“Canada’s resources get India into our door,” says Rana Sarkar, entrepreneur and immediate past president of the Canada-India Business Council (C-IBC), “but Canadians’ resourcefulness will get us into India.”
Given India’s galloping growth and its thousands of new business leaders to reckon with each year, Canadians need to understand this ambitious market – whether or not they do business there. Sarkar sees many more firms capable of succeeding in India, if only they adapt their strategies and thinking. Here are some of his thoughts on how to engage with India.
What are some key political and economic trends to watch for in India?
In the prelude to an election year in India, the key question is whether a new government will have the same commitment to a reform agenda. Generally, we expect India to continue with more open foreign investment provisions, becoming more friendly and predictable in its rules. Greater trade liberalization is expected in the long run and we want to see more short-term indicators in this direction too.
Coming out of the global downturn, we expect India to take a few years to get back to its (former) eight to nine per cent annual growth. But there are lots of variances from region to region. We will continue to see a regional growth story rather than an ‘India Inc.’ story. Clever entrants to this market look at India at a granular level and develop regional strategies.
In new trade agreements, we may see completion of the Comprehensive Economic Partnership Agreement (CEPA) between Canada and India this year. If the EU and India’s trade agreement goes through, resolving issues around intellectual property, this would help ease the way for CEPA.
Which regions and sectors are ripe for Canadian trade or investment, and why?
Many Indian states continue to see strong growth, such as Gujarat, Maharashtra, those in the south and some in the east. In major cities, like Mumbai, Bangalore and New Delhi, economic growth is in the double digits. Canadians need to develop regional relations in these areas.
Over the next decade, India will be in a geo-strategic race to build up its resources and infrastructure through projects at home, such as the $90 billion Delhi-Mumbai Industrial Corridor, and strategic investments abroad – for example, in oil sands and iron ore. Frugal pricing and operating models will be key for Indian companies.
Agriculture is a staple of India’s economy, so there are opportunities in pulses and potash, in agricultural machinery and cleantech, such as technologies that use less water and create cleaner power. New technology is always a staple.
As the food value chain expands in India, there is more interest in processed and frozen foods. There is also demand for services in commercial real estate and retail development. Really, anything you do, you can probably find a market in India.
What key challenges face Canadian firms that want to do business in India?
Connections don’t yet come naturally between Canadian and Indian companies, because of their physical and psychological distance, and their different business speeds and focus. For example, the best Indian companies are operating at the breakneck pace we’ve come to see in fast-growing markets. Canadian companies, most of which are small and medium-sized (SMEs), aren’t on the same burning platform.
More Canadian firms are now active in India, but the business rationale is not strong enough yet, particularly for smaller companies – they get a better (immediate) return from proximate markets. Or they may not have the time and resources to pursue the necessary market entry strategies for India.
You also have to realize that many of India’s EU or U.S. partners have had global-minded leaders for a few decades now, while most Canadian businesses were focused on the U.S. – which was natural when the U.S. was growing. But now we find ourselves in a quandary, without the same global management experience as some other countries. This will change over time.
So, what can SMEs do to overcome these real or perceived barriers?
Awareness building is key. Smaller companies need to use our government resources much more – like the Trade Commissioner Service and EDC, and the C-IBC – to learn about the market, meet potential partners, and learn from peers who have already done it. Our governments could also create more digital platforms and forums to help accelerate our business connections.
SMEs should understand their niche, and which region in India is best for their products or services. Then they need to tackle two things: partnerships and patience. Talk to many people, including employees, who understand the market, and perhaps experiment with different partners.
And expect to adapt your strategy in India over time – don’t give up after six months because something didn’t work out as you expected. You will have to risk your time and resources; but it is more risky not to do anything in today’s environment.
Canadian SMEs are entrepreneurial and many could focus on using new technology and their intellectual property to help bridge the distance between Canada and India.
What else do potential trade partners to India need to know?
Bureaucracy and corruption are still two of the biggest barriers to trade in India, as in many large emerging markets. There is opacity in regulations and it takes a lot of time to resolve permits. That’s why you need a trusted local partner and the help of local councils to work around these policies. The good part is that India’s government system is open to checks and balances.
Even companies that are not yet ready to do business in India need to raise their knowledge quotient. Use the free online tools; meet Indian businesses at annual events like the National Capital India Forum in Ottawa or C-IBC’s Forum in India. Do you recognize any of India’s big business names – such as Tata, Reliance, Godrej? This kind of knowledge helps build the confidence to go farther.
Looking ahead, India has great markets of scale, but the real opportunity lies in working with Indian companies to reach third markets – in Asia, Africa, Latin America. India’s supply chains are working towards growth in those markets and Canada too needs to think beyond bilateral trade.
What are some other best practices you recommend to succeed in India?
As I indicated, it’s all about partnerships and patience. Success in India is not going to happen over a short time frame. And, of course, you run the risk of picking the wrong partner. You can look to meet partners through Canada’s Department of Foreign Affairs and International Trade, EDC’s matchmaking sessions or the C-IBC.
Business negotiations too can be different, depending on which type of partner you are dealing with. If it’s with the Tatas or one of India’s leading high-tech companies, for example, expect negotiations to be very professional — little different than with another Canadian or U.S. company.
With some of the younger, tech or service sector firms, things can be both professional and very fast. Be prepared for the different paces in various sectors.
And, remember, India has a benign view of Canada.They like the image of who we are and we have a similar legal system, but when it comes to business, Canada doesn’t rank high in their imagination yet – they are more focused on the big markets, like many parts of Asia, the U.S. and Europe. So Canadians have to brand themselves better in India.
How often do you visit India yourself, and what recent changes stand out for you?
I travel to India about four to five times a year. Each time I am there I can see new infrastructure slowly getting built – you can now drive 80 or 100 km per hour on the highways, impossible a decade ago. The Delhi airport is very good – it has won awards for an airport of its size.
The number and quality of malls keep growing – you can get anything you want. On a recent visit to one of the Mumbai malls, I looked at the produce in a grocery store. In the wine section, I found everything from new Indian wine labels to Grand Cru wines at more than $2,000 a bottle.
At the top end, there is a lot of money in India. But even at the lowest end, you get a sense that growth is having an impact – there are more than a billion cell phone users today in India. Now there is even a low-cost tablet (under $50) for India’s mass population, created by Canada’s Datawind.
Meet Rana Sarkar
Rana Sarkar recently completed a term as president of the Canada-India Business Council and remains on its board of directors. He has also served as co-chair of the Advisory Board for the Munk School of Global Affairs (University of Toronto). Rana was a co-founder of Rawlings Atlantic Limited, a cross-border advisory firm, and Content Partners, a media agency. Earlier, he was a consultant at Roland Berger Strategy Consultants, based in London, which he helped establish in New Delhi. Sarkar is a commentator on global business and politics, featured on the BBC, CBC, Financial Times and Globe & Mail.