As the West Exits, Japan and Korea Seize Opportunity in India
Prime Minister Narendra Modi rose to power with a business-friendly platform. Western firms have been cautious about India’s economic prospects since things slowed down in 2012. But figures released by the Indian government show that Asia’s economic powerhouses are much more enthusiastic.STRINGER/INDIA / Reuters
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NEW DELHI, India — Since independence in 1947 Indians have looked mostly to the West for economic inspiration. The country has sent millions of expats to the US and Britain, and has developed ties with Western companies eager to tap into the huge Indian market.
But things are changing.
Already, Prime Minister Narendra Modi, who took office in May, has built a strong relationship with Japan’s Shinzo Abe — riding a huge influx of interest from the East Asian nation’s entrepreneurs and executives.
Despite a high-profile exodus of Western companies from India, a GlobalPost analysis reveals that Japanese, Korean and Singaporean applications for business visas have shot up in the last year. American and British applications have remained flat.
Western firms have been cautious about India’s economic prospects since things slowed down in 2012.
But figures released by the Indian government show that Asia’s economic powerhouses are much more enthusiastic.
“Now I would say that about 50 to 55 percent of assignments come from Asia"
In 2012, India issued a total of 26,869 business visas from its consulates in Japan. In the first ten months of 2013 (the most recent available stats) the number had jumped to 40,960, an 80 percent annualized increase.
There was a similar jump for South Korean business visas. A total of 18,044 visas were granted in 2012, and by October 2013, India had issued 20,985 visas for the year. That’s an estimated 40 percent increase annually.
Singapore business visas also jumped by about 50 percent, from 15,871 in 2012 to 20,059 in the first ten months of 2013.
In contrast, business visas issued to American and British applicants remained largely static. India handed out 55,629 business visas to Americans and 58,051 to Britons, and by October last year those figures looked likely to be repeated for 2013.
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The people who help expats settle in India have noticed the growing number of East Asian businesses.
Komal Smriti, of Sterling Relocation, said around 80 percent of her clients used to be from Europe or America.
“Now I would say that about 50 to 55 percent of assignments come from Asia,” she said. “Primarily these are large manufacturing base companies that are coming.”
Japanese brokerage Nomura said in a note in July that Japan’s government is targeting high-speed rail and power generation as areas for growth. Many Asian companies are involved in infrastructure developments between Delhi and Mumbai. Nomura predicted that if Modi is successful in cutting red tape, investment could rise by up to 15 percent.
“When a Western company comes here, they might send four or five expatriates. But when you deal with a Japanese or Korean company, the number of people coming is three or four times more"
India signed a trade deal with Japan in 2011, and there are now around 1,000 Japanese businesses operating in India, part of Delhi’s so-called “Look East” strategy.
The new government in Delhi looks to be propelling the trend forward.
Modi and Abe appear to have good personal chemistry, having met and stayed in contact long before either gained power. Both are wary of their larger, shared neighbor, China.
Yet total trade has not risen in line with the growth in business ties so far. In 2011-12, India’s trade with Japan was $18.3 billion. That grew only slightly, to $18.5 billion, by 2012-13.
Although the rise in business visas is partly due to more Asian companies investing in India, other factors also come into play, Sterling's Smriti said.
“When a Western company comes here, they might send four or five expatriates. But when you deal with a Japanese or Korean company, the number of people coming is three or four times more. They don’t just send the senior level management — also the middle level management come out.”
Western firms are sending more short-term assignees instead, she said.
For Indians, dealing with people from East Asia is not as straightforward as Westerners might believe.
Smriti said their requirements could be hard for relocation agencies to fulfil. No Asian expat will take a property without a bath, she said, which often involves re-plumbing the hot water system.
“Bathrooms are something they have very specific requirements for,” Smriti said. “Some of the clients have spent a great deal of money on a toilet seat cover. A padded one, or ones which are heated. They are not easy to get. We had to search through all the hardware stores to find where we could get one.”
India’s frequent power outages are not borne lightly either. Most families require both an oil-fueled electricity generator and a battery back-up.