Richard White, Trade Commissioner, New Delhi
Technology and services provided by New Zealand companies are successfully finding niches within this huge growth.
The election earlier this year of a new government with a strong focus on economic growth is breathing new life and confidence into the Indian economy. Prime Minister Narendra Modi has launched a number of major initiatives including the ‘Make in India’ programme which aims to turn the country into a global manufacturing and exporting hub.
Manufacturing currently contributes only 15 percent to India’s GDP, and the plan is to raise it to 25 percent through cutting red tape, developing infrastructure and making it easier for both local and foreign companies to do business.
An estimated US$350-400 billion of private sector investment will be poured into infrastructure development in the five years between 2012 and 2017 to develop roads, ports, rail and airports. Mr Modi also wants to build 100 “smart cities” throughout India.
Foreign governments have already committed major sums into infrastructure, e.g. Japan will invest US$35 billion into the Delhi-Mumbai industrial corridor while China will support development of high speed rail services connecting major Indian cities.
Infrastructure development will extend into food processing, though the construction of mega food parks to help the industry grow from a current value of US$102 billion to US$260 billion by the end of 2015. India is the second largest global producer of horticultural products but only processes 10 percent of what it produces, and only 2 percent of fruit and vegetables produced in India are processed.
The construction sector is projected to show an 18 percent CAGR over the next five years, this off a base of $441 billion revenue generated by the sector in 2013 including $325 billion of residential construction.
What does this all mean for New Zealand? India’s growth is not all about big numbers and large scale projects that can scare off smaller sized companies typical of New Zealand.
Technology and services provided by New Zealand companies are successfully finding niches within this huge growth, for example in design and architecture, baggage handling technology in airports, kitchen appliances in top end residential construction projects, food processing and cold chain technology, and there is growing demand for New Zealand cleantech solutions.
So the opportunities appear limitless, but the usual important caveats apply. Having an appetite for the challenges that India throws at you, spending time in the market to understand the business culture and identify appropriate niches, a long term vision, a willingness to adapt products and business models and finding the right partner are all key ingredients to India success.