Spicing up India-SA trade
Already we have witnessed the successful entry into South Africa of Indian conglomerates such as the Tata group and Ranbaxy, while South African companies seem set to make their mark in India, with FirstRand, SABMiller, Old Mutual and Sanlam setting up operations in the Asian giant and Sasol also investigating potential coal-to-liquid opportunities.
India is currently South Africa’s 13th-largest trading partner, with trade between the two countries reaching $4-billion (R27,6-billion) in the 2005/06 financial year. The trade relationship is also currently stacked in South Africa’s favour, with a trade surplus of $1-billion.
According to the Consul General of India in South Africa, Navdeep Suri, 2006/07 is looking like an even more impressive year with the half-year figures indicating that the $5-billion (R34,5-billion) mark will be reached.
However, if the declaration signed in Tshwane by Indian Prime Minister Manmohan Singh and President Thabo Mbeki in October last year is anything to go by, trade between the two nations is expected to treble by 2010.
Earlier this year South Africa’s Indian Business Forum (IBF) was established, one of only three in the world.
Suri, who works closely with the IBF, says the Confederation of Indian Industries looks for a critical mass of Indian companies when setting up a forum and the expectation is that the number of Indian companies will grow exponentially over the next few years.
He says there are more than 35 Indian businesses operating in South Africa and the forum will allow them to share their experiences and give them a platform to deal with common problems and issues they face. The IBF’s work will not only benefit Indian companies but also assist South African companies looking to explore the Indian markets.
Only last week Sanlam talked about its intentions to focus on the Indian market, where it feels profit margins are high and opportunities extremely promising.
“There are areas where we are strong and there are areas where South Africa is strong and so we complement each other,” says Suri. “I personally believe we are on the cusp of a transformation and we have only just begun this process of discovering each other; the best is yet to come.”
Suri, who says the entrance of Indian companies into South Africa is having very positive effects, cites the case of Indian pharmaceutical giant Ranbaxy Laboratories, which is now the fifth-largest generics company in the country.
“When you look at South African society, obviously one of the priorities is affordable healthcare and when I come here as an Indian I find the price of medicine horrendous,” he Suri. “When you compare to India you are not talking 10% or 50% more expensive, you are talking like five to 10 times more expensive.
“We certainly see a lot of room for Indian companies to come in and provide generics that will make healthcare a lot more affordable.”
Ranbaxy CEO Ranjan Chakravarti agrees. “We are quite convinced that, for us, South Africa is a very important market that offers us huge opportunities,” he says. “We want to be recognised as local players and big players.”
Tata Africa CEO Raman Dhawan also sees South Africa as the “main engine” to drive its expansion into Africa.
Dhawan, who is also chairperson of the IBF, says more and more Indian companies will look to South Africa as a gateway into Africa, because there are great opportunities in this growing economy. But he warns they must put their money where their mouths are, because a long-term view is required.
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