For Canadian businesses and investors alike, India represents a land of opportunity. It’s big, it’s developing, and it’s making all the right political moves to support that development.
Indian Prime Minister Narendra Modi is the champion of that movement, and his visit to Canada this week signifies a major step forward in Indo-Canadian relations.
“Modi’s visit will raise the profile of India in Canada, and Canada in India, which is very important to our trade relationship,” says Richard Bale, Consul General of Canada in Mumbai. “In the eyes of Indian companies, Canada is less visible than it should be. There is a tendency for people in India not to think of Canada as a significant partner, and not to know about our strengths beyond commodities. So this visit will serve to underline our capabilities, and help promote Canada as a more top-of-mind trading partner for India.”
“Building awareness like this is imperative because the economic fit is there – what India needs to continue developing its economy and infrastructure, Canada offers – it’s just a matter of building that relationship so connections can be made easier,” added Bale.
The circumstances of Modi’s visit certainly invite optimism. For one, he is choosing to visit Canada in the first year of his term as Prime Minister; significant given the degree of global pressure he would undoubtedly be under, as leader of the global economy’s rising star. And this is not a symbolic stop-over; Modi is taking the time to visit three Canadian cities and meeting personally with Canadian business leaders – all positive indicators that India is serious about building their relationship with Canada.
Modi visit: Why Canadian businesses should be excited
“Modi has a large agenda that varies from trying to establish more smart cities, to rail and transit, to telecommunications,” says Gary Comerford, President and CEO of the Canada-India Business Council. “He has a very broad perspective on what is needed in India, and I think a lot of the technology and intellectual horsepower to get there is available in Canada, so we need to ensure we take part in that development.”
“Also consider the Indian consumer. When you look at the emerging families with disposable income, capable of purchasing a number of consumer products, 15 years ago that was a much smaller percentage of the population. Today there are several hundred million people in India that are quite capable of buying consumer goods, and that number continues to grow along with the economy – that is good news for Canada,” added Comerford.
While it might have been more difficult in the past for businesses to access those consumers, Modi is pushing forward a number of initiatives that will simplify the process of doing business in his country. He is streamlining the corporate tax system, initiating land reforms that, once passed, will make it easier for foreign companies to buy property, and he is introducing a number of multi-billion dollar infrastructure plans to improve power generation and transportation within the country.
There are also free trade and investment agreements currently in the works.
How can Canadian companies succeed in India?
Build relationships and be patient.
“Business in India is very much relationship-based, there has to be trust established before transactions can take place,” says Nelson. “And these relationships can’t be email- or phone-based like they sometimes are in North America. In India, they like to meet you in person, speak with you directly, and they want to see you regularly throughout your business relationship, not just at the beginning. You’ll need to be present and show commitment.”
For those companies that are willing to adapt, there is considerable upside. Nelson offers McCain Foods as an example: They established themselves in India in 1998, but were not profitable for their first three-to-four years in market. Today, the Canadian company owns approximately 75 per cent of the Indian market share for French fries, and in a country of nearly 1.3 billion people, that amounts to a lot of fries.
Where companies doing business in India can get help
EDC has now been in India for 10 years cultivating relationships with some of the largest Indian corporations, such as Reliance Industries, the Tata Group, Aditya Birla, Larsen and Toubro, and Mahindra & Mahindra Limited, to create opportunities for Canadian companies. In that time, the volume of business that EDC has facilitated in India, including Canadian direct investment, has increased steadily from $600 million in 2004 to just under $2 billion in 2014.
With these supports in place, along with the opportunities and optimism being generated by Modi’s broad reforms, the impetus to invest and expand business in India is strong.
But Comerford would caution that nothing in India happens overnight. Companies and investors alike should expect to walk before they can run. His advice:
“You need to take your time, understand exactly the relationships you are getting into, spend the time to learn about your partner and get to know them. If you do that and you establish relationships that can be long-term in nature, it solidifies any kind of business link that you are going to have and that is very important. So you have to have a high IQ to do business in India, but it is equally important to have a high EQ.”