India offers one of the fastest growing emerging economies in the world. Norwegian businesses look at the sentiments.
A milestone report reveals emerging opportunities and the sentiment of Norwegian businesses operating in India.
India has a lot going for it right now. According to various reports by the IMF and the World Bank, it is considered as one of the fastest growing emerging economies in the world today, with annual GDP growth consistently hovering above 7%.
The Indian government, which is considered strongly pro-business, has recognised that there is enormous foreign interest in the country, and has launched several policy changes and initiatives in recent years in education, digitisation, infrastructure, healthcare among others, in order capitalise on the global curiosity and to attract further investment.
Norway, already has more than 100 companies actively doing business in India, around 65-70% of which are in the maritime sector. Team Norway recently published the first Business Climate Survey 2016: Norwegian Businesses in India, in an orchestrated effort between the Royal Norwegian Consulate General in Mumbai, Innovation Norway - the Commercial Section of the Royal Norwegian Embassy in India, the Norwegian Business Association of India (NBAI) with the support of various Norwegian organisations.
“It was a complete Team Norway activity. What makes this report unique, is that it captures the sentiment of Norwegian companies with operations in India, and we want to use it as a platform to attract more Norwegian companies to come here,” says Torbjørn Holthe, Consul General of Norway in Mumbai. “For the first edition of the annual report, we naturally focused on the maritime sector, as both countries have a long and rich maritime heritage, which has influenced both societies in a significant
way. Not only did the trade and business relations between Norway and India start with ship building and the maritime sector as a whole, but it remains one of the main sectors for cooperation to this day.”
The report gathered and analysed interviews from 83% of Norwegian companies in India, from industries including maritime, oil & gas, ICT, energy, consulting and biotech among others.
“The foundation for this report was the realisation that Norwegian companies want to have more clarity in terms of opportunities here, both in the short term and the long run. So we started mapping out the key areas where we could work together, along with the expected timeline. For example, there may be 8-10 really attractive areas, but not all of them are able to generate business in the near future, some may take longer while others can really be low hanging fruit” says Pankaj Patil, Market Advisor at Innovation Norway in India.
Aside from the maritime sector, the report identified several important areas like oil and gas, fisheries and aquaculture, but according to Helge Tryti, Director of Innovation Norway in India, there has been a strategic shift in recent years toward emerging sectors such as renewables, green tech and ICT.
“India needs to comply with the Paris Agreement and the mitigation of greenhouse gases emissions is a priority, but with a massive population, it’s difficult to completely shift from coal and petrochemicals to green tech. The government has generally accepted LNG as the fuel of the future, so India is trying to attract foreign investment and expertise in this area. When it comes to power generation, coal continues to be the most important source, but India has set an ambitious target of increasing its solar- and hydropower capacity, and has recently adopted an offshore wind policy. Norway has a lot of expertise in all of these areas,” says Mr Tryti.
Perhaps India’s most ambitious project toward sustainability and green tech is the Smart Cities Mission, a government-led urban renewal and retrofitting program, with the objective to develop 109 cities all over the country during the next decade, making them citizen friendly and self-sustained.
Aside from the optimism, the survey report also identified several challenges to doing business in India.
“The ease of doing business in India ranks very low not only globally, but even among other Asian peers, such as Korea, Japan, Singapore, Malaysia and Thailand. Moreover, Norwegian companies usually have a very flat organisation structure, whereas in India we have extreme hierarchies, which means that decision making is oftentimes delayed and there’s a lot of bureaucracy involved, which in turn can become rife with corruption. This is not only the experience for Norwegian companies, but all foreign companies in India,” says Mr Patil.
Part of the report’s goals was to identify all these areas of concern and present them to the government. The prime minister’s office is directly monitoring the ease of doing business in India in order to improve the ranking.
“It’s definitely a high priority as we can see that they are changing procedures
and regulations to reduce and digitise the paperwork. There is this optimism that if in the coming years we won’t see very drastic measures taken then at the very least some concrete steps being taken toward it.”
As of now, the government is incentivising launching start-ups and it can take 3-4 months to establish an entity and start doing business. For larger entities, however, it is a different scenario, depending on whether they want to set up a subsidiary or a joint venture with an Indian counterpart, the process can take longer. For Norwegian entities, Mr Patil says the preferred method is usually to appoint a local agent, who represents the company’s interest on the ground and gains local experience. This gives them confidence about business opportunities in the country before deciding on a longtime strategy.
For the 2017 edition of the report, the plan is to increase the scope to cover other sectors that will be vital to India’s development, such as infrastructure, green tech and renewables, while remaining relevant to the maritime and oil & gas industry.
Based on this report, specifically with maritime sector focus, the message is very clear – Norwegian companies need to change their strategy when it comes to India. It has traditionally been an equipment and service provider, they need to look at capturing the entire value chain, from ship design to ship building to emerging areas like Shallow draft vessels for coastal shipping & inland waterways, small scale distribution of LNG etc.
There is need to shift from commercial ship building, which is going through turbulence globally, to defence ship building, as there is a strong focus by the Indian government on modernising and upgrading the Indian Navy & Coast guard.
In terms of geography too, there has been a shift, where more and more emerging opportunities are on the east coast of India, while most of Norwegian shipping companies have historically been mostly focused on the west coast.
“Potentially one of the most significant areas for future maritime collaboration where Norway could leverage its expertise is Ocean Space, which is a holistic way of researching and utilising all the resources abundant in the oceans. It could be the solution to what India is aiming to do with Sagarmala Project, a strategic initiative to modernise the ports & shipyards that would directly contribute to India’s overall economic growth and sustainable social development.”