Economic Data
(In U.S. dollars, 1998 figures)
Total GDP: Purchasing power parity = $1.689 trillion
GDP Growth: 5.4%
Per Capita GDP: $1,720
Inflation Rate: 14%
Trade Balance: $9.2 billion deficit
Exports: $32.2 billion; textiles, gems and jewelry, engineering goods, chemicals, leather goods. Export trading partners: U.S. (19%), Hong Kong (6%), Japan (6%), and Germany (5%).
Imports: $41.3 billion, crude oil and petroleum products, machinery, gems, fertilizers, and chemicals. Import trading partners: U.S. (10%), Belgium (7%), U.K. (7%), Germany (7%), Saudi Arabia (6%), and Japan (6%).
Best Prospects for Exports: Computers and peripherals, telecommunications equipment and services, pollution control equipment, mining equipment, architecture, construction and engineering, metal working machinery, sporting goods, medical equipment, water resource equipment, and food processing/packaging equipment.
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For decades the textile industry has literally been on the move. Manufacturers looking for less expensive wages and a more cost-effective product have moved factories and production from the Northeast to the South and more recently overseas. To keep up with the trend, one Rhode Island company has spent the last five years building a relationship with new businesses in India.
”Like all third-world countries, the first manufacturing that goes in is textile,” said Max Brickle, president of Hyman Brickle & Son. “As the textile has diminished in the United States, that business has been taken up by countries like India. Trading with India has given us another avenue, it’s widened our customer base.”
Since it first opened in 1932 as a waste and raw material trading company, Hyman Brickle & Son, based in Woonsocket, has been a leader in industry. With subsidiaries around the world, and more than 300 employees, the company has found what it believes is a niche market.
“We will buy the waste created by U.S. mills and recycle it, turning it from clips and threads to staple fiber which is used to make finished goods,” Brickle said.
In countries like India, where the textile industry is just beginning to take off, Brickle said his company has found great success. Between 10 and 15 percent of the company’s U.S. exports are sent to the country. Additionally, the company’s European subsidiaries also export about 30 percent to India. Brickle said the company’s trading relationship with India began about five years ago.
”As India continued to develop its textile base they needed more raw material and we were contacted,” he said. “We met with some of the stronger mills and began working with them.”
Brickle said in the five years that the company has been exporting to India the relationships have grown stronger, and the process has become quite a bit easier.
”Initially, letters of credit had to be set up with banks to verify payment,” he said. “That process was time consuming and costly. What we have done over the past several years is eliminate that process. The companies we work with now have become like American customers. They are strong familiesalmost like family to us.”
Becoming a close knit group is important in the textile industry, according to Brickle. Two decades ago, the company expanded its own mission and started manufacturing its own finished product, wool blankets.
”We decided we needed to be a vertical entity,” Brickle said. “We decided we couldn’t survive being a recycle and trading company, because as a company we didn’t have a lot to offer. Today, we do what we call ‘circular trading’ supplying companies with raw material, and other things that give us more to talk about and more to bargain with. We as an industry have begun to look at things we can do together. That’s the only way we see textile surviving.”
Republic of India
Location: Southern Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan. Dominates South Asian subcontinent; near important Indian Ocean trade routes.
Geographic Area: 3,287,590 square kilometers, slightly more than one-third the size of the U.S.
Climate: Varies from tropical monsoon in south to temperate in north.
Main Cities: New Delhi (capital), Mumbai (Bombay), Calcutta, Chennai (Madras), Hyderabad, Bangalore, and Ahmedabad.
Population: 984,000,000
Languages: Hindi, English, and 14 other official languages.
Time Zone: Eastern Standard Time + 10.5 hours.
Workweek: Mon.-Fri., 9:30 a.m. to 5:30 p.m.
Independence: August 15, 1947 (from United Kingdom)
Type of Government: Federal Republic
Head of State: Prime Minister Atal Behari Vajpayee, President Kicheril Raman Narayanan. The President, at the recommendation of the Prime Minister, appoints the cabinet. Sovereignty is shared between the central government and the states, but the national government is given greater powers. Real authority is vested in the Parliament, consisting of two houses, the Rajya Sabha (Council of States) and the Lok Sabha (House of the People).
Currency: Rupee = 100 paise
Exchange Rate: US$1 = 43.3 rupees
Economic and Political Conditions: Economic reforms since 1991 have led to stronger economic growth, higher investment flows, and growth in trade. Inflation has been moderate, foreign exchange reserves have increased and the balance of payments deficit is lower. However, political uncertainty, high interest rates, a large government fiscal deficit, and inadequate infrastructure have hampered economic growth. In 1998, industrial growth slowed, exports were sluggish, and monetary growth was high. India’s modest current account deficit and low levels of short-term foreign debt enabled the country to weather the Asian financial crisis, despite lower foreign investment flows. The economy continues to grow at a moderate pace of 5.5 percent.
India and the United States have enjoyed improving relations in the post-Cold War era. Increased trade, investment and commercial ties between the world’s two largest democracies have spurred the two governments to work for greater cooperation on difficult bilateral and global issues.
India continues to develop an attractive business environment, and most industrialized nations are expanding their commercial presence in the country.
Tarriffs, Trade,Taxes, Trademarks
The Indian Government continues to reduce tariff rates from a peak rate of 300 percent in 1991 to a ceiling (with few exceptions) of 40 percent in 1998. Several items are fully exempted from customs duty, including computer software and equipment for refinery projects. A special 2 percent customs’ duty is assessed on all imports except those under various duty-free licenses. An additional 3 percent special customs duty is charged on most non-petroleum imports. Both increases have been described by the government as temporary. Tariffs have been lowered selectively on capital goods and semi-manufactured inputs to help Indian manufacturers.
An immediate 8 percent additional countervailing import duty was imposed in June 1998 on approximately one-third of all imports, excluding crude oil, newsprint, coal, fertilizer, power generation equipment, specified telecommunications equipment, life-saving drugs and goods imported for subsequent trading
Taxation: Marginal corporate rates are high by international standards (41 percent). Tax evasion is widespread, and the government has stated that improvements in tax compliance are necessary to further cut corporate tax rates. The government has streamlined the tax regime by increasing the revenue share from direct taxes, introducing a modified value-added tax (MODVAT), and replacing India’s complex tax code with one that is simpler and transparent. The government also provides tax incentives for specific sectors, such as a five-year tax holiday for infrastructure projects.
Foreign Investment: The U.S continues to be the leading source of foreign direct investment in India, accounting for nearly 26 percent of total investments.
Free Trade Zones: India has seven Export Processing Zones (EPZs): Kandla, Sant Cruzx Electronics, NOIDA, Cochin, Falta, Vishakapatnam and Chennai. Foreign investment up to 100 percent is permitted for companies in the EPZs. New industrial undertakings set up in FTZs are entitled, subject to various conditions, to complete exemption from income tax on business income. The period of exemption is five successive years out of the first eight years from the year in which production begins.
Trade Finance: Sources of finance are equally available to all companies, Indian-owned or 100 percent subsidiaries of foreign companies. Capital markets remain the most important source for raising finance in the corporate sector. Commercial banks are the main source of short-term finance for working capital. The Export-Import Bank (Ex-Im) provides direct loans to foreign buyers with competitive, fixed-rate financing for their purchases from the United States. The Overseas Private Investment Corporation (OPIC) and the Multilateral Investment Guarantee Agency (MIGA) provide political risk insurance for U.S. exporters involved in international transactions.
Marketing and Selling Factors: Matured channels of distribution and support have emerged for products ranging from commodities to high-end technology equipment. Marketers outsource key distribution and logistics functions, in an increasingly competitive market. There is no shortage of distributors willing to work with exporters, but it is important to select carefully, based on experience, financial strength and track record. No major national store chains exist, but the number of department stores and supermarkets is growing rapidly. Selling techniques vary significantly by product type and target market.
Key Contacts
The John H. Chafee Center for International Business and World Trade Center, Bryant College
Raymond W. Fogarty, Director; Edward Barr, World Trade Center Manager Telephone: (401) 232-6407 or (410) 232-6408
Fax: (401) 232-6416 E-Mail: postoffice@itdn.net
Website: http://www.rieac.org
Rhode Island Economic Development Center (RIEDC)
Maureen Mezei, International Trade Director
Telephone: (401) 222-2601 ext. 123 E-Mail: mmezei@riedc.com
U.S. Export Assistance Center, Department of Commerce
Keith M. Yatsuhashi, International Trade Specialist
Telephone: (401) 528-5104 E-Mail: kyatsuha@mail.doc.gov
U.S. Small Business Administration
Marilyn Bogue, International Trade Officer
Telephone: (401) 528-4585 E-Mail: marilyn.bogue@sba.gov
Embassy of India
2107 Massachusetts Ave NW
Washington, DC 20008
Telephone: (202) 939-7000 Fax: (202) 483-3972
U.S. Embassy in India
Commercial Service
Carol Kim, Commercial Counselor
Margaret Hanson-Muse, Commercial Attache
Shantipath, Chanakyapuri
New Delhi 110 021
Telephone: 91-11-611-3033 or 688-9033 Fax: 91-11-419-0025
English Language Publications
Business Standard, Economic Times, Business India, Business Today, Business World
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
