India Market Watch: Investors Eye India’s Agri-tech Startups and Indian IT firms Brace for New US H-1B Norms
Investors Eye India’s Agri-tech Startups
India’s startup landscape is fast becoming highly diversified as specialized technology verticals emerge in respective areas of economic activity. This trend is visible in the country’s farming sector as well, where an increasing pool of agricultural technology (agri-tech) startups have emerged, focused on developing new data solutions to mitigate various risks. Some of these startups are innovating the use of available technology like drones and tractors to get data on field, weather, and specific agricultural datasets.
Testament to the burgeoning value of agri-tech in India is the huge interest expressed by venture capital (VC) firms in investing in startups in this sector. Leading VC firms such as Accel India, SAIF Partners, and IDG Ventures and others have so far mobilized funding for various startups like farm equipment aggregator – Goldfarm, raw material procurement platform for farmers – Agrostar, or offer agricultural supply chain technology – Crofarm. Omnivore Capital is currently backing three portfolio companies – Stellapps Technologies (an Internet-of-Things platform in the dairy sector), Ecozen (solar solutions startup), and YCook (an organic, ready-to-cook processed foods startup) – all of whom are in the market to raise funds.
The agri-tech sector in India includes all the technology, modern products, and services used in agriculture to increase yield, efficiency, and profitability. This concentrated focus, scientific research, and industrial application collectively provide fertile ground to entrepreneurial ventures. The growth prospects are further boosted by the increase in smartphone penetration and internet connectivity as well as the government’s Digital India push.
India 10th Largest Business Travel Market
As per the Global Business Travel Association, India is the 10th largest business travel market in the world, having spent US$29.6 billion in 2015. In a report released by consultancy firm KPMG and FCM Travel Solutions, business travel spending in India registered an increase of 15 percent in 2015. This is set to grow by a compound annual growth rate (CAGR) of 12 percent through 2020 to 6 percent by 2030. The report observes that about 80 percent of the business travel transactions were domestic, the rest being international, while the revenue was evenly split; 77 percent of the total travel spend was on air travel. Finally, IT and pharmaceutical companies dominated spending at US$2.93 billion (Rs 20,000 crore) in 2015, up from US$2.13 billion (Rs 14,500 crore) in 2013.
The KPMG and FCM report assesses that this growth in India’s business travel segment will be greater than that projected for South Korea, Italy, and Brazil. In fact, by 2030, India could be among the top five countries in business travel spending.
Ultimately, the report concludes that growth in the Indian business travel market will depend on political, economic, and demographic factors. Future growth will also be shaped by India’s macroeconomic status, regulatory policies, the national pace of industrial activity, and the continued digitization of travel booking tools.
RELATED: Singapore and India to Include Limitation of Benefits in DTAA Amendment: Implications for Foreign Investors
Indian IT firms Brace for New H-1B Norms
Indian IT firms anticipate major changes in the American outsourcing policy as the new government takes charge in the US. Further, the US Congress introduced a new bill to tighten H-1B visa rules, earlier this month. The bill proposes an increase in the minimum salary requirement from US$60,000 to US$100,000 to target the misuse of visa issuance and eliminate the profit margins of outsourcing firms. The bill also aims to do away with the exemption on students holding a Master’s degree.
The implications of such a policy turnaround will be serious. To put the situation in context, in April 2016, the number of H-1B visa applications surpassed the year’s total cap of 85,000 in five days with almost two-thirds issued to the technology sector. Moreover, the US accounts for 60 percent of India’s IT exports. Keeping this in mind, the National Association of Software and Services Companies (NASSCOM) – the trade association of the Indian Information Technology and Business Process Outsourcing industry – is planning to reach out to the new administration to highlight India’s IT contribution to the US economy. Indian Outsourcing firms have previously highlighted the lack of enough IT professionals in the US, which compels them to outsource work. Expecting the tightening of visa regulations, Indian IT firms have already started recruiting locally from US colleges, acquiring US based IT firms, and increasing offshore capabilities.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Doing Business in India 2016 is designed to introduce the fundamentals of investing in India. As such, this comprehensive guide is ideal not only for businesses looking to enter the Indian market, but also for companies who already have a presence here and want to stay up-to-date with the most recent and relevant policy changes.
Pre-Investment Due Diligence in India
In this issue of India Briefing Magazine, we examine issues related to pre-investment due diligence in India. We highlight the different regulatory, tax, and socio-economic issues that a company should be aware of before entering the Indian market. We also detail some of the topics related to entry structures while investing in the Indian market, as well as cultural and HR due diligence, which may differ from state to state.
Strategies for Repatriating Funds from India
In this issue of India Briefing Magazine, we look at issues related to repatriating funds from India. We highlight the unique regulations for sending funds back from India, examine the various strategies companies can make use of while repatriating, and look at remittance procedures for different types of Indian entities. Finally, we give some tips on how expats can remit their Indian money to their home countries.