Leisurely business in India

Now that trade ties with Europe are collapsing, many large Russian companies have turned their eyes to India more than ever. For us, this story began during the pandemic. Obviously, the countries already then had a mutual interest in each other's markets. We understood that this was a big plus, but we did not know the specifics that exist within the country.

JSC "Penzaspetsavtomash" — manufacturing plant in Penza. We manufacture "smart" container filling stations "Benza", automated fuel dispensers, we develop software for managing departmental gas stations and fuel supply for enterprises. We are known in Russia and the CIS, but the goal has always been to expand further into foreign markets. We tried to go to Vietnam, participate in tenders in Algeria, but not everything worked out well, since the fuel dispensing equipment is quite difficult to sell abroad.

We paid attention to India, because there is a fairly large market and relatively stable business ties with Russia. It was important for us to open a company that can be managed from our own country. From previous experience, we understood that you cannot fully rely on partners and you need to promote your own business. In February 2020, just a month before the pandemic, we registered a company with an Indian partner in order to participate in a tender and supply our equipment to one large customer.

Calculate costs

The first obvious output of — Opening a company in India is quite simple. It costs little money, about 50 thousand rupees. The cost of 1 rupee today at the rate of the Central Bank — 0.88 rubles. Given this, it is very easy to keep count.

In India, there are many reliable firms that can be entrusted with legal matters. The cost for each operation, — for example, for an increase in the authorized capital, the introduction of new shareholders or a loan in the country of the bank, — from 10 to 25 thousand rupees. It's not that expensive. But the duties in the country are quite large. 28% for us was a tax on the supply of goods and services to India. We paid 15% for the duty. Thus, the state stimulates the production of goods on the spot, which leads to a rise in the cost of imported products, it becomes less competitive in the market.

Be patient

India — a territory with great trading potential, this was historically emphasized by its location next to China, Pakistan, Indonesia, Bangladesh and other states. We believed that there would be no difficulties with permits, and we would be able to quickly launch our container filling stations. But it turned out that in this country there is serious regulation, certificates of the American and European format are preferred even by their Indian ones. Having only a Russian certificate, it is almost impossible to promote products here.

In the process of work, we opened a company, rented an equipped office in the business center of Mumbai for 85 thousand rupees per month and hired an employee with a salary at the level of a qualified manager in Moscow.

We did not take into account that in business you cannot fully rely on any promises and agreements. The tender for the supply of equipment for an oil company in India, in which we are participating, began to take shape in June 2020. In January, we waited for the results, but have not received them so far. I had to conclude that this is natural for India. We agreed with the customer to make the documents in a month and a half, but they had to wait about 5 months. And so it was repeated from time to time.

It is possible that the pandemic had such an impact, but the conclusion that suggests itself — that all processes in India take an extremely long time. It is better to immediately multiply plans by 6. We still have not received a number of additional approvals from the local organization.

Other companies confirm to us that this happens very often. We have consulted with TechnoNIKOL, a manufacturing chain that has also launched sales in India, and have fully agreed on this point. Two years later, we are still in the process of collecting documents, agreeing and signing contracts. Although in Russia this can be done in 3 months.

But, on the other hand, everyone who has had time to work with India assures that the Indian market behaves very generously towards foreign companies. After the companies were launched in this country, they received a huge flow of customers, which we are now counting on.

Localize production

From the very beginning, we were looking for an Indian plant that would produce the main structures for us on the spot and, on the principle of contract assembly, would be able to assemble Benza fuel dispensing stations on its premises. from our components.

What is important to consider? The Indian market cannot be taken as a whole. The state includes 29 states and 7 union territories. All of them differ in ethnic, infrastructural, production and economic aspects.

The cost of services in different regions of the country varies greatly. In the north, in the Mumbai region, prices for services differ by almost two times compared to the southern regions. Likewise with wages. In the districts of the capital, it is 3-4 times higher. Given this, we realized that it is more profitable to assemble in the southern regions, but we found the contractor for our first products closer to the customer in the Mumbai area.

We began to assemble equipment at a local enterprise, because the Make in India program is quite popular in India. It assumes the value of products manufactured domestically. We knew that at the level of the state and large companies, the equipment assembled here would be perceived with greater preference.

It is important to think about the localization of production for everyone who tries himself in India. Let it be SKD in place, — what happened with our fuel-dispensing stations, — but such products in the market will be more successful. Now we are at the finish line and getting ready to launch the project.