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Outsource magazine: thought-leadership and outsourcing strategy | August 19, 2017

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India: free trade agreements back on top

India: free trade agreements back on top
Outsource Magazine

When you speak with entrepreneurs and executives of India’s IT and IT Enabled Services sector, you hear enthusiasm only. Quite rightly so.

For example, Indian restaurant search service Zomato is in talks to raise about $100 million in a fresh round of funding. Zomato is now present in 22 countries and over 500 cities around the globe. Flipkart, India’s largest online retailer, is now pegged at $11 billion. Paytm, an Indian mobile wallet brand, is valued at $2 billion since Chinese e-commerce company Alibaba and private equity company SAIF Partners infused $625 million. Last year, Snapdeal received funding from Japan’s SoftBank at a valuation of $1 billion. Info Edge, JustDial and MakeMyTrip are valued at around $1.7 billion, respectively. Investments are pouring in domestically as well as from investors across the globe.

As India wants to make a big technology leap, Google is ready to help the government implement its ‘Digital India’ initiative. Vinton G Cerf, Chief Internet Evangelist, Google is positive that India’s government has a well-laid-out plan to realise it. Likewise, Cisco is gearing up to cash in on the initiative, investing a fresh investment of $1.7 billion. The India job portals of both these companies (and of many other multinationals operating in India) list many, many vacancies. No doubt, salaries in India are likely to increase – and staff attrition rate as well.

But the money is not only going to India. There is considerable – and increasing – investment coming to markets in the West from there. Zomato (see above) acquired New Zealand’s MenuMania for a reported $808,000, making it the largest player in its space. TechMahindra is acquiring SOFGEN Holdings in Switzerland; the acquisition is expected to strengthen Tech Mahindra’s presence in the banking segment. In 2014 Cognizant acquired itaas Interactive TV Solutions, TriZetto Corp and Cadient Group in the US, and Odecee in Australia. Tata Consultancy Services acquired erstwhile French tech company Alti back in 2013. In September 2012, Infosys acquired Switzerland-based Lodestone Management Consultants. Etc, etc.

India is back on a path of growth. Let us not forget, India has 1.2 billion consumers! While the country’s GDP is predicted to expand by 5.8 per cent in the current fiscal period (2014/15), it is projected to grow by 6.4 per cent in the next one (2015/16). In its flagship publication, Global Economic Prospects, released early January this year, the World Bank said India will become the world’s fastest-growing economy by 2017.

It therefore must not come as a surprise that the US, EFTA (Switzerland, Norway, Iceland, Liechtenstein) and the European Union are all equally eager to get better access to sheer unlimited opportunities in India. These markets have a hopeful eye on the subcontinent also due to troubling economic news from Brazil, the security crisis and resource issues with Russia, as well as disappointing growth trends in China.

America’s President Barack Obama and India’s Prime Minister Narendra Modi are expected to make major announcements regarding significantly broader and deeper free trade in 2015.

Switzerland, another enthusiast for a free trade agreement with India, would love to be the first leader in the west to sign such a deal, even before the US. India has signaled that it does not see any reason why signatures should not be put on such a document swiftly.

And finally, the European Commission wouldn’t mind a free trade agreement with India either. It seems, however, the EU’s wish list for concessions to be made by India is so long that Manjeev Singh Puri, India’s Ambassador to the European Union went on record saying: “What you require is a determined will and willingness”. There are, of course, talks going on with the EU but with lower intensity than with the US and EFTA.

To be sure, India needs free trade agreements as much as its prospective partners. Without much-needed investments and know-how India will find it quite difficult to convert that emerging economy into a properly industrialised one. Investments will have to flow into research and development and, as a result, into intellectual property registered by entities in India. This will not only create assets for India’s national economy but also improve the protection of patents and copyrights, which both are much needed to improve foreign business partners’ confidence in doing business in India.


About the Author

Waseem Hussein 150Waseem Hussain is Managing Director at MARWAS AG. He is a renowned trainer, author, business consultant and keynote speaker on doing business in India.

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