‘Make in India’, serviced by Australia
I recently visited India to attend KPMG’s Global Board and Council held in New Dehli. It was an exciting opportunity to not only catch up with the firm’s global leaders and hear about developments in Northern Hemisphere and Asian economies but also to absorb aspects of India’s amazing cultural diversity and colour as well as engage with our local Indian firm.
India’s Prime Minister, Narendra Modi, has a high impact plan for jobs growth, productivity increases, delivery of new infrastructure, the expansion of the professional and financial services sectors, and more. Since he assumed office in May 2014, Mr Modi has signalled he wants to inspire confidence in and empower change for the Indian people. Economically, today India is on an upswing: inflation has tapered down thanks to the sharp reduction in the price of crude oil, fiscal deficit has reduced, demand has picked up, and the external value of the Indian Rupee has also stabilised. And the Indian economy is growing at 7 – 8 percent per annum.
KPMG India is also growing quickly at over 20 percent a year, making it one of our firm’s fastest growing markets. We have a team of 16,000 people there with 9500 staff in India servicing local clients and another 6500 providing shared services to other KPMG offices globally.
In India, KPMG advises an expanding business sector where there is increasing demand for a range of professional services across key areas including tax, audit and advisory but also in specific sectors such as infrastructure and education. There is considerable opportunity for two-way trade between India and Australia and increased foreign direct investment.
I was recently asked the question, “Is India the new China?”. If you are talking about future trade between India and Australia, there is no doubt India is an opportunity – a little more difficult and not quite so significant as China – but an opportunity nonetheless!
The Modi government is focused on tax reform and seeks to capture the cash economy through a goods and services tax. As well, Indians have opened more than 70 million banks accounts – injecting energy and capital into the financial services sector. The government wants to give every Indian a bank account and bring power to every Indian household. Already it is planning ‘smart cities’ with a stated ambition to build 100 of these.
Last year, I attended a Melbourne briefing by Mr Modi during his October 2014 visit to Australia. He recognised that even after 68 years of independence, since the end of British rule in 1947, poverty remains one of India’s most pressing concerns. As a means of counteracting this, the focus of the 2015/16 Indian Budget is on driving productivity and growth. Indeed, Mr Modi has made the revival of Indian manufacturing a top priority via the ‘Make in India’ campaign. He has signalled radical plans for improving the delivery of services in India.
Notably, India is also a consumer of Australian services, including professional and other business services, education, and tourism. In the 2014 financial year, we exported goods and services with a value of $2.09 billion to India representing a total share of Australia’s trade in services of 3.7 percent.
There is blue sky for Australia in trade with India. In 2013, Australia was listed as number 36 in India’s principal export destinations; the United States, United Arab Emirates were in the first three places.
As with every opportunity, there are also obstacles. When we think of India as a market its China multiplied by three in terms of complexity. India is ranked 142nd out of 180 countries surveyed by the World Bank for ease of doing business – thus it’s one of the hardest markets in the world.
In recent decades, Australia has focused on established markets such as China, Japan and South Korea. We simply haven’t turned our eye to the India opportunity and I believe it’s now time to do so. But to take advantage of it, we’ve got to get better at selling our capabilities and delivering those capabilities into Asia – including India.
As both a country and a firm, that is our opportunity and our challenge.
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