India is busy positioning itself as a global superpower and its engineering sector is central to this. This means investment, and where there’s investment, demand usually follows. And where there’s demand, there’s scope for foreign businesses to make money there.
Here, we look at the growing engineering sector in India and the kinds of opportunities for UK businesses with an eye for global expansion to cash in on this rapidly expanding industry.
Engineering in India – what’s the story?
There are several factors that have come together to result in the remarkable growth in India’s engineering sector:
The Engineering Export Promotion Council (EEPC) was recently set up by the Indian government in order to further promote and grow Indian exports of engineered products. The country is also now a member of the Washington Accord, which puts it in an exclusive group of 17 countries who have agreements in place to nurture engineering through studies and migration of engineers between the member nations.
These initiatives have helped to boost exports from India of all manner of engineered goods, including light engineering products, such as fasteners and castings, as well as capital goods, transport and machinery. The Indian capital goods industry alone was worth $70 billion by 2017, while exports to the US and Europe in the 2019 financial year were valued at $81 billion, up from $76 billion the year before.
Foreign direct investment has been encouraged and the entire industry is now de-licensed. Excise duties have been slashed and capital goods, consumer durables and vehicles have also seen their factory gate taxes removed.
Lastly, the Indian government introduced the National Policy on Capital Goods in 2016, which has the sole purpose of boosting employment in the sector and trebling the production of capital goods in the country.
It’s a direct contributor to other industries so it attracts a lot of public money
As well as government initiatives, the sector has benefited from government investment.
Indian government investment in its engineering sector has been enormous in recent years. Some $92 billion was allocated to the infrastructure alone in the 2018-2019 Budget. In addition, the defence sector also attracted massive budget allocations, rising to $45.5 billion.
Between 2018 and 2022, investment in infrastructure in India is expected to increase to $778 billion. All of this investment boosts demand in India and foreign businesses are bound to pick up some of the slack if they are savvy players.
It holds several business advantages over Western countries
India’s comparatively low manufacturing costs are a huge global advantage. There is also plenty of innovation and the regulatory environment is favourable when compared with many other nations.
How does all this translate to foreign direct investment?
According to the Department for Promotion of Industry and Internal Trade in India, inflows of foreign direct investment into the miscellaneous mechanical and engineering industries between April 2000 and March 2019 reached $3.58 billion.
An example is the decision by SANY India, the Indian arm of a Beijing-based engineering firm, to invest around $142 million in increasing construction capacity in the country.
The EEPC’s latest Doing Business in India report explains why India is an appealing market for foreign engineering firms. The report details a list of advantages:
- Growing domestic demand and consumption due to middle classes increasing in numbers
- Government’s ‘investor friendly policy’
- Lower labour rates resulting in lower cost of production
- Availability of skilled manpower
- Abundant natural resources
- English is one of the business languages, together with Hindi
- Government focus on improvement of infrastructure
- Located close to several other important markets
How can your engineering firm do business in India?
Doing business in India is obviously a tempting prospect for any UK engineering firm. However, the market is not without competition.
For starters, working alongside a language translation service provider such as Bubbles, will help you get ahead of the crowd when it comes to appealing to Indian consumers and working with Indian businesses. Remember, you’ll need to get an entirely new team onboard as well; this is about internal relations as well as external marketing to your new customers.
The UK India Business Council says that there are differences between the UK and Indian business culture that it pays to be aware of: “A good understanding of the underlying values, beliefs and assumptions of Indian culture and how they manifest themselves in the market and workplace is essential for the success of your business.”
A deep understanding of the cultural differences between the UK and India can be gained through working with translation experts. Your HR documentation, terms of service, intranet, contracts, marketing … all this and more will need to be translated to your new audience to ensure a smooth operation.
With the physical assets in place, don’t forget to research etiquette in businesses meetings, for example, which might enable you to gain the upper hand when pitching for public contracts in India.
When it comes to language, English can often be used, but some may prefer languages like Urdu or Hindi. Printing contracts and other official documents translated into these languages is advisable.
Even with English it’s important to be aware of small differences in the way English is spoken in India. For example, Indian business people are less likely to say ‘no’ as this might be deemed as offensive, so other phrases like ‘yes, but it may be difficult’, or ‘I will try’ might be used, when they actually mean ‘no’. These ambiguities can lead to misunderstanding, but a talented translation services provider will be able to navigate these complexities with ease.
There is plenty of scope for UK engineering firms to do business in India and the government there is actively encouraging investment in the region. Working in India can save you money, help reduce your regulatory burden, open up new markets and even result in tax breaks. However, to get the very most from your business there, investing a little in quality language translation services is a must.
Contact Bubbles today if you’d like to find out more about translating your essential business documentation for the Indian market.