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Doing Business in India - Wastewater Treatment
1. Running head: DOING BUSINESS IN INDIA
Doing Business in India – a Blueprint for the Wastewater Industry
Benjamin S. Cheeks
International School of Management, Paris
Author Note
This paper was submitted to fulfill the requirements of Indian Doing Business in
India, DBII 7016. I would like to thank all of the faculty and staff at Amity University,
Noida, for their support and dedication to make the first ISM – Amity Seminar a success.
Correspondence concerning this paper should be addressed to Benjamin S. Cheeks.
Email: bencheeks@hotmail.com
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Abstract
In a recent speech at the Inaugural Function of India Water Week by the Prime
Minister of India, Dr. Manmohan Singh (2012) stated “With around 17% of the world’s
population but only 4% of its usable fresh water, India has a scarcity of water. Rapid
economic growth and urbanization are widening the demand supply gap”. A report by
Saraswathi Gomathinayagam
(2013) finds that the wastewater market earned revenues of over
6.3 billion Rupees (ca. $114 million US) in 2011 and estimates this to reach 102.34 billion
Rupees ($1.8 billion US) in 2016.
Doing business in India is not easy and before entering the market, a thorough
analysis should be conducted. A PESTEL analysis shows that the wastewater market in India
is primed for growth. Due to on-going deadlock and disagreement within the political
environment, it is recommended that companies focus on the industrial wastewater market
rather than the government (municipal) market. It is also recommended that companies find
an Indian joint-venture partner with strong brand name and knowledge of the local market to
help manage Indian bureaucracy and regulatory environment.
Keywords: wastewater, PESTEL analysis, doing business in India
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Doing Business in India – a Blueprint for the Wastewater Industry
The wastewater industry provides water treatment services to residential, commercial,
industrial, and government (municipal) sectors of the economy. Water treatment includes
collection of wastewater, separation of solids and other impurities, cleaning or treatment of
the water, and regulating the return of the water to the environment. India has 4% of the
world’s freshwater, but 17% of the world’s population.
The Government of India is aware of the problem and is beginning to take measures
to address the problem. In April, India proclaimed 2013 the year of water conservation. In a
speech at Water Week 2012, Prime Minister Singh (2012) said “Our water bodies are getting
increasingly polluted by untreated industrial effluents and sewage”. This awareness and
attention will create incredible business opportunities for multinational companies in the
water industry within India. This paper lays out a high-level blue print for a company in the
wastewater industry to follow before doing business in India.
Framework
In order to create the blueprint, this paper will analyze India from the perspective of
the overall environment for doing business, the current wastewater market in India, the entry
strategies and options available to multinational corporations currently in India. Information
from the analysis is then reviewed to formulate a high-level blue print for an organization to
enter the wastewater treatment market in India.
Analysis of the Environment
An understanding of the environment in which the firm plans to operate is an essential
stage of the strategic management process (Hitt and Ireland, 2000). An excellent method of
doing this is with a PESTEL analysis. PESTEL analysis stands for Political, Economic,
Social, and Technological, Environmental and Legal analysis. It assists when doing strategic
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analysis or market research by providing an overview of the different macro-environmental
factors prevailing in a particular industry.
This paper will utilize a PESTEL analysis created by MarketLine as a framework for
developing opportunities and risks specifically related to the wastewater industry. Each
section will have an overview of the PESTEL analysis and how it relates to the wastewater
industry. The opportunities and risks are identified and discussed.
Political. Business cannot afford to ignore the actions and decisions (or indecisions)
of government. The policy of both the state and national government can have dramatic
effects on the business environment. In addition, international relationships can also affect
the business environment. Key political issues to consider in a PESTEL analysis are political
stability, legislation on taxation and employment, alignment of state and national
governments, and key policy initiatives.
Table 1
Analysis of the Indian Political Landscape
Current strengths
Current challenges
Strong democratic setup
Allegations of corruption
Improved relations with Europe and
Lack of comprehensive peace deal with
North America
Pakistan
Future prospects
Terrorism
Future risks
The new finance minister is expected to
Emergence of strong regional parties
bring in economic reform
Social and communal tensions
Improved accountability of the
Politics of fasts
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government
Source: MarketLine (2012)
Application to the water industry. The political environment in India is primed for
the wastewater management industry. Governments around the world realize that in order to
have sustained development, access to a sufficient and uninterrupted supply of clean water is
of utmost importance. The awareness of the Government of India to is apparent from
numerous recent initiatives.
Year of Water Conservation - 2013. A press release on May 9, 2013, announced the
Union Cabinet declared the year 2013 as “Water Conservation Year – 2013” (Press
Information Bureau, Government of India, 2013). Several mass awareness activities are
planned to make the masses aware of water related issues and encourage conservation.
National Water Policy (2012). A press release on December 28, 2012, announced
that despite apprehensions from some of the state governments, the National Water Resource
Council had adopted the National Water Policy (Press Information Bureau, Government of
India, 2012). The Policy seeks to address issues such as the scarcity of water, inequities in its
distribution and the lack of a unified perspective in planning, management and use of water
resources.
India Water Week. In April of 2012, Prime Minister Singh delivered a speech at the
inaugural ceremony of India Water Week. In this speech he stated:
With around 17% of the world’s population but only 4% of its usable fresh water,
India has a scarcity of water. Rapid economic growth and urbanization are widening
the demand supply gap. Climate change could further aggravate the availability of
water in the country as it threatens the water cycle. Our water bodies are getting
increasingly polluted by untreated industrial effluents and sewage. Groundwater
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levels are falling in many parts due to excess drawals leading to contamination with
fluoride, arsenic and other chemicals. (Singh, 2012)
Draft Twelfth Five Year Plan. The Draft Twelfth Five Year Plan acknowledges
India’s challenge and encourages industry to improve water-use efficiency by reducing water
consumption as well as reusing and recycling wastewater (Planning Commission,
Government of India, 2013). It proposes for industries to perform and publish regular water
audits as well as their water footprint.
In 2011, the Economist reported that Tension between India, Pakistan and China over
the region’s rivers has been increasing over the past few years (2011). Pakistan fears that
India will build dams on key rivers and limit the supply of water to Pakistan. India has a
similar concern with China; most notably, one of India’s largest rivers, the Brahmaputra,
flows from China and many in India fear damming or diversion of the river.
Opportunities. There are many opportunities that companies within the wastewater
industry could capitalize on due to the political environment in India.
Public Private Partnerships. Areas that were previously the exclusive domain of the
public sector, such as infrastructure, are opening up to Public Private Partnerships (PPP) in
India. There are several recently concluded projects that leveraged the PPP model. Some
key projects include:
Management contract of Jamshedpur water supply by JUSCO.
Provision of clean drinking water on Build, Own, Operate and Transfer (BOOT) basis
by Doshion at Shivpuri, Madhya Pradesh.
Industrial Wastewater. Industry and its water requirement will continue to grow.
Key industries such as power generation, refineries, pharmaceuticals, and the food and
beverage industries create great opportunities for wastewater equipment. As these industries
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grow, so does their demand for wastewater treatment. Even the notorious political stalemate
creates an opportunity in the industrial wastewater industry. Governmental delays in
addressing the problems will force industry to look for their own solutions.
Risks. Companies in the wastewater industry will have many threats to deal with
when entering India
Conflicts Between the States and GoI. The Indian constitution grants the states
exclusive power to regulate water supplies, irrigation and canals, drainage and embankments,
water storage, hydropower and fisheries. However, the federal government is entitled to
legislate on issues related to the use of inter-state rivers, shipping and navigation on national
waterways, and the use of tidal and territorial waters. It is unclear going forward which
group will take the lead in developing various water-related regulations.
Government Corruption. Transparency International (2012), a non-governmental
organization that monitors and publicizes corporate and political corruption in international
development, gives India a score of 36 on its corruption-perception index; a ranking of 94 out
of 176 countries. This level of corruption creates uncertainty when the government is
awarding contracts for municipal wastewater and water management projects.
Tax Surprises. Foreign buyers of Indian companies are vulnerable to tax surprises
and other regulatory and judicial challenges by different government bodies than those
involved with the actual investment approval process. In addition, as Vodaphone can attest,
these tax surprises can include retroactive taxes.
Economic. Economic considerations for doing business in India include GDP growth
rate and trends, inflation, interest rates, currency exchange rate and fluctuations, monetary
and fiscal policies, and input costs such as energy, transport, and raw materials.
Table 2
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Analysis of the Indian Economy
Current strengths
Current challenges
Inherent Strength of the economy
Unemployment
Second largest working age population
Energy constraints and overdependence
pool in the world
Highly favored FDI destination
on oil imports
Imbalanced regional development and
widening economic disparities
High inflation
Future prospects
Future risks
Manufacturing hub
Poor infrastructure
Expanding domestic market
High fiscal debt and public debt
Elevated current account deficit
Spillover risks from advanced
economies
Source: MarketLine (2012)
Application to the water industry. Despite the recent slowdown in GDP, the Indian
economy has grown over 8% on average for the past eight years. The CIA world fact book
(2013) estimates the Indian economy at US $1.95 trillion, making it the world's seventh
largest economy. Purchasing Power Parity of 4.8 trillion making it the world's third largest
behind only the US and China. This strong economic growth has made it a favored
destination for foreign direct investment (FDI). A survey by The United Nations Conference
on Trade and Development (2012) ranked India number three of the top prospective
economies for FDI. In addition, the Ernst & Young Attractiveness Survey for 2012 shows
73% of business leaders are keen to invest in India in the near future (Ernst and Young,
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2012).
Opportunities.
Poor infrastructure. India's weak power, transport and communications infrastructure
is increasingly seen to be a constraint on economic growth. However, from a water
management perspective, this is an opportunity as industries and consumers look for more
effective methods of conserving, reusing, and treating their water. A 2013 sustainability
survey by Ernst & Young ranked water as the number one cause for concern for global
executives among “resources most at risk” Ernst and Young (2013).
Manufacturing hub. India offers potential for equipment manufactures in the
wastewater management industry as a manufacturing hub due to low labor costs. According
to the United States Bureau of Labor Statistics, labor costs were just below $1 per hour,
including taxes and social security (Sincavage, Haub, & Sharma, 2010). The government
unveiled a new manufacturing strategy in November 2011, which aims to increase the share
of manufacturing to GDP to 25% within the next decade.
High fiscal and public debt. The high fiscal and public debt will force the
government to look for Public Private Partnerships to fund municipal wastewater projects in
the future. Likewise, it will put more responsibility onto the industrial sector to manage their
own wastewater.
Risks.
Global slowdown. A key risk when doing business in India is that the slowdown in
developed economies will spillover into India.
Exchange rate. The Indian Rupee has fallen considerably since 2009 and as of June
2013 is trading near an all-time low against the dollar. This could make import materials
more expensive as well as depress profit in US dollar terms. However, the depreciated Indian
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currency will also make labor costs cheaper and could spur exports.
Social. The current social situation in India is important to consider when preparing
to do business there. Key issues to consider from the social standpoint are changes in
population and demographics, employment patterns, popular social issues (i.e. green issues
such as global warming), values, education and health.
Table 3
Analysis of the Indian Social System
Current strengths
Current challenges
Growing proportion of young people
Healthcare remains a major concern
Rapid urbanizations
Weak social security system
Poor literacy rate
Low HDI rank
Future prospects
Future risks
Employment guarantee scheme
Government’s authority challenged
Rising life expectancy
Inability to control birth and utility rate
Source: MarketLine (2012)
Application to the water industry. India is the second most populous country in the
world with a population in excess of 1.2 billion people. This large and growing population
creates a variety of domestic water issues that Indian society is facing. A key concern is
healthcare. A study by UNICEF (UNICEF, 2004) estimates that in India, water-borne
diseases cost an annual $600 million in lost production and medical treatment. The cost of
ineffective wastewater processing is being pushed onto the population in the form of
shortages and poor water quality resulting in illness, health or by increasing house-hold
spending money to buy devices and technology to clean the water. In addition to the health
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concerns, there are also increasing conflicts across competing users of water. Joy, Gujja,
Paranjape, Goude, & Vispute, (2009). highlight 63 case studies of water conflicts of different
types across the country.
Opportunities.
Rapid urbanization. Rapid urbanization and increased life expectancy will continue
to put pressure on the current urban infrastructure. The government must act quickly to meet
the needs of the increasing urban population. Water treatment facilities will be a key part of
this infrastructure.
Corporate Social Responsibility (CSR). The concept of Corporate Social
Responsibility (CSR) is gaining popularity in India. Corporations realize that initiatives
towards environmental conservation are an effective means of advertising their good deeds to
society. Many firms in India are weaving CSR initiatives into their business strategy
(Kanchan, 2010). This focus by industry on CSR will make water conservation and treatment
a key point of their CSR agendas.
Risks. A technology to clean dirty water should face little threat from the social
environment. However, for a foreign company entering the Indian market, there is a threat of
localization or the preference given the local companies. In a recent interview, Arvind
Subramanian, an Indian born economist, stated anecdotally that India has recently embarked
on a localization spree, in a number of sectors, saying local-input providers should be favored
(Peterson Perspectives Interviews on Current Issues, 2013).
Technological. From a technical perspective, a firm considering doing business in
India should consider local research initiatives, speed of change and adoption of new
technologies, product substitutions, and the level of expenditure in research and development.
Table 4
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Analysis of the Indian Technological Landscape
Current strengths
Strong knowledge base
Cost advantage
Strong English-language skills
Current challenges
Gross expenditure on R&D remains
below 1% of GDP
The talent pool requires further
vocational training
Future prospects
Government policies promoting
research and development
Future risks
Low proportion of high-technology
exports
Significant competitive advantage in
biotechnology research
Source: MarketLine (2012)
Application to the water industry. Each year, India graduates more Engineers than
any country other than China. The fact that most Indian graduates speak English provides it a
boost over China when it comes to research and development outsourcing. This has led
several companies from Shell to Groupon to Microsoft to develop innovation centers in India.
Opportunities.
Research and development. Research talent in India is available at a much lower cost
in comparison with developed countries. According to MarketLine (2012), the average salary
of a researcher in India is $11,526, which is around 15% of a researcher’s salary in the United
States. This coupled with the strong English-language skills make India an excellent choice
for a global research and development hub.
Risks.
Talent pool unprepared for industry. Due to the fact that many technical institutes
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within India have a strong emphasis on theory, it is believed that many of the technical
graduates are not prepared to enter the workforce.
Environmental. Environmental issues to consider are changing weather patterns,
disposal of waste, and industrial effluents.
Table 5
Analysis of the Indian Environmental Landscape
Current strengths
Current challenges
Biodiversity
Air pollution
Right to information
Depleted water resources
Comprehensive environmental-policy
Poor performance on environmental
framework
indicators
Dependence on fossil fuels for energy
requirements
Future prospects
Reduction of carbon footprint
Future risks
Public-private partnership and
ecotourism
The adverse impact of economic
growth
Enforcement deterrents
Increased activism
Source: MarketLine (2012)
Application to the water industry. For companies in the wastewater industry, the
environment landscape in India presents the best argument for entering the market. India
faces environmental issues from air pollution to depleted and polluted water resources.
However, these challenges present a great opportunity in the wastewater industry as its
products and services offer solutions to help address water-resource issues. In addition,
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comprehensive environmental policies and increased activism will help provide the impetus
toward change.
Risks.
Enforcement deterrents. Weak enforcement of clean-water regulations could delay
the adoption of wastewater technology by industry as they find it cheaper to pay fines or to
avoid accountability completely.
Legal. From a legal perspective, firms should consider current law and government
policies.
Table 6
Analysis of the Indian Legal Landscape
Current strengths
Current challenges
Comprehensive legal framework for
Corporate governance
business entities
Weak implementation of intellectual
Taxation policy driving foreign
investment
property laws
Judicial delays
Implementation of VAT
Future prospects
Future risks
Tax reforms
Implementation of regulations
Good prospects in legal process
Lack of a single financial market
outsourcing
regulator
Source: MarketLine (2012)
Application to the water industry. The legal system of India is based upon English
Common Law. It has a comprehensive legal framework for both business entities. It also
contains a comprehensive framework related to water policy.
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Indian constitution. The Indian constitution grants the states exclusive power to
regulate water supplies, irrigation and canals, drainage and embankments, water storage,
hydropower and fisheries. However, the federal government is entitled to legislate on issues
related to the use of inter-state rivers, shipping and navigation on national waterways, and the
use of tidal and territorial waters. The Constitution also provides that the Union can legislate
with regard to the adjudication of inter-state water disputes.
Water prevention and control of pollution act of 1974. The Water Prevention and
Control of Pollution Act of 1974 seeks to prevent and control water pollution and maintain
and restore the wholesomeness of water. It gives power to water boards to set standards and
regulations for prevention and control of pollution.
Water prevention and control of pollution cess act of 1977. This act allows state
boards to levy taxes on water extracted for industrial use.
Environmental protection act of 1986. The Environmental Protection Act (1986)
created a nationwide program for the prevention, control, and moderation of environmental
pollution. It grants the government power to inspect any premises to gauge compliance of
established norms.
Opportunities.
Investment in Indian companies. Favorable policies on foreign investment have made
India a preferred place for foreign investment. This presents an opportunity to invest in
Indian companies in the wastewater industries.
Risks. The legal environment in India presents some of the greatest threats to
industries looking to enter the Indian wastewater market.
Multiple layers of regulation. Strong disagreements between the states and GoI on
who has authority over certain water issues could lead to varying legislation across the
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country making it more difficult to specify equipment requirements.
Weak intellectual property laws. International Property Rights Index (2012) ranked
India 62 out of 130 countries in the protection of Intellectual Property.
Delays. The Indian judicial system is notorious for its delays. Therefore, any legal
issues could take considerable time to resolve.
Contract enforcement. According to the World Bank (2013), India ranks low in the
enforcement of contracts. A key input to this is related to the delays in the legal system.
Analysis of the Wastewater Treatment Market in India
Understanding the nature of the industry and where the firm fits into the current
industry environment is an important next step in laying out a blue print. This analysis will
consider the size of the industry, the key players, and key partnerships that exist today.
Shay & Rothaermel (1999) show that businesses benefit from understanding the
competitive environment from multiple perspectives. According to a report by Avalon
Global Research, 2011, the water and wastewater treatment market in India is fragmented
with about 15 large players accounting for approximately 30% market share.
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Figure 1. Indian market analysis by tier.
Source: Avalon Global Research, 2011
The top eight players in the market hold approximately 25% of the total market. Most
of these eight also have global alliances.
Table 7
Top Companies in the Indian Wastewater Market
Estimated
Company
Market
Global Alliances
Share
Ion Exchange
5.3%
Joint Venture with Degremont, France
VA tech Wabag
3.7%
Wabag Germany
Thermax
3.0%
Wehrie Unwelt Gmbh and GE Water
Doshi Ion
3.7%
Joint Venture with Veolia Solutions, France and Tie up with
Kinetico Inc USA
HDO/IVRCL
2.8%
Degremont
2.3%
Driplex
2.3%
Triveni
Partnership with Best Water Group Austria and Lanxess,
Germany
1.4%
Source: Avalon Global Resource, 2011
Entry Options for the Indian Market
There are multiple ways to enter the Indian Market. The most common ways for nonresidents to invest in India are Foreign Direct Investment, Foreign Institutional Investment,
and Technology and Trademark License Agreements.
The Government of India updates the foreign direct investment (FDI) policy each year
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under in “Consolidated FDI Policy”. Currently FDI is allowed to some degree in most
industries. If FDI is allowed, it can go through the automatic route or the prior approval
route. As the policy is updated yearly, experts on FDI should be consulted before any
investment is made.
Foreign Institutional Investments (FII) can be made under the portfolio investment
scheme. Most FII are made through the Indian Stock market through the purchase of equity
stakes in public companies. A small part of a FII is in company bonds.
Technology and trademark license agreements give an entity in India the right to use a
patent or trademark creating a revenue stream for the licensor.
Entry Options for Foreign Investors. Foreign entities have the right to setup as
incorporated or unincorporated entities. Incorporated entities must either enter through a
joint venture or wholly owned subsidiary. Common unincorporated entities consist of liaison
office, branch office, and project office.
Table 8
Incorporated Entities
Type of
Definition of entity
incorporated
entity
Joint Venture
Joint Venture (JV) is defined as a contractual agreement formed between
two or more parties, with each party contributing their equity share, in
order to undertake an economic activity which is subjected to joint control.
Wholly Owned
Wholly Owned Subsidiary (WOS) is defined as an entity 100% owned by
Subsidiary
a foreign corporate body.
Source: business.gov.in - http://business.gov.in/manage_business/joint_ventures.php
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Table 9
Unincorporated Entities
Unincorporated
Definition of entity
entity
Liaison Office
A place of business to act as a channel of communication between the
principal place of business or head office and entities in India but which
does not undertake any commercial / trading / industrial activity, directly
or indirectly. A liaison office is not permitted to undertake any business
activity in India and cannot earn any income in India and therefore is
required to maintain itself out of inward remittances received from the
head office outside India.
Branch Office
A branch office is permitted to carry on activities, which are wider in
scope as compared to the activities permitted by a liaison office. The
profits of a branch office are permitted to be remitted outside India
subject to the payment of applicable Indian taxes. A branch office is not
permitted to engage in any manufacturing or processing activities in India
directly or indirectly.
Project Office
A place of business established to represent the interests of a foreign
company executing a project in India. Such offices are prohibited from
undertaking or carrying on any activity other than the activity relating and
incidental to the execution of the project for which such office is
established. In order to set up a project office, a foreign company has to
secure a contract to execute a project in India from an Indian company.
Source: J. Sagar Associates, 2012
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Recommendation
The wastewater market offers incredible business opportunities that companies cannot
afford to ignore. In a recent interview with the New York Times (Timmons, 2013), Ravi
Venkatesan, Former Chairman of Microsoft India said, “Right now, multinational
corporations have two choices. They can either not grow, or they can embrace the chaos of
emerging markets. If you think you can escape chaos, you’re sadly mistaken.”
The PESTEL analysis revealed opportunities in the municipal sector through Public
Private Partnerships with the government as well as opportunities within the industrial sector.
Although the government works to remove barriers to investing in infrastructure and
municipal waste water, corruption, delays, and growing disputes between the states and the
government of India create huge uncertainties when working with the government. However,
regardless of the politics, industry will continue to be pressured by the government to reduce
their production of wastewater. Government delays and inaction will force industry to take
matters into their own hands to ensure they have sufficient water resources of the proper
quality in order to run their business. Therefore, the recommendation is to enter the market
with primary focus on the industrial sector.
It is recommended that the market be entered through a joint venture with a local
Indian firm. Many of the key players have joint ventures or licensing agreements with large
multinationals, but there still remain many qualified India companies with which to work. A
joint venture offers many advantages and helps to mitigate some of the risks high-lighted
during the PESTEL analysis. The can also help with the Indian cultural framework. Some
additional advantages of a joint venture include:
Government and industry connections to help navigate bureaucracy, regulations, tax
systems, and tariffs.
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Existing relationships with customers, raw material suppliers, and banks.
Exiting distribution network.
21
Source of labor and professional talent required for project execution and ongoing
technical support.
Knowledge about local market, competition, and general market conditions.
Risk sharing.
When selecting a joint-venture partner one should consider the following:
The value each participant is bringing to the relationship.
Shared values, business and social values.
Creditworthiness of counterparty.
A good joint-venture agreement will include:
Shareholders rights.
IP protection and licensing.
Non-compete agreements.
Contribution of capital and capital calls.
Exit provision and buy-out rights for deadlock of key management decisions.
When negotiating the contract, it is important to take cultural considerations into
account. A few key things to remember are that Indians do not always see the final goal of
negotiations as a contract. Salacuse (2004) found that while 74 percent of the Spanish
respondents claimed their goal in a negotiation was a contract, only 33 percent of the Indian
executives had a similar view. Indians tend to view contracts as agreements and guidelines
for future acts. Also Indians are less sensitive to time. Salacuse (2004) found that among the
twelve nationalities surveyed, Indians had the largest percentage of persons who considered
they have a low sensitivity to time. There are also differences in the degree of trust going
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into the negotiation. Sycara, Gelfand, & Abbe (2009) showed that negotiators in the United
States trust until the other party proves to be untrustworthy. However, Indian negotiators
appear to embrace the opposite assumption, distrusting until the other party proves
trustworthy. Keeping these key differences in mind, patience is the key when negotiating
with an Indian company.
In a recent speech at TED-x, Ravi Venkatesan (2012) listed out some key success
factors when doing business in India. Ravi is someone who warrants listening to as the
former Chairman of Microsoft India and Head of Cummins in India; he knows what it takes
to be successful there. His key success factors include:
Commitment – the CEO must make a visceral commitment to India. The CEO must
make more than yearly status trips.
Move from control to accountability – in order to react to changing market conditions,
you must trust the local Indian management team to make the right decisions for the
company and not have every decision go back to corporate for approval.
Build India-specific products – Just because your product is successful in other markets,
does not mean it will be successful in India. Companies should see India as a market for
innovation.
Have a higher ambition – His motto is, “If it's good for India, it's good for us.”
Limitations of Analysis
This paper was written as part of the requirements for DBII 7016 Doing Business in
India. The primary purpose of the analysis was to gain a greater understanding of the
business environment in India. Therefore there was much more focus on this aspect rather
than the industry analysis. A more thorough analysis of the industry should be conducted
using a framework such as Porter’s Five Forces to gain a better understanding of the overall
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business environment. In addition, a VRIO (value, rarity, imitability, and organization)
model of the investing firm’s internal environment to uncover additional opportunities and
gaps. Also to uncover strengths and weaknesses that will help the organization to gain a
sustained competitive advantage.
Conclusion
Doing business in India is not easy. Some of the key risks include corruption,
governmental stalemates due to strong regional parties, high public debt, and a high current
account deficit. However, as Arvind Subramanian said in a recent interview (Peterson
Perspectives Interviews on Current Issues, 2013), “If you don’t lump it and start getting in
despite all the problems, you will be excluded from the market”. The India market is primed
for new entrants in the wastewater industry. Initially focusing on industrial wastewater
management will mitigate many risks of working with the Indian Government on municipal
projects. The wastewater industry is fragmented with over 800 players. The largest is Ion
Exchange and they have less than 6% market share. Many of the larger players already have
licensing agreements or joint ventures with multinationals. However, there are many quality
Indian companies available to form joint ventures. Finding the right joint-venture partner and
negotiating a solid joint-venture agreement are keys to success.
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References
Avalon Global Research. (2011). 2011 Water and Waste Water Treatment Opportunity in
India An Overview. Retrieved from http://www.slideshare.net/trade-gov-il/water-andwaste-water-treatment-opportunity-in-india-report-160811
Central Intelligence Agency. (2013). India. In The world factbook. Retrieved from
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