With a population of over 1.2bn and an ever-growing middle class, India is an exciting market for export for UK businesses.
What do you see as the main benefits of exporting to India for UK businesses?
In general terms, there are several reasons why companies should consider exporting, and we believe that for ambitious businesses, exporting should be a key part of any growth strategy. Companies that export are more resilient in times of economic turmoil, and tend to see much quicker growth then their purely domestic counterparts.
Exporting can also enhance operations in the domestic market as the experience and learnings taken from working in other markets can help to shape and define a company’s business model.
Specifically for India, I see the main opportunities as coming from the size and the demographic of the market. India has over 1.2bn inhabitants, 58 per cent of which are under 35. There is a growing middle class which is forecasted to reach 370m in 2024, a larger figure than the entire current population of the euro zone. These figures are quite compelling, and mean that India presents both a huge consumer market and a large, young and talented workforce.
So the opportunities are there, but are there any specific sectors for which the opportunities are particularly strong?
Yes, whilst the opportunities are bountiful, there are a few key sectors that should be of real interest to UK businesses. Manufacturing costs are much lower in India than those that you would typically expect in the UK, meaning that businesses can increase competitiveness through lower operating costs, this is particularly true for the IT sector.
Investors in the renewable energy industry can profit from government incentives and tax breaks, as can other key sectors including infrastructure, defence and the health sector.
With all these opportunities, why isn’t everyone already doing it?
Exporting can be daunting, and even those businesses which are already exporting to say Europe or the US, can face obstacles when venturing further afield to countries such as India.
Cultural differences and an unfamiliarity with local business practices can deter companies from expanding their global presence and exploring emerging markets such as India. Also, finding the right business partners and getting the right support on the ground can be difficult if you do not know where to look.
Read more about exporting:
- UK businesses blame lack of finance for export delays
- China overtakes Belgium and Holland as sixth most popular UK export destination
- Working towards the government’s 2020 export target starts now
Are there any challenges that are particular to India?
Each export market presents its own challenges and India is certainly no different, but that is not to say that they cannot be overcome. The best way to ensure success in the market is to research the market before you go so that you are as informed as possible.
For me, one of the main considerations should be that India is still an emerging market. Whilst India is seeing rapid growth and therefore lots of opportunity, businesses entering the market need to bear in mind that the current infrastructure is not as advanced as in developed markets, this is particularly important for businesses that are reliant on transport systems and logistics.
Another aspect that can cause challenges for foreign businesses is lengthy legal processes. The legal system in India is complex and it is therefore extremely important to work with experts in the field to make sure you fully understand the regulations and how they will affect your business/product. Furthermore, India has been notorious for red tape and bureaucracy, but this is expected to improve with the Modi government, but it will take time for this to be implemented.
Whilst the challenges can seem discouraging, they can be overcome. Many businesses are not aware of the support that is available to them, and this is where Santander is trying to help. We have signed an MOU with ICICI bank in India to provide our customers the right level of on-the-ground support when entering the market. We also have a partnership with UK Trade & Investment, meaning our customers can get expert support both here in the UK and in India.
Any final comments?
In general when entering India, you need to have a long-term view. There are no quick turnarounds and you need to be patient and persistent. It is crucial to find a partner in the Indian market who knows and understands your business objectives and vision.
There is no alternative to being on the ground in India when setting up business there and building relationships. Research before you go is vital, and making the most of the support available from banks such as Santander and ICICI as well as UKTI will definitely help you enter the Indian market.
In the next couple months we’ll also be hearing from Santander about exporting to Brazil and China – so stay tuned for more expert advice.