India’s attraction as a market grows
With “California” on Garrett Ashley’s name tag, the state’s undersecretary for international trade found himself quite popular at a business conference in Mumbai, India, that was attended by hundreds of executives.
“There is a lot of enthusiasm on the part of Indian businesses to partner with companies from California,” said Ashley, who attended the conference as part of the Commerce Department’s November trade mission to the world’s largest democracy. “I brought back a stack of cards from people that all want to work with California.”
The interest is mutual.
California companies of all sizes were well represented on the trade mission, which, with 258 participants, turned out to be the largest ever led by the Commerce Department.
Businesses are attracted in part by India’s growing middle class of 300 million, its high-tech expertise, its widespread use of English and its influx of foreign capital.
“Right now is the time to do it,” said Rick Moy, vice president of marketing at Eset, a small San Diego security software developer that participated in the trade mission.
The company’s first exports to India last year helped push the state’s total export dollar volume to the country up 41% to $1.3 billion for the nine months ended Sept. 30, compared with the same period in 2005. Overall, U.S. exports to India jumped 24% in the same period.
“The India marketplace is extremely attractive,” said Manuel Rosales, who was the Small Business Administration’s associate administrator for international trade until last week, when he left to head a private economic development group. He visited India in late January in part to boost export opportunities for small U.S. companies.
India’s robust economic growth -- expected to be 7% this year -- modest inflation rate and savings rate of more than 30% also make it an appealing export target for U.S. companies, he said.
Rosales signed a letter of intent with the Indian equivalent of the SBA to increase partnerships among the countries’ small businesses. Last week Commerce Secretary Carlos M. Gutierrez was in India to meet with business and government leaders to further discuss how to boost American exports to the country.
Next up: The Commerce Department plans a clean-energy technology trade mission to India in April (www.export.gov/cleanenergymission). And Ashley is gathering information for a potential California trade mission to India to be led by Gov. Arnold Schwarzenegger as early as this fall.
Doing business with India is not without its potential pitfalls, especially for smaller companies that don’t have the staff or money their larger counterparts do to overcome hurdles.
Software piracy is rampant -- an estimated 74% of software in the country is pirated, according to the Commerce Department. The country ranks near the bottom when it comes to enforcing contracts, according to the World Bank. And India is a major source of counterfeit pharmaceuticals, a concern for the many small California companies in the medical and biotech fields.
Whether India is ready and able to tackle those issues was the question poised by Franklin L. Lavin, the Commerce Department’s undersecretary for international trade, who headed the recent trade mission.
“The question in front of us is this: Is India on a long-term path of reform or are we simply looking at ‘the Indian moment’?” he said in remarks prepared for a speech during the trade mission. “Will these reforms continue or will India pull back?”
Piracy concerns aside, software developer Eset is working to expand its presence in the country.
“Our company’s view is there is going to be some piracy, but we believe that it’s within some bounds and worthwhile to allow the piracy to happen in order to build the brand equity,” Moy said.
The company is also improving its software licensing management practices to reduce the chance its software will be pirated, he said.
Eset is working with several resellers in India, but the size of the market will require a larger presence, specifically a distributor, Moy said.
“We really need to establish an office over there that will manage the growth, and we are looking for the right partner to work with,” said the marketing executive, who joined the Coronado Island-based company a year ago.
Since then, spurred in part by increased sales to India, the company’s revenue has grown 151% to $33 million and the number of employees has increased tenfold to 60, some of which are in its software development offices in Europe.
Moy, who recently leased the top two floors of a downtown San Diego office building to accommodate the larger staff, expects the employee count to more than double in the next few years.
For small companies that would like to follow in Eset’s footsteps in exporting to India, many resources are available, said Rachid Sayouty, director of the Commerce Department’s Export Assistance Center in downtown Los Angeles.
“We let companies know, given their product, which market would be suitable for their product to be profitable,” he said.
The U.S. Commercial Service’s website features an overview of the India market, upcoming trade events, featured exporters and services available for U.S. companies, including free counseling by trade specialists (www.buyusa.gov/india/en). A list of export assistance offices in California is at www.buyusa.gov/home/export.html.
More general export resources are available online at www.export.gov/index.asp. And a wealth of trade statistics posted by TradeStats Express is at tse.export.gov.
California small businesses would seem to be a natural fit to export to India based on the strengths of the state’s business sector.
“The things they are interested in, we are interested in, particularly in the areas of infrastructure, energy, clean technology, environmental tech, biotech,” Ashley said. “They have a need for some of the products and services that California companies are in a unique position to offer.”
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India facts
Population: 1.1 billion
Economic growth: 7% estimated annual increase in gross domestic product
Purchasing power: Fourth-largest in the world
Malls: 375 shopping malls this year, up from 25 in 2003
Source: U.S. Commercial Service
