The Indian lockdowns made doing business in the country difficult for a few weeks: mass homeworking, disrupted export chains and production lines that came to a halt. But at the same time, a lot of new, enduring habits also developed that actually offer companies interesting opportunities in the long run. At least, if you know where to look. Shashank Verma, head of Sales Order Management for Maier + Vidorno, IndiaConnected's partner in India, shares which sectors you should keep a sharp eye on in the coming period.
From cash to online payments: e-commerce is booming
According to Verma, India had to make a big switch when the Modi government announced the first lockdown in mid-March. "India got locked down at home in one fell swoop, so everything, even groceries, had to be delivered. This has made online shopping commonplace in India overnight. We are even seeing an increase in online car sales. Normally here in India we go to big shopping malls a lot, but now everyone tries to stay away from big crowds as much as possible. Online shopping is the efficient and safe solution and it will certainly remain the preferred option until a vaccine is found."
Despite the fact that in India it is quite normal to pay cash at the door for your product ordered online, the big online platforms like Amazon India, BigBasket, Flipkart and Zomato soon stopped accepting cash. They thereby pushed consumers to switch to online payment apps like Paytm. According to Verma, this is a very important development for companies looking to explore the Indian e-commerce market. "A cash payment normally has disadvantages for a company. The seller has to pay extra tax if cash is received and cannot, for example, charge for delivery if the customer refuses the product at the door. These drawbacks are falling away as online shopping and online payment become the new normal in India."
'India is going to knock China off its throne as the best place to manufacture'
Until the outbreak of the COVID-19 virus, entrepreneurs quickly thought of China when outsourcing their production, but the current situation shows that it is smart to spread the opportunities. Fokker Elmo did that by not starting a second factory in China, but by building a new one in India. They are reaping the benefits of this during this crisis. Verma sees that the Indian government also wants to grasp this opportunity with both hands. "One of the big challenges if you want to manufacture in India is to buy industrial land. The states have therefore all been instructed to look for land that can be made available for this purpose and with success. In total, an area twice the size of Luxembourg is now available for manufacturers who want to move from China to India or open a second manufacturing facility."
"Also, India wants to raise its profile as an export country," Verma says. "We will therefore see regulations relaxed for companies that do produce in India, but do not enter the Indian market with their products. A prime example is General Motors, they have stopped selling in India since 2017, but still produce for export." The new, Indian PLI subsidy further endorses this endeavour. Smartphone manufacturers can use this scheme to move their production to India in a very cost-effective way. "Apple is therefore already coming this way and we hear rumours that Samsung may also expand its factory. This success has whetted the appetite of our government for more, so I expect there will be incentives for other sectors as well."
India wants technological solutions that limit human contact
According to Verma, the outbreak of the coronavirus in India has increased the need for self-service options. "Companies that have technological solutions that reduce the need for human contact for simple daily tasks such as filling up with fuel, washing the car or checking out, should certainly look into the Indian market. Because of the current situation, the interest in solutions that can be done independently or even remotely is high. And this applies not only to consumers, but also, for example, to the distribution, agriculture and medical sectors."
Verma also expects India to be able to offer international companies more in this area. "We normally see many young, intelligent and technically skilled Indians leaving for abroad, but the corona crisis has prevented that from happening. So there is less 'brain drain' at the moment and this group would like to develop within an international organisation. This will create a win-win situation for companies looking for motivated and ambitious talent."
Vocal about local and let's make it global'
The Indian Government's support plan to lead the country out of the corona crisis sounded very isolationist. President Modi encouraged his country to buy as many Indian products as possible: 'be vocal about local'. "Yet international companies need not worry about their position in the country, India is very keen to bring in more foreign investment," says Verma. "India normally imports billions of products from China and the outbreak of the virus has brought home to us the fact that we need to be less dependent on imports. So the statement 'vocal for local' is not to deter companies from coming to India, but to encourage Indians to produce more products domestically. At the same time, we see the arrival of foreign companies as a great opportunity for our country."
Wondering what opportunities exist in India for your business?