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More than ever, the time is ripe to explore the opportunities in India in detail and determine how to tap into this vibrant market. To help the audience make informed decisions, Nirmalya Kumar, Author and Professor, Singapore Management University, delivered an insightful and energetic address in yesterday’s TFWA Asia Pacific Conference. All eyes on India: “If you are seeking growth as a company, you cannot ignore India” W ith a population of 1.4 billion, India is one of the largest consumer markets in the world. India’s positive economic trajectory has paved the way to a burgeoning middle class with disposable income and desire to travel. Today, India is also home to Asia’s biggest airport development and expansion projects. “India is an attractive market and still relatively under-penetrated by global chains (e.g. IKEA, Zara, Starbucks) relative to its potential,” said Nirmalya Kumar, Author and Professor, Singapore Management University. “Multinational companies like Colgate Palmolive, Nestlé, or Unilever that invested early in making a success in India have seen disproportionate market cap for their India subsidiaries. For example, the Indian subsidiary of Unilever is 70% of Unilever’s overall global market cap.” The Indian market, while large, does require localisation for success given the idiosyncratic consumption patterns and consumer behaviour. There are also constraints that must be overcome. Kumar noted, for example, that Uber and Amazon had to learn how to accept cash on delivery given only 1-2% of Indians had credit cards. “While some consumers perceive duty free is cheaper, the data demonstrates that this is true only for some highly taxed products,” Kumar added. “Furthermore, Indian duty free prices are among the highest. Increasingly, the need to tap into buyer motivations other than price will become critical for success.” The Indian economy is still small as a percentage of the global economy. “However, today it contributes disproportionately to global growth because of its size and fast growth combined with the slowdown in China over the past years,” Kumar explained. “If you are seeking growth as a company, you cannot ignore India.” The youth, optimism, and decades of repressed consumption is leading to fast growth. The middle class is exploding, but Kumar commented that foreign companies must not use their developed market lens to view India’s middle class. “By global standards, the middle class as a percentage of India’s population is small, even if big in absolute numbers. For example, about 7% have a per capita annual income of over US$36,000 (what we would call middle class in the US). The middle class in India is defined as per capita annual income of US$6,000. Yet, 7% of India’s population is equal to 100 million, which is larger than the population of France, Germany, or the UK.” The travel and airline business in India is booming – it is an exciting market. In the next five years, domestic air traffic is expected to double, while the number of airports will increase from 150 to 200. “A lot of public investment is going into this sector,” said Kumar. “Companies need to match this if they wish to exploit the related growth opportunities.” Kumar added the importance of studying the market to understand the Indian customer. “They may seem at first glance to be very price-sensitive, but it is extreme value consciousness. Quality is what they are seeking, but at an affordable price. Companies that can reengineer their processes to meet this challenge have and will continue to do well. Beyond this mass market, there is also the top end of the market, which may be miniscule as a percentage of the population, but is as rich as anywhere else in the world.” More than ever, the time is ripe to explore the opportunities in India in detail and determine how to tap into this vibrant market. To help the audience make informed decisions, Nirmalya Kumar, Author and Professor, Singapore Management University, delivered an insightful and energetic address in yesterday’s TFWA Asia Pacific Conference. Tuesday 14 May 2024 10 T F W A D A I L Y