by Mahip Baid, Twill Sales Representative
Figures show that India is the fastest growing market in the world, overtaking China with growth of almost 8% over the last year – and that means that you’re dealing with the 6th largest economy in the world.
In this blog post, we provide a low down on trading with India to give you a greater understanding of the opportunities available in a country home to over 1.3 billion people, over 17% of the world’s population.
India’s overall exports in 2018-19 are estimated to be over £530billion – with the main exports being chemicals, engineering goods, jewellery and textiles, pharmaceuticals and refined oil. The US is India’s main trading partner covering 16% of all exports, followed by the United Arab Emirates with a total of 9%.
And India is certainly working to continue its growth. The launch of the Government’s ‘Make in India’ campaign in 2014 aimed to position India as a global manufacturing hub, encouraging both domestic and multinational companies to host their manufacturing in India.
When it comes to imports, one of India’s main imports is crude oil, crucial to that future manufacturing ambition mentioned above. The import of electronics is also on the rise, which highlights a particular focus on improving mobility across the country.
Keeping trading simple in India
Despite recent figures showing a very minor slowdown in growth, from our experience it is becoming easier to trade in India.
Thanks to the recent introduction (July 2017) of the standard Goods and Services Tax, regulations are now better controlled. India is home to a complex federal structure of 29 states and seven union territories which has, historically, complicated the movement and sale of goods thanks to multiple taxes at both a state and central level. These days, it’s become much easier for smaller companies as well as those thinking of entering the Indian market with one single Goods and Services Tax to negotiate.
Apart from simplifying the tax structure itself, it also tightens the noose around tax evasion, removes tax disparity between states across India and allows exporters to take benefits of tax refunds.
When it comes to finding a partner in the country, as always, finding one who understands the local market is most important.
Embracing local knowledge
Understanding local culture is key to being successful for any SME. If you’re looking to enter such a multi-cultural and diverse country, it’s essential to be aware of the geographical differences when it comes to planning where exactly you’re hoping to trade.
From a market perspective, you will always have different experiences selling your product in different places. Your product could be extremely popular in the south of India, for instance, but not of interest at all in the north –
One example which we’ve seen recently is the sale of Horlicks – it’s extremely popular in places such as Tamil Nadu and West Bengal in the South and East of India, but it’s almost non-existent in other parts of the country.
Similarly, it’s important to build trust with the many smaller, family-owned businesses in India.
Relationships are valued very highly in Indian culture, so taking the time to build those in the first instance will prove invaluable further down the line – and effective and regular communication via a platform such as Twill will help create lasting relationships.
Implementing long-term change
From a technological perspective, industry digitisation is always an important pillar for growth across the globe. The potential in India on this basis could be huge, particularly as the country now ranks 40th out of 137 countries on the Global Competitiveness Index, representing the country’s adaptability and agility in the context of future change.
Ultimately, if you’re looking to enter the Indian market you need to be committed and prepared to work hard. Establishing your market position can take time, but our experience is that India presents a ripe opportunity for SMEs to grow at a good pace – and a solid long-term future.
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