India is open for business, but is Australia ready?

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CEO of Asialink Business MukundNarayanamurti believes that for Australian businesses to capture long-term growth in India, they will need to build leadership teams committed to an Asia strategy and have customised Asian talent management strategies

The Asian century is upon us, and with a pro-business government in power and youthful population of 1.2 billion, there’s rising hope India could soon become one of the preferred business destinations for Australian businesses.

For Australian businesses to take advantage of new opportunities in India, it will require a significant increase in the level of engagement, investment and commitment to capture long-term growth. PricewaterhouseCoopers in their report ‘Passing us by’ found “companies that are now successful in Asia arrived there up to 15 years ago and they made their business plans and investment work”.

MukundNarayanamurti was recently appointed as the CEO of Asialink Business, which is focussed on helping Australian businesses build Asia capabilities and improve Australia’s engagement with the region. He shared his views with The Indian Sun on Asialink Business’ mandate, the critical capabilities Australian businesses need to successfully engage with Asia, and the opportunities for greater trade between Australia and India.

 

What is your take on the current state of Australian business engagement and capabilities regarding Asia?

At Asialink Business we believe it is difficult to generalise on the state of Asia capabilities across the entire business sector. There are clearly some segments of the business sector (including both large businesses and small and medium sized enterprises (SMEs) that have been successful with their engagement with Asia. Our research highlights that where boards and senior management teams have greater language capabilities, cultural capabilities and on-the-ground experience in Asia, business performance reported from Asia tends to be better than expected. This research is summarised in our Developing an Asia Capable Workforce: A National Strategy, which provides perspective on the broad impact that Asia-capable boards and senior management teams have on the business performance of their respective organisations. You can find the report on our website: http://asialink.unimelb.edu.au/asialink_business/asialink_taskforce

 

Why are Australian businesses missing out on opportunities in Asia? What capabilities and skills are they lacking?

Again, we prefer not to generalise across the entire Australian market. There are many examples of success involving Australian businesses engaging with Asian markets. However, across the business sector there are various impediments affecting the ability of Australian businesses to target opportunities with Asia more effectively. Our National Strategy highlighted the various individual and organisational capabilities that are critical to capture opportunities with Asia. Individual capabilities include not just language proficiency but also operating experience in Asia, knowledge of Asian markets, and a capacity to deal with government. Organisational capabilities include having a leadership team that is committed to an Asia strategy, having products and services that are specifically tailored to Asian markets, and having customised Asian talent management strategies. Our National Strategy provides a more detailed list of these capabilities with context to what they represent. Our focus is on ensuring that these capabilities are embedded more widely and deeply across Australian business.

 

How do you plan for Asialink Business to help businesses improve capabilities and engagement?

The vision for Asialink Business is to serve as a world-class centre for Asia capability development that assists Australian organisations with the development of the critical individual and organisational capabilities necessary to succeed with Asia. Our strategy includes a focus on delivering capability development programs, research and advocacy. Our capability development programs will include a combination of open and tailored programs across a range of Asia-focused cultural intelligence and business-focused topics. Our research portfolio includes developing various country starter packs and case studies, as well as undertaking contract research for various industry partners. Finally, our advocacy arm is focused on hosting various symposia to raise public awareness on the need for Asia capability across the Australian workforce.

 

On India—do you see any areas where potential for trade is going unrealised due to lack of capabilities on the Australian side?

Over the past decade there has been significant investment by Australian Federal and State Governments, the Australian business sector, and Australian universities in seeking to deepen engagement with India. There have also been concerted efforts towards a free trade agreement. While this will clearly take a lot more time and effort, there has always been a willingness from the Australian side to engage with a vision of creating win-win outcomes for both sides. Within the business sector, perhaps the biggest area for progress is in developing products and services specifically tailored for the Indian market. This takes considerable time and effort to achieve as it requires a fundamental shift in the typical Australian business model from being margin-oriented to being volume-oriented, while accepting that it still takes time to achieve scale in India notwithstanding India’s large consumer base. Ensuring that you have the right business partners, deep and long-lasting business relationships, a product/service at the right price point, and a comprehensive understanding of the business landscape (including the regulations) are essential to succeeding in the Indian market. These factors take time for businesses from all over the world to achieve, not just Australian businesses.

 

There’s a lot of talk about Aus-India trade opportunities—like education, climate technology etc.—but what will it take for us to see real investment coming from Australian businesses?

Capital ultimately goes where it is most welcome, which is always where it can generate the highest level of return for a given level of risk. It has historically been difficult for Australian businesses to calibrate the level of risk involved with investing in India. At so many levels the risk assessment seems simple given the broad commonalities in the legal and institutional frameworks adopted by both countries. However, a lack of understanding of the complex and constantly shifting regulatory landscape, the institutional voids, and finally the sheer diversity of India (across states) in terms of the consumer base, has meant that Australian businesses have often sought to invest in other seemingly more open and homogenous markets. Clearly, in the long term, India cannot be ignored by Australian businesses, but it does not automatically follow that Australian businesses will seek to invest in India if they don’t feel a sense of comfort that the ease of doing business in India has improved such that any projected return on investment is likely to materialise.

 

What are the key reforms you want from India’s Prime Minister to make it easier to do business in India?

Prime Minister NarendraModi has a history of engaging effectively with the business sector. There is clearly a greater sense of commitment from the business sectors in both countries to engage even more under the governments of Prime Minister Modi and Prime Minister Abbott. They both have an “open for business” policy. The key reforms in India that would be welcomed by foreign businesses include further liberalisation of the foreign direct investment norms in India, greater certainty in the application of the direct tax rules, particularly related to international taxation, fast-tracking the introduction of the Goods and Services Tax, and simplifying labour laws in India. There seems to be a genuine commitment from the Modi Government to address these issues expediently.

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