Som Mittal is a Former Chairman and President of NASSCOM, India’s premier information technology apex body. He is a long time NZTE Beachhead Advisor. Among many of his important assignments, he is also a director on the board of Vistara, the upmarket Indian airline, which is a Tata group-Singapore Airlines JV. Mr Mittal was in Auckland for the INZBC Aviation, Tourism and Technology summit in September. KiaOra India editor Dev Nadkarni interviewed Mr Mittal at length on a number of topics about the India-NZ relationship. Excerpts from the interview:
As one who has been at the leading edge of India’s tech industry in leadership roles over the past few decades, what potential do you see for the India-NZ relationship in areas of technology in the short-to-medium term? Like elsewhere, India is going through a major transformation leveraging technology. Given its vastness, diverse economic structure and society, technology is playing a big role in providing citizen services, implementation of government programmes, education and healthcare. The Indian government has launched a major programme, Digital India, which also includes broadband connectivity in 250,000 villages and the smart city initiative. Currently India has one of the world’s largest tech resource bases with over 4million experts and a very vibrant start up ecosystem doing rapid innovation. Internet users are growing rapidly.
All these imply unlimited opportunities for NZ tech companies for devices, software and solutions that deploy IOT, AI, machine learning and other digital technologies. The legal framework is strong to safeguard intellectual property. The opportunity is not limited to just the Indian market but embedding NZ offerings in the solutions that Indian tech companies provide to global corporations as also leveraging the innovations emerging from startups.
As a NZTE Beachheads Advisor, what are the successes resulting in increased trade and investment between the two countries in recent years – particularly as a result of the Beachheads Programme? We have many NZ companies that have done very well in India either through direct operations or working with local partners. For them Indian operations are now a significant part of their global revenues. Many have also leveraged Indian tech resources for development of global solutions and customisation. India’s time zone advantage with overlapping time periods between NZ and Europe offers a unique opportunity to use India as a base for selling, servicing and supporting customers in the Middle East, North Africa and European markets. Several NZ companies have taken advantage of the ‘Make in India’ initiative and set up manufacturing bases, helping reduce cost and become more competitive globally.
India offers large, untapped opportunities and there is need to build on the success and learnings we’ve had. NZ’s Beachhead Advisors programme to support NZ companies enter new markets is very farsighted, unique and effective. This provides NZ companies who are entering Indian markets, the benefit of receiving local expert advice and guidance on doing business in India. This could be leveraged even more as NZ companies start taking a more strategic view of the market.
What according to you are the three major stumbling blocks in the NZ-India trade relationship and how may they be addressed? India will become the third largest economy in the next two decades. NZ as a country enjoys good brand reputation in India. Tourism is increasing. Given all this, India as a market cannot be ignored and has to be nurtured carefully.
Some hurdles faced in the past are: India has a Purchasing Price Parity (PPP) of over 3. This makes it a very value and cost conscious country. With a relatively weak rupee and local taxes, the pricing becomes challenging. The Indian market is not homogeneous and needs fine segmentation and the right product positioned at the right price. Those who have done it have succeeded.
Second, protection for local industry – particularly in agricultural, dairy, food and related products – attract restrictions. These have been overcome through local value addition and also policy interventions.
And thirdly, NZ companies tend to be relatively small and have resource and bandwidth limitations in developing and nurturing the market. Many have approached it as just an extension of Asian markets. India is a market to be created and harvested. This would need a strategic view of the market and senior management conviction and support. The resource limitations can be overcome through local well-constructed partnerships.
So what’s your advice for NZ companies eyeing India? NZ companies need to take a longer-term strategic view of the market. They need to build a strong conviction in the Indian opportunity and develop an India-specific strategy. There has to be careful product positioning for the right market segmentation. One size fits all, will not be successful given the diversity. This is not a place to play the market share game but one of creating the market itself. Selecting the right business model is important as is picking the right market segment and local partner if going indirect. The market is still growing and is the right timing to build a strategy for India.
What are your thoughts on growing aviation and tourism links? The aviation industry has been growing in double digits. The demographic shifts are bringing in new air travelers. Large orders for new aircrafts have been placed. This creates significant opportunities in the aviation ecosystem. In recent years, though the market has grown, competitive pressures combined with high cost of fuel and a weak rupee has put financial pressure on airline service providers.
Similarly for tourism, the Indian middle class is growing and increasingly taking foreign vacations. They are continuously looking for new locations. NZ is rapidly being included among the desirable tourist destinations. Given what NZ and India have to offer the scope to increase tourism both ways is high and potential still to be tapped.
Why has there been so little progress, if at all, in the proposed FTA between the two countries? FTAs are important instruments to remove policy hurdles and provide a framework to facilitate trade. Given the respective desires and ambitions of both sides the negotiations are always prolonged. Many of the provisions are related to agriculture and food, where local sensitivities exist and have political dimensions given a well-entrenched democratic society. While the FTAs get negotiated, there is still business to do and values realized within the existing construct.