09/06/2014 - 15:10

India: a complex market

09/06/2014 - 15:10


Save articles for future reference.

India presents an array of opportunities for WA businesses, however achieving success in the country can be harder than first thought.

India: a complex market
LASTING: Frank Wilson believes the Indian market will prove to be a long-term export destination for TFS. Photo: Attila Csaszar

India presents an array of opportunities for WA businesses, however achieving success in the country can be harder than first thought.

Exports from Western Australia to India have historically been dominated by the mining and metals space, but there is increasing demand for products and services in non-traditional trading sectors.

Austrade’s Siddharth Vishwanathan said WA was well placed to support India as it continued to urbanise and its middle class expanded.

He said India was looking to WA to help develop its infrastructure and energy capacities, up-skill and train professionals in the healthcare and biotechnology sectors, and to provide products to meet growing consumerism.

Mr Vishwanathan said WA’s expertise in developing infrastructure networks, mining technologies and energy efficiency and renewable energy projects, which had been strengthened on the back of the mining boom, provided valuable opportunities for India.

“India is seeing rapid urbanisation and ramp-up of infrastructure, so naturally these are going to be a major area of investment for the country,” he said.

“Exporting technologies in these areas is something Australia, and specifically Western Australia, can contribute to.”

India is also looking to WA to help up-skill its workforce and improve its capabilities in healthcare, biotechnology, aged care and occupational health and safety, according to Mr Vishwanathan.

“There is considerable expertise in the Indian market already, but the country is looking to ramp that up to the next level,” he said.

Mr Vishwanathan is on secondment at the Chamber of Commerce and Industry WA, where he is providing consulting services for local companies interested in entering the Indian market.

He said Australia could also take advantage of increasing consumerism in India as the well-travelled, affluent population continued to demand more imported, high-quality food products.

“(This includes) areas around dairy, fisheries and premium food and beverages which includes wines as well,” Mr Vishwanathan told Business News.

Osborne Park-based human resources and training firm TR7, which has been operating in WA for more than a decade, started doing business in India last September after opening an office in New Delhi.

Co-founder Shane Anderson said TR7 Health Care India was established to train healthcare professionals, as the Indian government has pledged to spend $20 billion up-skilling 500 million people by 2022.

TR7’s initial focus is on nursing assistants, however there are plans to provide training for geriatric care, medical tourism, nursing and paramedical roles.

“There are 16,000 private hospitals in India,” Mr Anderson said. “There is such a huge demand for healthcare over there; our goal is to train 100,000 people in the next two years.”

Mr Anderson said he expected the Indian arm of his busisness to achieve $2 million in revenue for 2014 and planned to open a further six training centres in the country by January.

Market mirage

Despite the opportunities in India, industry experts have warned of the mirage effect conjured up by expectations of what a population of 1.2 billion people may offer.

Mr Vishwanathan said one of the most common mistakes made by foreign companies entering India was the assumption that it was a big market (based on the size of the population).

“If you start classifying the population and then drilling down to who your target audience will be, it’s going to be a whole different number,” he said.

Austrade commissioner Grayson Perry agreed, saying India was often referred to as the United States of India –  a reflection that it was not a homogenous market.

“Trying to meet the challenges of servicing the whole Indian market is often difficult for Australian companies,” Mr Perry said.

“A better focus is to identify where the opportunities exist specific to Australian capability, or to target progressive Indian states that have a focus on international expertise and capability.”

One example of this is India’s wine industry.

Mr Vishwanathan said annual average wine consumption in India was just 10 millilitres per person, however consumption was much higher in certain regions because most Indians did not drink wine.

Mike Lee, the managing director of exporter Aztec Group of Companies, said it was important to know the Indian market well because the culture was very different.

“At the beginning you need a lot of time and energy to gain their trust – that is the hard part,” he said.

Aztec exports wool and animal hides, which are used to make high-end clothing and accessories, such as shoes and handbags for the likes of Prada and Louis Vuitton.

Mr Lee said about 25 per cent of the company’s business was done in India.

Aztec has been exporting to the country for more than 20 years and also exports to China, which accounts for about 50 per cent of its sales, as well as Turkey, Russia, Spain and Greece.

Nedlands-based TFS Corporation grows Indian and Australian varieties of sandalwood, used by the pharmaceuticals industry as well as for chewing products, perfumes and for worship and cremation purposes.

The company has been selling sandalwood oil into the Indian market for five years, with annual exports of about $10 million.

“We sell a lot of the Australian sandalwood to the Indian market, it’s a very good market and they use it in their flavoured chewing products,” TFS chief executive Frank Wilson said.

“We have only had good experiences in India.

“Long term, I think India will be a very good market.”


Other businesses spoken to by Business News have reported more mixed experiences in their dealings on the sub-continent.

Clairault Wines sales and marketing director Sharon Batley said the Margaret River-based company started exporting wine to India after noticing a demand for their products.

Ms Batley said Indian regulations and taxes changed regularly, making it very challenging for the company to continue exporting its wines to the market.

Another WA-based winemaker, who wished to remain unnamed, describe the company’s experience in dealing with India as “not very positive”, noting that the regulations were too complex and confusing.

Australia India Business Council Western Australia president Omesh Motiwalla said the free-trade agreement currently being negotiated by the federal government was expected to ease regulatory burdens and drive trade between the two markets.

He noted that business relations between India and WA were growing, but were not as strong as those of some other Asian neighbours such as Japan, China and South Korea.

“Culturally, India is much closer to Australia than some of Australia’s other Asian neighbours,” Mr Motiwalla said.

“We share a similar colonial history as well as strong sporting ties. Language is also no longer a significant barrier as a lot of business is conducted in English in India.”

Mr Vishwanathan stressed one of the key components to being successful in India was to have a local business partner.

“For a small or medium-sized business to go into the market it can be quite challenging because they really don’t understand the environment there. So it is quite essential to partner with someone strong in the market,” Mr Vishwanathan said.

This was the business model Mr Anderson adopted. He set up TR7 Health Care India as a 50:50 joint venture with an Indian national who had local contacts in government, hospitals and industry organisations.

“If you try to go over to India by yourself, it would take you years to set up. You have got to have a partner, and you have got to have the right partner,” Mr Anderson said.

On the flipside, Mr Vishwanathan said there was significant interest from large Indian corporates to seek joint-venture collaborations with Australian firms.

“Indian companies are quite interested in innovation, research that is happening in Australia,” he said.

“Indian corporates are starting to see Australia as a country that is high on innovation and high on new technologies. So that message is reaching out to India which is a positive for WA.”


Subscription Options