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Conducting trade in India: what you need to know

E-commerce · 4 Mins Read

Conducting trade in India: what you need to know

India is the world’s third largest economy in terms of purchasing power parity and is a promising export market for Australian businesses. Here’s an overview of trading in India, major sectors, trade laws, policies and regulations, and how best to navigate the landscape. 

There are many reasons why India makes for an attractive export choice for Australian businesses. It has a large, growing population of 1.38 billion – second only to China, as well as an economy that is growing at an accelerated pace. In 2017, India was the world’s sixth largest economy, with a gross domestic profit (GDP) of over US$2.5 trillion. A 2019 UN report predicts that India is set to overtake China as the world’s most populous country around 2027. With the right reforms, it may also replace the United States as the world’s second largest economy by 2050, in purchasing power parity terms.

Why should you consider doing trade with India?

Australia already has an existing trade partnership with India, one that has grown steadily in value over the last decade. Goods and services trade between the two countries has almost doubled in value – from AU$13.6 billion in 2007 to AU$24.3 billion in 2020.

India offers numerous benefits for Australian business on the lookout for cross-border opportunities. Some reasons why India should be considered as a major export market choice include: 

  • World’s third largest economy in terms of purchasing power parity

  • Large, wealthy and diverse middle class consumer market

  • Higher demand for premium goods from Australia 

  • Trade partnerships and policies that remove trade barriers

Trade policies between India and Australia

Australia has several free trade agreements with countries in Asia Pacific. While it may not have any existing partnerships with India, it has one in development. The Australia–India Comprehensive Economic Cooperation Agreement (AI-CECA) negotiations are set to restart and be signed by the end of 2022. Once these agreements are in motion, Australian enterprises will be able to enjoy fewer or no tariffs, removal of double taxation, a hassle-free paperwork process and less complex regulations. 

The AI-CECA arrangement also facilitates the integration of companies of these major industries, such as manufacturing, software and telecommunications,  from both India and Australia into their supply chains. This would mean the opening up of markets and the creation of two-way trade that is liberal – in order to promote economic growth.

Which industries offer potential for high returns?

India’s continued projected growth means it has increasing technology and infrastructure needs that require filling. Agriculture, food production, energy, tourism, healthcare and education industries here provide major export opportunities for Australian businesses. India is also an emerging e-commerce market, making it an attractive option for retailers. Major e-commerce segments include airlines and hotels, clothing and footwear, and electrical goods.

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India’s growing middle class – affluent and with increasing purchasing power – has also marked a shift in food consumption behaviour and trends. For example, greater demand for dairy, fresh fruit and vegetables, grains and pulses, and meats like lamb, provide a huge cross-border market opportunity for Australian food exporters. 

Transport infrastructure, such as roads and railway tracks, are equally vital in supporting India’s rise. Its global competitiveness, and inflow of foreign investment, hinges on its ability to improve its transport systems within the next few decades. The government is committed to providing better transport and improving existing networks. This makes Australian expertise, technology, consultancy services and equipment in transport critical – and a timely opportunity for local businesses in this sector. 

What should you look out for when exporting to India? 

Those looking to do business in India would likely have to overcome issues like cultural differences, bureaucratic red tape and differing trade regulations from one state to the next. It’s critical that you conduct adequate research on where and how to sell and distribute your products in India. 

The Indian market is diverse, with differences in languages, cultures, and socio-economic levels. By partnering with the right in-market representatives that have in-depth knowledge of the local market, you will be able to determine the appropriate distribution channels, whether through an agent or a distributor. 

Tariffs and import duties are subject to constant change and it’s best to keep up to date to ensure you adhere to regulatory compliance in India. Goods imported into India are subjected to a levy of basic customs duty (BCD) and integrated goods and service tax (IGST). The final taxation amount depends on the classification of the goods. 

DHL Express supports Australian businesses’ India export activity

Expanding into foreign markets can be an exciting venture, but also one that is filled with trepidation. Understanding foreign trade regulations in India can prove to be a challenge. However, by engaging a credible third party logistics provider like DHL Express, you can rest assured knowing that this part of your export process is fully taken care of. Along with other international free trade agreements, like the Regional Comprehensive Economic Partnership (RCEP), cross-border trade need not feel like an insurmountable feat. 

Take your business to greater heights and start your export activity by first opening up an account with us today.

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