Live Blogging “Navigate International Trade: India” forum

India trade conference @ GSUI’m over in Atlanta this morning at a conference about doing trade with India, conducted by the Georgia Indo-American Chamber of Commerce. While the context of the conference is Georgia-based, I’m using this as a chance to get some advanced (and concentrated) primer to the cross-border business with India… in preparation for TechBirmingham and AITA’s TechVenture that departs next week. It seems a bit light of a crowd (about 50 people including presentors and staff) , considering its in a region that is 4 times bigger than ours… considering that at least that many came to a similar meeting at the Birmingham Regional Chamber of Commerce a month or two ago.

Observations:

  • Dr. V.S. Seshadri, Minister of Commerce to the USA, Embassy of India (about to be promoted ton Ambassador to Slovenia for India)
    • Unlike other Asian countries, India does NOT have an export economy
    • Imports lead Exports and the gap is widening
    • Exports to india growing at 20% and imports are growing at 30% annually
    • While USA has been the #1 trading partner, China is now #2 (up from 8 many years ago)
    • Bilateral forum “High Technology Cooperation Group” (HTCG) focuses on creating an economic, legal and structural environment for technology business growth
    • A question from the floor said that ISO-9000 certificates are “bogus and worthless” making quality management an issue… a response suggests that government will implement regulation and that peer pressure and shame will resolve the issue
  • Craig Lesser, Commissioner, Georgia Department of Economic Development
    • Georgia must shift from competing with neighboring states in the southeast for FDI and start competing as if it were its own COUNTRY!
    • Rah Rah… geographic center of the growing south, busiest airport, growing port business (50% of cargo containers in Savannah come from China alone)
    • State’s resources allocated to China right now, but India will factor into 2007 and beyond
    • One of the Georgia’s strengths is logistics
    • A question from the floor observed that there is a dearth of VC funding in Georgia and asked how his department can pair tech companies here with the VC initiatives in India… answered saying that sustained relationships will bring it closer
    • Wants a sustained deployment of resources IN the country (by establishing a permanent office) and not relying on trips to/from the country
    • Earliest the office could be established is 2008, but “we have some work to do” to garner funding from the state legislature and determining the “right person” – also noted that “this is going to be a challenging year for funding” from the State

    “Negotiating with Tradition” presentation by Stan Tanunathan, VP Global Knowledge and Insights, Coca-Cola Company

    • Culture clash has significant implications for consumer-product companies and how to market to the Indian consumer
    • Core value is based on two elements… Restraint and Brahminical (santification of restraint by society)
      • Desirability of fitting in
      • Enjoyment of the ordinary
    • Society is structured on social rather than economic terms, structured to control level of aspirations by managing instinct and structured to manage the absence of growth… recent economic growth is changing these values, at least superficially
    • Loosening of restraint is beginning over role of women at home and willingness to display wealth

    “Expanding Atlanta’s Reach Around the World” presentation by Jorge Fernandez, VP Global Commerce, Metro Atlanta Chamber of Commerce

    • Two objectives of the “International Task Force”
      • Drive the growth of jobs in the Metro Atlanta area created through attraction of FDI to Atlanta, and…
      • Drive the growth of jobs created through the growth and expansion of international companies now located in Metro Atlanta
    • Concentrating efforts to attract inbound FDI and provide small to medium sized member services for outbound international growth (i.e. missions and match-making)
    • Emerging markets include China, Brazil, India, and South America which are added to established partners Canada and Mexico
    • It’s all about job creation
    • Wants India to establish a Consulate Office in Atlanta

    Comments from Teri Simmons, Partner, Arnall Golden Gregory LLP

    • Must, must, must have a local partner in India to provide guidance
    • Hard to enforce judge-awarded decisions, but there is a treaty to support arbitration decisions in contract disputes
    • No contract regarding employment practices can supercede the legal protections afforded to Indian employees
    • Incentives offered by the State of Georgia include an effective “tax haven” when companies are located in Georgia and sell into other states in which they have no physical presence will not be obligated to pay state taxes on profits from those sales — The state’s Department of Revenue has not weighed in on this new incentive
    • There is a new intellectual property law brought about by NASSCOM… Indian courts acts quickly to grant injunctions on any patent/trademark infractions – damages still may take 3-5 years for courts to act
  • “Cross-border Investments and Strategies” presentation by Anil Khatod, Managing Director, Argonaut Private Equity (a $2B fund from Tulsa) and others
    • Second most attractive destination for FDI among manufacturing investors, as per A.T. Kearney’s latest FDI Confidence index rankings
    • The old saying was that if you put money into India, you can not get it out… this has all changed
    • India Multinationals are currently on a buying spree
    • IT and IT-enabled services top the list of opportunities in the current investment climate
    • Considerations for potential investors include:
      • Political stability – an extraordinary accomplishment and substantially more attractive than China, although communalism and regional political parties may be a minor threat to stability
      • Labor markets – Highly educated, English speaking… but educational system is having a problem keeping up with high tech labor needs resulting in a temporary shortage
      • Infrastructure – New roads, established railroads, but electricity is a major problem… there are special economic zones that have redundant sources
      • Inter-state competition for FDI may increase in India
    • In 2003, US$508MM invested approximately in equal parts across IT/BPO, Life Sciences, and other
    • In 2006,US$7.2B investments in IT/BPO dropped to 25% with manufacturing and life sciences following close behind
    • Majority of investment in late-stage growth companies
    • 72% deals raised over US$5MM and 50% raised over US$10MM
    • There are limited early stage investments, more PIPE and growth capital oriented deals, buyout activity is beginning to pick-up
    • Raising money for early stage remains very difficult due to higher execution risks… this will begin to change in 12-24 months
    • Location and labor cost base arbitrage will continue for a few more years
    • There are lower barriers to entry in the market is driven from government policies and liquidity in the market
    • Some entrepreneurs in India have difficulty sharing control
    • Some investments’ structures have guaranteed returns promised to the investor
    • Governance and management experience (for early stage companies) are major challenges

All in all, this was a great, deep conference.  It was organized by the Georgia Indo-American Chamber of Commerce.  The organization is very similar in purpose to our Alabama-India Business Partnership (AIBP).

It’s too late to make any changes to our travel dates for the TechVenture next week, but I’m beginning to think that it’s time to revisit how we encourage AIBP to cooperate with our follow-on trip in the spring.  There’s plenty to consider… now, back to the freeway and rush home to spend Halloween with my family.

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