7. Think of Scale as Your Largest Business Opportunity
International technology companies have to change their mind-set if they want to tackle the real opportunity in India. Unlike the western markets, in India, while margins on individual sales are often lower, the opportunity of scale is immense. This understanding is the basis for developing adaptive business models for the local market. The parameters of a successfully implemented pilot project can then be replicated all over the country.
One example of how to change a business model from high-price to scale is the mobile phone service provider Bharti Airtel. In 2002, the management decided that the ordinary strategy (focusing efforts on increasing the average turnover per client) is not the right business-model-parameter for the Indian market. Instead, success would be based on reaching millions of customers with a uniquely low tariff. As a result, Airtel expanded their distribution network in cooperation with local shops all over the country to provide pre- and post-paid telephone cards. Airtel also heavily invested – in cooperation with the micro-credit provider SKS – in reaching out to the rural market. In 2010, the company had over 150 million customers under contract. By 2012, Bharti Airtel aims to double that number. As a result, Airtel can offer the conversation minute for 1 cent (compared to 2 cents in China and 8 cents in the U.S.). This makes Bharti Airtel the cheapest mobile operator in the world. Even with the cheapest call rates that it provides to its customers, it made profits of $ 461million as brought out in its fourth quarterly report.
8. Be Patient and Go with India’s Flow
One experience of working and living in India is that nothing goes as fast as you want it to – unless you have the relevant information or networks (See Point 2. and 3). An assessment by the Associated Chambers of Commerce and Industry of India reveals that 420 million man-hours are lost every month by the 7 million lakh working population of the Delhi Region who take public transport to office and back. The main reasons are traffic jams during peak morning and evening hours.[6] The daily nitty-gritties are the stumbling blocks, which will extend processes and delay outcomes.
International companies, often used to efficient public administration, are often struggling with India’s complex bureaucratic system. Also the legal framework, especially for securing technology transfer, creates a lot of uncertainty these days as the recent Enercon-case showed. The German wind turbine producer Enercon lost its intellectual property rights following a judge’s decision to dismiss the company’s ownership of a dozen wind turbine patents. As a result, the Enercon management in Germany stated recently, that coming to India was a failure.
Additionally, international companies have to incorporate the social and environmental circumstances from the beginning in order to maintain their so-called ‘licence to operate’ (See Point 5). There is no other choice than to accept the country’s unique flow (See Point 1) and invisible paths without over-analyzing its reasons. If one learns to see them as opportunities and develops adaptive and realistic solutions (See Point 4 and 6), one truly understood the scalable potential of India’s markets (See Point 7).
To be successful in India, it requires time, flexibility and financial commitment. India is not authoritarian China that can deliver results as promised, nor is it predictable EU – India is an emerging market, potentially huge, already significant and evolving each day.
Despite many remaining challenges, India is one of the most attractive growth markets in the world, making sincere efforts…, especially in the field of renewable energy, especially solar. Underlying them is India’s aspiration to become an international leader in the use of renewable energy and development and commercialization of new technologies.
The Indian 2010-2011 budget specified some key measures to increase the flow of renewable energy technology into the Indian market. They include the establishment of a National Clean Energy Fund and complete liberalization of pricing.[7] The Indian government also plans to set up a Solar Research Council, which would coordinate research activities in India according to the R&D strategy of the National Solar Mission. With an increasingly favourable regulatory and policy environment and a growing number of entrepreneurs and project developers, India has been ranked by Ernst & Young as the fourth most attractive country for renewable energy investment in the world, only behind the United States, China and Germany.
However, there is a clearly discernible market gap with respect to professional services required for setting up and running renewable energy plants and the adaptation of foreign technologies. BRIDGE TO INDIA contributes substantially to closing this gap. We are committed to ease the entry and successful functioning of foreign companies into the Indian market. For this purpose, we develop India-specific business models. This includes the assessment of the market requirements and providing consultancy for our clients to successfully establish their business in India.
Notes:
[1] For details, refer to BRIDGE TO INDIA’s “Solar Compass” January and April Edition.
[2] Further information on the bankability issue in India’s solar market is in BRIDGE TO INDIA’s “Solar Compass“, April 2011.
[3] University World News 2009.
[4] Article published in The Times of India, dated November 8, 2009.
[5] India Current Affairs report dated December 9, 2010
[6] Published in the newspaper, Express India, dated January 7, 2008.
[7] Union Budget. “Key Features of Budget 2010-2011” – http://indiabudget.nic.in/ub2010-2011/bh.bh1.pdf
About the Author:
Isabelle-Jasmin Roth is the Director and Head of Urban Planning at BRIDGE TO INDIA – a consulting company based in India focusing on environmental technologies in the Indian market.
With her strong background in entrepreneurship and her keen appreciation of the dynamics of the Indian economy, Isabelle-Jasmin is focusing on the fields of urban planning, informal value chains, innovation and sustainability, as part of core business models in India. Her solution-driven approach requires the understanding of policy-making, interaction with decision-makers and creative approaches to tackling systemic challenges, especially in India’s urban context.
Additionally, Isabelle-Jasmin Roth is responsible for BRIDGE TO INDIA’s information architecture. She regularly writes for leading newspapers and magazines, describing her observations about India in text and through photography. Before BRIDGE TO INDIA, Isabelle has set-up and sold a company.
