How to win a government contract in India

Under Prime Minister Modi, India has embarked on a major upgrade of the country. Through various government programs, such as Made in India, 100 Smart Cities and Digital India, billions are being invested in improving India's infrastructure. From clean forms of energy to the rolling out fiber optics. India is eager for foreign knowledge and technology for these ambitious projects. But how do you win such a coveted government contract as a European company?

You win a tender with 3 crucial ingredients'.

Joeri Aulman has been successful in winning government contracts in India in recent years. He is a project manager and airport developer for Naco, a division of Royal HaskoningDHV in the field of airport consultancy. "First of all, we were very lucky with our market entry. We entered the market in 2005, at the exact time that the first privatisation of airports in India was starting. That turned out to be perfect timing." 

But it was the good references from local business relations that really got the ball rolling for Naco. "On the recommendation of an existing client, we were allowed to present ourselves to the Indian party. The presentation was focused and, very importantly, not didactic. Despite our knowledge and experience, we were modest and that was the key to success." According to Aulman, the combination of smart timing, excellent references and modesty in presenting your plan are therefore the three crucial ingredients for winning tenders in India. "Over the past 15 years, we have learned that if one of these three ingredients is missing, we miss out on the contract immediately."

Not only India benefits, there are also interesting opportunities for European companies

According to the Indian Ambassador to the Netherlands, Venu Rajamony, there is a lot for European companies to gain in India. "We are the fastest growing, large economy in the world with a young population and a growing middle class. Competitive European companies entering India with long-term planning are going to benefit from the country's rapid developments and expanding consumer market."

For companies looking to win Indian government contracts, Rajamony has some advice. "To stand a chance, it helps when European parties cooperate with an Indian partner. In addition, companies increase their chances if they produce part of their technology in India (make in India), use Indian raw materials for it (source in India) and hire Indian personnel (hire in India). This not only aligns with various government objectives, but also reduces the cost of often expensive European technology. European companies must realize that India is a highly competitive market. Companies from all over the world subscribe to Indian tenders." 

There are hundreds of tenders open as part of the Smart City mission

Six tips to win tenders in India

In order to easily sideline those foreign competitors in the battle for an Indian government contract, you need to keep the following points in mind during the preparation: 

1. Timing: plan ahead

Timing is key, but you can't start building a network early enough. In other words, if you don't start building a network until demand for your products starts to increase, you are late.

2. Use references actively

India is a network economy par excellence: relationships are crucial. So don't hesitate to approach the Indian embassy in your country for help if you get stuck with permits and the like. Their network is large and they can often provide clarity. In addition, seeing is believing. Anyone who has previously done a good job on another project in India has an edge.

3. Be concrete but modest

India may be desperate for state-of-the-art technology in all sorts of areas, but that does not mean that foreign companies can be pedantic, condescending or arrogant. With such an attitude, a foreign company is doomed to fail in India.

4. Work with an Indian partner.

As mentioned, India is a network economy, so local cooperation greatly enhances your chances. If you do not have the right entrances, you will usually fail with government tenders. An Indian partner knows his way around the Indian bureaucracy - no need for the Dutch party to waste valuable time on this.

5. Make, hire & source in India

The Indian government is faced with the immense task of providing jobs for hundreds of millions of young Indians. Logically, companies that create jobs in India, directly or indirectly, have an edge in tenders. So put yourself in the shoes of Indian officials.

6. Understand your market value

Leave your European mindset at home and tailor your offer to the price/quality level the Indian government is looking for. Do you not yet have a good understanding of your sector and how you can best position yourself in the Indian market? Contact our experts and we will conduct a customised market research and give you concrete suggestions for the right next steps.

From outsourcing to winning tenders: how ARS T&TT from The Hague achieves success in India

Due to the shortage of engineers and software developers in the Netherlands, the technology traffic company ARS T&TT ended up in India twenty years ago. "India, unlike other outsource locations such as the Balkans and Argentina, offered us exactly what we were looking for. Highly skilled technical staff, excellent English-speaking people and good facilities", explains director and founder, Jan Linssen. "In addition, India also seemed like an interesting sales market to me."

Founder and Managing Director of ARS T&TT, Jan Linssen, signs an agreement with the Indian city of Vadodara for their technological traffic solutions.

Back in 1998, Linssen ran into the problem of not being able to find the right software developers in Europe for the technological traffic solutions that his company makes. Since then, finding suitable, highly educated technical staff has become even more of a challenge. According to Linssen, the solution is simple. "The logical step is to look outside Europe and, after a period in the Balkans and then a team in Argentina, we found what we were looking for in India. Many companies think of outsourcing in terms of cost savings, but you choose India because you can find talent there that is simply not available in the Netherlands. In the Netherlands, we pay such high salaries that wherever you set up a remote team, you will always save on costs." 

The outsourcing team as a basis for market entry

The Indian ARS team initially started developing software for the European market. "That gave them insights into the possibilities for India," says Linssen. "The more they learned about our European approach, the more they became aware of the enormous difference with the chaotic traffic situation in their own country. At that time, around 2000, the Indian government was also looking for solutions to improve traffic management. My team therefore regularly contributed ideas and suggestions on how ARS could also play a role locally. Their knowledge gave me a great insight into the market and laid the foundation for our market entry in India."

According to Linssen, the problem of most European companies is that they have too little knowledge of the Indian market and therefore try to make their entrance with an overpriced and advanced product. "The solutions that ARS develops in India for Europe are also far too high tech and an absolute mismatch with the Indian market. But we have a team of developers there who know our product and understand the local requirements. With their input, we can therefore develop cheap and simple solutions that do have a chance of success. If we hadn't started outsourcing to India, we would never have entered the market with so much knowledge and that is a huge advantage."

Indian tenders

Government initiatives such as the Smart Cities Mission, a programme of the Indian government to make cities across the country more liveable and sustainable, have created a great need for innovative products that can improve living standards. Yet, according to Linssen, it is difficult for European companies with no experience in India to compete as serious candidates for such contracts. "We sell our solutions mainly to Indian governments, which means we often go out to tender. In such tenders, the lowest bid automatically wins and as a European company you simply cannot compete with the Indian price standard. The prices are so low that it is impossible for international companies to deliver a good quality product. You therefore have to talk to governments in advance to ensure that specific quality requirements are included in the tenders. That way you can compete on quality, and demonstrate that you have a better product, rather than competing on price." 

According to the ARS foreman, it is also very important to explain concretely how much the European product will save in the long run. "In India, people often prefer to buy a bad product that works for one year but is cheap, rather than make a big investment for ten years. But if the customer already has experience with European products and you can show that your product lasts longer and is therefore cheaper in the end, they will really take you seriously."

In India, you cannot leave the sale entirely to your sales team'.

According to Linssen, the responsibility of selling an expensive, European product cannot be left entirely to the local sales team. "In India, it is very important that you build up a good relationship of trust with the highest boss. When selling a more expensive product, you want to be sure that they really understand the added value of your product. A good conversation from boss to boss can help with that. In addition, the relationships within Indian companies are quite hierarchical, which means that middle management cannot make a purchase without confirmation from the CEO. To get an appointment with that CEO or director, your local sales team is extremely important. Only with their good network and local knowledge will you actually get that done."

According to the ARS director, this also applies to tenders. "To win a tender, you have to be there before anything is announced. Local companies therefore always have an advantage, because they can already make appointments with the right people and do the groundwork before the tender actually starts. After twenty years in India, ARS is now also considered a local player, a position that you cannot buy but really have to acquire. You have to invest time in India as a company before you can reap the benefits." 

Payment problems in India

Another challenge that Linssen struggles with in India: getting paid on time. "It is important that the completion of the deal, including the payment, is laid down in detail in the contract. Help from local lawyers is no luxury here." According to Linssen, these payment problems do not stem from unwillingness, but are a consequence of the strong hierarchy in Indian organisations. "India is still very top-down, so a big decision, like the purchase of one of our solutions, is taken by the CEO. Then, when the product is received, it has to be paid for. But at that point, people are not 100 per cent sure that it will work as hoped and therefore do not dare to pay. Because what if, three months later, the boss turns out not to be happy at all with the product? Then he will ask for clarification from the employee who made the payment. This ensures that often no responsibility is taken and you as a company should make strict agreements if you do not want to wait months for your money. 

India has a clear vision for the future, clearer than the Netherlands'.

Despite India facing major challenges in terms of climate and the effects of the pandemic, Linssen has great expectations for the country's development in the years to come. "India has a very clear vision. It has sharper goals for the future than we have here in the Netherlands. The Smart City Mission is a good example of this; it pushes cities to develop into modern metropolises in all kinds of areas, from climate to infrastructure, within a short period of time. This of course offers great opportunities for international companies with smart solutions. If you invest now, you will soon benefit from the great improvement India is going through."

A successful market entry in India depends on a solid strategy based on knowledge of the local market. Gaining this knowledge takes time, because it requires experience with the Indian business culture. Are you considering taking your first steps into the Indian market and could use some guidance in shaping your strategy? We will set up special workshops to give you insight into what is involved in your market entry in India and you will receive valuable feedback on your plans from our independent experts.

Dutch company Sweepsmart wins Indian government contract with smart waste solution

First a pilot, then a contract from the Bangalore municipality. Sweepsmart, which develops waste management systems for emerging economies, got the job done. But the Indian government is definitely not an easy customer, warns founder and director Silvia de Vaan.

The start of the Sweepsmart pilot in Bangalore with Silvia de Vaan on the left and Niels van den Hoek in the middle.

In 2014, Silvia de Vaan stands at the top of India's largest landfill. The Pirana landfill in Ahmedabad is 84 hectares in size and is also known as the Mount Everest of waste. On the spot, De Vaan decides she wants to find a solution to this problem. Back in the Netherlands, she set to work with good friend Niels van den Hoek, who at the time worked for Van Gansewinkel, the largest waste management company in Northern Europe.

Test your idea before you enter the Indian market

"Our idea was to make people who look for saleable or edible items in a garbage dump become part of a better functioning waste management system and that they could earn income by picking up the dirt from people's homes and processing and recycling it in special centers," de Vaan says. "But whether what we came up with in the Netherlands would actually work in India was questionable. We therefore decided to organize a trade mission to India to test our idea against the real situation in India."

During their trip, De Vaan and Van den Hoek came to the conclusion that there was actually already a basis in India and that it was better to build on that than to start everything from scratch. "When we talk about a basis, I mean that NGOs were already setting up a system and that there were already sorting sheds, for example. But separating the waste was still done manually and people were sitting on the ground among the dirt," says De Vaan. "So there was a lot of room for improvement and that became our new goal: to take waste processing in India to a higher level. Without this exploratory trip, we might not have made that change and stuck to the idea we had put down on paper in the Netherlands. But to succeed in India, you need to understand where and how you can add value to what is already there. Therefore, I would recommend every entrepreneur to investigate that aspect properly first."

From pilot to government contract

De Vaan and Van den Hoek are starting with a pilot. "With the local organizations we had met during our trade mission, we wanted to form partnerships," says De Vaan. "They were already doing a great job in realizing solutions to the waste problem. We had to prove that we not only had great stories to tell, but that we could also make a real contribution. This became clear in the preparation phase during the discussions with IndiaConnected about our market entry strategy. It then became clear to us that we were focusing too much on how we would come to help, instead of explaining in concrete terms what we actually came to do there. You don't want to be a Western savior, but rather to work together to develop a solution that fits the local needs and wants."

Sweepsmart set up the first pilot in Bangalore. "There were already more than 140 small-scale sorting centers there led by experienced organizations, we had found good partners there, and on top of that the city was embroiled in a court case with citizens over the waste problem. So at the highest level, there was already thinking about a better approach and budget, and all kinds of initiatives for separate waste management had already been put in place." In the first four months in Bangalore, Sweepsmart, together with local partners, is taking two centers in hand and modernizing the processes with the installation of the conveyor belt and performance dashboard designed specifically for India. 

The success of the pilot project did not go unnoticed for long. "The municipality was on the doorstep of one of our pilot sites in no time and before we knew it there was a request for the upgrade of ten more sites. Our solutions are developed not only for, but also together with the location where it will be put into use. As a result, it fits in seamlessly with the local wishes and way of working. But in addition to the fact that we offered the right solution in the right place, there were also some peripheral issues that ensured we won a major government contract so soon after we started," says De Vaan. "First of all, our timing was good because of the ongoing court case that put the municipality under pressure to improve the waste situation as quickly as possible. As a result, a budget had already been made available for upgrading the centers. In addition, it also helped that the Dutch government gave a financial boost through the Dutch Good Growth fund with additional funding resulting from the pilot that was fully funded by them."

The challenges of an Indian government contract

In securing the contract, Sweepsmart immediately faced new challenges. "The Indian government is really incredibly complex," says de Vaan. "We are fortunate to work with partners who have good ties to Bangalore, but still I have spent days waiting in city hall in recent years." Despite the fact that the municipality had indicated to Sweepsmart that it wanted to start the project within a few months, it ultimately took 2.5 years for the Dutch company to actually get started. 

 "During the process, new difficulties kept coming up. This came as a surprise to us, but is quite normal for working with an Indian government," says the director. "In particular, the award of the contract was difficult, because governments normally have to tender all their work and in this case wanted to award the contract directly to us. It turned out that there was no quick fix for this particular situation, so we started investigating every possibility. In India that means literally going from desk to desk with all your paper documents and there are more than you think! In the end, with a '4B-exemption', where SweepSmart was designated as the 'unique supplier', and thus without a tender, we were able to get started. But it did take a lot of creativity and adaptability to find a solution that would work for both parties."

Delivering good quality at an Indian price is a challenge for foreign companies

When de Vaan and van den Hoek could finally get started, they were again confronted with the challenging differences between a Dutch and an Indian government contract. "Now that we finally had a contract with Bangalore, it turned out that we had left some agreements too open to our own interpretation," says de Vaan. "For example, we had agreed that the municipality would hire a contractor for the actual renovations, but who that would be or what requirements they had to meet we had left open. That was a mistake. We learned that we really have to lay down every comma and dot, because otherwise bad solutions are arranged or things take extremely long." 

She says the same applies to payments. "Make very strict agreements on this," she advises. "Not only in the case of a government contract, but also with commercial customers. People often only want to pay after the fact or they are quick to point out that you can do it much cheaper at a local competitor." De Vaan therefore sees price pressure as one of the biggest challenges for foreign companies starting to sell in India. "The customer often prefers to accept poorer quality, rather than having to invest too much. As a result, you really go into negotiations very differently," says the CEO. "For example, before we join, we look up the proposals and prices of our competitors and calculate them all the way through. Often it looks cheaper on paper because a lot is left out of the quotation, but it only makes a difference of five percent in price. We can then compare these during the negotiations and demonstrate that we really have a better solution to offer." 

Opportunities for innovative, European solutions in India

"India is developing at a rapid pace at the moment and therefore needs the knowledge we have in the Netherlands, but it is also challenging to market that knowledge here," says De Vaan. "In India, you won't succeed with a solution that isn't adapted to local needs, and besides that, Indians are incredibly smart and inventive. In their eyes, you are nothing special and you first have to prove that you are willing to invest. I noticed this very strongly, for example, when I was waiting in front of a civil servant's office in Bangalore. He would poke his head around the corner to see who the next appointment was and, as soon as he saw me again, he would pull a grin over his face like 'there she is again, is she still there? But our endurance did prove that we are really involved and therefore we are taken seriously."

In addition, de Vaan advises European companies that are not yet active in India not to focus on winning tenders. "We were actually a bit fooled by the fact that we had a contract with Bangalore in our hands so quickly, but that is not a realistic course of action at all. It's much smarter to take intermediate steps first by targeting local or commercial parties. By doing so, you not only get to know the needs of the market well, but you also gain important contacts that can support you in a government contract," she explains. "And also don't mistake the innovative solutions that are already being devised in India itself."