General Motors crash test dummies sit on display at the GM Proving Grounds in Milford, Michigan prior to the 15,000th crash test conducted by GM Wednesday, September 22, 2004.
India's economy is known worldwide for its information technology services and exports such as garments and jewellery, but it also has a thriving, if smaller, foothold in engineering industries, including autos and electronics.
For firms in these sectors – many of them small and medium-sized businesses – tapping the global market is a challenge. Chinese competitors have scale and aggressive pricing, and there are more stringent quality standards in places like North America and Europe.
This is where CSA International, the product testing arm of the Canadian Standards Association, comes in. Its Indian unit, which also serves neighbouring markets such as Bangladesh and Sri Lanka, provides product certification to help exporting companies clear quality hurdles. CSA is a not-for-profit body, but it competes like any other business.
"We have acquisition targets," says Saibal Mukhopadhaya, CSA's head of business and technical for the India region, which has eight staff members, mainly in Bangalore and Mumbai.
He said details are expected next year, but the aim is to acquire skilled personnel or laboratory facilities. In India, CSA competes with firms such as U.S.-based Underwriters Laboratories Inc., and Germany's TUV, and it caters mainly to clients that make electrical and power-supply equipment.
Mr. Mukhopadhaya says the certification process requires staff with specialized skills in each product segment, so high volumes are ideal, an area where India often lags China. CSA has to expand carefully so that it gets maximum value out of its employees.
"We don't want to enter all sectors," Mr. Mukhopadhaya says.
Word-of-mouth is key to its marketing plan, as well as the group's participation in industry associations and business-to-business websites that bring in clients at low cost.
CSA's Indian unit is occasionally called in to help customers in the Philippines when a specific skill is required that the nearby Hong Kong unit cannot supply. Experts from CSA's Toronto or Hong Kong offices are also pulled in to help Indian customers. Sometimes the firm pitches in with Canadian companies that have Indian manufacturing units.
To get the most out of its lean operation, CSA has partners such as Wipro – India's third-largest software and computer services company – to provide product testing facilities. It also uses the country's vast network of government-run laboratories. Partnerships are critical to keeping its efficiency high.
CSA's focus in India is to help manufacturers meet North American or International Electrotechnical Commission standards that are prevalent in Europe. Indian firms cater mostly to European markets because of their matching 220-volt electrical systems, unlike the North American ones that use 110 volts.
Country-specific revenue is not disclosed, but Mr. Mukhopadhaya says India represents a small portion of CSA's global operations, which turn in $227 million annually. He describes its yearly growth as "small," but points out it averages 15 per cent to 20 per cent.
Not bad for a lean operation focusing on niche markets.
India is "not very significant" right now, Mr. Mukhopadhaya says. "but we are going to grow fast.
"Next year, it is going to be very different."
Special to the Globe and Mail
Narayanan Madhavan is associate editor of the business news pages of Hindustan Times, a leading Indian daily newspaper. He has previously worked for Reuters, the international news agency, as well as The Economic Times and Business Standard, India's leading business dailies. Though focused mainly on business and economic journalism with a strong focus on information technology and the Internet, he has also covered or written about issues including politics, diplomacy, cinema, culture, cricket and social issues. He has an honours degree in economics and a master's degree in political science from the University of Delhi.