24 Apr Viexpo: Targeting India: A business prospect for Finnish companies
Published in Vaasa Insider 23.04.2018
Arshed Iqbal is born and raised in Pakistan. He has a MBA degree from University of Central Punjap as well as from University of Vaasa. Currently he works as an International Business Trainee at Viexpo.
Developing markets often have huge potential and opportunities for business, growth and development and India is not an exception.
It is expected that the economy of India will grow at a rate of more than seven percent in the coming years.
India is expected to become one of the top three economic powers in the coming 10 to 15 years. The country is anticipated to have around 100,000 new start-ups within the next 7 years, which in return will possibly create the chances of employment for 3.25 million people and about 500 billion US dollars of value.
India has a very diverse economy which includes farming, agriculture, handicrafts, modern industries, smart technologies and other multiple services (IBEF 2018).
Focus on Energy
Currently, India is focusing heavily on waste and water management, smart technologies, renewable energy and cyber solutions.
The country has a plan to obtain 40 % of its total energy from non-fossil sources (such as renewables, nuclear and large hydroelectric power plants) till 2030.
Moreover, it also aims to increase its capacity of renewable energy from 57 GW to 175 GW at the end of 2022. Out of which 100 GW will come from solar, 60 GW from wind and the rest of it from various small sources including biofuels and biomass (Hindustan Times 2017).
The current Indian government has also launched a “Smart Cities Mission” which aims to update and develop 100 Indian cities to make them sustainable and people friendly.
Water and waste management are also among the top priorities of the government since water is becoming a scarce commodity and poor waste management has caused many environmental and Health problems across India.
According to an article by BBC, the Indian city of Bangalore is among the “11 cities most likely to run out of drinking water” in the near future.
Even though India is an attractive and gigantic business market, there are certain challenges that companies can face while establishing business there.
There is strong chain of command and a strict hierarchical system in India which companies need to keep in in mind to avoid falling into bureaucracy. Lot of inspections and paperwork, power and policy otherwise, can create hurdles in the way of organizational progress.
Moreover, corruption and bribery can be encountered in India, and a foreign company need to know how to act in such situations complying the law. Also, it is important for companies to make sure that properties and assets they acquire are not disputed.
There are certain measures that can be taken to lessen these challenges prevailing in Indian market.
It is important for companies to make sure that properties and assets they acquire are not disputed.
First of all, finding a trustworthy and valuable local partner can be a great help.
Chamber of commerce and business supporting organizations are one example to find a partner who is trustworthy and at the same time has potential to help grow a business.
Finnish companies already working in India can be a good source to get information about the target market. It is also important to learn about the market, what kind of actors are operating on the market. Good market knowledge increases the chances of business success and helps in business dealings.
Moreover, you also need to spend time with your expected business partner to get familiar and to build trust for credible business dealings in future.
Consulting professionals and seeking advice in a relatively new target market can be very effective to understand a certain market. India is a huge country and different provinces and states have their own regulations, that need to be taken into account.
Bargaining is an important part of the Indian culture as well therefore, learning negotiations and bargaining skills can be an extra advantage. If taken properly, these steps and measures can help a foreign investor in India.
Sweden recently hosted a summit, at the initiative of India, where Indian Prime Minister Narendra Modi has met the Nordic leaders to deepen and strengthen their economic relations.
This was the first bilateral visit of any Indian prime minister to the Nordic countries in 30 years.
Before leaving India, PM Modi said he was looking forward to strengthening relationship and engagement in areas including trade, investment and clean energy. He has recently tweeted after meeting the Nordic leaders that, “Our countries can extensively cooperate in areas such as startups, manufacturing, renewable energy, urban transport, waste management and innovation.”
Prime Minister of Finland Juha Sipilä said, after meeting PM Modi that, “our country has potential of cooperation, especially in the fields of energy, satellite and education and we have agreed to strengthen our cooperation in these areas.”
There are great opportunities for Finnish companies, especially for those operating in the field of renewable energy, space, recycling, waste and water management, and smart technology.
Trade plays a vital role when it comes to the Indo-Finnish relations.
Trade between Finland and India has increased significantly, especially in the last decade. Ambassador of Finland to India Nina Vaskunlahti told “Statesman News Service” in a recent interview that, “the annual trade volume is just below one billion euros and increasing. Besides this, there are about 100 Finnish companies operating in India.”
Currently, India is among the largest trade partners of Finland in Asia. For those companies that consider India as a business destination, it is the right time to invest and address the business needs of Indian market to achieve the investment goals.
By: Arshed Iqbal, International Business Trainee, and Minna Jakobsson, International Business Advisor