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Grow: Narayanan Madhavan

India: Land of opportunity for SMBs Add to ...

The setting presented a mix of opportunity and obstacles.

I headed to New Delhi's central district from my home in East Delhi across the Yamuna river to attend a Jan. 7 seminar on Indo-Canadian partnerships for small and medium-sized businesses (SMBs). The nine-kilometre drive took more than an hour because the roads were jammed and police stretched to the limit on a foggy morning.

The jams were mainly caused by Auto Expo 2010, an industry show that symbolizes the opportunities India presents as a fast-growing economy. While everybody from BMW to small Chinese auto-parts makers were showing their wares inside a vast exhibition ground, the roads outside could not cope.

Prime Minister Stephen Harper arrived in New Delhi last November to set in motion a Comprehensive Economic Partnership Agreement (CEPA) with India. The CEPA will pave the way for Indian and Canadian SMBs to enter into joint ventures, franchising arrangements and sub-contracting.

Canada is a skill-oriented economy with businesses in advanced areas such as automotive, aerospace and nuclear energy that could seek a market in India. India, a nation of more than one billion people, 65 per cent of whom are below the age of 35, is teeming with would-be customers. India's middle class is two-thirds the size of the European Union.

However, there are twists and turns to navigate.

“You have a very complex economy,” Canadian diplomat Mario Ste-Marie says. “In Canada you can create a company in 24 hours on the Net. In India it could take months.”

Things are improving with e-governance taking off in India, and entrepreneurs also speak of a decline in corruption, once considered a major obstacle.

“If you really ask me, the only problem I see is in infrastructure,” says Asha Luthra, president of the Indo-Canada Chamber of Commerce.

That may not be the only problem for an SMB from Canada.

Satya Poddar, a partner at accounting firm Ernst & Young, and a former tax expert in Canada's Ministry of Finance, says “Canada is a small country well-served by the bureaucracy. The Indian tiger is caged by bureaucracy and regulation.”

What, you might ask, are the obstacles in an economy that unleashed economic reforms and liberalization 19 years ago?

Consider these, from Mr. Poddar's check list:

• Tax levels in India may be more than what they appear due to a maze of lesser-known duties and charges.

• SMBs in India are a powerful lobby against overseas competitors.

• India practises positive initiatives –something like affirmative action – to aid its own small businesses in a manner that could hurt big firms or rivals from overseas.

But make no mistake: the economy is growing up, with de-regulation as well as potential.

Ruby Dhalla, MP from Brampton Springdale, says she knows many success stories of people who have done well in sectors such as retail, real estate, infrastructure and green technologies.

But, like many, she thinks small businesses can get lost in a big maze.

“I want to create a mentorship program -- telling the stories, sharing the experiences,” she says.

I do hope to track down such businesses in the coming days to see how some cracked the puzzles of India's elephant economy—somewhat slow, but strong and sturdy. Like in Delhi, if you get past the foggy traffic jams, the destinations can be alluring.

 

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