BUSINESS E XC H A N G E P r o m o t i n g b i l at e r a l t r a d e & i n v e s t m e n t between THE UK & India
ENTRY TO INDIA : GUJARAT ukibc.com
UK India Business Exchange Issue 01 www.ukibc.com
UK India Business Exchange UK India Business Exchange is the UK India Business Council’s new flagship publication, which highlights business opportunities between both countries, predicts trends, profiles success stories, offers tips and practical advice, and carries in-depth interviews and analysis with business leaders and policy makers.
Mission Statement The UK India Business Council is a business-led organisation promoting business links between the two countries. Our mission is to facilitate an increase in trade through business-to-business dialogue. We inform UK Plc of the opportunities in India and, more importantly, how they can capture them. Through our partnership with UKTI, and with an extensive network of influential corporate members, we provide the resource, knowledge and infrastructure support vital for UK companies to capitalise on the opportunities in India. For more information please see www.ukibc.com
Published each quarter, the magazine is aimed at business people interested in bilateral trade opportunities between India and the UK. Editors: Pavel Choudhury & Ian Halstead Design & Production: Open Box
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For magazine enquiries please contact firstname.lastname@example.org
Gujarat fact-sheet Contact Details:
UK India Business Council Clifton Packaging HEAD OFFICE 12th Floor, Millbank Tower 21-24 Millbank London SW1P 4QP State Focus United Kingdom t: +44 (0) 207 592 3040 e: email@example.com w: www.ukibc.com
View from the Top Advertising enquiries: Open Box Regent Court 68 Caroline Street Jewellery Quarter Birmingham B3 1UG United Kingdom t: +44 (0)121 200 7820 e: firstname.lastname@example.org w: www.ob-mc.co.uk
Indian business news
UKIBC news + events
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Next Generation Network
Practical Advice - PwC
India’s Sillicon Valley
Farsan goes global
The Big Debate
Point of View
UK India Business Exchange Issue 01 www.ukibc.com
Welcome, Welcome to the first edition of the UK India Business Exchange. The purpose of the new magazine is to create a platform to exchange information about India and the commercial opportunities arising from its extraordinary growth over the past two decades presents to businesses located in the UK. It is the firm intention that this magazine becomes your platform through which your experiences, ideas, news, and insights and contacts can be shared with the broadest range of interested and engaged parties. Many people in the UK are aware that since 1991 when the growth-catalysing market reforms were introduced, India has grown into the 11th largest economy in the world at some US$1.68tn fuelled by a rapidly growing population of 1.2bn having posted an annualised growth during this period of some 7.45% p.a. It is hoped that recent reforms will create a renewed acceleration of growth. In November 2011, singlebrand retail was opened to 100 percent FDI. In September, India has gone on to relax FDI rules in a range of sectors including multi-brand retail, aviation and broadcasting. The Government has also taken the welcome step of gradually removing market distorting fuel subsidies. These steps in the right direction have boosted investor sentiment and the markets. Certainly, across India’s 28 states there are huge regional, political, social and economic differences. Some states have populations larger than many European countries – vz Gujarat (60m); Maharashtra (100m); Bihar (104m) – and one state, Uttar Pradesh has a population almost the size of Germany, France and the UK combined at over 200m.
In partnership with:
Moreover, India is in a period of transition – perhaps the most profound since 1947. The states are increasingly competing to become distinct economic destinations, some with commercial opportunities/ ecosystems within their own borders. Indeed, McKinsey in their report entitled “Urban World: Cities and the rise of the consuming class” identified 12 distinct urban clusters within India which they argue makes increasing sense of the growing complexity of urban structures in India.1 With UK India Business Exchange, we will delve below the surface and offer real insights, giving pointers to help you understand what is happening within India. Accordingly, we are focusing within each edition on a different Indian state allowing us to highlight specific opportunities relevant to UK businesses, the experiences of companies already operating there and to offer the information you need to capture opportunities. Gujarat will be the first state for this focus. Indeed, Gujarat has already featured largely in recent events over the past months. • In August I visited Ahmedabad as part of the planning sessions into a “Vibrant Gujarat” delegation the UKIBC is taking to the bi-annual event in January 2013. • In September, the UKIBC held a day-long programme and hosted a NGN event for a visiting group of Gujarati MBAs. • In October, the UKIBC is involved together with the CII, APCO and PwC in a UK-wide road show by a Gujarati Government delegation. • In January, UKIBC is a taking a delegation of UK businesses to the bi-annual “Vibrant Gujarat” trade conclave.
“India is in a period of transition - perhaps the most profound since 1947. The states are increasingly competing to become distinct economic destinations, some with commercial opportunities/ ecosystems within their own borders.”
At the same time, within the UK India Business Exchange, we also include new features including a “View from the Top” on growth amongst the BRIC economies contributed by UKIBC board member, Alpesh Patel of Praefinium, as well as many other items. We have also used the platform to keep you apprised of events, developments and progress within the UKIBC, including, as you would expect, analysis on each of our six key sectors. And we highlighted relevant areas where we have interacted with UK Government on behalf of UK Plc. Indeed, at a time when the focus of the Government remains on increasing exports, a House of Lords Committee on Small and Medium Sized Enterprises was appointed, to consider the Government’s assistance and promotion of the export of products and services by SMEs. The UKIBC received a Call for Evidence from the Committee. We submitted evidence based on the results of an extensive survey to which over 200 businesses replied and a roundtable held jointly with BDO, in which companies such as Astute Electronics Ltd and Four Cross Media participated. The launch of UK India Business Exchange has not merely provided a change of theme, expanded content, and new added features, it has also resulted in a significantly increased advertising platform and distribution. We are very grateful to all contributors and distributors – external and members who made this enterprise come together. However, at the end of the day, this is your magazine. If you have any comments or suggestions, please feel free to contact us at BusinessExchangeMagazine@ UKIBC.com I hope you enjoy our new format and content. Richard Heald CEO, UK India Business Council
McKinsey Global Institute.
Urban World: Cities and the rise of the consuming class. June 2012
UK India Business Exchange Issue 01 www.ukibc.com
State Fact Sheet
Gujarat Capital: Gandhinagar
Peter Beckingham, British Deputy High Commissioner - Mumbai
by Peter Beckingham British Deputy High Commissioner - Mumbai.
Gujarat is one of India’s most economically advanced states, and recognising its importance, the UK opened a British trade office in Ahmedabad in 2002, dealing with commercial inquiries and promoting business ties.
SIZE & LOCATION:
Area: 196,024 km²
% bigger than England and is
% bigger than New York.
Coincidentally, that office was opened by Patricia Hewitt when she was a cabinet minister, and she now chairs UKIBC. Commercial links between the UK and Gujarat have since flourished, and the companies with a presence in the state include Asian Media Group, Asite Solutions, BG, BP, BMT India, D&H Engineering, HR Wallingford, Mott MacDonald, MSBC Solutions and QX Solutions. Sectors offering significant prospects for UK businesses include infrastructure (ports, construction and railways), life sciences (healthcare and pharma) and energy. There’s also a stream of inward investment from Gujarat to the UK, with particular activity in the pharmaceutical, engineering and IT sectors. I recently met a company, Jaivel, which moved its CEO and other key staff from Rajkot to Derby, to provide software designs to Rolls-Royce.
60,383,628 Nearly three-times the size of Australia.
Narmada River Baruch by Pablo Ares Gastesi
GDP: CONSULAR SUPPORT:
Western Region: The British Deputy High Commission in MUMBAI covers Goa, Gujarat, Madhya Pradesh and Maharashtra. Naman Chambers, C/32 G Block, Bandra Kurla Complex, (Opposite Dena Bank), Bandra East, Mumbai 400051
compared to Ireland ($159 billion) and UK ($2.4 trillion).
91 22 6650 2222
tel: + fax: +91 22 6650 2324 e-mail: Consular.email@example.com. GDP per capita:
(Source: Government of Gujarat 2011-12)
(compared to national average)
Office Hours: Mon-Thu: (GMT) 02:30-07:30 and 08:30-10:30; (local time): 08:00-13:00 and 14:00-16:00 Consular Hours: Mon–Thu (GMT) 03:00-08:00 (local time): 08:30-13:30 Friday (GMT) 03:00–07:00 (local time): 08:30–12:30. Out of Hours contact:
91 11 2419 2100
November to February
March to May
June to October O
IN-COUNTRY TRADE ENQUIRES: Milind Godbole 404 Kaivanna, Near Ambawadi Circle, Panchwati, Ahmedabad 380 006 Tel: (91-79) 2646 7138 Fax: (91-79) 2640 3537
E-mail: Milind.Godbole@airtel.in Mangal Market Baroda - Designyantra
UK India Business Exchange Issue 01 www.ukibc.com
State Fact Sheet Main Business Centres:
Ahmedabad, Surat, Vadodara, Jamnagar, Rajkot and Bhavnagar.
• Reliance Industries operates the oil refinery at Jamnagar, which is the world’s largest grass roots refineries. • The world’s largest ship breaking yard is in Gujarat near Bhavnagar at Alang Ship Recycling Yard.
• Gujarat has two of the three LNG terminals in country (Dahej and Hazira). • Gujarat is the only state in India to have State Wide Gas Grid of 2,200km. • 87.9% of the total roads in the state are asphalt surfaced.
• Gujarat has largest OFC network of more than 50,000km. The state owned Wide Area Network is the largest IP-based ICT network in Asia Pacific Region and second largest in the world, connecting 26 districts and 225 talukas through 12,000 nodes. • There are more than 900,000 internet users and all villages are connected with broadband internet. There are 41million mobile phone users. • General Motors manufactures at Halol near. Vadodara. • Tata manufactures Nano from Sanand near Ahmedabad. • Ford invested $1billion in Gujarat plant. • Surat, a city by the Gulf of Khambhat, is a hub of the global diamond trade. • Main producer of tobacco, cotton and groundnuts in India.
• Nearly 100% of Gujarat’s 18,000 villages have electricity connection for 24hr power through the Jyotigram Yojana. • Gujarat ranks first nationwide in gas-based thermal electricity generation with national market share of over 8% and second nationwide in nuclear electricity generation with national market share of over 1%.
• 98.86% village connectivity with all-weather roads, one of the highest in India.
Port of Mundra by Felix Dance
FCO Contact: Travel AdviceHOW TO GET TO GUJARAT:
Register for LOCATE: In an emergency, they’ll have a record of your details to assist you. They help family and friends to reach you in an emergency.
www.fco.gov.uk Jet Airways London Heathrow – Ahmedabad, Sardar Vallabhbhai Patel International Airport
Emergency medical assistance Dial:
Jet Airways London Heathrow – Bhavnagar, Bhavnagar Airport
Road Network: SEZs: • 55 SEZs are present in Gujarat, covering an area of approximately
• Gujarat has 13 national highways (3245km) and innumerable state highways that efficiently connect Gujarat with other states in India.
Ports: • Kandla Port, • Port of Navlakhi, • Port of Magdalla, • Port Pipavav and • Mundra Port (privately owned).
• Out of 19761km length of state highways, 96% is black topped connecting major ports and towns.
• These SEZs are involved in several sectors such as Biotechnology, Power, Handicraft / Artisan, Gems & Jewellery and Port based multiproduct.
UK India Business Exchange Issue 01 www.ukibc.com
Clifton thrives on Indian connections MY TIP:
Clifton Packaging Group Ltd is a family-owned business started in 1981 as wholesalers of carrier and paper bags, but now a global packaging specialist. It was named Business of the Year 2012 at HSBC’s English Asian Business Awards.
High-production costs in the UK and increasing competition saw us try to establish long-term partnerships with companies in emerging countries, such as India and China in 2002. We soon realised that India was a better option with huge potential, but it required a lot of groundwork. However, India has now become our most important secondary production base, and the main hub for sourcing key raw materials from the UK manufacturing site. We wanted to replicate our UK manufacturing facility in India, but realised that Indian entrepreneurs were already investing and excelling, both in India and in global markets. There is a huge abundance of highlyskilled workers and massive untapped potential.
Director at Clifton Packaging Group Ltd
“In India you must adapt and get to grips with the Indian business culture. It is vital to pre-plan, establish a focused strategy and form firm links with Indian partners, who have proven track records.” So we changed our focus and, jointly invested and partnered with Indian companies utilising worldclass technologies, mainly in Ahmedabad, Mumbai and Delhi. A classic example of our India operations is Ahmedabad in Gujarat, which now has a worldclass airport, the road networks are excellent and the industrial development is awe-inspiring.
By Shahid Sheikh, Managing Director Over the years, we manufactured printed packaging films and bags, especially for the rapidly growing food industry locally. Today, we supply world-class printed packaging to many blue-chip companies, all over the UK as well as overseas.
Shahid Sheikh, Managing
Today, Gujarat can proudly claim to be among the greatest global success stories in terms of infrastructure development and the city is one of the best places to do business in India. Cultures vary tremendously as you travel to different parts of the country. It’s vastly different from the West but, having grown up in a cosmopolitan environment in East Africa, I speak Indian languages fluently, making things easier. Finding the right partner though, and the logistics of moving goods and travelling to different cities proved extremely demanding. However, we were very fortunate to locate high-quality skilled people through our partners in India, proving to be instrumental in accelerating our progress. Establishing mutual trust with partners is imperative. Our personnel travel to India regularly and we bring over selected personnel from our Indian partners too, providing them with intensive training on all the quality systems, production procedures and management structures of our UK manufacturing. This keeps staff abreast of procedures and developments at both ends.
“Establish solid relationships based on trust and commitment with local partners, which will help you progress rapidly in realising your long-term objectives. Embrace the emerging markets to win the race, or ignore them at your own peril!”
CONTACT: Need help accessing the Indian market? UKTI Contact Name: Kiraan Sharma Senior Trade & Investment Adviser t: +91 11 24192155 e: Kiran.firstname.lastname@example.org a: UK Trade & Investment, British High Commission, Shantipath, New Delhi - 110021 India
Since working in India, we’ve enjoyed sustained growth year in, year out giving us a formidable edge in the world of packaging and helping us expand our product portfolio. We didn’t need to downsize our UK manufacturing either, in fact, it allowed for further UK expansion, rather than having to reduce the workforce. We regularly monitor and adjust plans to ensure that we don’t overlook any opportunities. Large industrial parks supported by the government are emerging throughout India. We maintain regular dialogue with our Indian partners to see how best to further our business. Approaching matters with an enterprising open-mind and thinking outside the box proved to help us. Our case was not one of learning about the India opportunity, but more about creating an opportunity from the ground. We worked on the Indian equation well ahead of our competitors. We could not have achieved our success alone though, our partners have consistently proved to have a remarkable resilience and ability to navigate India’s regulatory environment. They are able to overcome bureaucratic impediments, corruption, and other obstacles. Their knowledge has proved priceless. In India you must adapt, improvise and get to grips with the Indian business culture. It is vital to pre-plan, establish a focused strategy and form firm links with Indian partners, who have proven track records. Do not underestimate the improved state-of-the-art technologies that Indian companies are using to compete worldwide. Things happen in a very different way in India and it is important to understand their methods of doing business. ‘Don’t try to run before you can walk.’ Establish solid relationships based on trust and commitment with local partners, which will help you progress rapidly in realising your long-term objectives. Embrace the emerging markets to win the race, or ignore them at your own peril!
UK India Business Exchange Issue 01 www.ukibc.com
India’s premier business destination Gujarat is one of the fastestgrowing and most developed states in India. Its strategic location on the western coast of the country and the State Government’s emphasis on transparent, progressive and empowered governance and infrastructure-led development have helped it rapidly become a preferred choice for both domestic and international investors. Mr. Maheshwar Sahu, IAS, Principal Secretary, Industries and Mines Department, Government of Gujarat explains why he believes Gujarat continues to be at the forefront of India’s economic development. Economically speaking, what are the strengths of Gujarat and what is the contribution of the state to the overall Indian economy? Gujarat has over the past decade continued to register double digit growth. This has firmly embedded the state in its position as one of the leading growth drivers in the country. Gujarat today contributes in excess of 16% of the country’s industrial output, and more than 22 % of Indian exports, despite being home to less than 5% of its population. For an investor in the UK wanting to invest in India, and specifically in Gujarat, what are the large project opportunities available? Gujarat offers a vast array of opportunities to investors in almost all sectors. Our aim has always been to support investors realize their dreams.
The state government is of the opinion that for any destination to attract investments, urban and industrial infrastructure is of prime importance. Gujarat has invested a considerable amount of time and money over the past decade in developing its core infrastructure and we are committed to improving things further. Large projects like the proposed Special Investment Region (SIR) at Dholera (a fast-emerging town about 60 miles away from Ahmedabad, Gujarat’s biggest city), the Petroleum, Chemical & Petrochemical Investment Region (PCPIR) at Dahej (about 64 miles from Vadodara, Gujarat’s second largest city), the Gujarat International Finance-Tec City (GIFT) in Gandhinagar, the State capital, the Metro-link express for Gandhinagar to Ahmedabad (MEGA) and DelhiMumbai Industrial Corridor (DMIC) are poised to transform the industrial scenario in the state. Apart from these, the State offers serious investors immense opportunities in renewable energy, manufacturing, ports & shipbuilding, and the agri and food processing sectors to name a few. So, when you say that the government is committed to providing industrial infrastructure to businesses, can you give some idea on the kind of facilities and infrastructure which is already in place? All the industrial zones and estates, the Special Economic Zones (SEZs) and Special Investment Regions (SIRs), are fully equipped with adequate water supply, 24x7 power, good road connectivity and even rail connectivity to an extent. Gujarat is a power surplus State despite having one of the highest per capita power consumptions in the country, has high tele-density and excellent internet access. We are strongly of the belief that if we are able to provide world-class infrastructure to companies, investments are bound to come to the State. And, that’s precisely what our experience has shown over the years.
“Gujarat today contributes in excess of 16% of the country’s industrial output, and more than 22% of Indian exports, despite being home to less than 5% of its population.”
Maheshwar Sahu, Ias, Principal Secretary, Industries and Mines Department, Government of Gujarat The giant Reliance Oil refinery in Jamnagar
CONTACT: FICCI Federation House Tansen Marg, New Delhi 110001 India t: +91 11 23738760 70 f: +91 11 23320714 +91 11 23721504 e: email@example.com
For handling such massive investments which have been made and which are expected to be made in Gujarat, how have you formed the State-level policies and what are the kinds of incentives available? Gujarat’s Industrial Policy focuses on robust, sustainable and inclusive growth. Gujarat is a state with investor-friendly policies and a transparent and progressive regulatory environment. The government has gained an enviable reputation for its processes and procedures. The Gujarat government was ranked 2nd amongst all state governments in the world by the International Council of United Nations Public Service Award. The government believes in encouraging private companies’ participation through the Public-PrivatePartnerships (PPP) model. And, the tax structure in the State is at par with other favourable business destinations in Asia. On another note, Gujarat was the first state in India to develop and implement a comprehensive Solar Power Policy in 2009. There are several such initiatives that the state is known for. We were the first state to support private ports, set up an LNG terminal and develop a state-wide gas grid that spans over 1,500 miles. Gujarat is also known for the quality of its skilled human resources, which is a result of the government’s focus on continuing to invest in education for its people across the state. Sustainable, business friendly and all-inclusive growth is what Gujarat stands for.
What are the social prospects for international investors in the state? Gujarati life is not only about business. Gujarat offers an extremely rich and diverse natural and cultural experience that embraces people from different parts of the world with equal warmth. The State also offers great recreational opportunities, a reasonable cost of living and superb food experience. Academically, it is home to some of the most to renowned institutions of higher learning in management, engineering, design and the arts. In your efforts for attracting investments in the State, the government has initiated the ‘Vibrant Gujarat Summit’ campaign, tell us more about this. Since 2003, the Vibrant Gujarat Summits have gone from strength to strength. They are acknowledged to be the premier platform for investments and discussions around sustainable development in Asia. Gujarat has emerged as the growth engine of India. The past five summits have cumulatively seen investment proposals announced worth in excess of $800bn, the last summit in 2011, which saw participation from over 100 countries, accounted on its own for over half this number. The Vibrant Gujarat Summit in 2013 aims, once again, to take a quantum leap forward. Scheduled for the 11th, 12th and 13th of January 2013, it promises to see a galaxy of global business and thought leaders coming together to provide inspiration for a new era of inclusive and sustainable growth.
CONTACT: Dev Ranjan Mukherjee Director & Head - CII Gujarat State Confederation of Indian Industry Western Region - Gujarat State Office CII House Gulbai Tekra Road Near Panchwati Ahmedabad - 380 006 t: +91 79 40279900-10 f: +91 79 40279999 e: firstname.lastname@example.org email@example.com
UK India Business Exchange Issue 01 www.ukibc.com
Advanced Engineering & Manufacturing BAE Systems targets £1bn of orders as India relationship blossoms BAE Systems may be headquartered in the UK, but after more than six decades of operating in India, it regards the country as one of its key international markets. It’s very easy to see why. India is a major long-term customer for the Company’s famous advanced jet trainer, the Hawk. In fact, as we go to press, BAE Systems has received a Request for Proposal from Hindustan Aeronautics Limited (HAL) for a potential order to supply products and services for the manufacture of 20 Hawk aircraft. Upon successful conclusion, this would be the third contract placed on BAE Systems for supply of materials and equipment for the Hawk Mk132, building upon previous orders of 66 aircraft in 2004, comprising supply of 24 Hawk aircraft in fly-away condition and 42 aircraft built under license by HAL, and a further 57 aircraft in 2010. The potential addition to the Indian fleet, one of the largest fleets of Hawk anywhere in the world, would take the number of Hawk aircraft ordered worldwide to over 1,000. At the same time, Government-to-Government discussions are underway between India and the United States about orders for BAE Systems’ ultra-lightweight 155mm howitzer, the M777, as part of the Indian Army’s multi-billion pound modernisation programme. Britain’s largest defence prime’s long-term goal is to be an integral part of India’s fast-growing defence market, by partnering in the Indian Government’s vision for its defence sector – Made in India and Made for India. Dean McCumiskey (pictured, top right), Managing Director and Chief Executive of BAE Systems, India, says he fully supports India’s long-term strategic mindset, as he talked to UK India Business Exchange from his company’s New Delhi HQ. “In India, technology transfer is what really drives an agreement, and that’s what we bring to the table. In the few months since I took charge, I have seen an increasing appreciation within the customer communities of our long-term approach to the tremendous opportunities the sector presents us,” he says.
“Looking forward, we see around £1 billion of opportunities here in the next two years. Naturally, the Hawk will be an important component of this as also we hope will the M777, a product of British design which has a unique titanium structure for air portability. The gun is assembled at BAE Systems’ facilities in the United States, although the titanium fabrication is largely done in Barrow-in-Furness in the North West of England. “We’ve already sold over a thousand of these howitzers, to the US Marines and Army, Canada and Australia, and we’re optimistic about prospects here. If the Indian Army places an order, we would feel very privileged to provide one of the finest armies in the world the next generation equipment they need.” A crucial aspect of the company’s footprint in India is its Joint Ventures (JV). Together with multinational group Mahindra & Mahindra, BAE Systems has established a JV named Defence Land Systems India (DLSI) whose focus is on the armoured vehicles and artillery sectors. BAeHAL, its JV with aerospace giant Hindustan Aeronautics Limited, is a software and engineering services organization based in Bangalore and has been in business for over 19 years. In fact, DLSI is participating on what is known as the Futuristic Infantry Combat Vehicle or FICV competition. As part of the partnership, BAE Systems will transfer into DLSI critical technologies including the company’s proven mobility technology, prime contracting and systems engineering capabilities. “The FICV is a pivotal programme, by any standards,” says Dean. “If the Mahindra-led consortium is selected, the design, testing and proving stages would start as soon as the work is awarded. The FICV also presents us the platform for our second technology transfer into DLSI – the first being for the indigenous Mine Protected Vehicle which benefited from technologies from our armoured vehicle business in South Africa.” Its obvious that a steady trendline of defence expenditure at about 2 per cent of GDP, a stated intent of $100 billion worth of acquisitions over the next five years, and the focus on self-reliance, are fundamental tailwinds for those eyeing the India defence market but it will take the long-term perspective and embeddedness of those such as BAE Systems to make a success of it.
View from the Top
The Indian State Growing Faster than China By Alpesh Patel
You may already think ‘BRICS’ is outdated. Either because the N11 (next 11) are increasingly in focus, or because growth has slowed. But you’d be wrong. The share of global GDP growth from the BRICS will be 61% from 2008-2014 according to the IMF. Compare that to 13% for the G7 for the same period.
Alpesh Patel, Founding Principal of Praefinium Partners Ltd and Ukibc Board Member
And within that, India is projected to have the same proportion of global GDP as it did in 1850 (5 times more than it does today). So the trend is clear, India in BRICS is going backward to move forward. But high-level generalities do not help businesses do actual business and win orders. They do not help practical business people succeed. You want within the fastest-growing countries, those states which are themselves growing the fastest and the most business-friendly - otherwise you’ve picked the right team, but the wrong player. According to MOSPI, (Ministry of Statistics and Programme Implementation in India), the regions’ driving India’s growth the most are Gujarat, Maharashtra, Tamil Nadu, Kerala, Harayana and Punjab.
TIP: Thorough research is a must - you have to do your homework. Make sure you understand the opportunity before you visit and check at the outset what, if any restrictions will apply to your venture.
With its charismatic Chief Minister Narendra Modi tipped by many to be the next PM, and even more charismatic brand ambassador, Amitabh Bachchan, Gujarat tends to be the poster child for India. The average annual growth rate over the past five years has been 10.4% - greater than that of China. Ahmedabad, the commercial capital is ranked the third-fastest growing city in the world by Forbes. And Gujarat contributes 22% of all of India’s exports. But describing India by statistics is like describing the Taj Mahal by its dimensions.
So what makes this, the home state of Gandhi, with roughly the population of the United Kingdom, but only the GDP of Angola, so different for business - and a regular starting point for British business into India. The obvious business aspects apply: low corruption, a business friendly regulatory environment, directives from the top, reduced bureaucracy, power and transport infrastructure, port connectivity, educated workforce and Special Economic Zones. Little wonder Tata shifted the manufacture of its Nano to Gujarat. Of course the Ambanis - India’s richest family and many of the world’s richest Indians happen to be Gujarati too - so the state has a history of political and business influence globally. And of course there is the familiarity for Brits - given how many Gujaratis there are in Britain - the culture and food will be of no surprise as Mr Peters meets Mrs Patel. So what would be anyone’s next steps to examine the opportunities to set up in States such as Gujarat? www.vibrantgujarat.com will leave you feeling exhilarated - it clearly reveals how hungry and able the State is for business. But of course the best starting place is the UKIBC. In years to come, those who did not look at the one-way trends, and therefore the one-way business bet of states such as Gujarat will answer to their shareholders or their offspring - why not? But as with all business - the 5 ‘Ps’ apply - poor planning produces poor performance. Alpesh Patel is an executive board member of UKIBC, and the founder of Praefinium Partners, a private equity firm focused on India. For the British government he is appointed a ‘dealmaker’ to look for companies of outstanding potential and technologies from India, China, Malaysia and Singapore.
UK India Business Exchange Issue 01 www.ukibc.com
Indian Business News
UK SUCCESS STORIES from India Retail, Lifestyle and Logistics
India’s Retail Market Opens Up The UKIBC welcomes the news that the Indian Government has approved the much awaited reforms to FDI in multi-brand retail. The reinstated reforms permit Indian states to allow FDI of up to 51 percent in multi-brand retail, opening the way for UK companies to invest in the Indian retail market. The UKIBC expects the reforms to be highly beneficial for both Indian – farmers, SMEs, and consumers - and for UK businesses. Additionally the reforms add new flexibility to the requirement that 100 percent foreign owned single brands must source 30 percent of their products from Indian SMEs. International firms seeking a waiver on this sourcing provision now have the option of establishing their own factories in India. The reforms are of major interest to UK Plc as they will allow UK retailers, food and drink exporters, and supply chain experts to enter into the Indian market on an unprecedented scale. British businesses already have a strong presence in the region, with major investments from UK brands such as Tesco.
Retail, Lifestyle and Logistics
Skills and Education
Cox and Kings
UK travel provider Cox and Kings are developing a new luxury wellness camp, called Lakshmi Kutir, in Allahabad which will commence operation in time for the 2013 Kumbh Mela.
The Indian Government has tied up with Pearson to set up a school education centre for assessment, evaluation and research. This is marking the first concrete move by the Indian government to foster public-private partnership (PPP) in the space, aimed at reforming the highersecondary segment.
Sun Mark Ltd Sun Mark Ltd launched their Royalty range of biscuits in February this year and their Pure Heaven juice brand is retailing across India.
If you would like to get more information or contact these companies please contact BusinessExchange@UKIBC.com
Pearson Group The State Government of Assam and Pearson Group have also announced a joint initiative to provide vocational skills training for young people in schools in Assam. Assam Chief Minister Tarun Gogoi also launched the first skills delivery centre, which is expected to serve as a platform for the introduction of the National Vocational Education Qualification Framework, an ambitious national program to integrate skills, training and qualifications in schools.
Retail, Lifestyle and Logistics
Advanced Engineering and Manufacturing
Jaguar Land Rover
Footwear brand Clarks opened their 18th store in India in May 2012. Spread over 2,600 sq.ft, the new outlet stocks collections for men, women, and children ranging from office to party footwear. Clarks now has 18 stores in India.
Premier Inn Premier Inn, the UK’s biggest hotel brand and part of LSE-listed Whitbread, plans to invest around Rs. 4,000 crore in India within the next eight years to build around 75 hotels across India. While there are currently two Premier Inn hotels in India – in Bangalore and New Delhi – their ambitious target is to open 8 hotels every year for the next 8-10 years in cities such as Pune, Goa and Chennai.
Pavers Ltd After becoming the first company to apply for India’s new 100 percent allowable FDI in single brand retail UK footwear retailer Pavers Ltd have announced they will open 40 more stores by March 2013.
Booker Booker are in the process of opening 2 to 3 new Cash and Carry stores which will be complete before the end of FY13.
Jaguar Land Rover is initiating a feasibility study to explore manufacturing in India
Indian Rotorcraft Indian Rotorcraft, a joint venture company of Augusta Westland and Tata Sons, is setting up a new helicopter production facility in Hyderabad. The joint venture will assemble, customise and flight-test new helicopters for the Indian and global markets, from mid-2013.
Stirling Dynamics UK aerospace manufacturer Stirling Dynamics has secured its first order from India.
India Power Cuts July 2012: Half of India’s 1.2 billion people lost power. The outage stretched from Assam in the northeast, to the Himalayas and the north-western deserts of Rajasthan. With such a high power demand, the blackout has given fresh impetus to India’s power sector. The push to reform when it comes, will unlock opportunities for UK companies, including those making mining equipment, the nuclear industry and renewables.
Mott MacDonald Mott MacDonald India has been appointed design consultant for the planned Raipur-Bilaspur National Highway 200 (NH 200). The 127 km, mainly 4/6 lane road, will connect Chhattisgargh to Chandikohole in Orissa.
Dedicated service for SMEs
Sector Subscription The UKIBC offers a Sector Subscription- tailor made for SMEs looking to enter India or are new to India. We all know that entering new markets is never an easy option but the case for export is equally compelling. According to the UKTI, firms that export increase their productivity by 35 per cent in the first year alone; they achieve stronger financial performance and are more likely to stay in business. The UK India Business Council’s Sector Subscription service helps SMEs understand the India opportunity and how to access it. Companies receive market intelligence, including monthly sector views, quarter reports, free access to sector events, and access to delegations. For more information or to subscribe please telephone 020 7592 3040 or contact firstname.lastname@example.org
UK India Business Exchange Issue 01 www.ukibc.com
UKIBC News Roundup UKIBC and BDO survey presented to House of Lords September 2012: The UKIBC submitted evidence to a House of Lords Select Committee on Small and Medium-sized Enterprises (SMEs), examining the nature of support wanted by SMEs to help them export. For the UKIBC, we will use the survey findings to inform our own approach to developing British business relations with India. Two major themes emerged: a need for more in-depth information about India, businesses know the generic/basics but want more granular details on states, sectors, and practical advice. The other theme is the need for an impartial in-country support to enable SMEs to enter the market.
Successful Skills Delegation September 2012: The UKIBC took a Skills Delegation to New Delhi and Hyderabad, accompanied by the Rt. Hon. Patricia Hewitt. In New Delhi we held sessions on ITIs and healthcare, a workshop for FE colleges, and attended the FICCI Skills Summit. In Hyderabad the delegation visited REEMAP (a Government of Andhra Pradesh skills training initiative) and spent a day examining healthcare skills opportunities, including a visit to the impressive Apollo Health City. Patricia Hewitt said: “It was a great success, demonstrating the importance that UK companies are placing on gaining access to Indian markets, and also the enthusiasm in India to partner with the UK.”
India’s Internet Usage with APTN September 2012: The UKIBC held a seminar with APTN, to compare and contrast China’s and India’s media scenes. China has tough controls designed to maintain political stability, which have discouraged big western media players (Google, News Corp) from playing a major role in the Chinese media scene. India though, is vastly different. Regulation is far lighter, and the media are predominantly driven by commercial considerations. The panel, chaired by Michael Forgione (IVCA), consisted of guest speakers Peter Phippen (East West Relations Ltd) and Benjamin Schmittzehe (Sustainomics Group). They discussed the differences in both media cultures and how it may affect the wider development of these two Asian giants.
UKIBC Delegation to ‘Vibrant Gujarat’ January 2013: The UKIBC is leading a crosssectoral delegation to the emerging state of Gujarat and the business hub of Mumbai. It’s an ideal opportunity for anyone looking to move into the Indian market or grow their business. The delegation will visit the Vibrant Gujarat conference, which is an excellent chance for delegates to interact with Gujarati, Indian and international businesses and discover the opportunities within the state. Mumbai offers the opportunity to meet Indian and successful UK businesses and learn more about succeeding in India. Focus sectors in Gujarat are automotive, engineering, chemicals, ICT, education/ training, clean energy, infrastructure, ports, logistics, agribusiness. For more details check the UKIBC website.
ATA Recruitment Ltd AgustaWestland Booker Bournemouth & Poole College DHL Supply Chain Duke Street Future Renewables Gwent College IVC Media Ltd Khaitan & Co Livetime Learning London College of Beauty Therapy Longbridge Veterinary Services Lorne Laboratories Limited PA Consulting Positive Moves Prefix Associates SBI Cap (UK) Ltd Summit Medical Ltd Surface Technologies International Limited The Oldham College Vogue Beds Ltd Wadaro
Gujarat: A state of opportunities 15th October, London
GUJARAT MBA’s VISIT THE UK
Opportunities in Eastern India and West Bengal 19th October, London Indian Aerospace and defence Supply Chain Opportunities 26th October, London Jeevika Trust and UKIBC: India - should Trade and Aid be linked? 31st October, London Supporting Healthcare Skills for India 31st October - 1st November, London and Manchester Insight India Roundtable: Retail Infrastructure - featuring Benoy 12th November, London The Indian Consumer: Retail Opportunities in India 20th November, London The Indian Consumer: Food & Drink Opportunities in India 4th December, Nottingham UKIBC Delegation to Vibrant Gujarat and Mumbai 10-17th January, India
September 2012: The UKIBC was delighted to host a group of young Gujarati business people. The programme included a visit to a vocational training centre, a roundtable on doing business in the UK and a networking event at the House of Lords.
For more information on UKIBC events please visit the website. Event dates are subject to change.
The objective was to raise awareness of the opportunities in the state and promote the Vibrant Gujarat conference in January.
Rt. Hon Patricia Hewitt,
Gujarati MBA’s visit
Chair of the Ukibc
the House of Lords
UK India Business Exchange Issue 01 www.ukibc.com
Gujarat - once seen... never forgotten By Pavel Choudhury
Cracking fireworks illuminate night skies with a spectrum of colours. People celebrate into the early hours promoting not only unity and brotherhood, but remembering religious sentiment. Navratri is celebrated across India for nine consecutive nights, but it’s particularly special in Gujarat. Filled with vibrance and vigour, Navratri is no different - people congregate in temples, singing and dancing till dawn. The festival is devoted to Durga, the mother goddess and her nine forms and begins in September/October, which usually coincides with the end of the rainy season. India is a culturally diverse nation and celebrates various holidays and festivals for Hindus, Muslims, Christians, Buddhists and Sikhs. At times of celebration, the nation observes the holiday universally and joyous celebrations fill the streets. If you are there during this time of year, you’re guaranteed an experience never to forget. Irrespective of caste and creed, Hindus across India visit temples during Navratri, offering pujas (religious ritual) at Durga’s feet. According to Gujarat Tourism, the region received more than 450,000 foreign visitors from April 2011 to March 2012 - up 50% from 2009-2010. Anthony Good, a UKIBC board member, who chairs the travel company Cox & Kings said: “The fairs and festivals are full of enthusiasm, entertainment and spirituality. Gujarat is known worldwide for its Navratri celebration, which sees people immersed in the spirit of dance for nine nights.”
Where to stay – In Gujarat Whilst in Gujarat, unwind at the Gateway Hotel Ummed Ahmedabad, International Airport Circle, Hansol, Ahmedabad 382 475 (Tel: 91 79 6666 1234 ). Located on the banks of the Sabarmati River, this hotel offers friendly service and local, authentic fine dining. For guests seeking culture, try the Gateway Hotel Akota Gardens Vadodara, Vadodara 390 202 (Tel: 91 265 6617676). Nearby attractions include the beautiful Laxmi Vilas Palace and Sayaji Garden with its planetarium. Alternatively, experience the five-star Gateway Hotel Athwalines Surat, Ambika Niketan, Surat Dumas Road, Surat 395 007 (Tel: 91 261 6697000), whose rooms boast spectacular views of the Tapti River.
TIP: Gujarat is warm all year round – Dress appropriately, at certain times of the year parts of India can be very cold, but Gujarat is broadly warm most of the time.
The Maharajah’s Palace & Navratri Celebrations
Like many Indian festivals, dancing is a showpiece event. If you like to sing, dance or both, the Raas Garba dancing starts after Puja. Men and women dance in the form of a circle and this is seen as purifying, releasing inhibitions and empowering one’s spiritually.
“the beautiful Laxmi Vilas Palace and the Sayaji Garden, which hosts a planetarium.” After the nine days, Dasara begins - also known as Vijayadashami (Day of Victory), where Lord Rama invoked the blessings of Durga by performing ‘chandni puja’ to kill the ten-headed king of Lanka, Ravana.
Vadodara is considered the cultural capital of Gujarat, is one of the most sought after locations for Navratri and makes an ideal place for you to submerge yourself in the culture.
The ten days symbolise Ravana’s ten heads and giant effigies of him are set alight on this day in declaration of the victory of good over evil.
The dandiya (colourful wooden sticks) often accompany the dancers during Garba. Darius Merchant, GM of the Gateway Hotel Ummed Ahmedabad recommends in Vadodara,
It’s a great sight to witness and especially loud with an enormous firework display. Each festival has its own mythological, historical or a religious significance, and is always met with a carnival-like atmosphere. There are other festivals and cultural, historical and natural attractions in Gujarat. Bright colours adorn January skies too, for the annual Ahmedabad international kite festival. The event showcases the art of kite fighting and coincides with Uttarayan, marking when winter turns to summer in the Hindu calendar. Kite enthusiasts from across the globe embark on Gujarat rooftops from dusk till dawn to pit their wits against all-comers. Ahmedabad has hosted the event since 1989. Darius Merchant advises a visit “by the banks of the Sabarmati River, see the local attractions of the Bhadra Fort and the Shaking Minarets.” Sasan Gir is home to Gir National Park, one of the most important wildlife sanctuaries in the world. Anthony Good added, “Sasan Gir is a premium tourist destination in Gujarat, endowed with an opulently rich ecosystem and plentitude of flora and fauna. The forest is the second place in the world, after Africa, where the lion can be seen in its natural habitat.” Bhavnagar is home to several lakes and temples, and is also a convenient base to visit the 9,000 big and small Jain temples at Palithana. Mahatma Gandhi was a Guajarati, and if you are intrigued by history, you should visit the Gandhi Smarak Sangrahalaya (Gandhi Memorial Institution), and learn more about the ‘Father of the Nation’. The museum, in Ahmedabad, documents key artefacts from his life. The beauty of Gujarat is that it encompasses a vibrant culture and a rich heritage, incorporating several civilizations. The pride of the destination is reflected in the art, music, literature, religious traditions, cuisine, fairs and festivals of its cities. With more than 4,500 years of history, Gujarat contains some of the greatest historical and archaeological monuments, and is certainly a special place.
UK India Business Exchange Issue 01 www.ukibc.com
Next Generation Network
Looking to network? UKIBC’s Next Generation Network Manager, Tara Panjwani, shares her highlights from a successful summer when the Network’s events continued to inspire and connect young entrepreneurs. In August, we had the pleasure of hosting awardwinning entrepreneur, Lord Noon, Chairman of Noon Foods - a global company specialising in frozen and chilled meals. Lord Noon led the introduction of good quality Indian foods into the UK’s supermarkets and homes. He is said to have coined the term ‘chicken tikka masala’, which has practically become the new British national dish. Lord Noon shared his fascinating story about his journey to the UK as a young boy, the factors that inspired him to set up his food business from scratch, the lessons he learned along the way, and the innovative strategies he had to deploy to succeed. He also highlighted new opportunities for young entrepreneurs, and discussed his current project to establish his business in India. Also in August, at a joint NGN-D Group event, the dynamic founder of Urban Shore, Sonita Dass, captivated her fellow NGN members with the story of how she successfully established her business in India. We also enjoyed fascinating insights that evening from Yogesh Chauhan of Tata Consultancy Services and Professor Brian Brivati of the D Academy. They explained how vital it is to have solid learning and development, as well as community and social engagement strategies in order to succeed in India. The summer also saw a great event with Ishan Saksena, Director of Swordfish Investments and exCEO at Queens Park Rangers Football Club. Ishan spoke about his time at QPR - what it took to turn around the business and put a winning team on the pitch. He also discussed the new opportunities in the field of sports management, especially in the Indian context. He was interviewed by Start Up Britain Campaign Director, Farid Haque.
Ishan also considered the investment landscape and the positive and improving entrepreneurial ecosystem in the UK India corridor. Within which, he said, the NGN was pivotal - bridging like-minded entrepreneurs to share their strategies for success and explore new partnerships. The next few months will also see some interesting new developments for the NGN and its members. We are working with some important corporate partners to design a ‘Succeed in India’ training workshop for small, high growth companies. Watch out for details over the autumn and winter. We are also compiling a report on how young business people envisage the UK-India relationship in 2030. We would welcome your contribution to this initiative, which has the working title of ‘Forging the Future’. For more information and to contribute please contact Adriana.Vega@ukibc.com.
What is NGN?:
CONTACT: NGN Network Manager: Tara Panjwani E: tara.panjwani @ukibc.com Tel: +44 (0)20 7592 3841
The Next Generation Network is a community of young entrepreneurs and business leaders interested in the UK India business relationship. It does this through a series of thought leadership and networking events, and via a dynamic LinkedIn community. As well as providing networking, the events help members understand new business opportunities in India and how to access them, develop cross border links, and to learn from successful entrepreneurs. If you are a young entrepreneur or business professional looking to build relationships in the UK India business corridor, then the NGN is for you.
Ishan Saksena talks business to NGN members
Benefits: - High quality networking with top young professionals and dynamic entrepreneurs within the UK and India corridor. - Access to exclusive Next Generation Network events throughout the year. - Profile on NGN section on the UKIBC website. - Opportunity to promote your work and achievements in UKIBC publications, newsletters and social media sites such as LinkedIn, Twitter and the UKIBC online portal and website.
BRIBERY ACT All UK companies conducting business at home and abroad are subject to compliance with the UK Bribery Act, which came into force in April 2011. This requires incorporation of certain procedures, no matter which country the UK company is operating in, and India needs to be seen as one of the markets where these procedures are best put into place. As your overseas operations are accountable under the scope of this law, we suggest the following guidelines to help you minimise risk
GUIDELINES: - Keep intermediaries to a minimum. Fewer parties involved will make your operations more efficient and reduce risk. - Screen your local representatives, agents and key staff and ensure their remuneration is at market rates. - Incorporate anti-bribery and corruption provisions into contracts with partners and allow for audit rights. - Regularly exercise audit rights and monitor third party’s activities. - Best practice guidelines for countering bribery and corruption typically require provision of whistleblowing facilities. This involves establishing a mechanism whereby individuals can report any suspicion of corrupt behaviour confidentially and, if they wish, anonymously.
“Although common knowledge suggests that bribery and corruption are a common occurrence in India, this has not been the experience of Titan HMG, neither in the start-up of our business nor in the day-to-day operations.” – John Fenton, Operations Board Manager and Board Director, Titan HMG Paints India Ltd
PwC’s Principles: 1) Proportionate procedures – smaller organisations with less complexity and/or resources are not expected to build programmes and controls with the same level of sophistication as a larger company does. No business is entirely devoid of risk, so doing nothing is not the answer. 2) Top-level commitment – the ultimate success or failure of an anti-bribery programme will depend on the culture of the organisation and whether people believe that ethical behaviour matters to the way they are evaluated and rewarded. 3) Conduct a comprehensive bribery risk assessment – a bribery risk assessment should be repeated periodically to ensure that the company’s procedures continue to be relevant. 4) Due diligence – it is essential that risk-based compliance due diligence checks are carried out on any third-parties that the organisation plans to engage. 5) Communication (including training) – regular training should be monitored and evaluated. 6) Monitoring and review – internal audit / real-time monitoring.
PwC’s 10-step implementation plan that will help organisations address all six of the Ministry of Justice principles
1) Assess risk 2) Evaluate existing controls 3) Target operating model 4) Remediation planning
CONTACT: Tony Parton Partner, Forensic Services Tel: +44 (0) 20 7213 4068 E: tony.d.parton @uk.pwc.com Faisal Ahmed Senior Manager, Forensic Services
5) Design enhancements
6) Roll-out 7) Implement ––[Business takes ownership] 8) Test 9) Follow-up
10) Ongoing monitoring and continuous improvement
Tel: +44 (0) 20 7804 6128 E: faisal.a.ahmed @uk.pwc.com
UK India Business Exchange Issue 01 www.ukibc.com
Kolkata - a city of charm… and of challenges Britain’s expertise in infrastructure is being shared with one of India’s most famous cities. Ian Halstead reports. Ruchi Chakravarty earned the chance to help recreate the city of her birth, when seconded from HOK to West Bengal, and her passion overflows like the mighty Hoogly as she recalls her return to Kolkata. “I’d left there when I was in my teens, worked in many other places, and lived in New York and London, so when the chance came up for a threemonth secondment there, I couldn’t resist,” says the architect and urban designer. “It was 42 degrees and 80% humidity when I arrived, so it was physically challenging, but it’s such a rare opportunity to be given a blank canvas, and to be asked to consider regeneration strategy for the longterm, that after the first few days, I eased into the different surroundings. “The project was especially intriguing because it’s quite the opposite of my normal work, where I employ detailed methodology and a very specific agenda. “In Kolkata, with the open-ended brief and the absence of a regimented process, there was the opportunity to improvise and to be spontaneous. Everyone was very receptive to different ideas and thoughts, and we were able to look at the issues with fresh eyes.” As the British capital of India for almost 140 years, the city has an imposing array of Victorian architecture, not least a waterside crammed with towering warehouses, and India’s largest railway station, Howrah - an eye-catching sight in its red sandstone glory.
“The city has a wonderful heritage, so preserving that sense of history will be very important, especially for attracting more tourists,” says Ruchi. “Kolkata has always been considered India’s intellectual capital, two Nobel Prize winners hail from the city, as does an Oscar-winning film director, which all adds to the city’s appeal. ”There are serious infrastructure issues though. Only one Metro line operates at the moment, and although four more are planned, they are all by different companies, so the need for a coherent transportation strategy is very clear. “There’s definitely a will and a desire to change, but one major challenge will be getting all the various state departments to work in partnership, towards common targets.” Kolkata also has an intriguing political heritage, having been under the control of the Communist Party of India (CPI(M)) for 34 successive years, which has left it with some interesting place-names. The British Deputy High Commission, for example, used to sit proudly on Harrington Street, but the road is now dedicated to Ho Chi Minh … Unfortunately, the outgoing administration also saddled its successor with massive debts, so private sector capital will have to drive much of the city’s physical renaissance. “The new government is definitely a catalyst for change, but hasn’t the resources to fund many projects,” admits Ruchi. “There’s a new town, Rajarhat, for example. The land was government-owned, so the plans went ahead swiftly. However, development of the areas largely driven by the private sector - who got involved in construction once infrastructure was put in place.
“Clearly, urbanisation is a massive trend throughout India, and there are huge opportunities for British companies, so we talked to as many professionals and as many people at the sharp-end as possible, to identify and discuss priorities and needs.”
“Kolkata is going to need external skills and regeneration expertise, and a great deal of finance, which is where UK plc will come in, and public-private partnerships will be very important. “A key element of the process will be bringing government officials from Kolkata to the UK, so they can meet their counterparts, and also make contacts in our private sector.” The original intention was to second one UK-based regeneration specialist to West Bengal, but the quality of applications was so strong, that two were chosen. Steve McKenna, head of town planning at Mott MacDonald, is a town planner and chartered surveyor, whose urban regeneration expertise including time working on the master-plan for the Howrah district, adjoining Kolkata, and he certainly relished his return. “We were both very aware that this is something for the long-term, and that it will take time to build relationships, but the first stage is to identify the challenges, and there is no doubt that the city and the wider region will have major opportunities,” he says.
“Our brief was to carry out a ’scoping study’ in West Bengal, but as most people live in and around Kolkata, and this is where infrastructure issues are of the highest priority, much of our time was spent there. We started by focusing on the key strategic issues, then went down into more detail to preparing a list of possible projects. “Clearly, urbanisation is a massive trend throughout India, and there are huge opportunities for British companies - even in the short-term - so we talked to as many professionals, and as many people at the sharp-end as possible, to identify and discuss priorities and needs.”
TIP: Spend time in India – India is large and complex, and so its regions can be very different from each other. Make sure you visit India and pick the right region for your business.
Steve even spoke at two conferences on urban development, looking mainly at issues around the future development of Kolkata and urbanization as well as densification of cities, and was pleased by both the response to his thoughts, and the degree of engagement from local business leaders and government officials. Britain is certainly not alone in seeking to develop relationships with Kolkata and West Bengal, and Steve encountered other representatives from several European countries, including Germany.
Map of urban renewal
UK India Business Exchange Issue 01 www.ukibc.com
Infrastructure UKTI international business specialist By John Nutt The Indian government is projecting to invest £600bn over the next five years with major spend in high-value urban infrastructure and regeneration projects. Since May of this year UK Trade & Invesment and UKIBC have been working together to look at urban regeneration opportunities. The scoping study on West Bengal is one such example of UKTI’s High-Value Opportunities (HVO) projects, which aims to help British companies win large-scale overseas contracts. Through our global network of trade specialists, sector specialists and private sector business partners, UK Trade & Investment identify and prioritise procurement opportunities which offer the most value to this country, then provide intensive support for our businesses to access them. The revitalisation of Britain’s inner cities has given the UK a global reputation as a source of world-class expertise and capability, in the design, construction and maintenance of infrastructure assets, most recently the Olympic Park in Stratford. Given the demands that rapid urbanisation places on infrastructure, Britain is uniquely placed to share this embedded knowledge and experience throughout India’s fast-growing cities, such as Kolkata. India’s Minister of Urban Development, Kamal Nath, is keen to attract greater participation from UK companies in infrastructure work, and a memorandum of understanding (MoU) on capacity building, land economics, sustainable master-planning, transport planning and heritage management was signed in London in September. UKTI and UKIBC’s urban infrastructure group led by Philip Bouverat, JCB and Terry Hill, Arup have been working together for almost 18 months to identify urban regeneration opportunities. After a very successful joint trade mission last November to Kolkata, Mumbai and Bhopal, we decided to focus on the State of West Bengal for a detailed scoping study. This was helped by the diverse array of potential opportunities (e.g., developing the Hooghly river along the lines of the South Bank) that play to UK strengths (such as our capability in the regeneration of the docklands in London). This expertise coupled with the strong desire of the Chief Minister of West Bengal to collaborate with the UK, were the catalyst for this scoping work. Consequently Ruchi Chakravarty and Steve McKenna were seconded to the state for three months, based in the Deputy High Commission, and working closely with both the UKTI team and the State’s Ministry of Urban Development undertook this task. The sectors they studied included tourism, heritage, food and retail, education and healthcare, as well as all aspects of infrastructure, from transport to water, energy and flood protection. Their report will be launched at a joint UKTI/UKIBC event in London in October. For further information on the UKTI High Value Opportunity Programme please access the link www.ukti.gov.uk/uktihome/item/219720.html, or, for more information on this project email@example.com or Rishikesh Chanda, UK Trade & Investment’s Project Lead based in Kolkata, firstname.lastname@example.org
“Through our global network of trade specialists, sector specialists and private sector business partners, UK Trade & Investment identify and prioritise procurement opportunities which offer the most value to this country, then provide intensive support for our businesses to access them.”
“Kolkata is going to need external skills and regeneration expertise, and a great deal of finance, which is where UK plc will come in, and public-private partnerships will be very important.” Ruchi Chakravarty Associate Urban Designer The HOK Planning Group email@example.com Tel: +44 20 7636 2006 Direct: +44 20 7898 5239
“There is no doubt they are starting a period of change, and the Chief Minister Mamata Banerjee is very charismatic and determined. Whichever regeneration route they choose to go down, publicprivate partnerships or not, projects are already being given the green light,” he says. “There might be limitations as to the availability of funding from central government, and it’s always possible that the initial effort is on a small number of ‘beautification’ projects, but everyone needs to have very focused targets, and to understand what can be achieved, and what can’t - for now at least. . “Some of the most basic issues, such as waste, water, sewage and transport, still need to be tackled. Kolkata’s main water treatment plant, for example, was built by the British around 150 years ago, as was the city’s sewerage system, and addressing critical infrastructure needs will be ever more urgent. “It was a wake-up call when recent power cuts across North and East India affected millions of people, including West Bengal.” Since Steve returned, he has been reshaping his initial ideas to make them more user-friendly for UK companies, but he stresses that whatever the sector, the challenges facing West Bengal will not be resolved through a traditional commercial mindset. “This is urban regeneration on a gigantic scale, and projects will need to be handled sensitively and with a people-orientated approach. It will be important for the companies and individuals involved to take a more holistic approach, and not just focus on the bottom-line,” he says. “It may be that one way forward is to see Indian developers involved, funded by overseas capital - and hopefully from the UK, but the solutions will definitely have to be devised and delivered with a proper understanding of the local context.” Steve McKenna Head of Town Planning Stephen.mckenna @mottmac.com Tel: 0208 774 2301 Mob: 07789 746425
Top: Kolkata Flower Market. Images Courtesy of Sudipto Sen. Ukti - Kolkata. Centre: Howrah Railway Station. Bottom: Vidyasagar Bridge.
UK India Business Exchange Issue 01 www.ukibc.com
India’s Silicon Valley takes shape The Delhi-Mumbai Industrial Corridor is a project on a global scale, often regarded as India’s equivalent of Sillicon Valley, and even that‘s an understatement. Planning and constructing a high-speed railway freight line running almost 1,500 kilometres, alongside a new six-lane express highway, is a major logistical and financial challenge for any country to tackle. However, the DMIC initiative includes a series of massive manufacturing centres, based on the hi-tech industrial models of South Korea and China, which will drive up exports of hi-tech products and create employment on an unprecedented scale, in a 100-km wide corridor The government’s long-term vision also envisages the creation of 24 new ‘smart’ cities, based on the latest advanced engineering the world can offer, with solarpowered energy grids, gas-based power stations, vertical residential zones and green belts, each housing between one and three million people. DMIC’s planners suggest a likely cost, just for the infrastructure elements, of between £50 billion and £60 billion, and the first industrial hub is expected to come on stream in 2018, near the city of Dholera in Gujarat. Close to 40% of the new corridor will run through that state, so the location’s an obvious choice, and innovative plans for Dholera’s evolution into a hi-tech city of the future have already been drawn up. However, one of KPMG’s UK-based audit partners, Mike Froom, says the DMIC proposals are also noteworthy for the government’s underlying philosophy. “This is one of the world’s most ambitious and innovative infrastructure projects, but its main drivers are economic and social influences,” he says. “McKinsey research calculates that almost 600 million Indians will be living in urban areas by 2030, as migration from rural areas increases, and as the
population continues to grow, so now is certainly the time to consider creating new cities. “All India’s existing cities are very constrained, and the idea of making the new cities fit for people to work, live and play is very much in tune with the latest urban thinking. The scale is so huge that this project will create work which will last a lifetime for many people. ”The timetable is very challenging, and the process of acquiring land along the proposed route will be a major challenge, but there is clearly a will amongst all the states to make this happen. ”Japan is providing a major element of the funding, and public-private partnerships will also play a central role, so there are enormous opportunities for Britain’s professional services sector, such as urban designers, architects, engineers, project managers and many more.“ KPMG director Justin Benson believes the most ambitious UK-based organisations will monitor the DMIC’s progress, and provide support for their colleagues on the ground in India.
“If you want to get a feel for a country, you can’t do it sitting in an office halfway round the world. You can’t beat getting your feet on the ground, especially in such a pro-business environment as India.”
“A project of this scale is certainly not something to rush into, but people need to start taking little steps now - not in five years,” he suggests. “Research is, as always, very important, but for me the best way to discover what this concept is all about is to get on a plane and see for yourself. “ If you want to get a feel for a country, you can’t do it sitting in an office halfway round the world. You can’t beat getting your feet on the ground, especially in such a pro-business environment as India. “As the project moves forward, companies will have to ensure they are in tune with the strategy behind the DMIC, to look at the skills needs within their own business, and to analyse and understand the potential risks which they could encounter. “For now though, whether you are a manufacturer wanting to know more about the special economic zones, or an architect interested in the proposals for new kinds of residential space in these cities, just go there. It will be hugely informing, and the enthusiasm with which you will be greeted will amaze you.”
TIP: Take a long term view of the market, persevere and commit – India is a growing and emerging market, you need to be there for the long haul in order to extract the best results from the market.
CURRENT UK COMPANIES OPERATING HERE:
DMIC area. Image courtesy of Aecom
• Halcrow Wilson • Scott Macdonald • Mott • Aecom
UK India Business Exchange Issue 01 www.ukibc.com
Biotech mission hits the target By Ian Halstead
A trade mission to create links between Britain’s life science sectors and their Indian counterparts has delivered its first solid results - just as the followup visit was being planned. Last October, a high-profile delegation of companies and advisers, backed by UKTI and the UK Bio-Industry Association (BIA), and including Wellcome Trust and the Health Protection Agency, visited Bangalore, Hyderabad and Mumbai. The core aim was to identify opportunities for UK businesses looking to capitalise on India’s R&D skills, and those interested in building long-term partnerships in the region. Now, one of the companies on that mission - Proxima Concepts - has unveiled a licensing arrangement with Mumbai-based USV, to develop and commercialise oral insulin for the Indian market. USV already leads the domestic sector for oral antidiabetic products, but believes Proxima’s innovative Axcess delivery system will provide significant new benefits, as it looks to deliver ever-more effective solutions to India‘s estimated 60 million diabetics. BIA’s chief executive officer, Steve Bates, was understandably delighted that the 2011 visit had produced such a swift result, and the timing was perfect with a similar mission arranged for September 2012.
Steve Bates, CEO of the UK Bioindustry Association
“In this instance, it’s about a British company providing proven drug delivery technology to a major Indian-based provider of insulin. In terms of benefits, delivering insulin orally to the liver reduces glucose fluctuations, and is also simple and pain-free.” Last month’s (September) mission, which included delegates from IP lawyers Cleveland, supply chain specialists Ellis Pharma and laboratory service providers SGS M-Scan, focused on the BioIndia event in Mumbai, and there were also meetings in Bangalore. Both cities are major healthcare centres, and Bangalore’s Baptist Hospital recently received an award for ‘successful innovation in operational excellence’ from the Federation of Indian Chambers of Commerce. “BioIndia attracts biotech and pharma players from North America, Europe and Asia, and if you’re looking to establish partnerships, or collaborations, with India’s most innovative companies in those sectors, you really have to be there,” says Steve. “The potential for two-way relationships between the life sciences industries in both countries is very clear and although there are still regulatory differences, everyone is working hard to remove those barriers. “The NHS is so well-regarded in India that it becomes a very powerful brand, when companies, advisers and organisations are trying to develop new partnerships. The UK is a global leader in life sciences, and India’s healthcare sector is growing remarkably quickly.
“There is already a strong relationship between the life science sectors here and there, generating benefits for both sides, but it’s great to have a practical deal to talk about,” he says.
“India is emerging as a provider of innovations and new talent, which offers huge scope for British businesses to win work - drug development companies, patent and trademark lawyers, supply chain specialists, logistics providers and many more. India also has many SMEs who do niche products, and they are eager to expand by linking up with overseas companies through partnering or licensing arrangements.
“It just shows what can be achieved by enterprising UK companies who are prepared to engage with India, and to go from first contact to signing a licensing deal so swiftly underlines the level of commitment from both USV and Diabetology (Proxima’s parent company).
“As India grows its life sciences sector, it will look to use more advanced technology, and again, UK plc has massive opportunities to win business there. India is looking to step onto the world stage in life sciences, and we need to let them know that we can satisfy its requirements.”
HOW TO JOIN A DELEGATION: Delegations can be a great way to see the Indian market. Business missions to India will introduce you to Indian contacts and potential partners. If your business requires officiallevel engagement such as with Indian state and central governments, then contact the UKIBC or UKTI. This route is far more effective than attempting to seek these contacts independently. Our next delegation is to Vibrant Gujarat in January 2013. Get in touch to find out more Direct: +44 (0)20 7592 3040 Email: firstname.lastname@example.org
UK India Business Exchange Issue 01 www.ukibc.com
Retail, Lifestyle & Logistics
Gujarat the catalyst for Farsanâ€™s global success â€œI was told how strong the infrastructure was in that state, and that its workers were skilled and enthusiastic.â€?
Top to bottom: Samosas, Nainesh Patel Obe, Managing Director at Farsan Ltd, Aloo Tiki and Nainesh with Farsan Staff
By Pavel Choudhury
Selling sand to the Arabs was long regarded as the ultimate achievement, but Nainesh Patel has managed to sell frozen snacks to communities weaned on the fresh variety. He set up Farsan Ltd in Leicester in 1999, with the simple goal of manufacturing good quality samosas for the large Indian community in that region. However, they were so well received by his British Asian customers that he expanded his Indian regional savoury snack range. Subsequent success saw him awarded an OBE in 2004 for his services to ethnic food manufacturers in the East Midlands, in recognition of his efforts in assisting British companies access international markets, and now he has a major food processing plant in India. Initially, Farsan focused on the UK market, but by 2001, the business had started to export to Europe, specifically Spain, Ireland and Denmark. During this period, Nainesh also started making frequent trips to India to assess the market and source spices, raw materials and basic food processing technology.
CONTACT: UKIBC Retail, Food and Supply Chain Logistics contact: Tara Panjwani e: email@example.com t: + (0)20 7592 3841
“I realised that there was a significant demand for these products in India, and consequently started selling samosas to Indians to tap into this niche market for good quality food,” he says. To make the most of India’s burgeoning retail sector, the company formed a partnership in 2004 with a distributor in Chennai to supply both the high-end and mass markets. One of the main problems the company then faced was rising manufacturing costs in the UK, so a second food processing factory in Gujarat to produce goods for the European and North American markets, as well as for the company’s growing base of Indian consumers. Farsan’s interest in Gujarat was triggered by a visit to Leicester by a delegation from the state’s Ministry of Agriculture in 2006, as Nainesh recalls. “I was told how strong the infrastructure was in that state, and that its workers were skilled and enthusiastic, and left with an open invitation to visit.” Nainesh later took up the offer, and having been taken across the region to see how its economy was growing, he decided it would be ideal for a production plant. For the first three years, Farsan’s strategy was to concentrate on the export market, but it began to increasingly focus on the local markets in Mumbai and Gujarat. Its entry into Gujarat was funded from internal resources, and as its success has evolved,. Farsan has appointed local distributors in Mumbai, Ahmedabad, Surat, Vadodara and Vapi. The Gujarat market has met Nainesh’s expectations, but only after much hard work and dedication He admits that overcoming people’s perceptions about frozen food was particularly difficult, but says Gujarat’s infrastructure and resources really made a difference. Along the way, Farsan encountered barriers from a regulatory perspective which they continue to contend with, but Nainesh now accepts red tape as a way of life in India. The Farsan Indian manufacturing facility was commissioned in 2009 and has proved extremely cost-effective. The success of this venture has now led to plans for establishing a fast food vegetarian outlet in Vadodara in Gujarat based on a franchise model. Farsan have already received a positive response from a dozen different companies in Surat, Rajkot, Ahmedabad and Mumbai, and Nainesh’s long-term vision is to roll out fast food vegetarian franchise outlets all over the UK and the United States.
UK India Business Exchange Issue 01 www.ukibc.com
Skills & Education
Skills initiative will work both ways UKIBC chair Patricia Hewitt has just led its skills mission to India. She explains the council’s ambitious partnership-based strategy. I have always believed collaboration should underpin all international relationships, so it’s very pleasing that September’s visit to Hyderabad and New Delhi made significant progress in creating links between UK-based skills providers and India’s training network - at both state and national level. We had a three-fold approach; connecting our specialist healthcare training organisations with the agencies needing such skills, identifying and debating India’s wider skill requirements, and concluding a detailed agreement on future collaborations. The delegation was a range of public and private sector providers including the AoC, FE colleges, Manipal City & Guilds, A4e, and Pearson Edexcel. Some of them are already operating in India, whereas others are very keen to enter. Healthcare training was a central strand of the activities in both Hyderabad and Delhi. We focused especially on the ‘low skill’ jobs that are vital to patient outcomes, quality and cost. In Hyderabad, Apollo Healthcare is working with the state training body REEMAP to develop ‘housekeepers’ and ‘caregivers’ for local hospitals. Westminster Kingsway and other colleges shared their experiences of similar programmes in the UK, transforming the self-confidence and employability of people with few previous qualifications. And, already in India, A4e is partnering with India’s Rural Health Mission to train bed assistants in several states.
We also discussed partnership opportunities with a major private sector company Genpact. In meetings outside the delegation that I had in Mumbai, I held conversations with Indian business leaders about opportunities to partner on digital media and construction skills. It’s early stages, but exciting prospects. Thanks to the efforts of everyone involved, not least our delegates, India’s healthcare sector skills council (HSSC), the government of Andhra Pradesh, the Federation of Indian Chambers of Commerce & Industry (FICCI), the Confederation of Indian Industry (CII), and our partners at UKTI, we were able to achieve all our aims. Our next step will be to build on this success, by stimulating the establishment of formal relationships between training agencies and colleges from this country, and their Indian counterparts.
Get involved – Healthcare Roadshow: There are huge opportunities in the healthcare training segment, both supporting State Government programmes and delivering B2B projects with organisations from within the UKIBC network. To raise awareness of these opportunities the UKIBC are holding events in London and Manchester, which will explore the healthcare skills market. For more information contact: Jesh Rajasingham UKIBC Research and Policy Manager e: firstname.lastname@example.org t: +44 (0) 207 592 3046
“India’s government wants 4.8 million people to be trained for healthcarerelated work during the coming decade.”
During 2013, I expect to see real practical projects starting to take shape, as a healthcare curriculum and qualifications are brought forward. There will also need to be national occupational standards in place which are recognised by the medical professions. The NHS is widely respected, and is both well-known and much admired in India, but whilst it can teach healthcare providers in that country a great deal, especially through its expertise in primary care, I am also sure the NHS can learn from India’s healthcare innovations. Such two-way relationships in skills mirror the UKIBC’s aerospace strategy. However, training - whether for healthcare, ICT or other sectors - is only part of the process. So there will also be a growing emphasis on establishing trade links with industries looking to recruit the skilled workers. As always with India though, the numbers make you pause for thought.
Rt. Hon Patricia Hewitt, Chair of the Ukibc
India’s government wants 4.8 million people to be trained for healthcare-related work during the coming decade, whilst Andhra Pradesh alone wishes to put 1.5 million young people into private sector jobs by the end of 2014, through job-specific training for the unemployed via its REEMAP initiative.
TIP: Hire good local staff, utilise the skills and expertise in India – many UK companies engaging with India have Indian offices with Indian staff, this is because there is a wealth of well educated and highly skilled staff in India. Make sure you exploit this resource.
The state is roughly the size of Egypt in terms of population, around 84 million, and - like this country - it has a very high and rising number of young people not in education, employment or training (NEETs), so this programme is a central element of its economic strategy. Andhra Pradesh is also a major centre for healthcare training, so we have engaged with several organisations which specialise in technical and vocational disciplines. However, we must be aware that winning work, through REEMAP or other India-based training projects, will not be easy, and will require our fullest commitment and dedication. It is clear that the scale of the commercial opportunities has attracted global interest, with Germany, Australia, Switzerland, Singapore and the United States among the countries competing for these multi-million pound opportunities. I know that UK plc can compete with the best, but we must develop a real understanding of what India wants, and take time to identify their precise priorities and needs. If we do - and everyone at the UKIBC is here to help you through that process - I am confident that we will achieve success.
UK India Business Exchange Issue 01 www.ukibc.com
The Big Debate We put questions on India’s growth agenda to the Indian High Commission, and PwC India’s Strategy and Research Leader, Shashank Tripathi.
PwC: Domestically, policy inaction, a focus on corruption, a fluctuating rupee and regulatory ambiguity around taxation and FDI in multi-brand retail have created uncertainty in the business environment. This has contributed to dampening investments and slowing down growth. In such a macro environment, major infrastructure and power projects have been delayed, slowing down industrialisation and contributing to the slowdown. Is the euro-zone’s economic turmoil a factor?
Why has India experienced slowdown in its growth rate? IHC: GDP growth did dip to 6.5% during the 2011-2012 financial year, but the economy had expanded at 8.4% in each of the two previous years, and India remains one of the world‘s fastestgrowing economies. The dip in growth was mainly rooted in the poor performance of three sectors; manufacturing, mining and construction. However, there were other influences, including subdued domestic demand, relatively high interest rates, a decline in the flow of credit to industry, and lower than expected growth in key trading markets, notably the US and Europe. The economy also suffered from lack of consensus in key policy areas, especially concerning direct foreign investment (FDI) in multibrand retail and other sectors, including aviation, insurance and pensions. PwC: Rising per capita incomes and growing demand in the emerging middle-class have ensured that India’s growth remains one of the highest in the world. However, India, like the other BRIC members, has experienced a slowdown in the last 12-15 months. Although the causes vary by country, low exports, low aggregate domestic demand and low investment were leading factors in each. What are the main factors holding back growth? IHC: Lack of adequate investment, low productivity and an inflexible supply chain in the agricultural sector is creating inflationary pressures and its share of GDP is declining. Although the service sectors are growing, manufacturing has remained stagnant at around 16% for several years. Skill gaps remain a major issue in various sectors, and many SMEs face challenges in terms of finance, technological upgrades and business modernisation. Policy-related issues related to FDI in multi-brand retail, insurance and aviation, and also to strategy concerning the environment and land acquisition, remain areas of concern, as does lack of fiscal consolidation, in terms of tax reforms and rationalisation of subsidies. Another challenge is the extremely low expenditure on scientific R&D investment - less than 1% of GDP each year.
IHC: Obviously. As one of the world’s great trading nations, India cannot remain insulated from the present global economic uncertainty. Subdued external demand has slowed down export growth, which was running at 40% in 2010-2011, but was down to 21% in the last financial year. The continuing uncertainty in the euro-zone has increased volatility in stock and debt-flows. The fragile economic situation in several European countries has also been the catalyst for subdued investor confidence. PwC: The slowdown has been compounded by the euro-zone crisis which has lowered demand for exports and limited credit growth. Increased investor risk aversion and perceived growth uncertainty have led to equity price declines, capital outflows and currency depreciation. What is India doing to return to high growth? IHC: The government is driving its growth agenda through a series of measures, designed to build confidence, and stimulate economic output. The new manufacturing policy (NMP) will accelerate the pace of investment in industrial infrastructure, and envisages increasing manufacturing’s GDP share to 25%, as well as creating 100 million jobs by 2022. The NMP also seeks to lift annual growth of India’s manufacturing sectors to between 12% and 14% - in the medium-term. The biggest single project underway is the Delhi Mumbai Industrial Corridor (DMIC), recently described by the consultancy arm of KPMG as one of the world’s most innovative and inspiring infrastructure schemes. This £58 billion project will accelerate industrial growth, and transform investment opportunities, along the new rail-freight corridor running for almost 1,500 kilometres, between Dadri and Navi Mumbai. Focus on infrastructure development, and siimplifying and rationalising FDI policy are other important initiatives, as is promoting exports. The Department of Commerce’s new strategy focuses on doubling merchandise exports by 20132014 and a series of incentives have been devised to help achieve that target. PwC: Over the long-term the opportunities in India, one of the few countries with a positive demographic quotient and a burgeoning middleclass, remain strong. PwC’s recent research shows
“FDI will have a crucial role in fostering India’s economic evolution, by improving skills, training and technology.” IHC
that the emerging middle-class will be over 570 million-strong by 2020, and will be the source of considerable domestic demand. The government is trying to improve the policy environment, improving infrastructure and implementing reforms such as the National Manufacturing Policy to help improve the enterprise environment. In the longer term, job creation to employ the growing workforce is being aided by sill development and training as well as boosting agricultural productivity in rural areas. Policies being crafted seek to generate employment which will create demand, raise the average savings ratio, lower labor costs and limit the long-term fiscal burden, boosting GDP growth and investment. The Indian government has realised that the issues holding back economic growth have to be addressed, in order to build global investor confidence. The recent changes at the finance ministry and greater involvement of the Prime Minister’s Office have started to drive action. The Indian government has declared a $370 billion investment in infrastructure and provided stimulus in agriculture for 2012, which should accelerate investment growth. Policies such as FDI requirements for single brand retail have been eased and steps are being taken to restore confidence in the tax regime. In addition to easing investment policies in key sectors such as multi-brand retail, it will be important to expeditiously and effectively implement the formalised policies and reforms to drive further foreign investment growth. Which sectors are likely to drive India’s future growth?
Mobile technology is a key driver of India’s fast-growing economy, and, right, PWC’s Shashank Tripathi.
“Rising per capita incomes and growing demand in the emerging middle-class have ensured that India’s growth remains one of the highest in the world.” - PwC
IHC: The manufacturing sectors, particularly SMEs are the future drivers of the Indian economy, in terms of employment, exports and overall GDP growth. Traditional labour-intensive sectors, such as textiles, leather, manufactured goods, handicrafts and carpets also have considerable potential for such expansion. Expansion of special economic zones, and the new national manufacturing and investment zones (NMIZs) are expected to have a major influence on growth in the manufacturing sector. The services sector has been a vital source of growth for more than a decade, and it is expected to continue to be both a net generator of foreign exchange and a magnet for FDI. Exports will continue to play a significant role in future economic growth, partly because of significant investment in such high-value and capital-intensive sectors as IT, gems, jewellery and engineering products, which require high skill levels. Investment in physical and social infrastructure will also be significant drivers in themselves, and create the improved linkages so vital to generate wider economic expansion. FDI will have a crucial role in fostering India’s economic evolution, by improving skills, training and technology. In general terms, the economy needs to move away from relying on primary commodities, and towards high-value manufactured products.
PwC: Sectors that leverage India’s export potential and domestic demand for essential products and services are likely to drive India’s growth. Healthcare, retail, consumer and industrial products hold tremendous growth potential. These will be complemented by continued, albeit slower growth of service exports in information technology. Healthcare: Growing at more than 20%, the sector is expected to touch $250 billion by 2020. The driving factors include rising population, increasing disposable income, increasing lifestyle related health issues, and increased government focus. Pharmaceutical firms and healthcare multinationals are raising their focus on the emerging middle class through innovative and affordable offerings. Retail & Consumer: Modernising a retail sector more than 90% of which is unorganised, emerging middle-class and scope for rural penetration create significant growth potential. Volumes for leading consumer packaged goods firms have grown. Domestic and global players are looking at innovative business models and value propositions to access the local markets better. Industrial Products: After a slow start the auto and industrial products sector is expanding at a rapid pace. The manufacturing capabilities have become more sophisticated and quality of output is improving. As a result, the share of intermediate industrial products in the export portfolio is increasing. Domestic and global players have significant capacity expansions planned in automotives, particularly auto components, to address the domestic demand and leverage India’s export potential. Information Technology: Global IT sourcing will continue to grow, albeit a little more slowly, as firms aim to cut costs, access local markets and innovate. With the domestic demand also growing, the sector revenues are expected to grow from $88 billion in 2012 to $130 billion in 2015.
UK India Business Exchange Issue 01 www.ukibc.com
Point of View: Legal
Resolution high on the agenda Jamie Harrison of Addleshaw Goddard’s India Business Group explains an increasing trend for business opting to resolve disputes by arbitration in Singapore rather than through the Indian courts. The expansion of India’s economy means that India’s corporates and entrepreneurs are involved in negotiations and commerce world-wide. Inevitably, growing international trade and more complex trading relationships gives rise to commercial disputes, and increasingly Indian companies and their contractual counterparties are turning towards international arbitration to help resolve these disputes. With India now a strategic market on the global stage, a significant source of investment and a fast growing reputation in advanced technology, Indian parties now have greater influence at the negotiating table and a greater say on the preferred method, forum and venue for resolving any business disputes. Notwithstanding recent efforts by the domestic courts to de-pressurise the system, it is still not unknown for a commercial dispute to spent years log-jammed in the Indian courts. In an ever faster business world, no company can afford to wait so long. Business has found that international arbitration can offer a quicker and more cost effective solution. Ease of practical enforcement and the strict confidentiality offered to the parties by the international arbitration process is extremely attractive, especially in dynamic markets like India where brand and reputation are key. It is therefore intriguing to note that, according to data from the Singapore International Arbitration Centre (SIAC), Singapore has seen a significant upward trend in the total number of new cases filed over the last three years, and with approximately 25% of cases emanating from India in 2011.
party and an international counterparty, but in others both sides are Indian based but have agreed to have any dispute heard outside of the domestic Indian court system. Why has Singapore in particular become so popular to business as a venue to resolve Indian-related disputes? It has a mature, stable legal system, based on English law and a wealth of experienced lawyers and arbitrators capable of handling the most complex disputes. The domestic Singapore court system is also sophisticated and can be trusted to support international arbitrations where necessary. The Singapore government has done much to enhance this reputation, illustrated by the significant investment in the headquarters of SIAC and its new rules of arbitration. Singapore is also a long-established hub for international trade, well placed between the Middle East, the Far East and Australia. This makes Singapore attractive to the Indian business community, because so many are heavily involved in the region and will be even more involved in financing and supporting construction and infrastructure projects in Indonesia, Malaysia, Myanmar, Vietnam and elsewhere. Of course, Singapore is also just five hours from India’s east coast and around a quarter of its population is Indian. There is, therefore, a strong social, cultural and economic tie between the two countries. As Singapore’s reputation as a global legal centre develops, it seems likely to become an increasingly preferred venue for Indian market participants to resolve any disputes. Jamie Harrison heads up Addleshaw Goddard’s Singapore office, is a member of the firm’s India Business Group and specialises in international dispute work. Contact Jamie Harrison:
The majority of these matters involve an Indian
“Inevitably, growing international trade and more complex trading relationships gives rise to commercial disputes.”
TIP: Litigation can be costly and time consuming - When possible, use English Law to reduce the chance of misunderstandings. It is also important that clear termination clauses are set out in contractual documents and provisions made for alternative methods of resolving disputes, that do not involve the courts.
UK India Business Exchange Issue 01 www.ukibc.com
UK India Business Exchange (Formerly Partnership in Action) is an authoritative magazine published by the UK India Business Council to drive...