India has been making positive strides as a global innovation hub over the years. In 2020, it ranked 48th on the Global Innovation Index, making it the third highest ranked middle-income economy in the world. This growth can be attributed to a strong STEM talent pool, increased industry academia R&D collaborations and ground up initiatives to groom student innovators.
With about 38,000 startups, India has the 3rd largest startup ecosystem in the world. This is expected to grow 12–15% year-on-year1. The ecosystem has given rise to 60 unicorns and is set to witness a three-fold growth in valuation with 150 unicorns by 2025. India is also home to over 5,500 active investors.
This growth is fuelled by both the government and private sector. Startup India is a flagship initiative by the government to foster a vibrant startup ecosystem. Since its launch in 2016, it has rolled out several programmes including tax incentives and regulatory easing with the objectives of supporting entrepreneurs and transforming India into a country of job creators. At the same time, government agencies are working with disruptive innovators to improve public service delivery. 26 states have also responded with their own startup policies and funding support programmes.
The private sector is equally keen to work with startups to complement their internal R&D efforts. With over 1,250 MNC Global In-house Centres (GIC) and 300 Indian conglomerate groups, there are plenty of opportunities for Singapore startups of different growth stages to offer their solutions and conduct co-innovate with these corporates and scale globally. Enterprise Singapore also works closely with partners such as the Confederation of India Industries (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) to foster mutually beneficial partnerships between the Indian private sector and Singapore startups around innovation.
Notable startup hubs across India include Bangalore, Mumbai, Delhi-NCR, Hyderabad, Pune and Chennai, based on the size of the startup ecosystem and funding received. The varying physical and demographical characteristics within each hub has also led to geographical and sectoral clusters being built up.
The Global Innovation Alliance (GIA) Bangalore node was launched in October 2019 to encourage and support the two-way flow of startups, technology and ideas between Singapore and India. As part of GIA Bangalore, ESG works with partners to run immersion programmes for Singapore start-ups looking to enter the India market. Thus far, ESG has conducted three market immersion missions, covering healthtech, urbantech and mediatech.
Trade and Logistics are fast-growing sectors in India and presents many opportunities for Singapore companies.
Trade
India was Singapore’s 12th largest trading partner in 2020, with top traded products including electronics components and parts, fuels, agricommodities and pharmaceutical goods.
India is on track to grow global exports to US$400 billion by March 20222. To achieve this target, there has been focus on ramping up manufacturing, addressing logistical challenges, and identifying new markets for Indian products.
India is promoting manufacturing through policy programmes such as Make in India (MII) and the Production Linked Incentive (PLI) scheme. Manufacturing is expected to lead India’s export targets in key sectors such as mobile phones, electronics, pharmaceutical, textiles, engineering products to name a few.
As a global trading hub, Singapore has strong air and sea networks to other countries such as those in the Southeast Asia region. Given our proximity to India, Singapore can serve as a trading hub for Indian companies looking to export to other markets.
Logistics
In line with MII and to boost exports, the Indian government has set out a plan to reduce the cost of logistics from the current 13%–15% of GDP to 7%–8%, over the next five years3.
To increase competitivity and supply chain efficiency, the Ministry of Road Transport and Highways, and the National Highways Authority of India are looking to develop Multi-Modal Logistics Hubs (MMLHs) to improve the country’s freight logistics sector, under the country’s Logistics Efficiency Enhancement Programme (LEEP). MMLHs will function as freight-handling facilities with various modes of transport access, mechanised warehouses and specialised storage solutions. Services such as customs clearance and late-stage manufacturing activities (eg. packaging and labelling) could be incorporated too.
The e-commerce logistics market in India is expected to grow at a CAGR of 19% from 2020 to 20274, spurred by the pandemic. This presents opportunities across the transport, warehousing, and value-added services segments, for both domestic and international markets. Companies interested to enter this space can tap on government initiatives for infrastructure development. The implementation of Goods and Services Tax (GST) has also made interstate transactions easier to account for and enable the development of more consolidation centre or warehouses closer to the population centre of key states.
In addition, there are opportunities to invest in supply chain related infrastructure (warehousing, cold chain) and for technology solution providers to partner with developers to improve their productivity, reduce operating costs and increase trackability of cargoes.
Singapore companies operating in India include PSA, SATS, Transworld Terminals, Worldgate and Legend Logistics, YCH, Trames.
The Make in India initiative (MII), launched in 2014, is viewed as key to India’s next phase of economic growth. It seeks to make India a global hub for the manufacturing of goods, and to attract businesses from around the world to invest and manufacture in India. At its inception, focus was on job creation and skill enhancement in 25 sectors of the economy.
With heightened focus on supply chain resilience, the Atmanirbhar Bharat (Self-reliant India) campaign was launched in 2020 as part of MII, and emphasizes investments in 13 critical sectors, such as electronics, automobile, food products and manufacturing.
These mid-to-long term investments focus onto enabling knowledge transfer and leveraging technology and cross-border partnerships to develop indigenous solutions that can address local conditions and eventually become commercially viable exports.
Since the launch of the initiatives, foreign investment into India has increased. India has registered its highest ever annual FDI Inflow of US$81.72 billion during the last financial year 2020-21 as compared to US$45.15 billion in 2014-20155.
To attract manufacturing activities, India is adopting proactive strategies such as the Production Linked Incentive (PLI) Scheme which provides financial incentives to companies for enhancing domestic manufacturing. To smoothen the investment facilitation process, many Indian states have also set up a single-window clearance mechanism for investors.
As India works towards positioning itself as a global manufacturing hub, the country is also reviewing its supply chain resilience and diversifying supply sources in sectors such as pharmaceuticals, automotive parts, and electronics.
In 2015, the Sustainable Development Goals (SDGs) were adopted by India as a part of the 2030 Agenda for Sustainable Development.
Nationwide initiatives such as Jal Jeevan Mission (clean water), Swachh Bharat Mission (Clean India) and emphasis on public-private cooperation were captured in the 2021 Union Budget. Focus areas include:
The government of India will also focus on private-public partnerships to enable technological interventions for recycling, upcycling and behavioural change communication.
If you are a Singapore company in the sustainability sector, opportunities in the Indian market include wastewater, e-waste, and green buildings.
Smart City opportunities can be classified into (i) Public Sector or (ii) Private Sector opportunities.
(i) Public Sector
The Smart City Mission launched in 2015 aims to drive economic growth and improve quality of life through developing social, economic, environmental, and institutional pillars of the city. Through the initiative, 100 cities were selected across India to be development nodes. There are opportunities to partner government-appointed Project Management Consultants (PMCs), Master System Integrators (MSIs) while keeping in touch with Municipal government officials and Special Purpose Vehicles (SPVs) to monitor upcoming projects.
(ii) Private Sector
Private sector smart cities are anchored by real estate developers and local system integrators who are investing and developing private townships and industrial/commercial projects. They are also actively searching for solutions and expertise to digitalise the management of their developments. Digital solutions that have done well in India includes Security & Surveillance, data analytics, resource management and construction technology. Contact us to find out more about opportunities you can tap on.
The Indian consumer market is poised to become the world’s third largest consumer market behind only China and US, and consumer spending in India is expected to grow from US$1.5 trillion at present to nearly US$6 trillion by 20306. The Indian government estimates that India’s retail industry will reach US$1.3 trillion by 2024, up from US$883 billion in 2020.
A youthful demographic and rising disposable income are largely driving this trend. The growing affluence of India’s middle class, coupled with rapid urbanisation, has led to greater demand for good quality shopping malls, consumer products and lifestyle services. In particular, more Indian consumers are seeking foreign brands and imported international consumer goods.
The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. The e-commerce market is expected to reach US$200 billion by 2027 from US$38.5 billion in 2017 (at a CAGR of 20.09%)7, supported by rising income and surge in internet users. In 2019, it was estimated that one in every three Indian shopped via a smartphone. By 2022, smartphone users in India are expected to reach 859 million. Overall growth in e-commerce sales volume is also reported in cities beyond India’s tier 1 metro cities. Online grocery, personal care, beauty & wellness, e-pharmacy, fashion/apparel, consumer electronics categories are expected to be key drivers of incremental growth.
Covid-19 has accelerated business transformation in many sectors. For example, with the lockdown keeping restaurants closed, takeaway meal options have been booming in India. There are signs that the shift towards home-delivered food will remain. Cloud kitchens are projected to become a US$2 billion industry in India by 2024.