It wasn't so long ago that the future foundations of global trade were going to be built by Brics – that is, Brazil, Russia, India, China and South Africa.
These expansive developing countries, with huge populations and emerging economies, looked set to dominate the new century.
But it hasn’t happened, and presently won’t. Brazil is in recession, Russia is cut off from the West, China is in slow down and South Africa is in a period of instability as the power of the long time ruling party is eroded.
India, however, despite jitters (especially the recent demonetisation of 86 per cent of the country’s banknotes), overtook China as the world’s fastest growing major economy this year, and anticipating a post-Brexit world, is an ideal place for British SMEs to do business.
India is a market which requires a lot of patience and a long-term strategy to be successful, but the payoff can be worth it for those willing to wait. At last count, the UK exported goods worth £6.35bn into India, and services valued at £2.24bn. The UK is the third largest investor in India – we have strong historic ties, English is widely spoken, and we share a common legal and administrative history.
Secretary of state for international trade, Dr Liam Fox, tells City A.M. that, “as a growing market, India is currently undergoing ambitious reforms to make its economy more open – this represents a real opportunity, particularly for the UK’s small businesses.”
The rising personal incomes of its young, educated, burgeoning middle class have created a new consumer market that makes India an ideal destination for SMEs with overseas ambitions – but where do you start?
India is a market of proportions unseen in the West – over 1.2bn people live there, and more than 50 cities are now home to over a million people. Husayn Kassai, chief executive and co-founder at Onfido, which creates background checking software, says there’s two sides to the market. “There’s this huge tech ecosystem that is developing, in particular the rise of fintech platforms and the online sharing economy. The sheer scale and speed of growth is very impressive, and with that growth, the appetite of the consumer has grown. There’s now 350m with access to the internet via smartphones – that’s been a key driver of the growing tech scene.”
Tech is at the heart of India’s growing success, and earlier this year, Prime Minister Narendra Modi set out on a mission to create 100 so-called “smart cities” in the country. The cities integrate ICT and Internet of Things technologies to create advanced, efficient urban hubs, in an attempt to mitigate poverty and lead the way in the design of future cityscapes.
One business taking advantage of this tech revolution is Nquiringminds, which produces the sensors and AI technology required to build smart cities. Its founder and chief executive, Nick Allott, went on Theresa May’s recent trade mission to India, in which she pledged to “reboot an age-old relationship in this age of opportunity”. He agrees, and says that “while they’re laying down this infrastructure, it is absolutely the perfect time and opportunity to sell this, and any other, type of tech to India”
His business has secured deals to provide sensors used in smart cities, as well as a large contract with the Indian Ministry of Agriculture to provide grain sensors. “I think post Brexit it’ll be important to maintain good relations with India, especially because of the size of the population and its massive urbanisation programme – it’s a huge market opportunity,” says Allott.
Kassai adds that “the unique thing with India is that you can expect growth to be 10 to 20 times higher – if not more. With new demand, companies like ours and others will be looking to expand proportionally to the population of brand new consumers – we’re expecting 10 to 20 years of very comfortable growth.”
India is well known for its tangled web of bureaucracy – each state has differing regulatory constraints, local sourcing requirements and import tariffs that businesses hoping to break the market should be wary of.
Jones says that the business environment is plagued with “red tape and paperwork”, adding that “banking and finance is hardly straightforward either; there’s taxation issues that you’ll come up against, but it’s not insurmountable.”
Untangling this web requires local representation on the ground, which Allott says is “important for most countries, but especially so for India. You can’t even properly qualify the market without people who can read through the local regulation,” he says.
Finding people to help in such a dense, enthusiastic country wasn’t a significant problem for Nquiringminds: “we used three strategies,” says Allott. “Random outreach, through simply searching for partners online who share our ethos, the DIT trade mission, and almost ironically now, the EU innovation network. It can be a regulatory nightmare, and because we still have so much more to do, and, although we keep them at arm’s length, we largely rely on our partners to deal with any issues.”
There are fruitful opportunities in India, and British businesses looking for a ripe market, not just open, but keen for British commerce, should be looking East.
Dr Fox adds that, “following the British public’s decision to leave the EU, we have the freedom to look beyond Europe and forge a new global role for ourselves. Strengthening relationships with key partners like India is an important part of this.”