Australian Investment into India: Skill India, Clean Energy Market
By Bradley Dunseith
Australia’s growth prospects in India are expanding.
Among key opportunities identified by the country’s entrepreneurs are: investing in India’s higher education and vocational sectors and India’s growing renewables market. India’s rapid growth has resulted in the need for complex, skill-oriented jobs on one hand, and accelerated its energy consumption and requirements, on the other.
When looking at the Indian education and training sector, Australian investors observe that India’s large labor supply does not automatically serve the country’s high employment targets. Rather, the availability of labor is now becoming a challenge for the government as industrial innovation and automation necessitates up-skilling and technical training.
Accordingly, this sector has captured the imagination of startups and foreign investors – incentivized by the Modi government’s support for private sector participation.
In the case of India’s energy markets, Australia’s trade and business relationship with India previously centered on the former being a major supplier of coal to India. Today, as India is focused on developing its clean and renewable energies industry, Australian companies are embracing new opportunities in the fast-growing market.
In this article, we focus on how Australian businesses are investing in the above industries – education and clean energy. Lastly, we discuss how Australian investors can improve their experience in India by approaching the country’s markets on a state-by-state basis.
Investing in ‘Skill India’ offers new growth strategies
India is one of the fastest growing emerging markets. However, like the country’s infrastructure, training programs and educational courses have not been able to keep apace of this surge in growth.
By 2022, India is expected to have the world’s largest, young workforce – nearly 900 million strong. But, without high quality education and effective training programs, India’s growing labor pool could become more of a liability than an asset.
Consequently, India’s federal government is increasingly looking to the private sector and to foreign players for support in training its massive workforce.
In 2015, the Modi government launched a new initiative titled ‘Skill India’ that seeks to train 400 million Indians by 2022. Complementary initiatives, such as ‘Make in India,’ or ‘Startup India’ aim to create a whole ecosystem of readily available skilled labor, develop supply chains, create manufacturing growth, and boost consumption.
Australian businesses investing in high quality programs training India’s workforce are not only capturing this newly emerging market opportunity. They are building a bigger space for Australian players to be a part of India’s growth over the long term.
In fact, Australian training models and services are already successfully establishing themselves in India. Sydac, a South Australian company, secured a major US$30 million contract to provide simulation training to the state-owned Indian Railways.
The governments of both countries are working together to increase Australia’s presence in India’s higher education and vocational sectors. In 2015, Australia and India signed a Memorandum of Understanding (MoU) on education, training, and research. More recently, in April 2017, Australia brought a Skills Mission to Delhi titled “Skilling a Global Economy.”
Clean energy: Australian expertise opens new market potential
Australia is a leader in clean and renewable energy, and India is pushing to dramatically increase its renewable power capacity. A recent Ernst & Young (EY) report showcases India’s move up to the second spot in the ‘Renewable energy country attractiveness index’ 2017 from the third position it held in the last two years.
During the 2015 UN Climate Change Conference in Paris, Indian Prime Minister Narendra Modi announced that his country would add 160 gigawatts (GW) of wind and solar energy by 2022. India has struggled to keep up with these ambitious goals. However, the country is still rapidly expanding both its wind and solar energy production. As of April 2017, India generated 5,400 megawatts (MW) of wind energy and 12 GW of solar energy annually.
Establishing Australian vocational training programs, which teach Indian technicians to maintain and repair wind turbines or solar panels – for instance – will spur increased demand for clean technologies made in Australia. By highlighting and leveraging this kind of expertise, businesses can foster a whole ecosystem of interest for Australian exports.
Doing business in India: A state-centric approach
According to the Australian Trade and Investment Commission’s 2015 International Business Survey, Australian companies identify India as one of its most important – albeit difficult – markets abroad.
How can foreign players make India a more manageable place to do business?
One way is to approach the country on a state-by-state basis.
Each Indian state has its own language, customs, and regulations. Preparing to engage with all 29 states at once will leave foreign businesses overwhelmed and frustrated. Targeting a single state, on the other hand, can make those cultural differences and business barriers feel surmountable.
A great example of this approach is in the sister-state relationship forged between South Australia and Rajasthan; the two states signed an MoU to the effect in 2015.
In a federal constitutional set up, state governments are usually able to implement reforms and streamline bureaucratic procedures faster than the federal government. In India, states often compete with one another for foreign funding by trying to provide the most attractive incentives for doing business within their unique state.
By approaching India one state at a time, Australian businesses will have higher success rates in navigating the country’s business climate. Moreover, a concentrated emphasis on individual states will better showcase Australia’s unique expertise – adding to the country’s ‘brand power’ while integrating Australia into India’s continued growth.
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