For New Zealand, real test of trade deal will be India’s regional diversity and complex economy

The recently signed free trade agreement between New Zealand and India has so far been discussed and debated in very broad terms: the size of the Indian market, opportunities for exporters, implications for immigration.

Much of this is understandable. Preferential access to a market larger than the European Union and ASEAN countries combined, with purchasing power forecast to grow exponentially by 2050, is indeed an opportunity.

Realising that opportunity, however, is another matter entirely. The real test for New Zealand businesses lies in how they now approach the regionally complex and dynamic Indian market.

While the free trade agreement calls for a clear strategy for doing business in India, the harder question is whether a pan-India strategy is enough in a market so diverse and difficult.

A country of countries

The regional differences within India’s large and complex economy make it a “country of countries” requiring a business strategy for each of its 36 states and union territories.

Key policy decisions – about infrastructure development, land and labour, healthcare and transport, licensing and permitting – are all made at state level. On top of this, economic, social, political and cultural expectations vary across states.

Approaching each as a separate market is vital, with the economic and operational environments considered in tandem.

For example, the states with highest GDP are Maharashtra, Tamil Nadu,...

Read more