An introduction to the Indian market

Shivendra Singh is the country manager for India with Scottish Development International (SDI), based in the British High Commission in New Delhi . In April, he made a flying visit to Aberdeen to brief some local oil and gas service countries on the potential existing for their products and services in this fast-growing new energy market.

Shivendra has worked in business development for 12 years, including a stint in strategic retail development in London . He has an MBA from Warwick University . He took a few minutes off from his busy schedule to give some nuggets of advice for North-east businesses to exportlink.

"I think it might be useful, before getting into oil and gas specifics, to start with some broad brush personal observations to help Scottish companies get a clear perspective on what is happening just now in the Indian market.

As you are probably already aware, India is amongst the fastest growing economies in the world and with a population of about 1.1 billion, and India's middle classes set for colossal growth of about 14 times between now and 2015, India is predicted to have the one of the world's largest single consumer classes.

The services sector led by the software industry has always been a strong point of the Indian economy and contributes almost half of India 's GDP.

The surprising progress, however, has been made more recently on the manufacturing side where India is fast establishing itself as a global manufacturing hub. Contributing close to one-fourth of the GDP, India 's manufacturing sector has a diversified base of world-class capabilities using state-of-the-art technologies.

This has been led by rapid growth on the auto-components side. Among the companies active in India are General Motors, Ford, Daimler Chrysler, Hyundai, Delphi , Cummins and Caterpillar.

Recently there has also been a major push on mobile phone handset manufacturing side through Nokia's announcement to set up a plant in Chennai. The Indian mobile phone market alone is one of the fastest-growing anywhere in the world. According to the A T Kearney FDI confidence survey, 2004, India has jumped four places to displace the US as the world's second most favoured FDI location among manufacturing investors.

Traditionally, India 's main international trading partners have been the US , followed by Europe , of which the UK is the largest component because of its cultural traditions and common language. But now one of our new trading partners is China , and in due course it may even be possible for Scottish companies to break into the vast Chinese markets through an Indian venture.

Indian companies have had a reputation in the past for competing on cost rather than quality, but that situation is undoubtedly changing fast. We already have four major Indian software corporations with turnover exceeding $1 billion, and they are true global players with a global client base and high-quality, internationally-accredited service offerings.

There is in fact generally a more aggressive, "let's get things done" attitude than has existed in the past. This is due, I believe, to a combination of factors.

One is the return to the Indian market of a significant number of Indian entrepreneurs who have cut their teeth in Silicon Valley and other competitive US sectors. These people have seen what can be done, and they are now drawing on their experience to move our software industries higher up the value chain into added-value activities like consulting and network services. Similarly in the pharmaceutical and biotech fields, more emphasis is being laid on high-end R & D.

Then there is undeniably also the sheer pressure of working in a big country with such a huge labour pool. To put it crudely, in many cases you simply have to be good to survive!

But let's now look at the oil and gas opportunities in India .

Energy opportunities

Cairn Energy has very much put Scottish/Indian oil exploration energy on the map, but there could be much more to come. 70% of India 's energy requirements are still imported, and there are still large unexplored hydrocarbon territories where licences are being issued.

Global participation is being encouraged in this quest, especially since India has no domestic drilling companies and is currently relying on foreign corporations for their technological expertise.

There are clearly huge opportunities here for Scottish companies - we estimate over 200 new wells will require to be drilled by 2010. In addition, there will be many valuable complementary opportunities in 2D and 3D seismic survey, safety and environmental studies, gas compressors and turbines and project engineering.

Downstream, there will be major growth in large surface pipeline construction, and energy shiplines and gassification/regassification projects. These huge markets will also present significant opportunities for experienced Scottish companies.

Flexibility

I think those Scottish companies which do successfully target the Indian market will find great flexibility in approach, and that it is a reassuringly easy place for UK companies to do business.

There will be flexibility on the market entry routes - which could be joint ventures, traditional agent/distributor agreements or wholly-owned subsidiaries. SDI is always happy to work with Scottish businesses to choose the best route to market.

You will find the legal and regulatory framework very familiar, and should encounter few language problems. International air connectivity is better than ever with an open-sky policy being signed with many countries. Whatever you do, though, don't attempt a three-day flying visit - although Indian businesses are eager to do business, take the time to build a good relationship from the start and you could well see an early sales return.

And one small word of warning for Scottish businesses in particular - India is still very London-centric. You may have to work harder than you think to get across Aberdeen 's status as an established international energy capital!"

Shivendra Singh can be contacted at (Tel) + 91 11 24192319, email shivendra.singh@scotent.co.uk .

SDI hopes to bring up an Indian awareness seminar to Aberdeen this summer - bookmark this site for further details, including possible missions to India.