Exporting to India is an interesting way for European companies to start selling in the country, but it requires good preparation, customisation and patience. Here are our five tips for exporters looking to conquer India.
1. Consider India as a continent
Remember that the EU internal market is more developed than the Indian internal market. In practice, this means that it is easier to drive a truck from Portugal to Germany than from, say, Tamil Nadu to Gujarat. It is therefore advisable not to start immediately with the whole of India, but to choose a state of India. Especially considering the differences at state level in terms of legislation, language, culture and climate in India.
2. Export to India requires customisation
Most companies that want to export to India tailor their products specifically to the needs of Indian consumers. Think of TomTom that developed a navigation system specifically for the Indian market that is based on landmarks instead of street names; or Dr. Oetker that decided to focus on mayonnaise instead of frozen pizza and home baking products; and think of Philips that is developing highly simplified medical equipment specifically for India. Of course, your customised product must also be of top quality. The whole world sees India as a market: the competition is huge.
3. Take into account import duties in India
The import duties in India are around 30%. This means that the actual "landed costs" of your product (including import duties, transport, insurance, etc.) for your Indian customer can sometimes be one and a half times your invoice. Keep this in mind during the negotiations.
You can also choose not to do these negotiations yourself, but to work with an agent, distributor or dealer. Such a local partner not only has important knowledge of your sector, but also already has a large customer base to whom your product can be promoted. Wondering what to look for when looking for a partner in India? Here, we compare the different options:
4. Working capital in India is expensive
Be aware that working capital is expensive in India. Interest on credit can easily reach 20-25% per year. The high cost of capital is an additional reason for Indian companies to only deal with foreign suppliers that can offer high added value.
5. Think out-of-the-box
Exporting high technology to India is usually not easy, due to high costs for the customer. It is therefore worth developing an alternative strategy for exporting to India. The Dutch company Fresh Food Technology is a good example. The producer of refrigerated storage systems for the fruit and vegetable sector broke open the Indian market with a creative CSR project. By cooperating with a local NGO and a socially committed investor, it managed to build its first installation in India. Today, more than 30% of its turnover comes from India.