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.
Indian Business Challenges
One sector that has persisted in India despite a number of obstacles is the wine industry. Ali Hogarth, regional manager for emerging markets at the Australian Wine and Brandy Corporation (AWBC) says that the country’s strict import duties pose the biggest problem. “That’s a big issue and not just an Australian one; taxes can be as high as 260 percent. Until that is reduced significantly, India will always be a smaller market for imported wine.”
Add the fact that India does not have the infrastructure to support a wine culture, lacking suitable storage and refrigerated road transport, and one starts to wonder why the industry persists. Hogarth says mostly it’s the size of the population, but she also points to shifts in the culture that indicate growth.
“Youth are really driving the economy and will be the future for imported wine,” she says. “It’s also becoming more acceptable for women to drink alcohol and more importantly, wine. Wine is preferable because it’s healthier and it’s considered a better option for women to consume, so women are also the drivers of growth.”
Part of the AWBC’s India strategy is wine education, targeting international students with their Introduction to Wine and Wine Services course in Australia and working with five star hotels in India to increase their on premise presence. Hogarth is also hopeful that India’s domestic wine industry takes off. “It means that wine becomes a more integrated part of society, so there’s more wine courses, sommelier schools, hospitality schools. It increases education across the board, which is a good thing.”
Other industries should take note of label Howling Wolves’ approach. “They’re one of the most successful Australian wine companies in India because they support the market very well, they visit several times a year constantly promoting and running dinners, tastings and events,” says Hogarth. “They have a very close relationship with their importer as well and it’s been a real success story.”
She concludes that India’s not a place to make a quick buck. “If India is a market that a winery chooses to export to, they need to be 100 percent committed to developing and growing with the market. They’ll probably start off small and grow as the market grows but the market will require a lot of commitment, a lot of time.”
Launching a Business in India
The adage about launching a product in India is that you need either a Bollywood star or a cricketer to make the media pay attention. This is true, as actress Tania Zaetta and cricketer Brett Lee found when they started to look closely at India.
Zaetta gained fame as the action reporter in TV show Who Dares Wins alongside host Mike Whitney, incidentally a former cricketer. Such was the popularity of the show in India that they filmed specials using Indian contestants.
Since then, Zaetta has worked to build her profile on the subcontinent, immersing herself in the culture and understanding how both the film industry and the business world worked. This made her savvy, leading to better career moves.
“Because there were huge mobs of people wherever we went, I was literally hotel-bound. All I could do was watch TV, listen to the radio and read the papers so I became an expert on Bollywood,” she recalls of the early days. “Then one journalist said ‘would you ever like to do Bollywood?’ and I said ‘absolutely’. The cover of the Bombay Times the next day read: ‘Tania wants Bollywood’. After that I got the call, but it was for the dance numbers. I knew well enough not to do that and wait for the right acting role.”
Two high profile movies—Bunty Aur Babli and Salaam Namaste—launched her into Bollywood stardom and Zaetta the businesswoman emerged. She is now an advocate for doing business in India and speaks at business events about how companies can enter the Indian market.
“I’ve known businesses that have gone into India, struggled and gone home with their tail between their legs, reassessed the situation and then realised that they need Indian partners or that they need to understand more about the Indian culture, the way that Indian business works,” says Zaetta. “You cannot waltz in there and think that just because you’re a foreigner you can take over because they won’t accept you, they’ll shut you down.”
Zaetta recommends that businesses spend time getting to know the Indian market and culture because strategies that work elsewhere don’t necessarily cut it in India. She also advises a price check. “[Businesses] do have to alter their price point because it’s a third world country,” she says, pointing out that the low price of a movie ticket contributes to the film industry’s success. “It costs 100 rupees to go to the movies, which is the equivalent of $2.80 Australian. That’s why Bollywood is so big, it’s a fantasy world and even the rickshaw drivers and the maids can find 100 rupees.”
Maintaining no illusions about her currency, Zaetta plans to maintain her profile by doing more film work—“in the entertainment industry you’re only as good as your last film”—but in doing so she’ll be able to help Australian companies launch their products in India. “You only need one percent of the population for anything and you’re laughing.”
The numbers are in and it’s clear that India has what it takes to become a mega export market in the next decade. Whether or not you’re there might well depend on whether you’re in for the long haul but for those dedicated exporters who can last the distance, the rewards will be immense.
Bollywood and the Australian Film Industry
While Tania Zaetta, Australia’s only Bollywood star, gravitated towards the bright lights of Bollywood, one man stayed behind to become Australia’s most important link with the Indian film industry. Anupam Sharma, filmmaker and adviser on Indian cinema and media, is an Australia India Business Council spokesperson and runs production company Film & Casting Temple.
Sharma’s story began when he realised that Indian productions were filming everywhere but here. In 1998 he met with director Feroz Khan and arranged to film with him. Hype did the rest. “When the first film got released in India, people loved the locations. When people like what they see, they come and start shooting. For the first two or three years it was all word of mouth,” recalls Sharma.
To the struggling Australian film industry, the robust Indian industry had attractive opportunities, although pursuing them was another matter. As Sharma found, there was very little information available, so he started a trade movement by working with other major players.
“We wanted to promote ourselves by doing contributory activities like ‘How to include Australia in your film project’ seminars,” he says. “When we started getting too many queries, I wrote a guide. Our aim was not to sell this guide but to put it in Australian missions in India and distribute it at film festivals. That was another way we contacted the market.”
Meanwhile, other film bodies noticed the market and started to collaborate with India. Last year, the South Australian Film Corporation (SAFC) hosted a mixed crew for the production of sci-fi film Love Story 2050 featuring former Miss World, Priyanka Chopra.
CEO Richard Harris says that the SA government initiated the relationship. “The Premier [Mike Rann] had both an interest in India and film so he saw a good way of having a connection was to have an Indian film shoot here, that’s where it had its genesis.”
The SA government offered incentives to the filmmakers and commissioned the SAFC to facilitate the film side of the deal. Although Harris notes that “negotiations with people from other countries always has its challenges” he is keen to see more productions come to South Australia. “The profile of the film will bring people in and that will hopefully result in more Indian films coming to shoot here and have more direct benefits to tourism.”
Sharma says that the next step is to start telling Australian stories that appeal to the Indian market because that’s where the real money lies. “Heyy Babyy [filmed in Sydney] employed 750 people and spent $2 million in Australia but the copyright remains with them. If it’d been a $6 million Australian film with the same amount of success, we would have had four times the return,” he explains.
He urges the industry to taking a leading role with India, claiming it’s a perfect match. “India is the most prolific film industry and Australia is the most professional film industry and the marriage between the two is a lethal combination. There’s so much for Australia to win.”
Business Tips from Anupam Sharma:
Indians never say ‘no’ but ‘yes’ doesn’t mean ‘yes’.
Know the market. If you’re pioneering a new industry, you’ve got green pastures all the way around. If you’re the second, third or multiple player in that market, it’s always good to have a coffee with your so-called competitor.
Travel to India. The Indian market requires hard work for the simple reason that the benefits are immense. India is not just Mumbai, Delhi, Calcutta and Madras, it’s all over.
Look beyond immediate commercial gain. You have to have a long term plan with India.
Business Resources
Austrade: India profile
www.austrade.gov.au/India-profile/default.aspx
Australia India Business Council (AIBC)
www.aibc.org.au
Utsav Australia (Celebrate Australia)
www.utsavaustralia.in
Australia India Business 2008 is a free information resource officially endorsed by the AIBC. David Collett, managing director of publisher Palamedia, says that unlike previous resources, which focused solely on Australia, this publication is truly bilateral. “What we’re doing is promoting India to Australians. In that sense it is more useful to Australians who are looking to do business in India.”
The publication is available through the AIBC, Palamedia (www.palamedia.com.au) and selected trade institutions.
Australia–India: A deepening economic partnership is another publication on this topic, endorsed by the Australian Federal Minister for Trade and his Indian counterpart. Produced by Focus Publishing Interactive (www.focus.com.au), it is due for release in February 2008 (price TBA).
Tania Zaetta can be contacted through her website www.tania.com.au
