India … it’s massive, it’s diverse, and it takes a strategic approach

At a glance, statistics rightly portray India’s market opportunity is massive. On closer inspection, however, experts caution that India is, in fact, many markets – each with unique upside and challenges – with success dependent on a firm’s ability to navigate India’s vast complexity. If money talks, VJ Gairola, EDC Chief Representative in Mumbai, says Indian banknotes, with 17 languages printed on them, speak volumes.

“This is a country of more than 1.2 billion people, 2,000 ethnic groups, 256 spoken dialects and six major religions.” Sara Wilshaw, Canada’s Minister (Commercial) and Senior Trade Commissioner, has spent three years in India, heading up Canada’s commercial program and its network of eight offices across the country.

 She says, despite a three-fold increase over the past several years, which has seen the number of Canadian companies doing business in India rise to nearly 700 today, and India-Canada trade hit $5.8B in 2013 – a gain of nearly 40 per cent since 2010 – India can nevertheless be “a challenging market.” Wilshaw says a variety of factors, including climate, cultural diversity, consumer preferences, price sensitivity, a growing population and more contribute to India’s market dynamics.

“In less than 25 years, a significant shift of India’s population from rural to urban areas has placed enormous stress on urban infrastructure. For several years, the economy was expanding in the double-digits. This has placed strain on the legal system and on the bureaucracy,” she says. “Indians are used to adapting to this pace of change, but for an outsider, getting the lay of the land and matching the stride can be daunting.”

Despite its challenging environment, India is a valued target companies seeking significant growth. In addition to the size of the prize, the International Finance Corporation’s Doing Business 2014 study placed India 134 out of 189 countries in terms of ease of doing business – outranking rivals like China (96) and Brazil (116).

Nevertheless …“Bombay, Bangalor, Mumbai, Gujarat and other regions are very progressive, while others, like India’s Northeastern Bengal states, are less business friendly, despite their inherent opportunities,” cautions Gairola. Raj Narula, President of Ottawa-based TaraSpan, a company that has been helping accelerate and de-risk India market entry for Canadian telecom, e-learning as well as health care and clean-tech companies since 2007, adds that as sophisticated as Gujarat might be, for example, “It is a no-alcohol, non-meat-eating state.”

Narula and others say intricacies like these underscore the need for Canadian firms to spend time establishing a local presence and contacts in India. A big mistake Narula has seen many Canadian companies make is to presume that a Canadian staffer of Indian heritage is the best choice to send to India.

“If this person hasn’t been to India in 20 years, and doesn’t speak a word of Hindi, Punjabi or another Indian language then sending him/her is a strategic error,” says Narula.

“They will more than likely be dismissed by locals.” Instead, Narula advises Canadian firms send a decision maker with subject-matter expertise. Travel for CEOs is important to get business done. “This will help attract meetings with similarly positioned executives. Indians are all about trust. They will want to know who they are dealing with beyond professional accreditation.”

Without a local partner setting up qualified meetings, for example, Canadian firms risk wasting time and money. “India is full of people with ‘can-do’ attitudes who will take a meeting just to see if it might lead somewhere, not necessarily because they can make a deal happen,” says Narula.

 

Patience is a virtue

Typically, it takes about two to three years to start seeing commercial results in this market.

Narula notes that companies should be prepared to initially invest in five or six trips “one every several months to demonstrate commitment to the market,” followed by six to nine months of engagement before “you might land a deal.”

Beyond the nation’s mounting infrastructure needs – everything from cleantech to telecom as well as roads and transport systems – consumer products and services are in hot demand. India’s rising middle class – now approaching 500 million strong – combined with the hundreds of millions of citizens now ascending from Indian society’s bottom rungs, are building a tsunami of consumption.

“India is all about the money that can be made by looking at the bottom of the socioeconomic pyramid. The question is how to achieve your profit margin, but offer the product at a price that middle and lower classes of Indian consumers will pay,” says Gairola.

Beyond service providers such as TaraSpan, which has a staff of over 100 in India working to help the firm’s Canadian partners succeed overseas, organizations such as EDC and Canada’s Trade Commissioner Service are there to help. “We can help companies understand the market, fine-tune their approach and connect them to the local contacts and potential partners,” says Wilshaw.

 

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