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India

country brief

contents
Key Economic Indicators ................................................... 2
Overview .............................................................................. 2
Political................................................................................. 3
imports and exports............................................................ 3
Sector Opportunities........................................................... 5
Sustainability ....................................................................... 6
Market Entry......................................................................... 7
Regulatory Issues ............................................................... 7
Freight .................................................................................. 8
Doing Business with India ................................................. 9
visa requirements.............................................................. 10
time difference................................................................... 10
Contacts ............................................................................. 10
useful websites.................................................................. 11

This document is one of a series of free information tools for exporters produced by New Zealand
Trade and Enterprise. New Zealand Trade and Enterprise provides a wide range of standard
services and sophisticated solutions that assist businesses through every stage of the export
India process.
Country For information or advice, ring NZTE on 0800 555 888, visit www.marketnewzealand.com, or
Brief contact your Client Manager.

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2008

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Key Economic Indicators

Economic Indicator India


Population 1.1 billion (2007 estimate)
GDP US$1,099 billion (2007)
GDP Growth Rate 9.2% (2007)
GDP Per Capita US$1,030 (2007), US$2,780 (2007 PPP)
Inflation 6.4% (2007)
Total Imports US$217.54 billion (2007)
Total Exports US$147.56 billion (2007)
Currency Indian rupee
Exchange Rate NZ$1= 31.51 Rupee (as at September 2008)
US$1= 45.80 Rupee (as at September 2008)
(see www.oanda.com for the latest exchange rate)
Sources: RBI, CSO, MoF, Asia Monitor, IMF, World Trade Atlas

Overview
Since achieving independence from Britain in 1947, India has created a modern economy with a
largely self-sufficient agricultural sector, diversified industry and a relatively large and
sophisticated financial and service sector. With its large population and a wide diversity of market
segments, India provides a potentially vast market for consumer and industrial products,
particularly when access is further liberalised.

India’s population is estimated at around 1.1 billion and is forecast to grow at a rate of 1.4
percent per annum over the next 10 years.1 Some of the key demographic changes are:
„ The ageing of the population – although this is less obvious in India than in other
nations. The population is still relatively young, with an average age of 26.6 years.
However, with a rapidly falling birth rate the population bulge is moving upwards. The
40-64 age group is forecast to grow by 2.6 percent annually over the next 10 years
compared to an annual growth rate of 0.5 percent for the 0-14 age group.
„ Improved access to education. The emphasis is still on education at the primary level
for all, but positive discrimination policies aimed at lower castes and “tribal groups” are
resulting in more positive levels of involvement in secondary and tertiary education.
„ The growing urbanisation of the population. Less than 30 percent of the population
currently lives in the cities, but rapid economic growth in the major cities is fuelling
massive internal migration. This rapid growth in the cities creates major infrastructure
opportunities.

The features of the current India trade policy are deregulation, simplification and transparency.
With regard to imports and exports, the trend is to deregulate wherever necessary by slowly
phasing out licensing restrictions and discretionary controls. The last remnants of the quantitative
restrictions on imports were removed in April 2001. Controls through tariff mechanisms are still in
place, but are being reduced over time. In February 2007, the Government of India (GOI) further
reduced the peak applied customs duty on non-agricultural goods from 12.5 percent to 10
India percent. However, agricultural products still face stiff tariff barriers and non-tariff barriers.
Country
Brief

September 1
The demographic statistics in this section are sourced from Global Demographics.
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Lobby groups continue to put pressure on the government to slow down trade liberalisation
commitments and there is little scope for flexibility around agricultural products because of the
massive electoral lobby represented by India’s small farmers.

India is experiencing a period of sustained and rapid economic growth. New industries such as IT
and business process outsourcing (BPO) operations are surging ahead, while there is a
resurgence in traditional manufacturing, and strong growth in imports and exports. Investment,
especially Foreign Direct Investment (FDI), has been growing, with FDI inflows increasing from
US$11 billion in 2006 to US$19 billion in 2007. There are also ambitious plans for faster
development of physical infrastructure, and progress in fiscal consolidation.

Political
India is a federal republic with a parliamentary system of government, which comprises 29 states
and six union territories. The President of India is the head of the Union, but acts in accordance
with the advice of the Union Council of Ministers, headed by the Prime Minister. While limited in
executive power, the President can influence the formation of governments at both the state and
national level when no party has received an outright majority. The Prime Minister is the head of
government, requiring the support of the national assembly. In the states, the Governor is the
head of the executive.

India has an extensive bureaucracy and the top-level bureaucrats enjoy a high degree of
discretionary power with regard to approvals of various projects. The states are responsible for
agriculture, irrigation, power, fisheries, education, forestry and state roads and bridges, all of
which account for more than half of India’s GDP. Distribution of powers between the union and
the states, as set out in the Constitution, is a field of considerable discussion and negotiation.

The last election was held in 2004, resulting in an upset victory to the Congress party and its
allies. Atal Behari Vajpayee and the Bharatiya Janata Party (BJP) had led a 22 party alliance up
until the election, but 675 million Indians voted for change. Mrs Gandhi’s decision to turn down
the prime minister post in favour of Manmohan Singh was a surprise but Mr Singh has been a
steady leader. Mr Singh is a former finance minister widely regarded as the architect of India's
economic reform programme. He is also the first Sikh to hold the position of prime minister.

The Congress Party does not have an absolute majority and is in power with a coalition of Leftist
and Regional parties. Opposition from far-left partners has delayed some of Mr Singh’s desired
economic reforms especially around labour market liberalisation, and opening sensitive sectors
such as retail to FDI. The next general election is scheduled for 2009.

imports and exports


India's Top Exports
India's Top Ten Exports, (US$ millions) 2006 2007
Refined oil 17,401.22 23,709.58
Diamonds 10,460.54 13,410.49
Articles of jewellery 4,600.95 5,088.24
India Iron ores & concentrates 3,760.20 4,536.67
Country Medicaments 2,458.59 3,115.16
Brief Rice 1,460.45 2,360.39
Organic compounds, not elsewhere specified 1,829.81 1,979.56
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India's Top Ten Exports, (US$ millions) 2006 2007
Women's or girls' suits 1,836.63 1,740.12
Refined copper & alloys 1,641.48 1,661.48
Cotton 978.01 1,655.06
Total exports 121,259.30 147,564.25
Source: World Trade Atlas: A Product of GTI©.

India's Top Imports


India's Top Ten Imports, (US$ millions) 2006 2007
Crude oil 47,697.42 54,523.24
Gold 13,314.64 17,015.98
Refined oil 6,158.35 8,631.75
Diamonds 7,452.61 8,516.02
Coal 3,466.18 4,691.84
Copper ores & concentrates 4,417.34 4,336.91
Transmission apparatus (mainly mobile phones) 4,370.85 4,137.16
Petroleum gases & other gaseous hydrocarbons 2,753.02 3,943.46
Telecommunications & communications equipment 1,668.38 3,370.55
Iron or non-alloy steel; flat-rolled products 1,652.62 2,944.58
Total imports 172,876.30 217,542.70
Source: World Trade Atlas: A Product of GTI©.

New Zealand’s Top Exports to India


New Zealand's Top Ten Exports to India, (NZ$ millions) YE June 2007 YE June 2008
Confidential items 120.34 113.02
Logs 47.75 61.78
Wool 57.00 48.75
Aluminium 15.41 20.31
Sheep skin leather 10.34 9.89
Ferrous waste & scrap 6.58 7.79
Waste and scrap of paper or paperboard 5.31 6.15
Apples 3.61 6.12
Raw hides and skins of sheep 3.06 5.78
Raw hides and skins of bovine or equine animals 2.47 4.52
Total exports 360.82 360.54
Source: World Trade Atlas: A Product of GTI©.

New Zealand’s Top Imports from India


New Zealand's Top Ten Exports to India, (NZ$ millions) YE June 2007 YE June 2008
Confidential imports 15.38 16.00
Diamonds 17.25 15.01
Medicaments, in dosage form 9.74 13.68
Articles of jewellery 7.51 11.31
Bed, table, kitchen linen, etc 9.35 8.86
India
Country Monumental or building stone 5.36 5.75
Brief Footwear 3.68 4.96
Cast articles of iron or steel 5.47 4.91
September Women’s or girls’ suits or ensembles, etc 4.56 4.82
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Travel goods, handbags, wallets, etc 3.77 4.47
Total imports 264.14 284.83
Source: World Trade Atlas: A Product of GTI©.

Recent Trends
India was New Zealand’s 23rd largest export market in the year ended June 2008, behind France
and ahead of Vietnam. Primary commodities still dominate New Zealand exports to India, and
exports of logs and aluminium, in particular, have grown significantly in recent years as a result
of the rapid growth in India’s manufacturing sector. Coal (which is included in the confidential
items) is also a major export to India.

In contrast to many other countries India is not a significant export market for food and beverage
(F&B) products, with exports of dairy products being worth less than NZ$1 million in the year
ended June 2008. Over the period the major F&B products exported to India were apples
(NZ$6.1m) and sugars (NZ$4.1m).

For New Zealand, education, film & tourism are the mainstay service sectors with large potential
in India. In the year ended June 2008, 23,328 Indian tourists visited New Zealand, an increase of
11 percent from the previous year. In 2007 just over 3,700 fee paying students from India studied
in New Zealand, making it the fourth largest source of students that year. In recent years more
than 120 Indian films have been shot on location in New Zealand, raising New Zealand’s profile
in India. India is also investing heavily on infrastructure development, thereby creating very good
potential for consultancy in infrastructure development and inputs for projects.

Sector Opportunities
There are opportunities for New Zealand exporters in the following sectors.

Biotechnology
This sector is growing fast in India because of a low cost base and availability of good
manufacturing facilities. A number of Indian companies are quite global in reach and offer
possibilities as strategic partners. Possible areas of interest are in:
„ joint research with Indian companies
„ conducting trials in India
„ contract manufacturing in India

Creative
Creative industries are a diverse sector, which includes screen production, television, music,
design, fashion, textiles and digital content. India has significant capability in most of these
sectors and it is important for New Zealand companies to be able to establish their competitive
advantage in some specialised niche within the sector. New Zealand is increasingly popular as a
shooting location for Indian films.

Education
The demand for overseas tertiary education in India is rapidly increasing. The high quality and
lower New Zealand fee structure and the safe environment appeal to Indian students, as does
India
the concept of education as a “pathway” to migration. Education promotion in India is managed
Country
under an Education New Zealand PACE programme. Opportunities for secondary education or
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ESOL training are limited. A number of New Zealand tertiary institutes are now offering courses
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ICT
There is excellent potential in this sector, given the rapidly expanding telecoms and IT market.
India’s diversified economy offers wide ranging possibilities and large-scale Indian companies
are a potential route to third markets for New Zealand companies. Rapid growth has given a
significant incentive to industry, which is in the process of upgrading systems and introducing
new technology. There are a large number of successful companies exporting ICT products to
India from New Zealand and a number considering opening marketing and product development
operations in India.

Specialised Manufacturing
The Indian government is investing heavily in infrastructure development. India is one of the
major recipients of World Bank funding for this sector. There are major road, aviation, energy,
and rail projects underway in many cities. With the rapid growth in air travel in India, the aviation
sector offers particularly promising opportunities for New Zealand.

New Zealand expertise is well considered and appropriate for many Indian projects.
Opportunities exist in defence, telecom, aviation, CNG, security, the oil and gas sector and food
processing equipment. All of these are high growth sectors.

Wood Processing
Market demand for New Zealand timber is increasing rapidly for use in construction, interiors,
furniture and packaging. The long-term demand for New Zealand radiata pine is excellent.
Currently most timber is exported as logs and processed in Kandla in Gujarat. Recent duty and
exchange rate changes may make export of manufactured timber products from New Zealand
more attractive.

For comprehensive information on the opportunities for these New Zealand export sectors,
please contact your New Zealand Trade and Enterprise (NZTE) client manager or call NZTE on
0800 555 888.

Sustainability
Environmental issues were ignored for a long time in India. However, in recent years, there has
been increasing concern about issues such as air and water pollution, particularly in the large
cities. According to the latest Pew Global Attitudes Survey, 49 percent of Indian’s surveyed in
2007 considered environmental problems to be the top global threat, a significant increase from
32 percent in 2002. Also, 57 percent of those surveyed regarded global warming as a very
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serious problem.

The government has enacted a number of laws with regard to environmental issues. For
example, all leather tanneries must now meet stringent EU compliant regulations on industrial
discharges. Action is also being taken to move away from diesel to CNG-based vehicles, with
changes being implemented initially in New Delhi, Mumbai, Chennai and Ahmedabad.

Industry initiatives include the Confederation of Indian Industry’s code for ecologically sustainable
business growth. The code, part of CII’s initiative, Mission on Sustainable Growth, aims to
India
promote conservation of natural resources in Indian industry without compromising on high and
Country accelerated growth. The provisions in the code include the reduction of water and energy
Brief

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Pew Research Center, 47-Nation Pew Global Attitudes Survey, June 2007.
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consumption and reduction of specific greenhouse gas emissions. More than 100 companies
have signed the code, including Tata Steel and Pepsico India Holdings.

Market Entry
There are generally three modes of entering the Indian market:

Agents/Distributors
New Zealand companies could appoint agents to import and distribute products. Depending on
the nature of the product, it is advisable to take care when deciding to use a single agent or
multiple agents with different regional responsibilities, given the scale of the market and regional
differences. Internal logistics in India are not well-developed.

Joint Ventures
This is an option that a number of overseas companies have resorted to, particularly in the food
and beverage sector and fast moving consumer goods (FMCG) sector. The legalities involved in
setting up joint ventures need to be carefully considered. Exiting joint ventures can be difficult.

Direct Investment
Liberalisation has facilitated direct foreign investment. Direct investment and joint ventures are
subject to approval of the Secretariat of Industrial Assistance or the Foreign Investment
Promotion Board. While most processes are being streamlined, negotiating Indian central and
state government regulations is neither easy nor quick.

India has recently established legislation for creating Special Economic Zones (SEZs) on the
Chinese model. Attractive features of SEZs include tax-free status, and the ability to import raw
materials duty free. This offers considerable opportunities for New Zealand companies
considering establishing a manufacturing base in India, or exporting materials to Indian
manufactures who establish themselves within a SEZ.

For Further Information


Market entry requires a wide range of information. You have to make decisions on all kinds of
issues that will ultimately affect your approach to the market. For further information talk to your
NZTE client manager or call NZTE on 0800 555 888.

Regulatory Issues
An outline of some of the regulatory issues that New Zealand exporters need to be aware of
follows.

Health Regulations
Importation of certain drugs is banned. Pharmaceutical products need the approval of the
Ministry of Health before they are marketed in India.

India Import Policy


Country Capital goods, raw material, intermediates, components, consumables, spare parts, accessories,
Brief
instruments and other goods may be generally imported without any restriction. Any person may
import such goods, whether they are the actual user or not. However, if such goods require a
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license, only the actual user may import the goods, unless the licensing authorities dispense with
the actual user condition. Second-hand capital goods may also now be imported.

Marking and Bar Codes


The use of bar coding is still at a very early stage, but is on the rise in India. It is likely to become
the accepted norm in the market with the growth in modern retail outlets and availability of
suitable software solutions.

Packaging and Labelling


Labelling and packaging requirements vary from product to product. English is the favourable
language for labelling. Indian Customs are strict and it is important to ensure that imported items
have the legally required information before they enter the retail market or are sold for
consumption.

Product Liability
Consumer awareness is increasing and dissatisfied consumers have recourse to consumer
protection agencies and can seek legal redress. Consumer/product related litigation is not yet
common practise in India.

Quotas and Restrictions


In accordance with its WTO commitments, India removed import restrictions on all consumer
products (mostly food and beverage products) over a six year period ending in April 2003. For
more details on India's current import policy, please see the website for the Directorate of
Foreign Trade (Ministry of Commerce and Industry) http://dgft.delhi.nic.in.

State Regulations
The Indian tax systems are quite complex. Tax structures vary from state to state and have a
direct impact on the price of a product. Some states levy a tax known as Octroi on cross-border
transportation of product. The government is attempting to simplify the situation and introduce a
uniform national GST.

Tariffs and Duties


In accordance with the WTO Agreement, India has phased out some import barriers. However, a
degree of protectionism continues through tariffs and duties on certain products, which are
reviewed annually in March/April. India has reached agreement with the WTO regarding bound
rates of duty. Excise duty or countervailing duties is also normally levied at the time of import.

Depending on the product concerned, NZTE may be able to provide free basic information on
tariffs at an indicative level to assist companies assess viability of market entry.

Freight
Air Freight
Most airfreight consignments from New Zealand to India are routed through Singapore. However,
connections are also available through Bangkok, Hong Kong, and Kuala Lumpur.
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Sea Freight
The main seaport servicing western and northern India is Mumbai. Chennai is the main southern
port. Most log consignments from New Zealand enter through the western port of Kandla. It is
advisable to avoid the ports of Calcutta and Cochin due to recurring labour problems and strikes.

NZTE has basic information on air and shipping freight options to this market, but for details on
rates and schedules, exporters will be referred to a range of appropriate service providers.

Doing Business with India


Cultural and Business Tips
India is a developing country and is considered a difficult market. New Zealand exporters should
undertake initial in-market research to determine actual prospects for their products and services
before visiting the Indian market.

Dress should be modest and conservative. Business clothing for men varies, depending upon the
climate. Suggested attire for winter is a suit and tie, and for summer, lightweight trousers and a
short sleeve shirt. In other seasons, lightweight trousers, long sleeve shirt and tie are
appropriate. Women are advised to dress conservatively.

There are many national and regional public holidays in India and exporters should check dates
before planning a market visit. Schools and colleges are closed for annual holidays during the
hot spell and the Monsoon of May & June. That is also the period when businesspeople and
government officials usually go on leave. It is advisable to plan business travel outside of this
period. The major Indian festival season falls in the cooler months of October and November.

Taxis are readily available and prices are reasonable, but make sure the meters are being used
or prices are agreed upon, before embarking on a journey. Prepaid taxi services are available at
all major airports. Hired cars are available at most hotels, but are expensive compared to
metered taxis. The rail network in India is extensive. Travel on second class air-conditioned
coaches is reasonably cheap and comfortable. Travel on first class air-conditioned coaches is
expensive and air travel often offers better value for money.

While travelling within a city or town is very safe, it is advisable to avoid road travel between
cities, particularly at night.

India has a number of full service and budget airlines operating on domestic routes. Jet Airways
has the most extensive network within India. Generally airline service and safety standards
match those of any international airlines. E-ticketing is now possible with most of the airlines.

Telephone calls and faxes from hotels are expensive. There are easily accessible telephone
“booths” offering local, domestic and international calls in most towns and cities, which charge
standard rates. Visitors can arrange to have international roaming on their cellphones before
departing New Zealand or alternatively purchase a suitable prepaid SIM card on arrival in India.
SIM card purchases now need identification registration due to terrorist concerns.

Health problems can be avoided by taking common sense precautions. Drink mineral water from
sealed bottles only and avoid ice in drinks. Avoid fish in summer. Do not eat salads in
India restaurants. Meat and vegetables should be well cooked. Fruit should be cooked or peeled.
Country Avoid contact with animals, as rabies is a major problem. HIV is a serious problem in India, with
Brief India now having the world’s largest HIV-positive population. If health problems arise, hospitals in

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the private sector are of a reasonably good standard. Leading hotels can advise on a reliable
doctor.

Tipping is widely expected and will ensure good service. Tipping in restaurants is usually 5-10
percent of the bill. For a full day use of a taxi, a tip of around 50 rupees to the driver is
recommended. For less than a full day 20 rupees will suffice. Porters in hotels are tipped 5–10
rupees per bag.

Indians are generally very religious people and can appear morally quite conservative. Indians
may often be vegetarians on religious/caste grounds. Most Hindus do not eat beef because of
their reverence for the cow, and Muslims do not eat pork. The consumption of alcohol is also
forbidden in some parts of India, and drinking patterns are quite restrained. Dinner is usually
served late at functions held in private homes and will usually conclude the evening.

India has recently been subjected to sporadic violent clashes in some regions and has also been
the victim of terrorist activity. For current information and advice on where and when to travel to
specific regions of the country, you should seek the advice of NZTE and/or refer to the current
travel advice issued by the Ministry of Foreign Affairs and Trade (www.safetravel.govt.nz).

visa requirements
New Zealanders require a visa to visit India. The visa and passport should remain valid for at
least the duration of their stay. A visa should be obtained from the Indian High Commission in
Wellington before departure from New Zealand. An application form can be downloaded from the
High Commission’s website. Up to three weeks should be allowed for the issuing of a visa. The
contact details of the Indian High Commission are:

Address 180 Molesworth Street


P O Box 4045, Wellington
Phone +64 4 473 6390
Fax +64 4 499 0665
Email hicomind@xtra.co.nz
Web Site www.hicomind.org.nz

Time difference
India is six and a half hours behind New Zealand except during daylight saving, when it is seven
and a half hours behind. For the current time in India, go to: www.timeanddate.com

Contacts
New Zealand Trade and Enterprise
Enterprise Hotline Phone 0800 555 888
Web Site www.nzte.govt.nz
India
Country
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New Zealand Trade and Enterprise in India
New Delhi

Address c/o New Zealand High Commission


Sir Edmund Hilary Marg
Chanakyapuri
New Delhi 110 021
India
Phone +91 11 2688 3170
Fax +91 11 2687 6554
Email info@nzte.govt.nz

Mumbai

Address 701-705, Dalamal House,


Nariman Point,
Mumbai-400021,
India
Phone +91 22 6615 1155 - 57
Fax +91 22 6615 1158
Email info@nzte.govt.nz

India / New Zealand Business Council


Contact India New Zealand Business Council
Address PO Box 1590
Wellington, New Zealand
Phone +64 4 475 8955
Fax +64 4 475 8982
Executive Director Fergus McLean – fmclean@xtra.co.nz

useful websites
Organisation Web Address
Indian Government directory www.goidirectory.nic.in
Indian Chambers of Commerce & Industry www.ficci.com , www.assocham.org
India Trade Promotion Organisation www.indiatradepromotion.org
Foreign Investment Promotion Board http://finmin.nic.in/the_ministry/dept_eco_affair
s/fipb/fipb_index.htm
India Brand Equity Foundation www.ibef.org
Times of India www.timesofindia.com
Economic Times www.economictimes.com
Guide to Trade Fairs in India www.exhibitionsindia.org

India
Disclaimer:
Country While New Zealand Trade and Enterprise has verified the information in this document, we
make no representation as to the completeness, correctness, currency, accuracy or fitness for any
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purpose of the information. New Zealand Trade and Enterprise will not be responsible for any
damage or loss suffered by any person arising from the information contained in this document,
September whether that damage or loss arises from negligence or otherwise.
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