As economies across the globe recover from COVID-19, the market in India is poised to grow. What are some opportunities in India for Singapore-based SMEs?
At a Singapore Indian Chamber of Commerce and Industry (SICCI) seminar in March 2022, a panel of experts from DBS, Enterprise Singapore (ESG), and SICCI discussed the potential opportunities in India for Singapore-based SME business owners.
As COVID-19 recedes in India and the world, the Indian economy is well-positioned to grow. During the webinar, Radhika Rao, Executive Director, and Senior Economist at DBS alluded to an uptick in encouraging indicators such as loans to industry, and credit lending, indicating that the economy is poised to leave the effects of the pandemic behind. “Supply-side catalysts have a strong role in the Indian economy's growth,” explains Rao. “Singapore SMEs have multiple opportunities.”
Here are some areas SMEs should be mindful of.
CAPEX and infrastructure: The National Infrastructure Pipeline, better known as NIP, is a government initiative meant to attract investments into infrastructure. It has become a crucial supply-side catalyst over the next five years. Through the NIP, the government encourages investments in several sectors, such as transport, logistics and social infrastructure and is expected to emerge as a crucial catalyst for the growth story in India.
The business ecosystem continues to be strong: Recent developments in the regulatory and funding landscape have helped make it easier for SMEs to do business. Over the past few years, there have been corporate tax cuts, and exemptions have been rationalized. Foreign direct investment (FDI) ceilings in sectors such as insurance have been raised, and overall FDI measures have been eased (increase in automatic clearances). State governments are also providing SMEs with land and labour support.
Supply chain investments: Opportunities will arise from India's efforts to modernise the country's supply chain and trade infrastructure. India intends to improve the productivity of its supply chain by 40% to meet the international average, explains Justin Goh, Regional Group Director at ESG. “Meeting this goal will require heavy investment in roads, railways, and logistics parks," adds Goh. “Look out for opportunities in the supply chain.”
Manufacturing push: India introduced the Make in India programme in 2014 with the aim of developing the country into a global design and manufacturing hub, and the government continues to drive this initiative even through the pandemic. The programme spans the electronics industry, drugs & pharma, specialty steel, auto and green economy, and more. In particular, the government hopes to attract investment across the entire electronics value chain. One example is handset manufacturing, which is growing rapidly, with investments in the semiconductor sector being the other priority.
ESG’s Justin Goh added a few words of parting advice—he explained that SMEs looking to invest in India must consider that India is a large country with many local, regional nuances and business values. "Pick your strategy according to regions," he emphasises. "It might be prudent to look at strategies at the local level.”
In the closing session, DBS Bank India’s Sandeep Chopra, Managing Director - Institutional Banking Group explained that DBS, with its comprehensive product suite, including structured financial solutions, is uniquely positioned as an Asian bank to support businesses wanting to expand into India.