Palm Fronds, Sweat, and Opportunities for U.S. Businesses in South India
With a growing middle class and an English-language business culture, south India offers many opportunities for U.S. businesses wanting to expand their exporting horizons. Aileen Nandi, principal commercial officer in Chennai, India, talks about what is easy and not so easy in this economically vibrant region.
Aileen Nandi is responsible for looking after U.S. business interests in south India, which includes Bangalore, Chennai, and Hyderabad. Nandi has served in the Chennai post since 2008 and has been with the U.S. and Foreign Commercial Service since 2002, after postings to Kolkata, India, and Mexico City. Doug Barry of the Department of Commerce’s Trade Information Center talked with Nandi about the south Indian market.
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|Aileen Nandi (third from left), U.S. and Foreign Commercial Service’s principal commercial officer in Chennai, India. (U.S. Department of Commerce photo)
Barry: I’m imagining palm fronds nearby and that you’re probably dripping perspiration.
Nandi: Pretty much true. It’s very hot—in the mid to high 90s.
Barry: What in general are the opportunities for U.S. businesses in south India?
Nandi: South India has a wide range of industries: automobiles, automotive components, textiles, information technology, leather, chemicals, financial services, food processing, biotechnology, engineering, aerospace components, pharmaceuticals, and renewable energy. We really work a wide gamut of industries and sectors to help U.S. companies down here.
Barry: What kinds of businesses are knocking on your door?
Nandi: Right now, we’re working with a number of machinery and automotive companies. But every day in south India is really different in terms of companies that are coming to us. We see a really wide range of industries. The number one thing—and this holds true for all of India—is whether a U.S. product or service can compete on the basis of price.
Barry: Why leap over New Delhi and Mumbai and go directly to the south?
Nandi: Many U.S. companies, especially those coming to India for the first time, do choose to go to New Delhi and Mumbai. They are the political and financial capitals. But in certain industries, it makes sense to come straight down to the south. Chennai, for example, has a lot of manufacturing and a lot of automotive factories, so anything related to machine tools, automotive components, textiles, etc.—those companies should probably come straight to Chennai and bypass New Delhi and Mumbai.
Barry: Any other sectors of note?
Nandi: In another sector—energy efficiency and renewable energy—U.S. companies have done very well in the south. The state of Tamil Nadu (of which Chennai is the capital) generates more than 32 percent of India's renewable energy. As this region is also a manufacturing hub, companies and builders are increasingly devoting resources to make their facilities and buildings environmentally friendly.
Barry: What’s the standard of living in south India? And what is the size of the middle class and the infrastructure for doing business?
Nandi: Infrastructure is a challenge throughout India. The middle class is fairly sizable in Chennai, and the quality of living is, by Indian standards, very high. You don’t have the same amount of pollution and traffic that you do in other Indian cities.
Barry: To what extent has the economic downturn affected businesses in south India?
Nandi: The economic downturn has not affected India in quite the same way as the United States and the rest of the world. U.S.–Indian trade went from about $17.6 billion in 2007 to around $18.6 billion in 2008. And most companies down here are still hiring, although not in the quantities that they were before. However, I am seeing major companies here becoming a little bit more conservative in terms of large purchases.
Barry: Should U.S. companies ride out this economic storm before jumping into the Indian market?
Nandi: It depends on the industry. India is still growing. The government expects it to grow 7 percent, but most people think that’s optimistic. But the point is that the Indian market is growing, whereas the rest of the world seems to be shrinking. If U.S. companies do not come here now, they’re really missing opportunities because their competitors are very busy.
Barry: What about the business culture in India? If there’s a rule of thumb for Americans about doing business in India, what would it be?
Nandi: Well, for every rule of thumb, there are 10 rules to the contrary. In general, India is a country where personal contacts are vital. We often see U.S. companies trying to do things by videoconference or e-mail, but that’s simply not as effective as coming here and meeting people. I would also say that this market requires a lot of patience. It takes longer to sign deals.
Barry: In the business world in India, it seems you can get around very well just speaking English, and the legal system is one that Americans would probably recognize.
Nandi: Correct. In that respect, Indians are very Anglo-Saxon in their outlook, which is the result of a long period of British rule. Oftentimes, companies that have first done business in China find it much easier to do business in India for those very reasons.
Barry: Do you have any parting thoughts?
Nandi: I would just note that India has a growing middle class and a very young population of 1.2 billion people. While the exact size of the middle class is debatable, there are customers here to buy products from the United States, and U.S. companies cannot afford to ignore this market.