Narendra Modi’s rock star-like reception at Sydney’s Allphones Arena to a capacity crowd of 16,000, his address to 400 business leaders at Government House in Melbourne and his speech to parliament set the scene for India’s arrival as an economic powerhouse.
During the first visit to Australia by an Indian prime minister in 28 years, Modi successfully showcased his government’s transformation agenda, which includes initiatives such as ‘Make In India’, Clean India and the ongoing liberalisation of the economy.
Modi brings a new tone of assurance about creating an India that is foreign-investor friendly. Since taking charge six months ago, his government has embarked on a series of measures to cut red tape, remove superfluous laws and weed out corruption.
Stalled projects have been revived through the establishment of a single-window clearance for investments. This has boosted confidence among Indian business leaders for the first time in a decade.
During his recent visits to the US and Australia, Modi has appealed to the non-resident Indian diaspora, recognising the enormous asset bank that they represent as potential investors and ambassadors to India’s progress.
Modi’s style of incremental reform may be too slow to propel India back into double-digit growth, and the overhang of bad policies are too acute to be solved in a matter of months.
The Prime Minister seems intent on working through gradual, calibrated changes to India’s policy framework. These reforms are creating a cultural shift in the bureaucracy and igniting a new era of social responsibility, even in government.
India is the rising force of Asia. Current projections from the OECD suggest that India will average 6.7 per cent growth from 2011 to 2030 and 4 per cent growth from 2030 to 2060.
With 800 million people under 35 years, India’s demographics are more favourable than China’s, where the labour market has peaked. India’s population is expected to grow at least through 2045 when it is expected to be home to just under 1 billion workers. Key to the country’s future, therefore, is skills development of India’s youth and financial inclusion of its poor.
The Prime Minister’s recent Jan Dhan Yojna Scheme, which saw 71 million bank accounts opened for those below the poverty line within 10 weeks, is one such measure aimed at wiping out corruption while simultaneously bringing the poor closer to the economic mainstream.
As Modi said in his address to Parliament, India can be the answer to Australia’s search for economic opportunities. Australia already plays a significant role in educating Indian students and must now seek to leverage its world-class vocational education and training infrastructure to train India’s youth.
Much of India’s future cities and infrastructure have yet to be built. Australia has a significant opportunity to participate in India’s growth and development in sectors such as agriculture, food processing, mining, infrastructure development, building and construction, finance, technology and energy.
Australian investment and partnerships can provide funds, resources and technology that will drive India’s progress and diversify Australia’s global economic engagement.
To seize these business opportunities, Australian companies need to conduct thorough due diligence, build relevant networks, find local partners and invest in the execution of a long game. Business in India is a marathon, not a 100-metre sprint.
India’s new national program to facilitate investment has identified growth corridors in Delhi, Mumbai, Amritsar, Bangalore and Chennai that will attract the infrastructure and ecosystem to enable competitive, world-class manufacturing.
Along with the growth of these corridors will come greater demand for Australian skills and talent right across the value chain. Architects, educators, specialists in waste management, environment, urban design, construction and health management professionals should begin to look towards India for growing their business.
As Australian manufacturing winds down, India can play a role as a manufacturing destination for Australian IP and advanced technologies, through collaborations and joint ventures with Indian partners.
Makeinindia.com, a website offering insight into 25 sectors earmarked for foreign investment, is a useful first stop for every Australian business seeking to understand the opportunities more clearly.
The fact is, however, we are playing catch-up with other countries in our engagement with India. While accelerating our negotiations on a free trade agreement with the world’s largest democracy is a step in the right direction, the hard work is still to be done by Australian businesses on the ground.
Success in India will require far more than a free trade agreement or cliched references to our common bonds of cricket. It will need the patient and careful execution of well thought out investment plans, by management teams that have a deep understanding of how this market works.
Australian businesses need to work together in industry groups, and with local, state and federal governments, to identify the opportunities in the relevant industry sectors, and ensure they get the right advice both on the ground in India, and back home in Australia.
Once this groundwork is in place, Australia and India can look forward to an enduring economic and strategic relationship forged on the strengths of their common democratic principles.
Rohini Kappadath is director of Cross Border Business at Pitcher Partners.