Do business with India Now?
Is it time to do business with India – is it ever time? A recent reprint of a 1920’s article in The New York Times says it all.
Close to a century after this article the premise remains the same. The market is too big to ignore. Undoubtedly, the hows and whats have changed over the passage of time, but if American companies subscribe to the long term play the returns are undeniable.
India and USA have endured a half century of the ‘blow hot blow cold’ syndrome, mainly as a result of changing politics and alignments. At least since the 1960’s, America has experienced the diaspora – well educated, hard working folk willing to contribute, while themselves, gaining from the freedom afforded by our great country. Doctors, engineers, and educators from India have permeated all walks of our society to our benefit. Initially they came here to experience the ‘good life’. Over a few decades, they came to pursue scientific and other dreams as well. This was, however, a one-way street.
The IT explosion brought numbers of young talented engineers who temporarily migrated. Upon their return to India, they wanted to retain their American experience. They also allowed vast sums of hard currency to come to India creating a very favorable balance of trade.
The simultaneous liberalization and opening up of the economy in India allowed the free availability of what used to be called ‘imported luxury goods’. As free trade became the norm more than the exception, economic policies facilitated imports, production and exports to create 7- 10% growth year upon year with goods reaching lower and lower levels of the economic population. By and large, however, only the middle class has partaken of this. Keeping in mind that the entire population of the USA is about 1/3 and that the Indian middle class alone may be as large as the entire US population, the potential is enormous.
India is the world’s largest democracy. It is a good democracy, but the idiom ‘too many cooks spoil the broth’ is apt. While democracy and democratic values are here to stay, the Government is not. Mostly built of coalitions, governments have to pander to various elements lust to stay in power. Unfortunately that does not translate into making tough choices and decisions. A consequence is the lack of infrastructure, electricity, roads, transportation, healthcare, and education. India is where it is economically in spite of this which is a tribute to the dogged desire of the population to improve themselves in more ways than one.
The coming together of needs, the desire to fulfill them and the wherewithal to do so creates huge opportunities for American companies. We have the technology, quality standards research and innovation that puts us in a unique position to engage with India today. The playing field has changed however. Given that manufacturing, by and large, seeks the lowest cost, competing on price alone will not cause success. Aimed at the long term, success will be created upon innovativeness and engaging in bi-lateral trade. Creating a win-win both up and down the value chain with facilities or long-term partners in India would cause a long-term and self-sustaining effect. If India grows at its current rate for the next 50 years it may achieve the quality of life that Americans take for granted.
In looking for products or services that make sense for American companies, one only has to look for the ‘gap’. Sometimes economic or governmental policies cause the gap either because of protectionist or social motivations. As an example, life insurance was very restricted for a long time to protect the government owned Life Insurance Corporation. In the recent past, easing of norms have allowed insurance companies from the world over to open offices in partnership with domestic companies and access a huge population base
Healthcare in all forms is a huge opportunity – hospitals, clinics, instruments, diagnostic equipment to name a few. We see plenty of doctors from India here today. Some are investing in healthcare ventures back home, bringing their expertise as well as their money. Reputed hospital chains in the US are tying up with partners in India which in turn is spurring the ‘medical tourism’ industry. The ‘gap’ still remains immense, creating huge opportunities for investment. Similarly, health insurance, as always, remains both a need and a ripe area for American companies, along with the downstream distribution and fulfillment mechanisms.
Almost anything to do with energy and power has a huge demand the world over, and most certainly in India. Solar, wind and utilization of non fossil fuels has enormous potential. Among fossil fuels too, coal and energy from coal will have a long future, given the enormous reserves. Kentucky, in particular, can greatly benefit. Mining and processing technologies, as well as raw material have a big market. Electrical generation by any means is essential to sustaining growth. This need has prompted the debated ‘nuclear deal’ between the two countries. If it goes through, once again, opportunities abound.
The need for sustainable infrastructure is enormous as well as critical in India today. Roads, airports, sea ports, transportation are all seeing big investments from within and without. Worldwide conglomerates are zeroing in to take advantage of the ‘gap’. All services from design to project management are in great demand in addition to equipment, parts, maintenance and technologies.
Opportunities for sourcing from India have now moved from the traditional handicrafts, leathers and textiles to high-tech engineering items, movie production and pharmaceuticals, to name a few. The more sustainable opportunity, however, lies in using India as a springboard to other markets. Manufacturing facilities set up in India will not only return cheaper product cost and access to a huge market in India, but will also allow re-export of products back to the USA as well as to SE Asia, the Middle East and Europe. American firms will be well-advised to think along these lines.
All in all, India is a country that in the span of a few decades has produced firms that own the largest steel plants -Jaguar and Land Rover who produce the cheapest car in the world. India is a meaningful home to over a billion people. The time to engage and do business with India is now!
