India’s recent reforms to it’s foreign direct investment guidelines have prompted a flurry of excitement from companies looking to get in on the action, and there are a few growth sectors to watch out for in 2016, says U.S.-India Business Council India Director Nivedita Mehra.
Earlier in November, the Indian government relaxed several of the stringent foreign investment guidelines, giving leeway for increased bilateral business development.
The government eased regulations for 15 sectors including mining, defense, construction, real estate, civil aviation, and broadcasting.
Mehra, who is based in New Delhi with the USIBC, and regularly hosts multinational delegations seeking business in the country, pointed out a few of the sectors to watch for 2016.
Single brand retail is first on everyone’s watch list. India is well on its way to allowing single-brand retail foreign companies to sell in the country via e-commerce portals. This coming as a possible boon for the 100% foreign owned Ikea.
“There’s a lot of interest in that space,” says Mehra, “but procurement norms will be a challenge as well – and of course, consolidation will be a given fact.”
She says U.S. technology leaders find India attractive because they are able to build supply chains here, which reflect not only in India, but also at home – Amazon warehouse technology, for example, is in ongoing development.
But the big one is the defense sector.
“Strategically it is important because of geopolitics,” says Mehra, “the U.S.-India partnership is going to be a long one.” She cites defense companies coming to the country to develop eco-systems, but a newer phenomenon is the wave of tier 2 suppliers entering to catch a piece of the pie.
A recent commercial nuclear delegation led by Westinghouse Electric and GE as the main vendors, brought in a whole supply chain for the industry – and everyone from the Russians to French to Germans were involved, says Mehra.
“This is a new concept in terms of U.S. cooperation,” she says, adding that all these strategic industries are creating jobs in manufacturing, and new industries.
“There’s so much innovation going on in the world,” Mehra says, “India’s ripe for that kind of innovation.”
Foreign business are talking to the government as a whole now, indicating a shift from the previous manner of tackling one ministry at a time.
“It’s definitely a very exciting time to be in India,” says Mehra, “two years ago, things had cooled down quite a bit, but now we’re at that cusp where ease of doing business is improving – if we can see clearances, permits move faster, that will be a huge win.”
Citing competitive federalism as another prompting factor for companies to be paying more attention to the country, Mehra says the USIBC is working with individual Indian states and countries in potential new business tie-ups.
Engaging state governments to work with international companies in order to meet their state targets has been particularly interesting, she says. For example, the Indian state of Karnataka, better known as being home to the tech hub Bangalore, took a trip to Silicon Valley and spent some time with start-up companies to see how they could innovate and function better in india.
“That’s a very healthy sign,” says Mehra, “for 2016 the states will be a big focus area.”