March 21, 2019
India Governments Market Review (B2G Segment)
At the end of the day, what matters is the customer. And if the governments in India are not on your list of potential customers, you may want to rethink your India sales strategy.
Apart from industry and consumers as potential customers, seizing business opportunities with the government sector in India is crucial to achieving optimum returns on India investment plans of foreign multinational companies.
The central government, 29 state governments, and seven union territories of India are among the largest buyers of goods and services in India. The estimated size of the government procurement market at the central government level alone in India is about $300 billion. Out of this, central ministries of Defense, Railways, and Telecommunication allocate approximately 50% of their respective budget on public procurement.
Government initiatives like Make in India, Digital India, Skill India, Smart Cities, Urban Transformation, FDI reforms, Ease of Doing Business (EoDB) reforms along with sectoral thrust from respective ministries such as Railways, Power, Tourism, Transport, Aviation, Food Processing, Construction, Defense represent a huge market opportunity in India for several large and small companies over the next 15-20 years.
When it comes to doing business with the Governments in India, overseas companies often raise issues related to lack of transparency, lack of standardization, corruption, and red tape leading to delays and frustration.
Currently in India, there has been emphasis on the urgent need for state governments to improve upon the ease of doing business climate as the whole world now wants to partner with India. The concept of competitive federalism is driving the governments in India to implement reforms to make processes easy for doing business in their respective states and expediting the pending project clearances.
The World Bank’s Ease of Doing Business Index has generated a lot of enthusiasm between states in India and each one is hungry for more and more investments for development.
The simplified online access to opportunities and the bidding process and the new, user-friendly procurement system helped with eliminating previous frustrations expressed by small companies. The officials at ministries and government offices have been working more professionally to expedite and execute the business process. As a result, dealing with governments in India has become more transparent and accessible to overseas small and medium-sized enterprises (SMEs) that want to bid on government contracts.
The dynamics of business negotiations in India change significantly when the customer is a public-sector enterprise or government department seeking to purchase items that may involve significant expenditures. Accordingly, overseas companies work with local representatives in India to identify relevant opportunities, discover the right contacts, and understand how the system works, including the procurement process.
HLS India is familiar with the culture and customs of India and can cut through the bureaucracy in government ministries to secure contracts. We can support your business efforts while helping your company avoid common mistakes.