India’s sunny growth forecast and stable leadership makes it an ideal time for Kiwi entrepreneurs to enter the market, writes risk consultant Rikky Minocha.
Some 371 years since the East India Company’s first contact with India, the Royal Bengal Tiger is rising from the shadows of plunder, pillage and patriarchy, and shaking off its Victorian-era spider webs, to emerge with a sunny long-term growth forecast of 7 per cent a year.
Strong improvements in India’s business story include the rise in foreign capital and ease of doing business in the country.
But despite this confidence, some business challenges remain – for instance, securing land for factory permits is difficult, and mining for coal and steel are still partially-state controlled.
These limitations present a unique opportunity for New Zealand tech, education and blockchain entrepreneurs, with our Number 8 wire ethic, to eye the Indian market.
Here are some details to be mindful of when deciding to engage commercially with India.
Beware the unknowns
The unknowns make thinking about India laborious for any investor. I met a well-travelled lawyer who grimaced when recalling a recent business trip.
Needing an urgent respite from a bout of sickness, he found himself in an awkward pants-down situation in a medical office where the collective idea of privacy was similar in spirit to Cambridge Analytica’s treatment of Facebook-user data.
And yet, India has a distinctly inimitable sincerity. The uncertainty, while bright, is not blinding.
Practice business prudence
India has common law systems of governance. Its corporate system has seen strong upgrades – the Companies Act 2017 introduced new rules for appointments on boards of directors, including more robust definitions around female representation and independence of directors. The Act also further clarified what a “related party” means with regard to lending, borrowing and ventures with other companies.
These upgrades have had an impact on activities in Dalal Street, Mumbai’s equivalent of Wall Street.
Loans to Indian businesses from terrestrial banks rose by 11 per cent between January 2017 and 2018. Conducting a quick check on any undeclared loans or liabilities owed by your future business partners is prudent in India.
Two large-scale corporate fallouts in 2016 and 2017 involving India’s largest corporate entities, the Tata group and Infosys, brought to the fore long-standing questions about the independence of directors in India. New Zealanders conducting business with Indian counterparts will be well-placed to consider conflicts of interest before promising their sums.
Retrieving corporate records in India is possible online. On the Ministry of Corporate Affairs website (referred to as the Registrar of Companies), you can access basic information about companies and directors’ details, and retrieve shareholding patterns and annual reports. This ensures you are adhering to international and local KYC (know your customer) laws, such as the Anti-Money Laundering and Countering Financing of Terrorism Act in New Zealand.
“About half of India’s population is in the 20-55 age group, which is the earning, spending and consuming demographic.”
Know the audience
Reputational sentiments paint a picture about the business resilience of Indian partners and will give you a nuanced view on how to conduct yourself during negotiations or crises.
The BBC’s India profile tells us there are approximately 12,000 different newspaper titles in India, many of them in English – The Hindu, The Economic Times, Times of India being some of the widely-reputed ones. Using this information strategically should form the bedrock of your India strategy.
About half of India’s population is in the 20-55 age group, which is the earning, spending and consuming demographic. Strategies to boost your investment could range from proactive market entry based on social and cultural demographics, or a close following of industry trends in India.
Navigate the cultural nuances
Any Kiwi who has travelled to India will have a negotiation story for you – and the art of negotiation is a key part of doing business in the country.
Donations are expected during some parts of the year. During Diwali, the Hindu festival that generally falls around October or November each year, you may find it customary to give gifts. But you may also come across, in a land of the billion, a minority of people using the word “Diwali” interchangeably with “bribery” – I have seen this happen first-hand!
Making sure your partner or investee has a robust internal fraud-reporting mechanism is a good way of protecting yourself.
India may still look daunting at times, too risky for comfort, but as the world draws closer to political trepidation and economic uncertainty, Prime Minister Narendra Modi stands out as a symbol of stable dependable economic and political leadership. New Zealand – with her practical attitude to getting stuff done, fingers and pulse at the ready – is uniquely placed to enter this market.
Views expressed are personal to the author.
– Asia Media Centre