INTERNATIONAL TRADE ADMINISTRATION
Federal News Service
MARGARET GOTTLIEB: Thank you. Good afternoon, and welcome to the U.S. Commercial Service webinar titled “Doing Business with India: Why India? Why Now?”
My name is Margaret Gottlieb, and I am the international trade specialist with the U.S. Commercial Service in St. Louis, Missouri. The St. Louis office is one of 100 domestic offices and 100-plus offices in over 80 countries. Our mission is to help U.S. companies by providing export counseling and assist with finding qualified agents and distributors overseas.
If you aren’t working with your local U.S. Commercial Service office, I invite you to set up a meeting with him or her to discuss your company’s goals overseas and how the organization may be able to assist you. You can find us at www.export.gov.
During the conference, if anyone is experiencing technical difficulties, please press star-0 and an operator will assist you. At the top of your screen, then slightly right, there is a feedback box. Please feel free to let us know if you need help, are having difficulties hearing, or would like the speaker to slow down.
The purpose of today’s webinar is to provide an overview of doing business in India: the best prospects, challenges, and the Department of Commerce resources to assist you. The PowerPoints and the link to the recorded audio will be e-mailed to you in several days. The recorded audio will be available for listening for 30 days.
If you’ll look toward the top of your screen, you’ll see a Q&A box. I would like to encourage everyone to submit questions during the program in the Q&A box. We will answer your questions at the end of the program. So don’t be shy asking. This will increase the amount of information sharing between everyone. Questions from the Q&A box will be anonymous. We will also be taking live questions from participants at the end of the program.
Now I’d like to introduce the speaker(s) for today’s webinar. Ms. Aileen Crowe Nandi is responsible for advocating U.S. commercial interests in organizing trade-promotion activities in south India. In this capacity, she oversees the U.S. Commercial Service offices in Chennai, Bangalore and Hyderabad, and coordinates with Colombo, Sri Lanka partnership posts. Ms. Nandi’s most recent assignment was Calcutta, India, where she served as the first-ever principal commercial officer at post, and established a vibrant partnership program with Dhaka, Bangladesh.
Prior to her India experience, Ms. Nandi was a commercial officer in Mexico City, Mexico, from 2003 to 2006, and received awards from the U.S. Department of Commerce and U.S. Department of State for her trade-promotion work there. Before joining the U.S. Commercial Service in 2002, Ms. Nandi worked as a country manager for Central/Eastern Europe with the U.S. Trade and Development Agency from 1998 to 2002.
Ms. Nandi has an M.A. from the School of Foreign Service at Georgetown University. She was a Fulbright scholar to Dresden, Germany, where she researched unemployment effects among women after German unification. Ms. Nandi also holds a B.A. in economics and international studies from the University of Richmond in Virginia. She speaks fluent German and proficient Spanish.
Ms. Nandi is a native of St. Louis. She grew up in Clayton and went to high school at Cor Jesu Academy. Ms. Nandi Crowe – Ms. Aileen – Ms. Aileen Crowe Nandi is responsible for advocating U.S. commercial interests and organizing trade-promotion services in south India.
I’d also like to introduce our second speaker, Mr. Abdul Shaikh. He’s a senior international economics and regional coordinator for Africa, Middle East and South Asia at the Trade Information Center, U.S. Commercial Service, U.S. Department of Commerce, in Washington, D.C. He coordinates business counseling to promote the trade, investment and commercial opportunities for U.S. companies, including joint ventures, and counsels American business engaged in exports to Africa, Middle East and South Asian countries. He is constantly sought as a speaker at trade events on doing business in the Middle East, India and Africa. He also directs the India Business Center.
Prior to this, he worked as industry economist at the U.S. Department of Commerce, responsible for collecting, analyzing and interpreting complex financial, economic and trade data, and maintained a vast array of economic and business information. He also worked briefly at the Import-Export – at the Import Administration and led a team of investigators to Canada on a lumber-dumping case.
Prior to this, he was a senior policy adviser with the Economic Development Administration and designed economic and business-development programs. He was deputy associate director for policy and market development, Minority Business Development Agency, U.S. Department of Commerce. He developed programs and policies for the growth of minority-owned business in the United States and supervised and managed a 35-person office.
He has taught at the University of Massachusetts and served as professional chairman of the 30-member Business Administration department with the Massachusetts University System at North Adams. He has taught in MBA and executive MBA programs at Johns Hopkins, the University of Maryland, George Mason and Virginia Tech. He received his Ph.D. in economics from the University of Massachusetts and holds two master’s and a law degree.
I am very thankful that both of these speakers with such high credentials have taken the time today to share their expertise with us today.
Aileen, you may begin.
AILEEN CROWE NANDI: Great. Thank you, Margaret, for your help in coordinating this webinar.
Good afternoon, everyone. And it’s great to be here back in St. Louis and Missouri. And I look forward to working with you to help you succeed in India.
The U.S.-India relationship is really at its high point right now. And you probably know that President Obama has invited the Indian prime minister, Manmohan Singh, to be the first state guests here in the United States in November, and that really testifies to the – to the strength of our relationship. It’s a very exciting time to be doing business in India, with lots of opportunities. But there are a number of pitfalls, which I’ll talk about later in the – in the presentation.
India, since it liberalized its economy in 1991, has really become an economic powerhouse in the global economy. And this is – this has been a trend that is shifting, and we don’t expect it to go back to the old days. They slowly reduced their barrier – their tariffs and other barriers, so U.S. companies are finding it easier to do – to do business now. But with all the opportunities that India has, there are – there are a number of challenges, and so we advise companies to proceed slowly and know the people they’re doing business with.
What’s particularly exciting about India – and this has been a new development in the past 10 years – is that the private sector is really taking charge. You know, there are lucrative government contracts, but they pale in comparison to the opportunities in the private sector.
India, of course, is a huge country with over a billion people, but what’s exciting and important to note is that it’s a very young country, which will really be a factor for doing business in the next 15 years. And in contrast to China, which – U.S. companies really compare India to China – China, having the one-child-per-family policy, will look very, very different in another 10 or 15 years. So India, with its young population, will have even more opportunities for U.S. firms.
Of course, the middle class is growing and developing. The size of the middle class depends on who you talk to and what statistics they use. But again, that talks – testifies to the opportunities for U.S. companies. One thing I’d like to point out, however, is that middle class in India is significantly different from our standard middle class, you know, where you talk about, you know, a house and two cars. India, the middle class might be a family of four riding on a motorcycle. So it’s, you know, very, very, very different.
Also, you know, Indians are big spenders, so the private consumption indicated on the slide is 62 percent of GDP, so lots of opportunity. The momentum, as I said, is very strong, we expect it to continue in the – in the – in the future.
And what’s really exciting about India is that the economy is still growing in an area where most of our world economies are shrinking or having very, very anemic growth. The next slide shows that we’re looking at 5 to 6 percent growth this year. It’s down a little bit from the 8 to 9 percent growth that we’ve had in the past couple years. But again, this is one of the few economies that still has great, great opportunities.
India is really weathering the financial crisis quite nicely. Part of this is due to the fact that they have – their export-oriented sector is not as big as other countries’. Those export-oriented industries, such as textiles, jewelry, automotive components and many others, they are hurting. But India’s also a cash-based economy. A lot of business is done – well, most business is done on a cash basis. So they have that buffer to help them.
A lot of foreign investors are still coming into India. The United States is the number-one foreign investor. And a significant shift is that opportunities are moving from the main areas, you know, such as Delhi, Mumbai and the other major cities, to the second-tier cities and the rural areas. India’s still very much a village-dominated country, so a lot of the most savvy companies are really targeting their marketing campaigns towards the rural customer, most of which, you know, have cell phones and have access to Internet on, you know, their village Internet cafes.
So, you know, India is suffering. I don’t want to make light of the fact that it’s suffering, as the rest of the world is, with the economic downturn. But we really expect India to emerge brighter and stronger as a result.
This graph just shows the trade that skyrocketed since the year 2000. You know, you can see that – a significant jump in the year 2007, where we made significant inroads. And in that case, we sold a bunch of Boeing planes to India. But what’s exciting is that the growth continues in 2008.
In the first six months of this year, however, we saw a 7.9-percent decrease. And that might sound alarming – and perhaps it is – but even at a 7.9-percent decrease, we’re still higher than where we were in 2007. We’ve really seen things turn around in the past couple months, so I’m hoping as we come to a close of the calendar year 2009, that we’ll be able to make inroads into that.
A couple years ago when President Bush got together with Manmohan Singh, they made a pledge to double our bilateral trade. And as you see – within five years. And as you see, we’ve been able to do that. And when President Obama and Manmohan Singh get together, we’ll see if they make a similar pledge to keep us all very busy.
India – with it – with its skyrocketing trade, India has leapfrogged its position in terms of importance to U.S. companies. In 2003, it was the number-25 export market. Now it’s number 14. And I would just stress that in the – in the next 10 years, it would probably – in the next couple years, it would probably be in the top 10 percent – top-10 list. So for those of you doing business in other markets, the graph on the right kind of shows the indicators of the – our top export markets and their growth rate.
India is becoming a more and more confident country for many, many reasons, but their largest companies are looking to invest in the United States now. So you see this slide, it shows our investment in India, which is impressive. But you see the increase in Indian investment in the United States. And we think this will increase even more dramatically, which is good news for us. It creates jobs and helps sustain our industries.
The U.S. Commercial Service has offices in seven cities in India. I cover south India, so Hyderabad, state of Andhra Pradesh and the southern states. What’s interesting to note in doing business in India is that it’s such a vast and diverse country. So doing business in Delhi and Calcutta, where I was before, is very, very different from doing business in the south.
In Calcutta, where I was, for example, it’s a very social place. So before inking deals, people will want to have dinner with potential business partners; they – you know, to get – to get to know them. In the south, that doesn’t matter as much. They’re more, I guess, focused, and they’ll do a deal and not necessarily care as much who’s on the other side. But these things are all very important factors to consider. And given our extensive inroads in India, we can hopefully navigate those things.
What we want to do is help you succeed in the Indian market, so we do what it takes to help you make a deal, to help you get your goods out of customs, to help you get paid by your partner who’s avoiding your phone calls. You let us know what your problem is, and we will work with you to craft a strategy to get the – get the job done and get the problem fixed. We have a number of different agencies in India. We work closely together. And we have the U.S. government clout to help step in when things are sometimes at a – at an impasse.
It’s really hard to talk about the top sectors in India, because there are so many. Aviation and aircraft parts is the number-one sector in terms of dollar value. But there’s very few sectors that don’t have potential in India. And I’ll talk about it a bit later, but the main barrier for U.S. companies to do business in India is the price factor. But the – commercial nuclear power is one area that has just bloomed, in large part due to the – due to the civil nuclear agreement that we signed – ratified last year.
Aerospace and defense, of course, is a – is a huge sector. In November, we are – we will be bringing a trade mission of 10 companies to New Delhi, Bangalore and Hyderabad to meet with the Indian civil entities to hopefully make sales.
Energy efficiency and solar power, clean energy, is another huge area that we’re focusing on right now. We have a couple of trade missions coming up, one energy efficiency in November, and then a solar trade mission in – next February.
And India, we see India kind of leapfrogging other countries, just the way that they have in the telecom sector. Many years – you know, years ago it was very difficult for an Indian company to – an Indian person to get a landline connection in their house. So as soon as cell phones came out, everybody rushed to get a cell phone, and they have a very impressive cell phone penetration rate. And we see that with energy, because energy – the energy demand far exceeds the supply. So they’re looking for nonconventional energy usage. And we see this as a very hot sector, and it could possibly surpass other countries in their usage of renewable energy.
So some of the best bets in 2009, they’re listed here. Consumer goods, of course, with the rising middle class, is a – is a – is a key – a key sector. And again, this is where going to the second-tier cities is very important to do, because they’re not saturated with consumer goods, as other major cities are. The – the Mumbai attacks last November has really taken up the expensive security in the country. So safety and security equipment and services are in tremendous demand right now.
Health care is another booming area. We will be leading a health care trade mission to India next March. And India really is trying to position itself as a medical tourism hub for U.S. and European patients who – they might not have the funds to get these expensive procedures done in the United States. You can have them done at a fraction of the cost in India. So they really need top-notch medical equipment to be able to attract that. And, of course, manufacturing and telecom.
One thing I’d like to point out is that India is very interested in getting U.S. companies to set up their manufacturing base in India, which can oftentimes make business sense. That’s not what we do in the U.S. Department of Commerce, but – and as you go to India and we start looking for partners and things like that, that will come up in conversation from the – from the time you step off the plane.
So in terms – I presented a very rosy view of doing business in India. And there are enormous opportunities, but there are a number of challenges to consider. One is, it takes a long time to do business. So I have at the top of the slide the three P’s. You need patience. It just – with the amazing diversity that they have, over 23 official language – you know, major regional languages, so many religions, so many different ethnic groups, it can be – it’s – there’s so much going on that it can be hard to get things done. So it does take longer to close a deal there.
And you do need to be there. The presence is very important. You need to go there and meet face to face with your partners, develop a relationship with them. If you can’t be there full time, you need to have a local partner. It could be an agent, local office, distributor, representative. We can work with you to craft the strategy that makes most sense. It – depending on your sector, it could be that one office or one agent could service the whole country, or it might make sense to have a regional representation. Again, we will work with you to make sense.
But the biggest factor, as I mentioned before, is price. India is a very price-sensitive country and market. So when we work with U.S. companies to determine whether there’s a market for their good or service, price is almost always the number-one hindering factor.
In the case of automotive – the automotive sector, which is big in the south, where I am, for example, the after-market component and accessories, U.S. companies can’t compete on the basis of price, because India is flooded with, you know, Chinese goods, their own domestically produced goods. So the – it’s really – in that sector, U.S. companies that design high-end precision tools, the instrumentation, those are the things that could be competitive.
Likewise, Starbucks has not been able to make inroads into India for a number of reasons, one of which is that they keep their prices the same around the world, unlike McDonald’s, which has different prices in different countries. You know, you pay $4 for a Starbucks coffee anywhere in the world, so they have not been able to make significant inroads.
If you’re interested – if you’re interested in doing business in India, we do provide an analysis free of cost to you to determine whether your company has strong prospects in India right now. So my – I’ll give – leave my contact information at the end of the slide, and just contact me any time, or my colleagues in St. Louis, and we will work with you on that.
Penetrate the regional market(s). And again, I talked about the second-tier cities. It’s important to get out beyond the main – the main areas. But also, India, because it’s so diverse – and, you know, it’s really a different country in the south than it is from the north – different languages, different customs, different – just everything is different. So it might make sense, as I mentioned before, to have a regional strategy in terms of doing business in India.
You really need to know who you’re doing business with and do due diligence. And again, we can do background checks on companies that you might be appointing to representing you or if you’re signing a big deal. This is important, because what you see is not necessarily what you get in India. You can have major business leaders who have shady business arrangements, and it’s very important to know that beforehand, because the person might look very respectable, but is not – may not be the type of person – or they might have business practices that you’re not comfortable with.
Intellectual property rights is, again, a big issue. They’re not enforced uniformly or at all sometimes in India. If you have a sensitive technology, you must get a – you must get a patent in India, because if you don’t – if you don’t and somebody copies it or takes it, they throw up their hands and say, well, you weren’t registered with us, even if you’re registered in every country around the world.
So I have here “sharpen your pencil.” And again, that just goes hand in hand with what I’ve been saying. Really know who your partner is and what you – what you – who you’re working with. And I mentioned before, you need a local partner, some kind of local presence. India is still a traditional country in many, many ways, and personal contact, personal interactions, is very, very important.
Make sure you get paid. Of course, that’s what it’s about at the end of the day. And with the economic downturn, I am seeing more complaints from U.S. companies needing our assistance to follow up with their partners who aren’t answering the phones. And, you know, make sure you structure your contracts or your payment policies accordingly. We usually recommend, you know, normal business caution when working with a new partner. And maybe, you know, try to get the payment up front first or, you know, proceed with caution in the beginning, and then as time goes on, you can perhaps provide more flexible payment options.
So these are just some basic – a basic overview. For those of you who might be interested in government contracts, they can be lucrative. But the terms and conditions can be onerous, and sometimes so onerous that U.S. companies tell us they’re not interested in bidding on the – on the government contract.
So I mentioned in the beginning that the growth in India is really driven by the private sector, and so most U.S. companies who are talking to us, you know, prefer the opportunities in the – in the private sector and see where that’s the major growth area. But in areas like mining, defense, aviation, you know, government contracts, of course, have – play a big, big role.
Corruption is kind of like the big elephant in the room when doing business in India. And, you know, every year they have these different surveys in terms of the corruption indices, you know, done by the World Bank and other entities. And, you know, India kind of goes up and down on that list. But that’s still – it’s always an issue in terms of doing business there. And again, this is why you have to sharpen your pencil and have your eyes wide open, know who you’re doing business with to make sure that they have the same business practices that you’re comfortable with.
So some U.S. companies have a preference of like “don’t ask, don’t tell” policy where, you know, their local person can do what it takes to get done as long as they don’t know about it. But again, we have very stringent, you know, policies with the Foreign Corrupt Practices Act that can sometimes put a U.S. company at jeopardy with what is, you know, against the law in our country.
But even though it talks about the challenges, I just wanted to provide a very realistic overview of doing business in India. I think in most cases the opportunities far outweigh the problems. And again, this is – this is our goal, is to help you navigate the market, figure out the opportunities, meet the partners that you need to meet, but then also provide you information on the challenges so you can make your best decision in terms of deciding how to proceed in the market.
So this is my contact information and also our website, which has some very comprehensive information. I didn’t want to talk too long, because I want to leave the bulk of the time for the question-and-answer session. But I look forward to working with you to help you succeed in India and look forward to the question-and-answer session. Thank you.
MS. GOTTLIEB: Thank you, Aileen.
I’ve just put up Abdul’s presentation. Abdul, when you’re ready, you can begin.
ABDUL SHAIKH: Okay. Thank you, Margaret. And thank you, Aileen, for an excellent presentation. And I want to take this opportunity to thank all of you for joining us for this important webinar.
I am at the Trade Information Center, and I call it the resource center. And we recently established India Business Center. And I’m going to talk about that, what it does, how it can help you. And Aileen has given you a very good overview of what are the potential markets in India and why we should focus on, but I think getting into what you need to know and how you get there and what kind of information that you can have, so India Business Center can provide that.
India Business Center is a part of the larger Trade Information Center. So wherever you want to do trade, in any part of the world, you call us here. And we have established an 800 number. So if you don’t remember whatever I say, at least you should remember 1-800-USA-TRADE. That is the place where you can begin finding out the information about doing business overseas.
Now, India Business Center is primarily focusing on India, because we find there is an increasing number of American companies are interested in doing business. You know, these are the two major mega markets, the China and India. In fact, recently we have started what we call a “Dueling Tigers” series of trade promotion, and I’ve been a part of that, trying to provide information and educate American companies that – why they should not miss the opportunity of taking advantage of the potential that exists in India.
I think Aileen mentioned there is a growing middle class and their income is rising. Unlike here, their wages are rising too, because a majority of those are Internet-savvy. They are looking for, now, quality products, not just Chinese products. So this is a great opportunity for American companies with quality products to sell in India. So I would also give you various products and services, and then briefly talk about the challenges, I think some of which Aileen has already alluded.
This is – I don’t know if anybody can see that – there is a map of India. And India is a very big country, but it is almost only one-third of the size of the United States, but it has four times the population. So you can see that how crowded it is. Any of you who have traveled to India, and the first thing you see is the people, first, you land in any of the airports, whether it is Mumbai or Chennai or New Delhi, so you’ll always find.
And the southern part of India is much more advanced economically. In fact, six of the states provide about 65 percent of the gross domestic product. And then the western part of Haryana and Punjab, they are much more advanced, and then the middle part is the less developed.
And some of the states like West Bengal, where Calcutta is, and Kerala, they are much more socialistic. And in fact, recently Tata wanted to establish their Nano car in Calcutta. They had to withdraw because the state was not able to provide, and there was a lot of hesitation and conflict between the farmers and the state.
So India is a diverse country. As Aileen has indicated, it has a different culture, different classes. The food – the – from the south is different than from the north or the west or the east. They speak different languages. Although one advantage – I think one of the important legacies that the British left in India is the language, the English language. So unlike in China, you don’t need a translator here, because most of the people you are doing business with and correspond with, know English very well. So that is – that makes your life a lot easier to deal with the business.
Now, what is the India Business Center? Now, this is – what we have is a part of the Trade Information Center. In fact, we have three business centers. One is India Business Center, another China Business Center, and the Middle East, because these are the three major markets we are exploring here.
So you have information. If you go to a – the – our website, which is export.gov/india, so, the first thing you want to know, you know, there is a number of you who have signed up here, maybe first time looking at India. So if you want to do that, the first thing we have is how to start trading with India. What do you need to know? What are the prospects there? What kind of products they are looking? What are the requirements in terms of the documentation if you want to see it? What are the customs, duties?
So this website provides a country commercial guide. So we have all 200 pages of the country commercial guide. We’ve talked about the Indian market, India as a whole, what are the policies and the problems that you encounter, how to open an office if you want to do that. So it is a very good information, and importantly, it is free. So if you go to export.gov and click on Market Research, it opens up a library, then you can do research on it. You can do research by the industry. So if you are in aerospace, consumer goods, telecommunication, and then you will find vast amount of market research reports that our Commercial Service is – in India is producing. And these are posted on this website, and this is a great resources. Because if you hire a researcher or a consultant, you have to pay quite a bit of money.
And in order to export your product, one thing you need to know is what is the duties when it lands. And we can provide that. We have a website on it on our India Business Center. So you can look at that: what is the tariff, because India has several different tariff – (inaudible). There is a basic duty, there is a countervailing duty, there is education set. So it is a very complex phenomenon as far as the duties is concerned.
They have been continuously reducing the tariff duty. Nonetheless, the duty is still high compared to other countries. So the duties then becomes a part of determination of competitiveness of your product. Because if the product costs here are hundred dollars and if you have to pay a 20-percent duty, so that would be $120. But if they can find a product for 110 (dollars), then the American product may not be purchased. So we can help you in that. And if you have questions on it, you just call 1-800-USA-TRADE.
We also post on this website a number of trade events. In fact, you know, we are conducting these educational seminars throughout the country about India. We also post the webinars. I think, you know, last month we had one on India customs. We had about 120 people signed up. We talked about the procedures and the complexity of getting your product into India. So we are trying to identify the problems and issues and concerns of American companies to be successful trading in India, and then those kind of information is selected and disseminated and transmitted, and then – through these kind of seminars and events.
Now, we also have trade leads. You know, this is a great thing, that if you are looking for what to sell, and these trade leads are perfect. They are generally screened, and therefore they are not scams, because, you know, you will find those scams quite a bit.
So the market research, I was looking at how many reports we have on this website, India Business Center. You can see that we have 1,580 reports. And yet the information and communication markets, we are 234; health technologies 80; environmental, security and safety services. So you can see that depending upon what product or what category of industries that you are in and you want to know more about it, and that information.
Now, each of these industry, you will find information as to the market, the competitors, what is the expected share of the U.S. market. So that gives you a good indication of what you can sell better in India. So this is important information if you are really interested to look at the market in India.
I think Aileen talked about the current major prospect for American companies. Here is a whole list of things. You can sell, you know, anything and everything, but these are the best prospects that you have. You know, India is booming in construction. They are building new airports. They are building bridges. They are building roads and railways, housing. So it is a booming construction. So they are looking for all kinds of, you know, design and equipment. Because I had Larsen & Toubro here, which is a major construction firm. You know, they are not looking at the – how the pavement is done, but the designing of the roads. So they are really looking for American technical know-how and quality products they can use.
I think Aileen mentioned about the medical equipment. The medical tourism is one of the big things. Some of the hospitals like in Chennai, Apollo in New Delhi, they are run by American-trained doctors. So they want to use most modern equipment.
Education is another thing. India today has liberalized quite a bit, and there are more and more American universities wanting to participate.
The food processing: You know, 60 percent of the food produced in India is wasted because of poor transportation, infrastructure, lack of storage facilities. So, you can see that India is looking. In fact, the food-processing minister I met in L.A. a few months ago, and he was telling us that, you know, he is really looking for American technology and American way of improving the storage and marketing of their products.
So pollution controls and water treatment.
And I think Aileen already mentioned that series of trade missions we are planning. And so – and all that information is posted on India Business Center, what trade mission is planned, where we are going, what is the focus of it, and, if you are – want to get in, how to apply for it and who is a coordinator for that. All that information is on India Business Center.
So I think one of the things that you may want to do there to find out more information about India and doing business in India, you know, please go to India Business Center. And the Trade Information Center also works with the 19 other federal agencies. We work with SBA. We work with Export-Import Bank. We work with the TDA and – (word inaudible) – and many other agencies. So if you are exporting a product and you run into a financial issue, we will put you in touch with the Export-Import Bank person that – who would provide you assistance in coping with the financial side of it.
So these are some of the challenges, I think. I don’t want to spend too much time. I think Aileen has already did that.
So you have to be very careful. You know, there is corruption. But – there is intellectual property rights. But I think India is making progress, because I think they realize that software has to be protected too, because they are selling lot of those overseas. You know, in Cincinnati the Tata consultancy has opened up their office, and they are employing about 50 people from Ohio. So that is a good thing. And they also want to protect their intellectual property rights. So India is realizing that.
And we have very good bilateral trade relationships. We constantly meet with – you know, there is the private sector group of executives from United States and counterpart in India. And these people meet every other month to hash out any problems that the American businesses face in doing business and the Indian business face. So we will take up those matters with their respective governments to resolve that.
So there is a lot of progress. In fact, the bilateral relations between India is not only on trade, on commercial dialogue, on pharmaceutical issues, food. You know, so we are moving in the direction to increase that, because there are some projections that in the next 10, 15 years India may become the third-largest economy in the world if it continues to grow. Because one of the reasons they are growing is because of the domestic consumption, because it is not export-oriented, but the domestic demand is so huge. They are looking for special products and more products to enjoy their higher standard of living.
So this is what India looks like, the traffic jam, you know, if you go there, because the infrastructure is a huge problem in India. And this is going to add more. This is what I was talking about, Tata’s Nano car, which is sold there for 2,500 (dollars) for Indian currency is the one – (inaudible). People had lined up when Tata had announced that. This is like your Smart car here, a little smaller. This will replace those motorscooters or motorcycles where they travel with a family of four.
Now, India, although we have given you kind of a rosy picture, but I think you need to take it with a grain of salt. And I think Aileen mentioned World Bank, their “Doing Business” 2009 report; you know, they do – they do survey 181 countries in the world and then rank each one of them. You know, the number-one best country in the survey was Singapore; that means it is easy. And the United States is number four. And in that rank, you can see India is 122. So it is not very high, but I think every year I look at it, they are improving in some cases, not all. I think there is a list of doing business in India, starting a business, dealing with licenses. Because India still has a lot of government bureaucracy and license requirements, but I think they are moving in the direction, because they realize if they don’t open up and liberalize and change their regulations, they are not going to attract more investment and they are going to – not going to get a better quality product.
And so there are services available from India Business Center that if you are looking for market research report or trade events or trade leads. And we also have free-trade agreement, because we don’t have one with India but we have, what, 14 other countries in the world that if you are doing business, we can provide you information. So if you don’t remember anything what I say, remember one thing, the phone number, which is a toll-free number and it is answered live at Trade Information Center, and that is 1-800-usa-trade.
And this is what the U.S. Department of Commerce, the Commercial Service, the – what we can do. If you are in St. Louis, I think the first person you want to see and contact is Margaret or her staff because these are our trade specialists. And we have trade specialists in trade, the Export Assistant Center throughout the country, wherever you are – you live. So that is – (inaudible).
And if you don’t know where to call, you can always go to export.gov or call us at 1-800-usa-trade. So we can help you to locate international buyers, distributors, agents, and also deal with your specific problems that you encounter in exporting process. So we help you to enter new markets much faster and make more profit.
So that is basically what the India Business Center is, and it is – we are here to help you. So if you have any questions, give us a call or contact me personally or call 1-800 number. We have several trade specialists here who will be too happy to answer the questions.
So I want to take this opportunity to thank Margaret again and for all of you for joining us for this webinar. Thank you.
MS. GOTTLIEB: Thank you, Aileen and Abdul.
And at this time our operator, Julie (sp), will explain how participants of the webinar can get into a queue and ask their questions live to either Aileen or Abdul. Also, if you have typed a question in the question box, my colleague Matt will alternate with some of the live questions on prompt from me so that those questions are addressed as well. If by chance we don’t get to your question either verbally or written, please send us an e-mail and we will make sure that you get an answer to your question.
Julie (sp), if you could please explain how the Q&A queue works.
OPERATOR: Thank you. (Gives queuing instructions.)
One moment please to see if we have a question.
MS. GOTTLIEB: While we’re waiting for people to queue for a live question, Matt, do we have any questions from the Q&A box?
STAFF: Yeah. In the services area, do you see Indian developers and corporations leveraging U.S. architects for design and delivery of buildings?
MS. NANDI: I – I’ll take that one. Yes, certainly. There’s been a number of high-profile buildings designed by U.S. architects.
But I should mention, you know, I talked before about pricing, a key factor. You’re looking at blue chips or, you know, name-brand companies who are able to afford the services of U.S. architects. Also, architecture is a field where joint collaboration is very much needed. So the successful architecture firms that are doing business in India are doing some work from the U.S. and then they’re working with a local firm, you know. And that definitely helps, you know, in terms of navigating building codes, getting the approvals done and things like that. But yes, there’s a definite demand for that.
So the building and construction sector has seen a little bit of a downturn, of course, with the economic – with the recession. You know, Indian companies are being, you know, cautious, of course, in terms of, you know, large capital expenditures. But in terms of a long-term trend, we definitely see this as a – as an opportunity for U.S. architecture firms.
MS. GOTTLIEB: Thank you.
Operator, are there any questions?
OPERATOR: Yes. I do have a question over the phone. Vishal Hurrik (ph), your line is open.
Q: Yes. I’d like to know regarding the construction that is supposed to be happening in India, I think that there’s a lot of people that need jobs over there. But with the U.S. market being as – you know, as bad as it is, it seems a lot of people in India don’t have any jobs right now.
How is it that that’s an increase if they want to build new highways and get hospitals and get more medical equipment and all the other things and stuff you talked about? How will that – you know, where will the infrastructure for that come from with such a bad economy in the U.S. and all over the world?
MS. NANDI: Abdul, do you want to take that one?
MR. SHAIKH: Yeah. I think you can understand the question that the infrastructure development in India is much – you know, much more progressively moving along than in the United States. You know, there are a lot – for example, there are a lot of construction workers in Dubai from India who (worked ?), and now they are being called back because the construction boom in Dubai has gone down.
So there is still a lot of road building. You know, there are – a lot of smaller city airports are being built. The railway expansion is taking place. In fact, you know, there are thousands – (inaudible) – highways they have completed, but they are smaller.
And then they’re also building housing, because there’s a large number of – you know, the middle class is demanding better housing even though – you know, not many homes, but these are the apartments that are being built.
So they are looking for architectural service, design services, because they have enough labor force there. You know, despite all that, there is still high unemployment. There’s a large scale educated population, too. So the construction activities of hospitals, building bridges and roads is going on much larger scale than in the United States or Europe.
Q: Thank you.
MS. GOTTLIEB: Operator, do we have another question?
OPERATOR: Right now I show no further questions over the phone. (Gives queuing instructions.)
One moment please.
MS. GOTTLIEB: Matt, I do believe we have more questions from the Q&A box.
STAFF: Yes. When in March is the mission going, and where in India are they going? And on top of that, is it necessary to attend the entire week?
MS. NANDI: Yes. The medical trade mission is – it’s in March. I want to say – I don’t have the exact dates off the top of my head, but I can send out information to you. It’s going to New Delhi, Chennai and Mumbai.
And yes, you need to at least pay for the entire trade mission fee. But if you drop out of one city, you know, we can’t force you to go to all three cities. But you do need to sign up for the – for the entire package.
MS. GOTTLIEB: Thank you.
Matt, is there another question in the Q&A box.
OPERATOR: I do have another question.
MS. GOTTLIEB: Oh, okay. Go ahead, Julie (sp).
OPERATOR: Jeff Jane (ph), your line is open.
Q: Thank you. I just wanted to know for an architecture firm that wants to establish operations in India, what location or geography of India would be most suitable to provide design services to local developers and Indian corporations in the retail, commercial office space and hospitality, doing government work or those kinds of areas – and knowing that we also have a potential partner in Bangalore? Thank you.
MS. NANDI: Most of the architecture and construction firms are located in Delhi and Mumbai. But this is really a sector where it doesn’t matter as much because so much is happening throughout the entire country. So if you have a local partner in Bangalore, it probably, you know, makes sense for you to consider that, you know, that area.
This sector is also kind of regionalized. So, you know, one of the leading architecture firms, for example, in Calcutta, where I was, covers most of the high-end buildings in east India and also doing, you know, international projects. So you can have, you know, high achievers in cities outside Delhi, Mumbai.
MS. GOTTLIEB: Matt, is there another question from the Q&A box?
STAFF: Can you guys talk more about the prospects for U.S. franchising businesses in India?
MS. NANDI: Oh, thank you for that question. I’m trying to lead efforts to help U.S. franchising companies. That’s the sector that – where we see tremendous potential, because Indians are very entrepreneurial. And, of course, the franchising model makes a lot of sense because they’re using tried and true practices that were successful in other markets in India.
Also, the organized retail sector is really booming in India, you know, in terms of malls and grocery stores, which have really only turned up in the past five to 10 years. So, of course, that gives a way for, you know, the commercial space for many franchises. So we see tremendous potential for food franchises, education franchises, health and wellness franchises and other types of services. So I’d be happy to talk to you offline to find out what – which area you’re working on and if it makes sense for you to come to India right now.
MS. GOTTLIEB: Julie (sp), do we have another question?
OPERATOR: Yes, I do have a couple more questions over the phone.
The next question comes from Vishaw Parat (ph). Your line is open.
Q: Yes. This is for Dr. Shaikh and also a little bit for Aileen. Just being a freight forwarder, where does our role play, as I’m a freight forwarder and I do a lot of (moving ?). I have – and I have agents in India who I do deal with, and we are freight forwarders and do a lot of exports from here to India. I’d like to know what kind of role could I play in the business that you guys are in of trading stuff from India to – from the U.S. into India.
MR. SHAIKH: Yeah. Very often when people call us that – they are looking for a freight forwarder because they don’t want to directly export themselves because there are documentations needed, (customs ?) clearances. You know, so the freight forwarder becomes a useful service to consummate the deal. And so we always refer them, the freight forwarders. We can’t identify one trade partner and prefer one over the other. So we do give them the contact information.
Q: Thank you very much.
OPERATOR: The next question comes from George Conway (sp). Your line is open.
Q: Thank you. I’ll ask this in general. I also sent it in writing, so you can ignore that.
First of all, I really have two questions, and that is: What are the opportunities in the Indian dairy market for American products?
And then, two, what is your working relationship with the Food Export Association?
MS. NANDI: We actually don’t handle any agricultural products at all, because those are handled by the U.S. Agricultural – USDA and specifically the Foreign Agricultural Service.
MS. NANDI: I do know it’s very – there’s very little potential for U.S. dairy products because India has such onerous requirements and they have a lot of restrictions, which is really bad for me because I love ice cream and you can’t get good ice cream. I would love to have Haagen-Dazs or Ben and Jerry’s in India.
But Holly Higgins is the person to talk to in India. And I can – if you send me an e-mail, I can give you her contact information.
Q: Okay. Thank you.
OPERATOR: And right now I show no further questions over the phone.
MS. GOTTLIEB: Are there any further questions in the Q&A box?
STAFF: Yes, there are. What will be spent on infrastructure, over the next couple of years, in India?
MR. SHAIKH: I think the latest budget I saw infrastructure, if you include road, highways, the airports, public transportation, they were talking something to – in the neighborhood of 200 (billion dollars) to $400 billion.
Matt, is there another question in the Q&A box?
STAFF: Yes. Is there an appetite in this downturn for Indian corporations to use real estate space optimization services?
MS. NANDI: I’m not familiar with that concept. Could you just briefly explain what you mean by that?
STAFF: That I’m not sure. I’d have to get more details for you.
MS. GOTTLIEB: Would the person that asked that question perhaps get into the queue with the live queue so that you could explain your question, please?
OPERATOR: One moment.
Jeb James (ph), your line is open.
Q: Hi. You know, I asked that question regarding the real estate space optimization services, (instead of James ?). What it basically implies is, you know, when there is so much vacancy available in different parts of the world and the U.S. also, companies want to find a way to account for it in their balance sheets under the occupancy-expense area.
In India, is there something like that on a balance sheet that companies worry about? And are they – are they – is that something that – you know, that our processes are – (inaudible) – that people have blocked here in the U.S.? Would they be interested in leveraging those services?
MR. SHAIKH: I’m not sure. You know, generally the vacancy space are very low in India, because there is so much demand. And the – with the demand from both private sector – increasingly from private sector is so huge, and the land area is limited. So every bit of it is being used for construction and, therefore, the vacancy rates are relatively low – (inaudible) – in cities – of course, except in rural India where some construction projects are being abandoned for lack of funds.
MS. GOTTLIEB: Julie (sp), are there any more questions in the – in the queue?
OPERATOR: Right now I show no further questions in the queue. (Gives queuing instructions.) One moment please.
MS. GOTTLIEB: Don’t be shy. We have two experts available for your questions.
I believe we have another question from the chat box, Matt?
STAFF: Yes. Are there any opportunities for a U.S. manufacturer of high-quality party and decoration staples at a commensurate price point?
MS. NANDI: That would probably be a tough sector because, again, this is a sector where there’s a lot of cheaply made goods from China and even locally made in India. So you’re probably looking at a very niche area of, you know, the – you know, the upper-middle class, the wealthy people who would want high-quality decorations. But I think this would be a sector that would be a little bit harder to penetrate in India.
MR. SHAIKH: Yeah. I think just to add what Aileen said, you know, the top four – you know, four of the top 10 billionaires are living now in India. And some of those high-income brackets, they spend so much money lavishly during the birthdays and the wedding parties for, you know, the Indian people who are rich, fabulously rich. So it may be a very small market but it may be a very good market if you can find the niche for those people who are looking for it and they are looking for, you know, high-class products to have a (blast ?) of the party.
Any other questions, Julie (sp)?
OPERATOR: I show no further questions.
MS. GOTTLIEB: Any other questions, Matt?
STAFF: That’s all that I have.
OPERATOR: I do have another question over the phone.
MS. GOTTLIEB: Okay. Very well. We’ll take it.
OPERATOR: Richard, your line is open.
Q: Thank you. I’m an acoustics consultant and work in the design of cultural facilities, theaters, concert halls, things like that. And I was in India exploring the potential for the market there, and I was wondering if the speakers have any insight on whether there’s an expectation to be building this type of building in the near future.
Also, another question: We noticed that the – India’s number 180, 181 in the World Bank information about honoring contracts. And, you know, if you have any hints on how we could structure a relationship, I would appreciate it. Thank you.
MR. SHAIKH: Aileen, do you want to take that?
MS. NANDI: Sure. On honoring contracts, this is where it would be essential to have a local law firm either approve or, you know, provide input on the contract that you’re signing, because they would better understand the Indian regulations, and they would also understand the – I don’t want to say “tricks” but they’d also understand the methods of operation that Indian companies employ at times. Because U.S. companies take a very straightforward approach in terms of doing business, whereas in India there’s sometimes this invisible dynamic that it’s always hard to put your finger on. But, you know, so this is – again, having a local partner and having a local lawyer either write or review the contract would be very helpful.
Could you just repeat the first question again, please? I lost my train of thought.
Q: Yes. I – we are acoustics and audio consultants, and we design cultural facilities like theaters and concert halls. And I’m wondering what the long-term market looks like for the construct – design and construction of such buildings. We note that India has very, very, very few facilities and seats per capita compared to other developed countries. And we think there’s a need, but we were wondering about your thoughts.
MR. SHAIKH: As the income increases there, they are becoming more and more aware of the need for higher-level cultural facilities. You know, I mean, India produces the largest number of films, the Bollywood.
MR. SHAIKH: Now we have Hollywood and Bollywood collaboration. And, you know, the – (inaudible) – invested $500 million in Hollywood. So they are, you know, trying to build more of those kind of facilities, especially the music and entertainment, where the middle class and higher-income groups can enjoy the acoustic level of the advanced increases that we are used to.
Q: Very good. Thank you.
MS. GOTTLIEB: I’d like to remind everybody that I am going to send out the contact information for our speakers, the PowerPoints and a link to the recording probably on Tuesday of next week. We’re getting into some really specific questions, so for – but we do want to give everybody an opportunity to ask their questions. So for those of you that do not have a question or don’t have a specific question, we are recording the Q&A session as well. I just wanted to make sure that people get a chance to answer their questions, but some of them may not apply to everyone.
Any more questions, Julie (sp)?
OPERATOR: I show no further questions over the phone.
MS. GOTTLIEB: Matt, are there any more in the Q&A?
STAFF: Yes. What is the market for concrete papers?
MS. NANDI: There is a solid – a very good market for this, but this is something where I would have to do more market research to find out whether the current papers are locally made or brought in from, you know, China or other low-cost countries. So, yeah. Let me – if the person who asked this question could send me an e-mail, I’d be happy to get more information for you on that.
MR. SHAIKH: Yeah. If I can mention to you that – you know, I told you that India Business Center has lot of market research reports based on our thinking in India as to what would be the best prospects for American companies. But if you have a product and if you want to explore whether there is a market for it, I think, you know, our folks in India, you know, as Aileen mentioned, that if you – if you contact Margaret or directly contact one of us, we will be glad to explore the possibility of those markets and get back to you.
I think there’s another question in the chat box, in the Q&A box.
STAFF: Yes. You discussed and mentioned roads, airports, rail, et cetera in the infrastructure budget, but there was no mention of water or wastewater. What is the value money to be spent on water and wastewater in India?
MR. SHAIKH: Don’t think we have that number, you know, offhand.
MS. NANDI: I don’t know the number off the top of my head, but we could get it – get it for you. This is a tricky – there’s a lot of opportunity here, but again, the financing for it can be – can be tricky. This is one area where the villages – there’s a lot of potential in the villages. Villages are, you know, putting together very unique mechanisms to pay for and implement wastewater treatment and, you know, water-purification technologies. These projects would be – would be very small in size, but some of the – some of the different projects that they’re doing are very, very innovative.
So, again, if the person who asked this question could shoot me an e-mail, we could send you more details on that.
Any more questions in the operator queue?
OPERATOR: I show no questions over the phone.
MS. GOTTLIEB: Any more questions in the Q&A box?
STAFF: That was the last one that I have.
MS. GOTTLIEB: Having no more questions, I’d like to thank Aileen and Abdul again for their expertise and sharing their presentations with us and being available for the Q&A. As mentioned earlier, I will send out the materials to you on Tuesday. I’d like to thank everyone for participating in the webinar, and we look forward to working with you. We’ll end the webinar at this time. Thank you.
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