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It’s time for our next special issue: a guest article by Gopal Nadadur on what European businesses need to be aware of in order to be successful in India for the long .

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The author of today’s guest article is our fellow Riser Gopal Nadadur, who is based out of Delhi, India.

Gopal Nadadur leads the manufacturing and supply chains portfolio at The Asia Group's South Asia Practice, and is based in New Delhi, India. He advises businesses and investors in different stages of market entry, market access and sales, and corporate strategy. He brings experience from across the private and public sectors, with expertise in engineering, supply chains, business strategies, and industrial and trade policy.

Gopal also serves as a Senior Non-Resident Fellow with the Atlantic Council’s South Asia Center and is an alumnus of the Raisina Young Fellows program and the Indo-German Young Leaders program.

Enjoy the guest article!

Gopal is recommending a great mix of a podcast and a book:

Podcast - WTF with Nikhil Kamath

Book - Straight Talk on Trade: Ideas for a Sane World Economy by Dani Rodrik

By Gopal Nadadur

India and the EU are entering a new and even higher-energy phase of their partnership, spanning trade and commerce, defense and strategic domains, and more.

Among the agreements announced by both sides’ leaders on 27 January, the free trade agreement (FTA) rightly generated significant interest among businesses. As noted in an earlier India Rising edition, the FTA will significantly improve market access. Each side will eliminate or reduce duties on over 95% of tariff lines (96.6% by India, 99.3% by the EU), increase ease of mobility of professionals, and undertake a host of other actions.

For EU businesses, capitalizing on these and more opportunities will require a deep and nuanced understanding of India’s government, policy, and regulatory environments. Many EU companies have developed this kind of familiarity with China, Vietnam, and other Asian economies over the years. Now, they must delve into India’s ecosystem.

To be sure, many EU companies have already developed a sophisticated understanding of the market, are generating attractive returns, and are poised to expand and deepen investments across sectors: manufacturing, sourcing, tech and AI, GCCs, and many more. Examples of such companies include prominent brands such as Bosch, Volkswagen, Siemens, Scheider Electric, Air Liquide, Novo Nordisk, Capgemini, L’Oreal, Decathlon, Airbus, and Dassault Systems. In fact, close to 90% of firms surveyed by the Federation of European Business in India (FEBI) stated that they saw India as being “a key driver of their overall growth”; over 95% of EU businesses in India plan to expand their operations in the country.

Given the success of many EU firms that are already familiar with India, this article may be more interesting to businesses that are less familiar with India but interested in capitalizing on the India opportunity. To this end, EU business leaders could begin with three fundamentals.

Both the EU and India are large, complex, and diverse geographies in terms of language and culture, politics, business environment, and more. Both also operate as federal systems of government. The European Union leads on some subjects (e.g., customs union and monetary policy), while member states retain significant sovereignty on many subjects (e.g., defense, police, agriculture, health).

In India, the Union government leads on foreign policy, defense, customs, and monetary policy, among other areas. State governments retain substantial mandates in areas such as land, labor, utilities (electricity, water), police, health, agriculture, and more.

In other words, to succeed in India, EU companies need to understand and engage with both Union and state level policies and stakeholders. It is important to understand and engage with New Delhi as well as with focus states.

To take the chemicals manufacturing industry as an example, at the Union level alone, a business could be impacted by policies and regulations from the Ministry of Chemicals and Fertilizers, Ministry of Commerce and Industry, Ministry of Environment, Forest, and Climate Change, Bureau of Indian Standards, and other agencies. As another example, a company operating in the food sector may need to understand the Ministry of Agriculture and Farmers Welfare, Ministry of Food Processing Industries, Ministry of Commerce and Industry, and a couple of autonomous standards and exports agencies.

EU companies might feel that all this seems much too complex and confusing. Interestingly, this is what Indian companies often feel about the EU!

The complexities notwithstanding, the potential for long term returns are worth the effort, as businesses on both sides increasingly understand.

Let’s take the automotive industry as a case. Tamil Nadu, Gujarat, Karnataka, Maharashtra, and the Delhi National Capital Region (NCR) are examples of states with well-established industrial clusters and policy ecosystems. Parts of Uttar Pradesh and Haryana beyond Delhi NCR, Andhra Pradesh and a few other states are examples of emerging players in this sector.

Each state differs in underlying context: history and culture, politics, policy, administration, presence of reliable domestic partners, and more. Success hinges on prudently selecting a “home” state – or multiple home states – and building strong and constructive relationships with key stakeholders.

With these three fundamentals in mind, EU business leaders could look to do the following:

As with any market, when learning to think local, there is a risk of relying on insights and perspectives that are outdated or incomplete. For instance: “India is very protectionist” or “all I need to do is have one great meeting with the top leaders”. Outdated or incomplete information can result in a sub-optimal India strategy.

To avoid these pitfalls, there is often no substitute for visiting India. Visits can help to form first-hand impressions through meetings with advisors, policy stakeholders, potential partners, and others, and even by observing the country’s infrastructure development, work culture, and more. In some cases, these conversations may be sobering reality checks. In other cases, the conversations could challenge misconceptions and offer clear pathways and partnerships.

The next wave of EU-India business and investment growth is approaching. With a few preliminary steps, EU business leaders can catch the wave and enjoy the ride.

Sources: European Commission, European Parliament, FEBI

For further information, please contact the author via LinkedIn.

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