Getting in on the Ground Floor

The press reports are negative: The Great Indian Growth Story (or GIGS, as some call it) has hit a bump in the road. India’s economy, which was growing by eight per cent annually before the global financial crisis, is now down to 6.5-per-cent growth amid rising inflation, loud corruption scandals, mixed messages on welcoming foreign investment, and very public hand-wringing over the capacity of the state to keep up with its part in the implicit bargain of growth – to include everyone. But here’s the rub: India is still growing, despite all of this, largely off the back of domestic consumption and ever-rising middle-class aspiration.

India has the youngest population of any major global economy, with 50 per cent of its citizens under the age of 25. In fact, India will see 231 million new workers enter its economy between now and 2030, compared with Brazil and China, which will see an additional 18 million and 10 million, respectively. The need to deploy and employ this labour surge is enough to keep governments awake at night.

As if there weren’t already enough to worry about, India also finds itself at the coalface of some of the biggest collective action problems of our time, including issues with sustainable development, water and food security, and education. To solve these problems, India needs better infrastructure. Its roads, airports, ports, and buildings are being used at nearly 100 per cent of their capacity, and new projects cannot be built quickly enough. As a result of this lacking infrastructure, up to 40 per cent of the fruits and vegetables produced in India spoils on the way from the farm to the plate.

Luckily, governments and industry are finally stepping up their game, having invested almost half a trillion dollars’ worth of new infrastructure in the past five years (37 per cent of which has come from the private sector). The state, which for decades held a monopoly over the infrastructure sector, simply does not have the capacity, cash, or skill to do the job on its own. Thus, most projects are now being delivered through private-public partnerships. Some of India’s cities are enormous building sites and hard to recognize if you haven’t visited them in a few years.

In addition, the Indian government has set a goal of investing a cool $1 trillion between now and 2017, with more than half of that amount coming from private investors. Policy nudges, less red tape, better models for public engagement, and private investment will increasingly play their part in making this happen.

Big plans are in the works, including the US$90-billion Delhi-Mumbai Industrial Corridor, the largest building project on the planet, which will link India’s two biggest cities via high-speed freight rail, connecting seven new “smart cities” along the way. The Indian government is confident that it will be building 20 km of roads per day by 2014. It has already doubled its ports capacities, and, in the last year alone, brought on 12,000 MW of power-generation capacity.

Canadian companies – both big and small – are already in the market. Bombardier has a $41-million manufacturing plant in India that built the cars for Delhi’s new subway. SNC Lavalin has more than 1,100 employees, and several projects underway, across India, and LEA Group, a Toronto-based engineering consulting firm, has been involved in more than 500 engagements through its Indian subsidiary.

Innovative small and medium enterprises are also making their mark: Quebec City-based H2O Innovation signed a joint-venture agreement dedicated to providing water-treatment systems and maintenance services to the Indian industrial and commercial markets, while Ontario-based RV Andersen is helping rebuild Mumbai’s municipal water system.

All of this is good news for Canada. India is one of the economies of scale of the 21st century, and will be an important export market and an experimental hotbed for innovation. The upside for Canadian companies looking to crack the Indian market is its sheer size and competitive nature. Markets for products and services that fly well under the radar in a country as populated as India can be game-changers for Canadian companies, and can have a disproportionate impact on India’s growth. India will demand not only our resources, but also our resourcefulness: our developed ecosystem of architects, planners, engineers, clean tech products and services, and technical training schools.

India also can’t afford to build like Canada does. Resource constraints force the need for cheaper, cleaner, less energy intensive, and sustainable infrastructure. This need has already made India (along with China) one of the world’s largest builders of green water systems, buildings, and power – at least 10 per cent of India’s new power supply will come from clean sources in the next five years. To check costs, India will need to apply “frugal innovation” to the challenge, producing better results at a fraction of the cost. This, in turn, will produce blowback innovation for the rest of the world and help us in the rebuilding of our own cities.

Canadian companies need to be in India, learning alongside Indian companies as they grow and innovate. Participating in India’s infrastructure push affords Canada a chance to showcase its global offer beyond natural resources and highlight our technical skills, expertise, and resourcefulness in technology, communications, clean tech, waste and water management, and environmental stewardship. By embedding our technical skills into Indian projects and institutions, we are also securing our prosperity by building the relationships and links that will carry us into the coming decades.

Original Article
Source: the mark news
Author: Rana Sarkar