appear quite laid back. Many business people will forego a suit and tie for more casual attire and in the south, where it is hot, it is not uncommon for business people to adopt even less formal attire.

Indian time awareness is not as acute as yours may be and therefore business people may not always be punctual.

Despite this apparently casual approach, Indian business people try hard to please and as a result have difficulty saying no. If their response to your request is ‘I’ll try my best’ in reality this means no.  It is recommended that you obtain a ‘yes’ or ‘no’ answer, or ask them what they can commit to.

Everything in India is negotiable, from taxi fares to business. It is important to understand how Indians negotiate because they will be expecting it.

Top Tips for successfully exporting to India

• Don’t neglect due diligence
• Visit India to get a personal appreciation of its scale and diversity
• Find an untapped market and get in on the ground floor
• Be prepared to do the hard yards
• Never sell your product short
• Be willing to commit to the ‘long haul’
• Stay in touch with the rapidly evolving Indian business world
• Network with others doing business with India
• Meet the price points of the Indian market
• Find reliable partners
• Don’t underestimate cultural differences
• Avoid scheduling a meeting around major holidays
• Be flexible and be prepared to change strategies when needed
• Seek help from professional advisors

Know the challenges

Australian Business International Trade Services senior advisor in New Delhi, SP Joshi, warns businesses intent on trading with India: “You need to have a long term perspective and exercise patience as the gestation period for any business in India is long and Indian markets can often be slow to respond”. 

There is little doubt that exciting exporting opportunities exist in India, but with these opportunities come certain challenges for would-be exporters.

The operational environment in India is relatively complex and the administrative structure is bureaucratic, both of which can cause delays for foreign companies entering the market. Some successful businesses have partnered with an Indian company to help minimise the effect of these barriers, however care should be taken in finding the right partner.

Infrastructure in some regions of India needs modernisation. Research the infrastructure in the region you intend to enter to be sure it can support your business.

Remember: there is currently no bilateral trade agreement between Australia and India resulting in high tariffs for Australian businesses. As economic reform by the Indian Government continues, these tariffs may reduce.

As the size of the Indian market grows, so too does its competitiveness. Businesses should be prepared to enter a competitive market with many local businesses, especially in the manufacturing sector. A thorough understanding of the market and cultural traditions is required for success.

Where to go for help

Do it yourself

Australian Business International Trade Services: for help with exporting to India as a new or existing exporter

Export Guidance: TradeStart offers a package of free services designed to assist you in developing your business overseas and in making your first export sale.

The New Exporter Development Program (NEDP) offers:

• Advice and information on export development
• Coaching
• A review of your export capability and an evaluation of your export readiness
• Identification of suitable target markets
• Guidance with international marketing strategies and business plans

Once a market has been selected the program will offer:

• Briefings on local practice and business culture
• Appointments with appropriate business contacts
• Help with participation at international exhibitions and trade fairs
• Assistance on the ground in foreign markets.

Online Business Directory

NSW Business Chamber Online Business Directory connects you to thousands of businesses across NSW. With exclusive access to special offers and great deals, you will find a service provider, business partner or supplier who can meet your needs. Listing on the Online Business Directory is open exclusively to NSW Business Chamber members.

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