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India is the world's second most populous nation, with an estimated population of more than 1.2 billion, and GDP exceeding US$1.94 trillion in 2012.
The Indian economy has become one of the world’s best performers, with average annual GDP growth of more than 8 per cent over the past ten years, although IMF forecasts are for slower growth in 2013 with forecasts of GDP growth 7 per cent in 2013 and 7.5 per cent in 2014.
Victoria and India Engagement Strategy
India is a key priority for Victoria’s international engagement. The Strategy outlines an action plan for Victoria to deepen its relationship with the India.
In 2012, total goods exports were valued at $13.1 billion and services exports were worth $1.9 billion.
India is one of Australia’s fastest growing export markets, growing more than 11 per cent annually since 2007. Major goods exports to India included coal, gold, copper andcrude petroleum , while the most significant services export was education worth $1.4 billion in 2012
In 2012, Victorian goods exports to India were worth $326 million, with wool, fruit and nuts, wheat and dairy the key export categories. India is also one of the largest source markets for Victoria's international education sector and the sixth most valuable source of international tourists.
Current and emerging opportunities
India's ongoing industrialisation, urbanisation and economic expansion offer strong potential for Victorian companies across a broad range of sectors.
The Indian Government has identified a range of areas for investment and growth that will drive export opportunities, including:
- food, water and energy resources for 1.6 billion people by 2030 – agricultural products, water management capabilities and partnerships with Indian providers on local energy R&D capability;
- increased pressure and impacts from a changing environment — carbon capture and storage, coal clean-up technologies, green technologies and associated industries, and emergency management and recovery;
- growing international competitiveness of Indian firms — public and private education campuses in India, engineering, construction, logistics and urban planning, capital markets, financial markets and asset management.
According to an India Brand Equity Foundation report, capital expenditure required to support this growth is forecast to be US$142.8 billion in 2010-11 for the industrial sector alone. A further US$30.8 billion will be required in the electricity sector.
Growth of India’s middle class to over 500 million by 2025 will increase demand for tourism, higher education, food and beverages, personal services, healthcare and prevention, financial services, major events, film, culture and sport.
Victoria is well positioned to meet India's increasing demand for the supply of goods and services in areas such as education, tourism, ICT, aviation, life sciences, financial services, sustainable urban design, automotive and food and beverage.
A key issue to contend with while exporting to India, is whether to export directly or sell into the market through a distributor. This choice is usually determined by the nature of the product, but the Indian importer / buyer will be keen to know if there is a local post-sale service arrangement that can be accessed. So it is essential to have a local point of contact – either a marketing office or a distributor to serve as a support.
Given the vastness of the country and economic activity that’s spread over many states and cities, it is important to decide between working with one distributor or with multiple distributors. If it is a single distributor, they should have a distribution network that covers most of the country.
Indian distributors expect continued support from the principal with marketing, promotional activities, follow-up visits, regular contact, etc. Do not expect to sign up and forget – continuous engagement with your Indian distributor is essential.
Intellectual Property protection laws in India are as good as anywhere else, but enforcement can be a lengthy process. It is essential to get some good advice on registering your patent and trademark in the country before entering the market.
India is a ‘value conscious’ market, so be prepared for the possibility of long negotiations on price. You might want to factor this in while presenting the first quote, as the buyer may come back asking for reconsideration of the quote.
Tariffs, taxes and regulations
Despite years of progressive reduction, India is still imposes one of the highest rates of customs duties in the world. On an average, import duties cumulatively would add up to 40 per cent, including basic Customs Duty, Countervailing Duty and Education Tax.
Certain products like wines attract import duties of around 180 per cent and a host of other taxes. In addition to customs duties, exporters to India have to take into consideration local levies such as VAT and an Entry tax applicable in some cities.
Victorian Government support
The Victorian Government is supporting Victorian businesses to increase exports to India through a sustained trade engagement program that provides targeted support through its Access and Trade Mission programs.
The Victorian Government Business Offices (VGBOs) in Bangalore and Mumbai provide in-market intelligence and support to Victorian companies.
A Super Trade Mission involving more than 100 Victorian companies and organisations travelled to India in February 2012 and again in March 2013.