Cracking the mega-market: Inside the growth of India
As Australia questions its export dependence on China, political and corporate attention is turning to the 1.3 billion people across the Indian Ocean. The election of reformist Indian Prime Minister Narendra Modi last year has raised hopes of India becoming more open for international investment, however finance and policy may still present a challenge.
Advocating discussion on the subject, Curtin Business School and The West Australian organised an Asia Insight event held at the Hyatt Regency Perth in September. A keynote speech by Premier of Western Australia the Honourable Colin Barnett was followed by a robust panel discussion, and question and answer session moderated by the West Australian newspaper’s state political editor, Gareth Parker.
Premier Colin Barnett identified LNG as a key export commodity to satisfy India’s growing energy use. He said that while the 14 million tonnes of LNG India used annually was relatively small, it was forecast to grow rapidly in 25 years.
“Forecast gas consumption will treble in 25 years,” says Mr Barnett. “India’s going to be a big buyer of gas and Western Australia’s got a huge opportunity to be a significant player in the distribution of that.”
The Premier said there was also potential for iron ore given the sub-continent’s steel needs were expected to rise from 100 million tonnes per year to 300 million tonnes per year by the end of the decade.
Strategic Growth Oceania and Western Region, Asia Pacific Growth Leader and Managing Partner of Ernst and Young Michael Anghie, pointed to the need for foreign investors to help build the infrastructure needed to fuel India’s growth.
“Generally speaking, Indian corporates are highly geared and I don’t think they are in a position… to fund the development needed,” he says. “Funding and growth is going to have to come from outside India,” says Anghie.
He urged Australian businesses engaging with Indian counterparts not to expect easy deals just because of the country’s potential and stressed that the relationship between the two countries is fundamental to the transactional one. There are 29 states in India, and companies as well as governments need to know which area is best suited for their business.
But while discussion on cracking this new ‘mega-market’ focuses heavily on mining exports and infrastructure, the service industry, particularly the education sector, was highlighted as an area that should be looking to expand into the Indian market.
According to Mr Barnett, providing education for Indian nationals should remain a key service offered by Australian institutions and he suggested that institutions take their services to India.
“[Education] institutions could beef up their presence in India as most Indians cannot be expected to obtain their education overseas,” he advises.