The world is flat.  Or it was, mostly, for a while. 

Recent years have tested the premises of globalization as a combination of trade disputes and stagnant overseas economies have reduced opportunities abroad.  Jurisdictions that once seemed attractive now present unreasonable risk or offer limited growth for investors. For Utah businesses looking to explore international waters, these trends are not ideal.  One jurisdiction that may be an exception, however, is India—which just happens to be sending a delegation to Utah later this month.  

The India Opportunity

India’s population will eclipse China’s in the next five years.  Think about that. It will become the most populous nation in the world.  And with economic growth rates in the 6-7 percent range, the secret is out. For instance, last year, India passed $100 billion in M&A transaction value for the first time.  

While trade tensions have arisen between India and the US, they are not anywhere near the scale or intensity of the disputes between the US and China.  The Trump Administration is not accusing India of predatory behavior as it has with other countries, but it has expressed concern with the scale of tariffs India charges on the US imports, with Harley Davidson Motorcycles being held up as a prime example.  

These tensions seem more surface-level.  For example, the “Howdy Modi” event in Houston in September witnessed a gathering of roughly 50,000 Indians to welcome Prime Minister Modi and President Trump.  This was the largest-ever gathering with a foreign political leader in the US  It was also a powerful show of support for Modi and Trump and brought the two leaders and two countries closer together.  

In terms of windows of opportunity, we may be in one right now.  2019 has been a big year for India. It held its national elections in June, in which Prime Minister Modi’s BJP party won re-election in a landslide, giving Modi a powerful mandate to continue with his aggressive blend of social and business reforms.  Many of these reforms have been designed to increase the attractiveness of India to foreign investment. For example, in 2016, India adopted a modernized bankruptcy law to make clear the rights of investors and provide for insolvencies to be sorted through in months rather than years (or decades).  

Of course, there are plenty of areas where India needs continued reform.  If a counterparty is breaching a contract there, it can take a decade to get justice in the overloaded judicial system. That said, companies are not without recourse and effective strategies include seeking injunctive relief in emergency situations, taking government relations approaches and using alternative dispute resolution.

Opportunities for Utah Companies

Tech.  India as a tech market holds much promise, and several of our Silicon Slopes companies are eyeing it.  But again, it is complicated. Uber and Lyft gained access only after years of lobbying for rule changes.  Earlier this year, Amazon and Walmart found their online business models upended in India by new e-commerce rules that restrict the deals they can make with online buyers and sellers.  Like any country, India’s national interests shape its policies, and e-commerce has been an area of protectionism. On the flip-side, it’s IT services industry is a powerful resource for many US businesses looking to outsource some functions of software development.  India’s offerings in this respect provide an unmatched combination of quality and cost.

Clean Energy. India and Utah are already working together closely in the field of clean energy.  In August, the Governor’s Office of Energy Development signed a Memorandum of Understanding with the State of Rajasthan in India to help integrate resources and technology for renewable energy including energy storage, scheduling and forecasting, electric vehicles, and strengthening of power transmission networks.  India’s air quality challenges are a powerful motivation for it to accelerate its move to clean energy, and we are seeing businesses jump into what may be a massive infrastructure overhaul in that nation. 

Natural Resources.  Even though India is on the other side of the world, opportunities exist across the range of Utah’s natural resources.  There is excellent potential to export crude oil, natural gas, and coal to India, commodities in which Utah is rich.  Utah’s waxy crude may be of particular interest to refiners in the country who export to markets demanding very low-sulfur fuel.  India could also be an excellent market for Utah’s coal industry. Utah’s high-heating value coal would be a major upgrade to India’s current supply. The challenge is, of course, getting these products there. The Uinta rail project promises to solve some of these challenges, but adequate port and terminal facilities in our coastal states remain the other half of the equation.  Dialogue with countries like India will help raise awareness of Utah’s potential and the importance of solving logistical (and political) challenges within the US.  

Nutritional Supplements.  Utah’s strength in nutritional supplements could translate well in India, where the industry is estimated to be growing at above 16 percent per year.  Tariffs make it more cost-effective to manufacture in-country, which means Utah companies with their powerful brands and innovative formulations will likely want to take a foreign investment approach rather than relying solely on an export model. While manufacturing in India can seem challenging (permitting even a simple project can take years), the long-term value is there.  Joint venture partnerships with existing manufacturers are a good way to speed things up, even with the extra layer of complexity that comes in a partnering arrangement.  

India: Meet Utah

Later this month, World Trade Center Utah, the Salt Lake Chamber, and Dorsey & Whitney will be hosting an India-Utah Forum involving India’s consul general for our region, cross-border experts on doing business in India and representatives from several of India’s largest companies.  The forum will take place on November 21st. For more information go to wtcutah.com/event/india/.

By David Carlebach, World Trade Center Utah, and Troy Keller, Dorsey & Whitney