Growing business opportunities in India for local companies
Robust fundamentals backed by infrastructural development, digitalisation and regulatory reforms make India fertile ground for Singapore businesses
With the sheer size of the Indian market and its burgeoning middle class, the opportunity for Singapore businesses is tremendous, says Mr Ajit Singh, a former diplomat to India who is now a Consultant (India) with Enterprise Singapore (ESG).
Indeed, supported by a GDP growth rate ranging between 6% and 7% since reforms started in 1991, the country is among the world’s fasting growing economies. With a GDP of nearly US$11.5 trillion (S$15.9 trillion), India is also the world’s third largest economy after China and the United States, according to 2019 estimates from the International Monetary Fund.
“On the back of robust macroeconomic fundamentals, India is set to become a nexus of international commerce, so in addition to exploring investment opportunities in China and ASEAN, our companies should also pay close attention to the emerging South Asia region,” says Mr Singh.
100 Smart Cities Mission
Launched by the government of Indian Prime Minister Narendra Modi in June 2015, India’s “100 Smart Cities Mission” is a massive urban renewal and retrofitting effort that aims to develop a hundred smart cities countrywide. The programme has approved funding of some INR98,000 crore (US$14 billion), and will benefit nearly 100 million people living in cities shortlisted for the programme.
According to the country’s Ministry of Housing and Urban Affairs (previously known as the Ministry of Urban Development), the key objective of the programme is “to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions”.
Such an ambitious programme entails a vast scope of works and services that ranges from infrastructural requisites like electricity and water supply, sanitation and waste management, real estate development and transportation to services higher up the value chain such as IT connectivity, digitalisation and sustainability solutions.
Many Singapore SMEs have longstanding experience at multiple points along the supply chain — such as in manufacturing, construction, environmental management, shipping, legal and arbitration expertise and last-mile delivery services — and can therefore seek opportunities to participate in India’s mega-development projects.
In February last year, PSA International, through its subsidiary PSA Bharat Investments, launched the billion-dollar Bharat Mumbai Container Terminals (BMCT) in Mumbai, while other Singapore companies like SembCorp and Ascendas-Singbridge (now CapitaLand) enjoy substantial presence in the areas of energy provision, environmental management and IT business parks in various Indian cities. These companies have successfully penetrated the Indian market, established a foothold and paved the way for more Singapore firms to follow.
Digital transformation to catalyse demand
Meanwhile, widespread digital penetration and connectivity, together with a growing middle class, is expected to boost consumerism, and along with it, a demand for premium products and services.
There is, therefore, ample leeway for Singapore SMEs in the services industry to expose consumers to the Singapore brand quality, and gain traction among a young, savvy population keen to try new offerings and experiences, experts say.
Meanwhile, India’s Internet user base rose dramatically to 530 million in 2018, up from 360 million in 2016, and is expected to exceed 600 million before the end of this year. These figures put India squarely in second place behind China but ahead of the United States.
This massive user base is anticipated to fuel growth for the current US$66 billion internet-consumer market to expand to US$200 billion by 2022. The rapid growth is expected to cascade down to other areas such as fintech, ecommerce, travel and tourism, as well as mobility and transport.
Entering the Indian market
However, making a foray into a new market like India may prove intimidating at the outset. As such, large Singapore companies should first form consortiums with their own trusted vendors and suppliers, advises Mr Singh. “They should then move as an entire supply chain onto foreign shores. That way, we can form business eco-systems in which Singapore firms can quickly become operational.”
“Through such an approach, smaller firms can serve as subcontractors for larger companies, and therefore enjoy the opportunity to participate in mega projects and burnish their track records,” he adds.
One Singapore entrepreneur that has successfully penetrated India is Mr Gideon Lim, founder and CEO of Web Synergies, a Singapore-headquartered business-solutions consulting firm which also operates out of Hyderabad. It recently started operations in Bangalore and is also exploring opportunities in the city of Amaravati in Andhra Pradesh.
Mr Lim says that his firm’s “secret recipe is to let trusted colleagues who have been with us in Singapore, and who hail from the same place in India, run the operations there”. He adds that it had been an effective shortcut to “imbibing the culture of a place”, and has enabled his business to run smoothly in India over the past 20 years.
To take advantage of the lower costs of resources there, Mr Lim originally intended his India office to function as an outsource centre for Singapore clients. Due to successful integration, however, it has today evolved to become a profit-generating business in its own right, and attracts customers from various parts of India.
Staying the course for success
Wide-ranging reforms under the Modi government have made it easier for companies to obtain construction permits, pay taxes, conduct cross-border trade and secure funding. According to the World Bank’s Ease of Doing Business index, India climbed to the 77th spot in 2018, up an impressive 23 positions from 2017.
While the landscape may still prove daunting, given the country’s staggering size and diversity, ESG’s Mr Singh encourages Singapore firms to stay the course.
“There is always a gestation period before any new initiative can see success,” he says. “But given the abundant potential of the Indian market, resilient businesses that stay the course will eventually reap the rewards.”
Business Mission to Hyderabad and Bangalore
SBF is organising a business mission to Hyderabad and Bangalore from 15–21 September 2019. Companies interested to participate in future missions or find out more about India’s business landscape can drop us a line at email@example.com or visit our site.