India’s daunting scope for growth

India’s importance as an emerging market has been well known for almost two decades: it was one of the original BRIC – Brazil, Russia, India, China - economies championed by Goldman Sachs in the early 2000s.

It is hard not to be impressed (and daunted) by the scale of India with a population of 1.3 billion, one million people entering the work force each month and an economy of $US2 trillion.

"It is hard not to be impressed (and daunted) by the scale of India."
Jonty Ephron, Chief Risk Officer, ANZ in India

With a strong education system and English widely spoken, India is a global leader in outsourcing, IT and generic pharmaceutical manufacturing. The country’s GDP in 2017 is forecast to grow at 7.5 per cent driven by domestic consumption despite weakness in the global economy.

Yet, with faint praise, India is still called “promising” or said to have “potential”. I see that changing.

India is benefitting from a reform-minded government that is challenging the states to support the pro-business and pro-investment agenda.

One telecommunications company recently announced it had signed-up 16 million customers in its first month of commercial operation while targeting 50 million by Christmas. There are very few markets that can offer that scale and growth in such a short time frame.

I recently had the opportunity to speak to a delegation of businesspeople from New Zealand in India with the New Zealand Trade Commission, exploring opportunities to expand activities in India under the Modi Government’s Make in India push.


The speakers at the meeting in Mumbai were from a diverse range of industries – manufacturing, e-commerce, engineering and financial services. Whilst each had their own nuances, there were several common themes which were deemed to be critical to success in India.

• Spend time on the ground. Drink chai, talk cricket and build personal relationships. It is all part of the business culture in India and these things can’t be rushed (see Patience!)

• Patience. Whether it’s spending hours at the visa office, being stuck in traffic to get to a meeting or building client relationships this is a must have!

• The right partnerships. This may be a formal business partner, a lawyer or an advisor. The key is to work with someone you can trust that can help navigate the inevitable local challenges.

• Flexible plans & funding. Business needs to be able to adapt to the local market and the original plan may need to go through several rounds of iteration and refinement before its fit for purpose.

It is likely to cost more and take longer than the original plan. The locals call it ‘jugaard; a flexible (and frugal) solution to a complicated issue - even Amazon has had to adapt its business model for India!


For all that potential, India is still only ranked 130th in the World Bank ease of doing business survey.

Infrastructure is poor, bureaucracy and regulation are a potential minefield, public sector banks are saddled with non-performing assets. The list goes on. There is no unified internal market, the corporate sector is leveraged and the government is fiscally constrained so investment led growth is a challenge.

In respect to the divided market, reforms to replace state based sales tax with a consistent nationwide goods and services tax will be a significant positive step. Whilst the constitutional amendments have been approved, the proposed implementation deadline of April 2017 looks challenging.

GST is also expected to bring parts of the informal economy within the government tax net and thereby increase overall tax revenue.

In summary, the potential in India is significant. The vibrancy, passion and capability of its people is truly impressive but behind the smiles and hospitality is a steely determination, lots of challenges and more than likely a very capable local competitor or three.

Jonty Ephron is Chief Risk Officer at ANZ in India and Chairman of the Australia & New Zealand Business Association in India.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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