What you need to know about exporting to India

The Indian market is looking attractive to many Australia exporters. With over a billion people and a burgeoning middle class with rising disposable incomes, exporting to India can be a dream but, you need to be wary of drawbacks to entering the Indian market.

The reasons for courting the Indian marketplace are obvious. India boasts the second largest population in the world after China and its well-educated middle class is starting to earn more as salaries increase. Although considered 10 years behind China in terms of progress, this subcontinental nation has a few bonuses over its more populous neighbour. As the world’s biggest democracy, India is less restrictive than China and without a planned birth policy, the Indian population has a much younger base. Add to that our shared Commonwealth roots and a love of cricket and you can easily see why Australia and India are a good match.

Michael Carter, trade commissioner for Austrade in New Delhi, says that exceptional growth over the past five years means India is now Australia’s fourth largest export destination “worth in the vicinity of $12 billion”.

India’s rapid growth has allowed Australian exporters from the construction industry to move in. “To some extent there’s been a lag with the development of India’s infrastructure and that has provided an opportunity for many Australian companies to come in and fulfil some of that demand requirement,” says Carter, listing buildings, roads, railway and aviation as areas where Australians have won contracts.

He adds that it is not just India’s population that makes the market attractive, but also the fact that Australia can provide what India needs in key industry sectors. “Australia has very strong supply capability, for example in the mining and minerals sector. If we talk about the education sector, Australia is now the second preferred destination for Indian students,” he says. “If we talk about some of the services that Australia provides, again across the mining sector, across the manufacturing sector and to some extent the agribusiness sector, we see business being won in those categories.”

Education has been a big earner and Australia derives a lot of secondary revenue from Indian students living here while they complete their degree. Meherlyn Jussawalla, assistant director of international operations at the University of NSW says that engineering and business are still the most popular undergraduate and postgraduate degrees undertaken by Indian students, though there has been recent interest in digital media, architecture and sustainable development.
“The majority of Indian students are here for postgraduate study and it is anywhere between one to two years of full time study. For the undergraduate engineers it is a four year program and undergraduate business is three years,” says Jussawalla. She adds that up to 90 percent of Indian students also work part-time, mainly in hospitality and call centres where flexible hours fit around class attendance.

While education is one of the more established sectors, other services have started to make gains. Hairdressing franchise Just Cuts recently launched in Mumbai, while mortgage company Wizard Home Loans aims to have 250 branches open by 2011. Tourism is also a sector to benefit from wealthier Indians taking more holidays abroad.

“Financial services and tourism are two emerging subsectors within services which are starting to get some traction,” says Carter. “[Austrade] are interested to work with Australian clients in sectors like financial services and tourism and to provide opportunities to Australian companies as well.”

Doing Business in India

As with any market, potential exporters should do their due diligence by seeking out qualified advice. Associations like the Australia India Business Council (AIBC) run events where interested parties can listen to speakers and network, while organisations like Austrade are directly involved in trade matching.

For the most part, says Carter, India is conducive to accepting new business in most sectors. “There is a level of bureaucracy that one has to manage but in saying that, we’ve found that clients working with organisations and government bodies at a state and federal level were able to help facilitate things to be completed sooner rather than later.”

Mohan Monteiro, NSW chapter president of the AIBC, agrees that the system can be “bureaucratic, time-consuming and compliance-orientated” but says that the biggest challenge for Australian business is actually other exporters.

“Australia is about a decade behind the rest of the world in courting India, so we need to work hard to establish our brands,” he says. “This means that businesses need to think about attraction and retention of staff.”

Another trap that Australian businesses fall into is thinking of India as one market, when region plays a big part in the culture. “There is a lot of regional diversity in terms of geographical diversity, language, cuisine, dress code, business mentality, business approach,” says Carter. “Doing business up north is quite different from doing business in the west, east or south. I think that’s what makes the market very exciting. One can look at a [regional] market, coming initially into one and then spreading out into other parts of India, but not necessarily with the same partner.”
Monteiro adds that all it takes is research and planning. “Businesses need to have specially tailored plans for different markets and their projects need to be for the long term,” is his advice.