India’s Next Wave of Economic Growth

India’s Next Wave of Economic Growth

The time is ripe for Canadian suppliers to go after some low-hanging fruit. The Global Agenda Council on India put out two impressive forecasts early this year. First, India is expected to overtake Japan as the world’s third largest economy, in real GDP, by 2025. Second, it should surpass China as the most populous nation by 2030.

These demographic shifts, propelled by a fast-rising urban and middle class and a booming business sector, are shaping India’s next wave of economic growth. As well, India’s bilateral trade with Asia and Africa have reached new heights in just over a decade — now surpassing $100 billion with China alone, compared to $1 billion in 2000.

“India opens doors to the biggest emerging markets, present and future ones,” says Vijendra Gairola, EDC’s chief representative for India.

Despite new challenges this year, such as slowing growth and rising inflation, India’s strengthening middle class continues to drive consumption. That’s not just a numbers game; it results from better education, workforce training and economic policies to take advantage of India’s demographics, says the International Monetary Fund. In particular, policies that encourage public and private-sector investment in business and social enterprise are having the most impact on Indian society.

By helping address India’s key investment priorities, Canadians too can reap economic benefits from the new India, as the following examples illustrate.

Energy Security

As the world’s fourth largest energy-consuming nation, India imports 80 per cent of its crude oil and 25 per cent of its natural gas. By 2030, up to a third of India’s energy demand will be met by renewable sources. The country wants to have more control over its future supply.

The time is ripe for Canadian firms in this sector to bring their renowned expertise and innovation into India’s energy mix, including creating partnerships with Indian firms to supply the related equipment and services.

“This is low-hanging fruit,” says Gairola. “Remember, India is not just looking to import oil and gas, but also equipment and services for exploration and development. So the opportunities along the entire supply chain are huge.”

Take India’s multi-industry giant Larsen and Toubro (L&T). EDC has a financing facility in place with L&T whereby EDC provides a loan to the multi-national with the understanding that L&T will be open to procuring from Canadian suppliers. At the January Petrotech show in New Delhi, EDC introduced L&T executives to several Canadian participants, among some 30 small and medium-sized Canadian suppliers to the energy industry. Two of these companies that EDC introduced are now doing business with L&T.

Trillion dollar opportunities

Furthermore, India currently has some 380 million people living in urban areas, but that number is expected to grown to 600 million by 2030, according to the deputy chair of India’s Planning Commission, which presents massive commercial opportunities for various urban services.

In fact, India’s 12th national plan, which runs to 2017, calls for a trillion-dollar investment in the country’s infrastructure. “Canadian companies are already participating in some of these projects; in hydroelectric structures, airport expansions, waste water treatment and much more,” says Gairola. For example, Toronto’s Formglas, working with L&T and other Indian partners, built the spectacular ceiling in Mumbai airport’s new Terminal 2.

“Other key areas of opportunity fuelled by the demographic shift include the automotive sector, medical technology and devices, and telecom,” adds Gairola In 2013, EDC worked with some 300 Canadian firms doing business in India.

See also … Learn how Toronto-based Formglas is making inroads in India

Categories Asia & Pacific, Infrastructure & Construction

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