J The Jai Group Business Services for the BRICs Economies Increasing ( or sustaining, without...

J

The Jai GroupBusiness Services for the BRICs Economies

Increasing ( or sustaining, without Diesel) Indian market share of Brazilian trade

November 22, 2012

Final Summary Report

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PROJECT FLOW

Identification of Key Sectors Detailing Selected Sector Potential

Activities

Deliverables

• Top Down, data intensive, quantitative analysis of Key Sectors Identified in Trade Industry, vision document with respect to Brazil

• Empirical Analysis of current Brazilian Trade and Investment with other countries to spot opportunities

• Economic Factor Analysis, to identify deeper trade patterns that have still not occurred

• Strategic assessment of sectors where trade is happening today to determine an index of saturation

• Analysis of PTA between India and Brazil• Scenario Analysis

• Market sizing of potential trade and investment

• Strategic analysis of• Current Competitors and their strategy (who is Brazil

Importing these products from currently ? For instance)• Why India stands a chance ? What are the sources of

India’s competitive advantage ?• Barriers to entry and ways to overcome them• Incentives offered by the government• Type of companies that can address these segments, with

examples from India.

• Prioritization of Sectors

• Fact based defensible short list of sectors and a clear rationale on why they are better than others to focus in the India-Brazil Corridor

• Business case for each sector identifying key challenges and potential

Source: Jai Group Analysis.

The project looked at which sectors are worth betting on in the India- Brazil corridor to improve trade and investment

2

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AGENDA

• Executive Summary

• Indo Brazil Trade Today

• Sourcing From India

• Sourcing From Brazil

• Services Imports

• Investment Study

• Strategies for Trade Promotion for the Consulate

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EXECUTIVE SUMMARY (1/6)• Brazilian imports are growing at a steady clip over the last decade though three year CAGR ( ~ 9.36 % p.a.) is more modest

• Indian exports to Brazil are growing twice as faster than overall Brazil imports whether over the long term or the short term

• India is focusing on a limited variety of items and currently has a respectable share in a limited set of items. Many of these items are small volume items and growth potential is limited beyond a point

• To achieve growth India must:

• Focus on larger volume items

• Achieve significant share in as many items as possible

• Consolidate items where it already has significant share

• We have identified three groups of products for the consulate to focus on

• Group A are products where India has a significant competitive advantage and ease of entry is relatively higher, either due to regulatory or market barriers being lesser

• Group B are products where growth potential is limited due to either, already high market share, despite huge competitive advantage or where while growth potential is high and India can make some headway, there are not major competitive advantages for India

• Group C are products where there is neither growth potential nor major competitive advantage

• We recommend the consulate to focus promotional efforts on Group A products for biggest bang for the buck and to a limited extent on those products in group B where growth potential is high. No money should be spent on Group C products

India needs to focus on a larger basket of products to achieve top 5 position among Brazilian imports

4

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EXECUTIVE SUMMARY (2/6)

5

Area Status Examples Why ? Potential beneficiaries

Key issues Next Steps

Goods exports

Petroleum, Organic chemicals, Yarn , some steel products India has significant positions in areas where it has no competitive advantage ( Petroleum) or products where share of Brazilian import basket for that product is small

1. Tractor Parts

2. Bags and Trunks

3. Heat treatment machinery

4. Valves and Taps and Boiler fittings

5. Electrical equipment and components

6. Insecticides

7. Sulphates

1. These occupy a large share of current Brazilian imports and are growing

2. India today exports them to other countries

3. Currently Brazil is importing them from high cost geographies that are distant ( Europe, Japan)

4. Local manufacturing in strategic locations within Brazil , a high ROI opportunity

Kirloskar brothers, Crompton Greaves, EMCO transformers, Kalpataru, Welspun Gujarat, Pricol, Shanti Gears, Motherson, Mahindra & Mahindra, Tata Motors, Royal Enfield, Jaishree insulators

India has a neutral image on manufacturingSome local assembly, distribution required, financing needed in some areas, brand building needed

1. Establish India Brand as an engineering powerhouse, alternate to low quality China and high cost Europe

2. Establish financing package with BNDES for project supply

3. Actively pursue a partnership/ local manufacturing approach as it eases the difficulties of sourcing from India, if led by a Local

4. Tie up with states, especially in the North East where a new manufacturing hub is opening up and no one is present yet

5. Work with customs/ ministry of commerce to facilitate the supply chains

6. Set up web based mechanisms of collecting feedback and distinguishing who is a credible and not so credible importer/ agency

In goods exports, India needs to push engineering and chemicals in a big way

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EXECUTIVE SUMMARY ( 3/6)

6

Area Status Ideal Focus

Opportunity Potential Beneficiaries

Key Issues Next Steps

Services Exports

IT services, but miniscule

Shipping , Tourism, Engineering, IT services, E-learning

1. Brazil is a big consumer of Tourism and Shipping

2. Brazil currently faces a huge shortage of engineering and IT talent but is importing the unemployed from Europe at high prices

Punj Lloyd, Tata Consulting Engineers, SITA Travels, Jet Airways, India Tourism Development Corporation

India is seen widely as a strategic competitor globally, and local industry wants to block India out

1. Through a widely publicized economic benefits study through a well reputed economist / agency, start a National debate on the merits of engaging with India in service imports

2. Promote Joint Ventures between Indian and Brazilian companies

3. Promote India as a main stream destination for tourism, by emphasizing the new infrastructure ( airports and hotels) and nature spots

4. Promote courses on India together with Airlines

5. Tie up with large trade houses for contracting shipping services and insurance of Indian origin, where possible in Asia, and mandatorily when cargo is destined for India

Despite an acknowledged bottleneck on engineers to support its infrastructure boom, India does not export services to Brazil, because, it does not shape a public debate in a country that is unaware of benefits / paranoid about jobs

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7



Key Issues What steps should India take?

Sourcing from Brazil

Semi precious stones, Sugar, some iron ore

Wood Pulp/ Celulose, Pig Iron, Petroleum, pulses,

1. India is currently importing wood and cellulose from other countries, whose environmental practices are not sustainable and/or volumes are not sufficient.

2. India could become a net iron ore importer as its steel industry grows.

3. Indian agriculture is suffering the impact of reducing land, stagnant productivity and dropping water table

Aditya Birla, JK Group, Tata Steel, Jindal Steel, several small steel mills, India’s vegetarian protein consumers, Sugar companies, NMDC

1. Iron ore, is a big players game, railway constraints are easing, but port is becoming a bottleneck

2. Many of these commodities are still not an urgent items

1. Set up a sourcing cell in the consulate to help Indian investors who want to source from Brazil

2. Work with agencies in the mining and agricultural ministries, to identify a list of opportunities for investment in Brazil

3. Think about involving Public Sector of India in port infrastructure investments in Brazil as it is likely to be a big bottleneck

4. Develop a strategic partnership with Petrobras , by tying to objectives in goods exports

5. Create transaction platforms for commodities such as sugar and ethanol where sellers and buyers are fragmented and informal/ integrate commodity exchanges

Except for Oil, no Governmental focus for strategic sourcing from Brazil, lack of bargaining power , lack of capital clout to obtain access through investment in infrastructure and absence of transparent platform s deters sourcing efforts

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EXECUTIVE SUMMARY (5/6)

8



Issues Next Steps

Partnering with Brazil

Not much with Private sector

Several, Construction projects in AfricaInnovation partnershipsStar Alliance Opportunities, Building Brands and distribution channels together, collaborating in the seed industry, urbanization know-how

1. Allows India to articulate a more inclusive vision that increased Brazilian trust levels

2. Geographical complementarity

3. New surplus funds due to natural discoveries but not enough PhDs

4. Lack of vertical integration in many commodities resulting in low value addition

5. Interest in BRICS economies by overseas investors

6. Complementary know-how ( seeds: rice + wheat versus orange, soy and cane) , urbanization technologies

Indian construction companies working in Africa, Indian investment banks, service providers,Indian Pharma companies, Indian seed companies

1. India sees Brazil as a market only and little merit in partnerships ( whatever these guys can do, we can do better )

2. Brazilians see Indians as competitors come to rob their jobs, leading to suspicion even at highest levels of private sector and public sector

3. Beneficiaries of such mutual mis trust and dis respect are rich countries

4. Prevents India from achieving full potential in trade

5. Like Jack Welch of GE obtained significant in roads in to Indian market by furthering Indian ambitions, India can achieve a lot in Brazil by being seen as facilitating Brazilian private sector ambitions where possible

1. Sensitivity training for Indian Managers

2. Create a media relations strategy that would talk/ write about these themes in the media

3. Promote work-shops, webinars4. Start discussions on a joint

innovation fund with the Brazilian Government to fund joint R& D projects

5. Create a mechanism for periodic collaboration for areas where both countries are large commodity exporters such as coffee + tea, cashews, granite, leather products, sugar etc

6. Create a common data base together with National statistical agencies of market data on various sectors, for example:

a. Economic Classesb. Urban Development

7. Start the process of integrating the commodity exchanges

A conscious partnering strategy, in areas where Brazil is seeking advantage, will increase comfort levels to facilitate exports to Brazil in other areas

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9

China Strategy

What ?Potential

answer by India

What ? Why ?

Scale

China engages Brazil on a large scale as a marketIt has impact on entire country, through iron ore, Soy, power project

FocusInstead of spreading thin, India can create a special partnership with one state per region,.

At the state level India can become a big enough player as a market and a source of investment

Competitive Capital

China invests in large projects of infrastructure in Brazil, disarming Brazilian resistance to Chinese imports

Smart Capital

Establish a India- Brazil joint innovation fund, Participate in joint innovation projects with Brazilians, innovation is a pet theme for Brazil

While India will invest in resources, India can never match Chinese infrastructure investments, but it can fund joint innovation

Cost

China has not succeeded in building brands in Brazil except in high-tech ( Huawei) or Consumer Durables ( Car)

Brand

Establish an India Brand fund to promote whole product categories from India such as tea, ayurvediccosmetics, basmati rice, snacks, apparel, tourism etc. through showrooms, kiosks, select magazine advertisements

India has greater soft power through culture and being a democracy, this power can be channeled in to and consolidated as a brand, brand building as a country is good when the exporter is small and the product category is where India has strengths

China is a good benchmark to aspire to for India, but achieving Chinese performance would require a different set of levers

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AGENDA








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GROSS DOMESTIC PRODUCT EVOLUTION

CAGR**: 8%

PURCHASE POWER PARITY IN USD TRILLION IN BRAZIL

* PPP rate equalizes the purchasing power of different currencies in their home countries for a given basket of goods.. Using a PPP basis is arguably more useful when comparing differences in living standards on the whole between nations because PPP takes into account the relative cost of living and the inflation rates of different countries, rather than just a nominal gross domestic product.** Compound annual growth rate.Source: Central Bank of Brazil

Brazilian economy is growing steadily and rapidly …

Highlights

• Brazil is benefiting from deep reforms from the 90’s that consolidated democracy, privatized state-controlled companies, and integrated the local markets/industries into the global economy

• Brazil is ranked number 9th as an economy in PPP terms. Nominal GDP is USD 2.4 trillion which puts Brazil in the 10th position

• Only China, India, Japan, and US have grown faster over the last century

• Economy is pushed by increase in population and particularly investments in infrastructure in selected industries which will create a demand for connectivity

• biofuels, oil & gas• wood pulp, agribusiness• real estate, credit markets• energy transmission

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

1.2 1.3 1.3 1.41.5

1.61.7

1.82.0 2.0

2.2

2.4

11

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MACROECONOMIC INDICATORS

CAGR**: 8%

PURCHASE POWER PARITY IN USD TRILLION IN BRAZIL

* PPP rate equalizes the purchasing power of different currencies in their home countries for a given basket of goods.. Using a PPP basis is arguably more useful when comparing differences in living standards on the whole between nations because PPP takes into account the relative cost of living and the inflation rates of different countries, rather than just a nominal gross domestic product. Brazil is ranked number 9th as an economy in PPP terms. Nominal GDP is USD 1.6 trillion which puts Brazil in the 10th position. Only China, India, Japan, and the US have grown at higher pace over the last hundred years** Compound annual growth rate. *** Annualized 12 month moving average.Source: Central Bank of Brazil

… and all major macroeconomic indicators seem positive

2000 2005 2010 2011

1.2

1.6

2.2

2.4

… and trading more … … and despite the appreciation of

the exchange rate, reserves are

growing …

… as the economy becomes stable

1996

1998

2000

2002

2004

2006

2008

2010

2011

0

50000

100000

150000

200000

250000

Dollar reserves in December 2011 reached USD 354 bi

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2002 2004 2006 2011

Interest Rate

Inflation Rate** (IGPM)Exchange R$/US$

Imports

2003 2004 2005 2006 2007 2008 2009 2010 2011

0

50

100

150

200

250

300

350

400

0

0.5

1

1.5

2

2.5

3

3.5

Reserves US$

2008

Brazil is growing …

12

USD Trillions

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INVESTMENT TRENDS

Brazil was even the first preferred investment destination in the world a couple of years ago ……

Bloomberg provides a quarterly insight into how business men perceive markets for FDI*.

1o 2o3o 4o

Brazil

China

India

US

OCTOBER, 2010

* Poll is carried out among investors, analysts, and traders. Source: Bloomberg, BACEN (Central Bank of Brazil), Link Investimentos

FDI* (USD billion)FDI Destination Ranking

Favorable macroeconomic conditions

• Credit is growing

• Interest rate lowering

Growing demand

• Growing population with rising income and huge

housing deficit

• Emerging Middle Class

Growing supply

• Specific investment-heavy projects

• World cup (2014)

• Olympic Games (2016)

• Government-led programs and state-controlled

company investments

• Luz para Todos (Energy)

• Minha Casa Minha Vida (Housing)

• PAC (Civil Infrastructure)

• Petrobras oil platforms

• Private sector investments, specially in agro

commodities and logistics

forecastevolution

Driving forces

31% of the investment goes to heavily regulated industry (Electrical, Transport, Metallurgy, Mining, and Telecom)

13

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India’s Trade Balance 2011

SWITZER-LAND

CHINA P RP

SAUDI ARAB

AUS-TRALIA

NIGERIA KUWAIT IRAQ IRAN QATAR KOREA RP GERMANY INDONE-SIA

JAPAN SOUTH AFRICA

MALAYSIA BELGIUM ITALY HONG KONG

FRANCE U ARAB EMTS

U K BRAZIL SINGA-PORE

U S A NETHER-LAND

Trade Balance -24.1 -23.9 -15.2 -9.1 -8.5 -8.4 -8.3 -8.2 -6.4 -6.3 -5.1 -3.7 -3.4 -3.2 -2.6 -2.3 0.3 0.9 1.4 1.6 1.7 2.7 3.2 5.5 5.9

-23.5

-18.5

-13.5

-8.5

-3.5

1.5

6.5

-24.1 -23.9

-15.2

-9.1-8.5 -8.4 -8.3 -8.2

-6.4 -6.3-5.1

-3.7 -3.4 -3.2-2.6 -2.3

0.30.9 1.4 1.6 1.7

2.7 3.2

5.5 5.9

US $ Bn

Source : MDIC, DGFT, Jai Group Analysis

Brazil is one of the few large countries with whom India runs a goods trade surplus

Country With Economy >= $1 Trillion and Population >= 100 Mn 14

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BRAZIL TRADE WITH INDIA AND WORLD

15

Indo-Brazilian trade has grown significantly in the last decade, more than double of overall Brazil trade

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

1

2

3

4

5

6

7

8

9

10

Total Brazilian Imports v/s Exports (India) 2000-2011

Export Import

US$

Bill

ion

32.6%

27.7%

20002001

20022003

20042005

20062007

20082009

20102011

0

100

200

300

400

500

600

Total Brazilian Imports v/s Exports (World) 2000-2011

Export Import

US$

Bill

ion

13.5%

14.9%

No of Items

74 74 73 73 78 79 76 79 79 78 80 84

Overall

Share(%)

0.5 1 1.2 1 0.9 1.6 1.6 1.8 2.1 1.7 2.3 2.7


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COUNTRY VALUE (US$ Bn) SHARE (%)

1. China 44.3 172. United States 25.8 103. Argentina 22.7 94. Netherlands 13.6 55. Japan 9.4 46. Germany 9.1 47. Italy 5.4 28. Chile 5.4 29. United Kingdom

5.2 210. South Korea 4.6

2

18. India 3.2 1

Major Markets for Brazilian Exports in 2011

Total Brazil Exports(2011)

US$ 256 Bn

India Still a Minority Trade Partner, but with an export share of 2.7% , looks all set to meet target of USD 15 B in 2015, just going with the flow

16

Major Supplier Markets to Brazil in 2011 (Imports)

COUNTRY VALUE (US$ Bn) SHARE (%)

1. United States 33.9 15

2. China 32.7 14

3. Argentina 16.9 7

4. Germany 15.2 7

5. South Korea 10.1 4

6. Nigeria 8.3 4

7. Japan 7.8 3

8. Italy 6.2 3

9. India 6.1 3

10. France 5.4 2

11. Mexico 5.1 2

Total Brazil Imports(2011)

US$ 226 Bn


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COUNTRY VALUE (US$ Bn)

SHARE (%)

1. China 44.3 17


3. Argentina 22.7 9

4. Netherlands 13.6 5

5. Japan 9.4 4

6. Germany 9.1 4

7. Italy 5.4 2

8. Chile 5.4 2

9. United Kingdom 5.2 2


18. India 3.2 1

Major Markets for Brazilian Exports in 2011

Total Brazil Exports(2011)

US$ 256 Bn

However If Diesel is pulled out, India market share falls significantly

17

Major Supplier Markets to Brazil in 2011 (Imports)


SHARE (%)


2. China 32.7 14

3. Argentina 16.9 7

4. Germany 15.2 7


6. Nigeria 8.3 4

7. Japan 7.8 3

8. Italy 6.2 3

9. France 5.4 2

10. Mexico 5.1 2

21. India 2.6 1

Total Brazil Imports(2011)

US$ 226 Bn


11.CHILE 4.6

12.CANADA 3.6

13. TAIWAN 3.5

14. UNITED KINGDOM 3.4

15. SPAIN 3.3

16. ALGERIA 3.1

17. SAUDI ARABIA 3.1

18. RUSSIAN FEDERATION 2.9

19. BOLIVIA 2.9

20.SWITZERLAND 2.8

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INDIA BRAZIL TRADE EVOLUTION 2011- 2015

2011 2012 ytd 20150

2

4

6

8

10

12

Exports

Exports without Diesel

Imports

Indian exports as a % of total Brazilian imports

18

Diesel has already started declining, despite non-diesel Indian exports share up slightly in 2012, 2015 trade target: USD 15 Bi ( export target USD 9.7 Bn) , requires a huge jump by India, assuming Diesel will continue to fall

1.2%1.2%

2.7%2.7%

%%

2.4%2.4%

1.3%1.3%

Projections

??

USD B

We have assumed that the trade target will be split in to exports and imports in the same ratio as 2011.

Export Target 2015:

USD 9.7 Bn

Export Target 2015:

USD 9.7 Bn

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AGENDA








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20

# of Items at HS 2 Level World Brazil

India Export 98 84

India Import 98 75

Net Export 21/50 41

Net Import 19/48 43

Brazil Net Importer 50

Brazil Net Exporter 48

# of Items at HS 2 Level World India

Brazil Export 97 75

Brazil Import 96 84

Net Export 48 40

Net Import 49 35

India and Brazil already trade in a lot of products, and in most of them there is no conflict

Source: MDIC, DGFT, Jai Group Analysis

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Brazil’s Import Basket for 2011

21

27, Min

eral

fuels

84, Nucle

ar re

acto

rs, boile

rs,

85, Elec

trica

l mac

hiner

y

87,Veh

icles

other

than

railw

ay

29,Org

anic

chem

icals

31,Ferti

liser

s

39,Plas

tics an

d article

s ther

eof

30,Phar

mac

eutica

l pro

ducts

90,Optica

l instr

umen

ts

40,Rubber

article

s

72,Iron an

d stee

l

38,Misc

chem

ical p

roduct

s

73,Arti

cles o

f iron or s

teel

74,Copper

and ar

ticles t

hereo

f88,A

ircra

ft parts

10,Cer

eals

28,Inorg

anic

chem

icals

48,Pap

er an

d paper

board

76,Alu

min

ium

article

s

26,Ore

s, sla

g and as

h

22,Bev

erag

es, s

pirits

and vi

negar

54,Man

-mad

e filam

ents

32,Tannin

g ext

ract

s

3,Fish

and cr

ustace

ans

25,Salt;

sulp

hur

15,Anim

al or v

eget

able

fats

62,Arti

cles o

f appar

el

86,Rail

way an

d parts

52,Cotton

55,Man

-mad

e sta

ple fibre

s

0

5

10

15

20

25

30

35

40

4542

34

26

23

9 9 86 6

54 4 4 3 3 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1

US $

Bn

Source: MDIC, DGFT, Jai Group Analysis

Products for Which Brazil is a Net Importer and India is Net Exporter

No Exports By IndiaNo Exports By India Brazil Net Importer and India Is Significant Exporter i.e > US$1BnBrazil Net Importer and India Is Significant Exporter i.e > US$1Bn

India hardly present in key Brazilian imports, even where India is a significant or Net exporter to Rest of World

17178888909047473232535331312727303010210232326060262619191616774545232325253434494914142020

303053531616

4141

3030

2727

4949

India Share > 3% of total

Brazilian Imports

CAGR % (2009-11)of Brazilian Imports

from the World

CAGR % (2009-11)of Brazilian Imports

from the World

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TOTAL PRODUCTS TRADED AND SHARE OF KEY TRADED ITEMS

22

China US Germany France Italy India Japan South Korea Mexico0

10

20

30

40

50

60

70

80

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

7166

4438 36

2117 16 13

72%

93%

69%

50%

25% 27%

53%

66%

17%No

of It

ems

whe

re B

razi

lian

Impo

rts

>=3%

Cumulative Share of Product W

here Brazilian Im

ports >=3%

Total No of Items Traded

92 96 95 95 92 84 82 80 81

Average Share in Brazil’s Import

Basket of Products with >=3% Share

1% 1% 2% 1% 1% 1% 3% 4% 1%


To become a top 5 exporter to Brazil, India needs significant share in larger items like South Korea or achieve respectable share in lots of items like China

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DIVISION OF BRAZIL IMPORTS BY INDIA SHARE

Is Brazil importing/

India exporting to

other countries ?

India market share above 3 % or above ?

# of products = 20

# of Products= 64

# of Products = 12

# of products = 2

Products with > 15 % = 4

Products with 3-15 % share = 16

Live Animals, Meat, Dairy, Fruits, Cocoa, Malts, Vinegar, Prep of cereal, Pulp of wood, Ships/Boats

Project goods, Miscellaneous Articles

Yes

No

No

Yes

No

Yes

Currently Traded between India and Brazil ?

Current Indian trade performance achieved through a significant share in a limited basket of goods in Brazil

Source: Jai Group Analysis

Plastics, Fertilizers, Inorganic Chemicals, Furniture, Suitcases, Iron Steel, Footwear

14Items

84 Items

23

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Missing Commodities of Previous Slide Explained

24

2 Level HS Codes 01 to 99

Code 77 is reserved for classification of future commodities

99-1 = 98 total

Brazil does not trade 98,99 which are misc articles of waste, samples and other returned articles

98 - 2 = 96 total

96 Commodities

84 Traded 12 Not Traded

Source : Jai Group Analysis

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DIVISION OF BRAZIL IMPORTS BY SIZE OF IMPORTS AND INDIA SHARE

25

Brazils Imports From the World

>1Bn 500-900Mn 100-500Mn <100Mn No of Items

India's Exports to the World

>10Bn (3) 71 (Pearls) - - 4

1-10Bn (19) (5) (4) (3) 31

<1Bn (2) (7) (5) (5) 19

<300Mn -

20(veg/fruit prep) (2)

67(feathers/ human hair) 4

No of Items 24 14 11 9 58

No Of Items India Share >3%

4 5 2 82%

Overall Share in the Category

4% 1% 10%

India holds significant share in small and relatively insignificant items in Brazil import basket


Detail Back upDetail Back up

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THREE WAYS

Focus on few large import items to achieve significant market share

Focus on few large import items to achieve significant market share

Broad strategy on many commodities to achieve 3 % share in many

Broad strategy on many commodities to achieve 3 % share in many

Up Brazil Market Share

•Polyester Filament Yarn•Organic Chemicals•Pharmaceuticals

•Which are the items Brazilian imports are being dominated by ?

Dominate current products where India has significant share

Dominate current products where India has significant share

Three ways to increase market- share, we have focused on new items

•What to Eliminate from a large set of items ?

26

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China

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

5

10

15

20

25

30

35Total Exports to Brazil 2000-2011

US$

Bill

ion 34.8%

No of Items With Share >=

3%33 39 44 46 52 56 58 62 66 67 70 71

No of Items 91 91 92 89 91 91 93 93 93 93 93 92

Overall Share(%)

2.2 2.4 3.3. 4.4. 6 7.3 8.7 10.5 11.6 12.4 14.0 14.5

Going forward, India could follow Chinese strategy of a broad based attack, which could potentially be ambitious ……

Source : MDIC, DGFT, Jai Group Analysis 27

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South Korea

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

2

4

6

8

10

12Total Exports to Brazil 2000-2011

US$

Bill

ion 19.3%

No of Items With Share >

3%17 18 14 11 14 11 15 15 15 14 18 16

No of Items 80 80 81 76 80 79 79 78 77 83 82 80

Overall Share(%)

2.6 2.8 2.2 2.2 2.7 3.1 3.4 2.8 3.1 3.8 4.6 4.5

Or south Korean strategy of focusing on large import items from Brazil

Source : MDIC, DGFT, Jai Group Analysis 28

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The Jai GroupBusiness Services for the BRICs Economies 29

The Filtering Process Explained

• Brazil does not trade 98 and 99

• 77 is reserved for future classification

• 12 Items Not Traded With India

• 26 Items India is a small exporter <300Mn to the World

• 20 Items removed • Petroleum and other where India

cannot compete• Items for which Brazil is actually a

net exporter • Items where Brazils Imports from

world are less than 15% of India’s exports to the world.

• For which we then did a 4 level study

96 Items Traded By Brazil

38 HS2 Level Commodities


84 58

Both strategies require some kind of focus, and we started a filtering process to identify key items

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Out of the 58 we removed the below 20 because :

30

HS Code Description Comments

9 COFFEE, TEA, MATE AND SPICES. Too Small Imports by Brazil

10 CEREALS. No - Brazil mainly import from Argentina

17 SUGARS AND SUGAR CONFECTIONERY. Distance to much + India unlikely to do sugar exports

23 RESIDUES AND WASTE FROM THE FOOD INDUSTRIES; PREPARED ANIMAL FODER. Brazil is a small importer

24 TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES. Brazil is a small importer

27 MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION; BITUMINOUS SUBSTANCES India will not be able to compete

40 RUBBER AND ARTICLES THEREOF. Distance / Mostly Exports are local

41 RAW HIDES AND SKINS (OTHER THAN FURSKINS) AND LEATHER Brazil is a small importer

48 PAPER AND PAPERBOARD; ARTICLES OF PAPER PULP, OF PAPER OR OF PAPERBOARD. India doesn’t have much paper, India net Importer

50 SILK Brazil is a small importer

52 COTTON. Brazil is exporter

53 OTHER VEGETABLE TEXTILE FIBRES; PAPER YARN AND WOVEN FABRICS OF PAPER YARN. Brazil is a small importer

57 CARPETS AND OTHER TEXTILE FLOOR COVERINGS. Brazil is a small importer

63 OTHER MADE UP TEXTILE ARTICLES; SETS; WORN CLOTHING AND WORN TEXTILE ARTICLES; RAGS Brazil is a small importer

69 CERAMIC PRODUCTS. Brazil is Net exporter

70 GLASS AND GLASSWARE. Energy is required for glass

71 NATURAL OR CULTURED PEARLS,PRECIOUS OR SEMIPRECIOUS STONES,PRE.METALS, Brazil is net exporter

72,73 Iron Steel and Iron Steel Articles India Growth probability low, India Net importer

74 COPPER AND ARTICLES THEREOF. India itself has shortage of copper + distance barrier

76 ALUMINIUM AND ARTICLES THEREOF. Al requires electricity - India energy cost are high, India net Importer


J


4 Level Short listing Reasons

• We removed– Commodities where Brazil is a net exporter– Commodities that have share less than 15% share in exports currently reaching America (6-

9000 mile radius)– Commodities where India has exports to world less than 150 Mn– Clothes and apparel(61,62) as a sector since Brazil is protective of the industry – as it is job

generating, except t-shirts– Commodities whose value of imports by Brazil is less than 15% of India’s total Exports.– Items where Brazils current sources are >=150Mn from Latin America and Mercosul– Filtered items which were primarily exported by countries which may have technical or

distance advantage over India.• Internal Jai Analysis on Probability and Unlikelihood of certain articles and sectors.

31Source : Jai Group Analysis

For the 38 HS2 Level code we listed all possible 4 level HS codes and filtered them once more

J


Sourcing From India


We identified 46 items that can power Indian exports to Brazil over the next three years

Total Imp From India – US $ 6 Bn

High Potential for further growth Moderate Potential for further growth

Top 10 Imports From India(US $ 4.2 Bn)

3004, Medicaments8708, Parts and Accessories of Motor Vehicle2933, Heterocyclic Compounds3902, Polymers of Propylene

High Imports But Low Potential Because Indian share already 20-25% :2710, Petroleum5402,Synthetic Filament2704, Coke of Coal2934, Nucleic Acids5509, Yarn5205, Cotton Yarn

Currently traded large value (Total, Brazilian Imports), but low

Indian market share

3808, Insecticides8419, Plant and Lab machinery4202, Trunks suitcases3921, Plastic Plates, Film, Sheets, Film

3204, Synthetic Organic Coloring Matter8502, Eletric Gensets5510, Yarn of artificial fibres8504 Electrical Transformers8536, Electrical Apparatus for protecting circuits8481, Taps and Cocks8421, Centrifuges3811, Antiknock Preparations8532, Capacitors9032, Automatic Regulating 3824, Binders for Foundry8535, Electrical apparaturs for protecting circuits

Currently Traded Small Value(Total Brazilian Imports) <US

$ 200 Mn

2833, Sulphates and Alums5503, Synthetic Staple Fibres Not Carded Combed6109, Tshirts8547, Insulating Fitting for Electrical3303, Perfumes and Toilet water9001, Optical Fibres4901, Printed Books9608, Ballpoint Pens9404, Mattress supports8204, Hand Operated Spanners8205, Hand Tools,

1302, Vegetable Saps and extracts9405, Lamps and Lighting including Searchlights3823, Industrial Mono Carboxlyic Acids

Future Items

3924, Plastic Tableware3212, Pigments for Paints3302, Mixtures of Odiferous Substances8803, Parts of Helicopter

8484, Gaskets and similar9603, Brooms, brushes, hand operated sweepers3002, Human Blood for therapeutic

J


Sourcing From India (Reasoning)

33

High Potential for further growth Low Potential for further growth

Top 10 Imports From India•High Growth >15%•India Share Low t< 15%

•Low Growth <15%•India Share High Already >15%

Currently traded•High Growth >15%•India Share Low <15%•India to America Share > 15%

•Low Growth <15%•India Share Already High >15%•India to America Share < 15%

Future Large Value

•Imports by Brazil Greater than US $ 200Mn•India Share Low < 15%•India Share to US Significant•Also products that are almost zero in terms of value

exported to Brazil.

•Imports by Brazil Greater than Cutoff•Import Growth Not High•India Share High Already > 15%•India to US Limited

Future Small Value•Imports by Brazil Lesser than US $ 200 Mn•High Growth > 15%

•Imports by Brazil Lesser than Cutoff•Low Growth < 15%


J


DESCRIPTION OF BARRIERS TO ENTRY

Regulatory Barriers

Reflect chemistry between Natura and the Potential Partner

Market Related Barriers

Describe adherence to strategic objectives of Natura

Key Success Factors

Image

Market Access

Protectionism

Phyto- sanitary Barriers

Brand Sensitivity

Country Image

Registration Time + Cost

Distribution Channels

Preference to Locals

Local Manufacturing a Pre-condition

We then evaluated ease of entry in to Brazil based on scoring difficulty of individual barriers

Categories Description of Attributes


Import Duties

Technical Barriers

Market Concentration

1. Common External Tariff2. Technical standards that are rigorously

checked3. Barriers related to health and sanitary

conditions

4. How important is brand to sell in to Brazil ?

5. How important is country image and its impact on perceived quality ?

6. How long does registration with key customers such as Petrobras ?

7. How important is having an established distribution channel ?

8. How concentrated is the market ?

9. Are there strong Brazilian incumbents, who will increase protectionism if they are seriously threatened ?

10. Is there a specific preference for local manufacturing through credit / quotas ?

J


35

19% 15% 10 % 8%

20 % 11.8 10.4 8.7 8.0

10 % 9.9 8.5 6.7 6.0

0% 8.3 7.0 5.2 4.5

Even if the selected products other than Diesel grow at 25 %, if Diesel imports decline too rapidly, meeting export target will be unrealistic

Projected Indian share of Brazilian Diesel Imports ( 2015)

Projected Indian share of Brazilian Diesel Imports ( 2015)

Projected annual growth

Rate of Diesel imports ( 2012-2015)

Projected annual growth

Rate of Diesel imports ( 2012-2015)

TargetNot met

Met

Indian Exports to Brazil in 2015- USD bi

J


Sourcing From India

36

High Potential Moderate Potential

Top 10 with potential

3004 Medicaments 147 2934 Nucleic Acid 11

8708 Auto parts 162 5510, Yarn of artificial fibres 37

2933 Bulk Drugs and Heterocyclic compounds 54 3823, Industrial Mono Carboxlyic Acids 32

3902 Polymers of Propylene 46 3204, Synthetic Organic Coloring Matter 30

5402 Synthetic Filament 899405, Lamps and Lighting including Searchlights

30

8484, Gaskets and similar 305509 Synthetic Yarn 39

Top 10 that will decline in sales

2710 Diesel 37 * Cotton Yarn (10)Coke of Coal (43)

Some of the top 10 categories today hold potential, some do not

J


37

Total Imp From India – US $ 6 Bn

High Potential for further growth Moderate Potential for further growth

Currently traded large value (Total,

Brazilian Imports), but low Indian market share

4202, Trunks suitcases 62 A 32 5510, Yarn of artificial fibers 21 A 373921, Plastic Plates, Film, Sheets, Film 12 B 30 3204, Synthetic Organic Coloring Matter 22 A 308419, Plant and Lab machinery 63 B 26 3824, Binders for Foundry 11 B 283808, Insecticides 117 A 22 3811, Antiknock Preparations 11 C 27

8532, Capacitors 9 C 248421, Centrifuges 24 B 238502, Eletric Gensets 214 A 228504 Electrical Transformers 66 A 219032, Automatic regulating or controlling instruments and apparatus 48 B 198536, Electrical Apparatus for protecting circuits 83 B 188481, Taps and Cocks 152 B 18

Currently Traded Small

Value(Total Brazilian Imports)

<US $ 200 Mn

5503, Synthetic Staple Fibers Not Carded Combed 8 B 37 3823, Industrial Mono Carboxlyic Acids 2 C 324901, Printed Books 17 B 34 9405, Lamps and Lighting including Searchlights 18 B 309001, Optical Fibres 9 B 30 1302, Vegetable Saps and extracts 10 C 192833, Sulphates and Alums 11 B 278547, Insulating Fitting for Electrical 3 B 276109, Tshirts 32 B 248204, Hand Operated Spanners 9 B 218205, Hand Tools, 33 B 219608, Ballpoint Pens 11 C 19

3303, Perfumes and Toilet water 20 B 15

9404, Mattress supports 15 C 15

Future Items

3924, Plastic Tableware 41 B 9603, Brooms, brushes, hand operated sweepers 5 C8484, Gaskets and similar 13 B 30

3302, Mixtures of Odiferous Substances 7 B 33 3002, Human Blood products for therapeutic usage 61 A 273212, Pigments for Paints 5 B 30

As a result, we arranged each heading items in decreasing order of their ease of entry and grouped them in to A , B and C (Total Score =45) We did not score top 10 traded items

Sourcing From India

J


HS code Description2011 Brazil Exports

3 year CAGR ( 08-11) Expected Growth Rate

Expected Growth Rate (11-15) %

Current Indian Exports to Brazil

Current Market Share

Projected Market Share

Additional sales due to market growth

Sales due to increased market share

Expected annual Jump in 2015

8502

Electric Generating Sets and Rotary ( principally wind powered) Converters 918 55% 18,72% 66 7% 10% 65 149 214

8708

Parts and Accessories of Vehicles ( mainly tractor parts, gear boxes, suspension systems, brakes) 6318 8% 8,00% 96 2% 3% 76 86 162

8481

valves and similar appliances for pipes, boiler shells, tanks, vats 1193 8% 8,00% 10 1% 10% 4 149 152

3004Medicaments and Pharma 3490 10% 9,36% 105 3% 5% 45 102 147

3808Insecticides and Pesticides 1959 16% 9,36% 44 2% 5% 19 98 117

>100 M of additional annual growth in exports possible

We evaluated each of these items individually and made reasonable assumptions to gauge potential ( I)

J


HS Code Description of commodity

2011 Brazil imports from World

CAGR ( 2008-2011)

Expected CAGR ( 2012-2015)


Current Indian Market Share of Commodity

Expected Market share 2015

Sales due to market growth

Sales due to share growth

Additional Exports in 2015

5402 Synthetic Filament 798 9% 9,00% 204 26% 26% 84 5 89

8536

Electrical Apparatus for Switching or Protecting Electrical Circuits ( principally less than 1000 volts) 1301 10% 9,36% 12 1% 5% 5 78 83

8504Electric Transformers ( Principally static converters) 1161 12% 12,00% 25 2% 5% 14 52 66

>50 M of additional growth in exports is possible

We evaluated each of these items individually and made reasonable assumptions to gauge potential ( II)

J


HS CodeDescription of commodity


CAGR ( 2008-2011)








9032

Automatic Regulating and Controlling instruments and apparatus ( all kinds of process instrumentation) 913 3% 3,00% 3 0% 5% 0 48 48

3902 Propylene Polymers 519 12% 9,36% 65 15% 15% 46 - 46

3924

Tableware and other household articles and hygienic or toilet articles, of plastics. 86 25% 9,36% 0,3 0% 20% 0 41 41

2710 Diesel 16905 20% 10,00% 3244 19% 15% 1506 -1.469 37

8205

Keys and wrenches (including torque wrenches); interchangeable spanner sockets, with or without handles 80 21% 9,36% 1 1% 20% 0 32 33

6109 T-Shirts 107 61% 18,72% 7 7% 10% 7 25 322934 Nucleic Acid 475 3% 3,00% 114 24% 26% 14 11 25

>25 M in additional growth in annual exports in possible

We evaluated each of these items individually and made reasonable assumptions to gauge potential (III)

J




CAGR ( 2008-2011)








8421 Centrifuges for liquids and gases 839 5% 5,00% 7 1% 3% 2 22 24

3204 Synthetic Organic Coloring Matter 311 4% 4,00% 69 22% 25% 12 10 22

5510 Yarn of Artificial Staple Fibers 275 16% 9,36% 21 8% 10% 9 12 21

3303 Perfumes and Toilet Waters 117 24% 9,36% 4 3% 10% 2 18 20

9405 Lamps and fittings 181 22% 18,72% 2 1% 5% 2 16 18

4901 Printed booked 180 11% 9,36% 2 1% 7% 1 16 17

9404

Support for beds (somiês); mattresses, duvets, pillows, ottomans, pillows and the like, fitted with springs or stuffed or internally fitted with any material comprising these articles of rubber or plastics, whether or not covered. 60 37% 18,72% 4 7% 12% 4 11 15

8484 Gaskets and similar joints of Metal 171 27% 9,36% 0 0% 3% 0 13 13

3921Other plates, sheets, film, foil and strip, of plastics. 237 9% 9,00% 5 2% 5% 2 10 12

3824Prepared binders for foundry moulds or cores 475 5% 5,00% 6 1% 3% 1 10 11

2833 Sulphates; alums; peroxosulphates 186 8% 8,00% 7 4% 7% 3 8 11

<25 M in additional annual growth in Exports

We evaluated each of these items individually and made reasonable assumptions to gauge potential ( IV)

J



2011 Brazil imports from

World

CAGR ( 2008-2011)

Expected CAGR

( 2012-2015)

Current Indian

Exports to Brazil

Current Indian Market Share of

Commodity

Expected Market

share 2015


Sales due to share

growth

Additional Exports in

2015

8421Centrifuges for liquids and gases 839 5% 5,00% 7 1% 3% 2 22 24

3204Synthetic Organic Coloring Matter 311 4% 4,00% 69 22% 25% 12 10 225510Yarn of Artificial Staple Fibers 275 16% 9,36% 21 8% 10% 9 12 213303Perfumes and Toilet Waters 117 24% 9,36% 4 3% 10% 2 18 209405Lamps and fittings 181 22% 18,72% 2 1% 5% 2 16 184901Printed booked 180 11% 9,36% 2 1% 7% 1 16 17

9404

Support for beds (somiês); mattresses, duvets, pillows, ottomans, pillows and the like, fitted with springs or stuffed or internally fitted with any material comprising these articles of rubber or plastics, whether or not covered. 60 37% 18,72% 4 7% 12% 4 11 15

We evaluated each of these items individually and made reasonable assumptions to gauge potential ( V)


J




CAGR ( 2008-2011)








3811 Anti-knock preparations 222 12% 9,36% 6 3% 5% 3 8 11

1302 Juice and Vegetable Extract 87 4% 4,00% 10 12% 20% 2 8 10

8204 hand operated spanners 46 19% 9,36% 9 20% 25% 4 5 9

8532 Electrical Capacitors 286 6% 6,00% 2 1% 3% 1 8 9

9001Optical fibres and optical fibre bundles; optical fibre cables 114 21% 18,72% 3 3% 5% 3 6 9

5503

Synthetic staple fibers, not carded, combed or otherwise processed for spinning 127 9% 9,00% 5 4% 7% 2 5 8

3302Odorific Substances for making perfume and for food industry 119 21% 9,36% 0,2 0% 3% 0 7 7

9608 Pens and Pencils 63 12% 9,36% 5 8% 12% 2 4 6

3212 Pigments for Paints 49 1% 1,00% 0,2 0% 10% 0 5 5

9603Brooms, Brushes and Hand Operated Sweepers 90 15% 9,36% 0 0% 3% 0 4 5

8547 Insulate Fitting for electrical 95 8% 8,00% 1 1% 3% 0 3 3

3823 Fatty Acids, Industrial Carboxyclic Acids 150 5% 5,00% 14 9% 9% 2 - 2

5509 Yarn, Synthetic Staple Fibres 338 17% 9,36% 87 26% 20% 37 -36 1

5205 Cotton Yarn 134 -10% 0,00% 82 61% 50% 0 -10 -10

2704 Coke and Lignite 937 1% 1,00% 189 20% 15% 8 -50 -43


We evaluated each of these items individually and made reasonable assumptions to gauge potential ( VI)

J


AGENDA








J



SHARE (%)

1 U ARAB EMTS 34 14

2 U S A 26 10

3 CHINA P RP 20 8

4 HONG KONG 10 4

5 SINGAPORE 10 4

6 NETHERLAND 8 3

7 U K 7 3

8 GERMANY 7 3

9 BELGIUM 6 3

10 INDONESIA 6 2

18 BRAZIL 4 2

Major Markets for Indian Exports in 2011

Total Indian Exports(2011)

251 US$ Bn

45

Major Supplier Markets to India in 2011 (Imports)

Total Indian Imports(2011)

369 US$ Bn



SHARE (%)

1 CHINA P RP 43 12

2 U ARAB EMTS 33 9

3 SWITZERLAND 25 7

4 SAUDI ARAB 20 6

5 U S A 20 5

6 GERMANY 12 3

7 IRAN 11 3

8 AUSTRALIA 11 3

9 NIGERIA 11 3

10 KOREA RP 10 3

31 BRAZIL 4 1

Brazil is even less important to India as a source

J


INDIAN TRADE WITH BRAZIL AND WORLD

46

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

1

2

3

4

5

6

7

8

9

10

Total Indian Imports v/s Exports (Brazil) 2000-2011

Export Import

US$

Bill

ion

27.7%

32.6%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

100

200

300

400

500

600

700

Total Indian Imports v/s Exports (World) 2000-2011

Export Import

US$

Bill

ion

22.1%

18.8%


Imports from Brazil are however growing only slightly faster over overall imports

J


DIVISION OF INDIAN IMPORTS BY BRAZIL SHARE

Is India Importing

these Items from Rest of

World

Of the items currently imported

Brazils’ Share is >= 1%

# of products = 18

# of Products=

# of Products = 23

# of products = 0

< 8% Share:Live animals, trees, coffee, gum, tobacco, salt, crude oil, raw hides, wood, pulp, iron and steelVinegars and Ores(slag) 8-9% ShareSugar 18% Share

Meat, Fish, Fertilizers, Cereal, Dairy Produce, Malt, Fur, Cork, Stra, Carpets, Headgear, Umbrellas, Lead Zinc, Tin,

Yes

No

No

Yes

No

Yes

Currently Traded between India and Brazil ?


Plastics, Fertilizers, Inorganic Chemicals, Furniture, Suitcases, Iron Steel, Footwear

23 Items

75 Items

47

Brazilian share is dominant in sugar and slag, but much lesser in most other commodities

J


India’s Import Basket for 2010-11

48

27, Min

eral

Fuels

& O

ils

71, Nat

ural /

Culture

d Pearls

84, Nucle

ar re

acto

rs/boile

rs

85, Elec

trica

l for S

ound Rec

29, Org

anic

Chemica

ls

72, Iron an

d Stee

l39, P

lastic

15, Anim

al an

d Veg Fa

ts31, F

ertiliz

ers

98, Misc

26, Ore

s, Sla

g

90, Optica

l, Med

ical P

recs

ion M

eas

87, Veh

icles

Oth

er th

an Rail

28, Inorg

anic

Chemica

ls

73, Arti

cles I

ron/S

teel

89, Ship

s, Boat

s

88, Airc

raft Par

ts

28, Misc

Chem Pro

d

40, Rubber

Article

99,Misc

Good

76, Alu

min

ium

Article

s

48, Pap

er an

d Pulp

74, Copper

Article

s

25, Salt

, Sulp

hur and Cem

ent

44, Wood, C

harco

al7, E

dible

Roots8, E

dible

Fruits

30, Phar

mac

eutica

l Pro

d

32, Tan

ning a

nd Dye

ing E

xtra

cts

47, Pulp

of Cell

usotic M

ater

ials

0

20

40

60

80

100

120

140

116

77

29 27

13 118 7 6 6 5 5 4 4 4 4 3 3 3 3 2 2 2 2 2 2 1 1 1 1

US $

Bn


Out of 99 HS 2 Level Commodities India’s Imports of 30 are above US$ 1 Bn

Products for Which Brazil is a Net Exporter and India is Net Importer

J


49


38 Products Where India Net Importer

Removed Product where Brazil Net Importer

75 Common Trade Products

7 HS2 Level Products with India Imports from World Moderate


3838

We did distance analysis and also checked at HS 4 level if opportunity presents itself

1717 10 HS2 Level Products with India Imports from World >

US$1 Bn

We used a similar filtering process as used for Indian exports

J


50

Sourcing From Brazil

Tot Imp From Brazil – US $ 3.5 Bn

High Potential for growth Low Potential for growth

Top 10 Imports From Brazil Currently Traded

(US $ 2.9 Bn)

2603 Copper Ores1507 Soyabean Oil7204, Ferrous Waste2903 Halogenated derivative of Hydrocarbon

High Value But Subjective to Market Needs2709 Petroleum and Oils1701 Cane and Beet Sugar2926 Nitrile Function2524 Asbestos2207 Undenatured Ethyl Alcohol7208 Flat rolled > 600mm widtb

Currently traded

7502, Unwrought Nickel3901, Polymers of Ethylene4407,Wood Sawn2922, Oxygen Function Amino Compunds

8802, Helicopter Parts8523, Prepared Unrecorded Media2602, Mn Ores and Concentrates8501, Electric Motors Excluding Gensets7225, Flat Rolled Prd of Steel and other alloy4104, Tanned Crusted Skin of Bovine7207, Semi Finished Prd of Iron and Steel7227, Bars and rods irregularly wound of Iron and steel2849, Carbides

Future Large Value

4703, Chemical Wood Pulp Soluble7601, Unwrought Aluminium8302, Base Metal Mountings4702, Chemical Wood Pulp Insoluble

4403, Rough Wood7404, Copper Wastes8406, Steam Turbines2901, Acyclic Hydrocarbons7213, Coils of steel

Future Small Value

4410, Particle Board907, Cloves1806, Chocolate /cocoa5004, Silk yarns,4408, vener sheets for wood,2009, Fruit Juices

2909, Ethers and their derivatives2825, Hydrazine2507, Kaolin and Other Kaloinic Clay4813, Cigarette Paper1520, Glycerol7103, Precious Stones1521, Vegetable Wax


Wood, Pulp, currently untraded items with potential for growth

J


Sourcing From Brazil (Reasoning)



Top 10 Imports From Brazil Currently Traded

•High Growth > 10 %•Brazil Share Moderate

•Low Growth <10%•Dependant •Brazil Share High >15%

Currently traded•High Growth >10%•Brazil to India Share Low < 5%•Brazil to Asia Significant >15%

•Low Growth <10%•Brazil to India Share Already High > 5%•Export to Asia Limited <15%

Future Large Value

•Imports by India Greater than US $ 150 Mn•Brazil Share Low <5%•Brazil to Asia Significant >15%•Also products that are almost zero in terms of value

imported from Brazil.

•Imports by India Greater than Cutoff•Import Growth Not High <10%•Brazil Share High Already >5%•Export to Asia Limited <15%

Future Small Value•Imports Lesser than US $ 150 Mn•High Growth

•Imports Lesser than Cutoff•Low Growth

J


Scoring Mechanism – Sourcing From Brazil

52

When do you

Score ?

Strategic, industry related barriers

Long term sustainability Logistics Asset Price Multiples Payment terms Trading culture

Price to cost difference: does one need to own

assets to access competitive cost ?

Predominance of Brazilian players as

against multi-nationals

1Brazil has no structural advantage

No logistics access is available

The sector is in great demand and buying a company or the underlying productive assets such as land/ mines/ trees very expensive versus revenue / profit potential

Payment is very informal with very high risk of non performance.

Trading culture is very unorganized. People go back on their word very easily. Very few people speak English in the industry.

One needs to own assets to have access to better than market prices..

Multinationals are pre-dominant and they control both sourcing and markets in Asia.

2Brazil has some structural advantage, so does India

Logistics exists, but is locked up by oligopolistic operators

The sector is a sector with long term fundamentals well recognized, though at present it is not in the midst of a bubble

Payment terms are better than most informal sectors, but is largely based on trust without any documentary hold.

People speak some English. While not every trader is untrustworthy, It is possible to identify good versus bad traders. Trading culture is more formal

Owning assets improves the ability to access lower costs

Multinationals and Brazilians share the ownership of key privileged assets connected with sourcing.

3Brazil has a structural advantage stronger than India

Logistics exists but if prohibitively expensive

The sector is a sector with long term fundamentals well recognized, and currently is fairly valued

Payment terms are international , but are relatively high cost alternatives. Letter of credit required from a class 1 bank of American / European origin.

Most traders are reliable and trust worthy. Easy to communicate. Trading culture is very formal.

Owing assets allows improves reliability and lowers hidden costs

Sourcing is largely dominated by larger Brazilian companies with an international presence

4

Brazil has structural advantage that India cannot match but some of its neighbors can attempt to compete with Brazil

Good logistics options exists, but requires planning

The sector is currently undervalued.

Payment terms are standard international payment and letter of credit from Indian banks are accepted.

Trading is very international. Multinational traders dominate. Very organized and formal culture.

Owing assets is not required , a good sourcing contract ( by volume, time or payment variables) can lower costs significantly.

Sourcing dominated by Brazilian companies who trade internationally, also with India.

5

Brazil has significant structural advantage, which India or its neighbors cannot achieve due to factors that cannot be changed

Logitics is not a big issue at all

The sector’s assets are available very cheap.

Payment terms are open credit. They are better than international standards avoiding huge transaction costs.

Most trading is done transparently on an electronic trading platform. Impersonality lends credibility

Owning assets is not required. It is a easily traded commodity and prices in Brazil are among the lowest even under fair market conditions.

Sourcing dominated by Brazilian companies, who trade internationally, but have not traded with India yet.

Assuming India wants to source ( ignoring Government related barriers), we generated a questionnaire for scoring the sourcing opportunities

J


53

Tot Imp From

Brazil – US $ 3.5

Bn


Currently traded

2922, Oxygen Function Amino Compounds A 39 8802, Helicopter Parts A 377502, Unwrought Nickel A 35 4104, Tanned Crusted Skin of Bovine A 363901, Polymers of Ethylene A 33 2849, Carbides A 354407,Wood Sawn A 30 7225, Flat Rolled Prd of Steel and other alloy B 34

7207, Semi Finished Prd of Iron and Steel B 337227, Bars and rods irregularly wound of Iron and steel B 338523, Prepared Unrecorded Media B 328501, Electric Motors Excluding Gensets B 312602, Mn Ores and Concentrates B 30

Future Large Value

8302, Base Metal Mountings A 32 2901, Acyclic Hydrocarbons B 337601, Unwrought Aluminium A 31 7213, Coils of steel B 334702, Chemical Wood Pulp Insoluble B 26 7404, Copper Wastes B 314703, Chemical Wood Pulp Soluble B 25 8406, Steam Turbines B 31

4403, Rough Wood B 29

Future Small Value

1806, Chocolate /cocoa A 36 7103, Precious Stones C 325004, Silk yarns, A 36 2909, Ethers and their derivatives C 31907, Cloves A 35 2825, Hydrazine C 314410, Particle Board B 33 1520, Glycerol C 314408, vener sheets for wood, B 30 2507, Kaolin and Other Kaloinic Clay C 302009, Fruit Juices C 29 4813, Cigarette Paper C 27

1521, Vegetable Wax C

As a result, we arranged each heading items in decreasing order of their ease of export (Total Score =45)

We did not score top 10 traded items. Also, we point out the category that each product belong

Sourcing From Brazil

J


AGENDA








J


Brazil’s Service Imports Basket

55

243,O

ther

perso

nal tr

avel

272,O

pera

tional

leasin

g ser

vices

208,Se

a tra

nspo

rt - F

reigh

t

280,A

rchite

ctura

l, eng

ineer

ing

and o

ther

tech

nical c

onsu

ltancy

209,Se

a tra

nspo

rt - S

uppor

ting,

auxil

iary a

nd oth

er se

a tra

nspo

rt se

rvice

s

263,Co

mputer

serv

ices

211,A

ir tra

nspo

rt - P

asse

nger

294, O

ther

gove

rnmen

t ser

vices

n.i.e

.26

0, Fina

ncial s

ervic

es

284,O

ther

busin

ess,

profes

sionna

l

and t

echnic

al se

rvice

s

391, W

orke

r's Re

mittan

ces

270, M

erch

antin

g25

7, Rein

sura

nce27

5, Leg

al se

rvice

s

256, O

ther

dire

ct insu

ranc

e

278, A

dverti

sing,

marke

t res

earch

and p

ublic o

pinion

polling

292, E

mbassi

es an

d con

sulat

es

213, S

uppo

rting a

ir tra

nspor

t

serv

ices

247, T

eleco

mmunica

tion s

ervic

es

255, F

reigh

t insu

rance

0

2000

4000

6000

8000

10000

12000

14000

16000

1800015844

13806

4110 3825 3501 3414 29171907 1679 1119 855 851 756 650 642 521 488 299 270 123U

S $

Mn

Source: Trade Map, Jai Group Analysis

Services for Which Brazil is a Net Importer and India is Net Exporter

Brazil is Net Importer and India Is Significant Exporter i.e > US$1BnBrazil is Net Importer and India Is Significant Exporter i.e > US$1Bn

There are 20 Common Services Traded By India and Brazil with the world where Brazil’s Imports >= US $ 100 Mn

US $ Mn

-17-17-4-466773434-30-301414114114-4-41717882121

121200141433

-5-5

1212

3333

2323 CAGR % (2008-10)of Brazilian Service

Imports

CAGR % (2008-10)of Brazilian Service

Imports

J


56


• India Total Services Traded = 39

• Brazil Total Service Traded = 46

Removed• Brazil Service Imports <$ 100Mn

and• India Services Exports <$ 100Mn

Removed Services• Where India is a Net Importer• Where Brazil is a Net Exporter

28 Common Services at

Detailed Level

7 Services With Probable

Opportunity

EBOPS : Extended Balance of Payments Services ClassificationSource : Jai Group Analysis

99

Like Products have HS Code Services Have EBOPS Code which are 3 Digit Numbers, EBOPS level is most detailed level i.e. similar to HS8 and BPM5 which similar to HS2 in terms of Hierarchy.

J


Overview of Service Exports

57

-0.1 0.4 0.9 1.4

-2

0

2

4

6

8

10

12

14

16

Export / Import Ratio Of Brazil

Indi

a’s

Tota

l Exp

orts

(US

$ Bn

))

Source : Trade Map, Jai Group Analysis

53 3 1

There are 19 Common Services Traded By India and Brazil with the world but for some of these India itself is a Net Importer

4

1

India Net Importer

All Values – Total Brazilian Imports (US $ Bn)

Personal Travel

Sea Transport and Frieght

Computer Services

Workers Remittances

Financial ServicesArchitectural

Engg Services

Embassies and Consulates

Misc Business and Proffessional Services

Sea Transport and auxiliary services

Operational Leasing Services

Air Transport Advertising, Market Research

Freight Insurance

Telecommunication ServicesLegal Services

Other Govt Service

Other Direct Ins

Reinsurance

Merchanting

J


List Of Services With Opportunity for Export from India to Brazil

58

India Brazil

EBOPS Code

Description

ExportGrowth (05-10)

Import ImportGrowth (05-10)

Export

2009 2010 2009 2010 2009 2010 2009 2010

243 Other personal travel 11,136 14,160 14% 3,706 4,235 10,457 15,844 30% 5,191 5,780

208 Sea transport – Freight 7,508 9,502 17% 2,910 5,577 2,906 4,110 19% 1,161 1,517

280Architectural, engineering and other technical consultancy

1,412 1,971 -6% 3,584 5,565 3,200 3,825 19% 5,583 5,591

263 Computer services 46,233 56,286 21% 1,616 2,176 2,709 3,414 16% 192 195

275 Legal services 603 474 4% 212 160 628 650 42% 273 317

256 Other direct insurance 99 119 19% 110 102 1,042 642 4% 269 366

255 Freight insurance 979 1,240 18% 0 0 133 123 4% 5 9

Travel , Transport , Engineering and Computer Services are Main Targets

Source : Trade Map, Jai Group Analysis

J


Sourcing of Services From India

59

High Potential Low Potential

Relatively Easier to Enter

(Score >= 30)

208, Sea transport – Freight 33

243, Other personal travel 30

More difficult to enter Brazil(Score < 30)

263, Computer services 27 256, Other direct insurance 15

280, Architectural, engineering and other technical consultancy

24 255, Freight insurance 19

275, Legal services 19

As a result, we classified the products in to four different categories

J


AGENDA








J


Country Total Inward FDI(US $ Bn) Total Outward FDI (US $ Bn)

2009 2010 2011 2009 2010

India 25.8 19.5 36.5 15.9 14.6

Brazil 25.94 48.4 66 10 11.5

61Source : DIPP, UNCTAD, Jai Group Analysis

Brazil receives two times as much and invests outside slightly less than India

J


Where India is Sourcing FDI and where Brazil is directing its FDI Globally

India’s Main Sources Of Inward FDI

Country 2009 2010 2011Cumulative

00-11

% Share of Total

Inward Cumulative

Mauritius 10.3 6.9 9.9 64.1 38

Singapore 2.3 1.7 5.2 17,1 10

UK 0.6 0.7 9.2 15.8 9

Japan 1.1 1.5 2.9 12.3 7

USA 1.9 1.1 1.1 10.5 6

Netherlands 0.8 1.2 1.4 7.1 4

Cyprus 1.6 0.9 1.5 6.4 4

Germany 0.6 0.2 1.6 4.6 3

France 0.3 0.7 0.6 2.9 2

UAE 0.6 0.3 1.7 2.2 1

Brazil’s Main Destinations For Outward FDI

62

Country200

8200

9201

0Cumulative

01-10

% Share of Total

Outward Cumulative

Europe -1 53 4 87 48%

Austria 0 43.2 -5.2 40 22%

Cayman Islands

11 -44 9 32 18%

British Virgin Islands

-2 3 -1 16 9%

United States 4 -1 2 14 8%

Bahamas -1 1 0 13 7%

Netherlands 0 1 8 12 7%

Denmark -3 5 -2 10 6%

Spain 1 0 3 10 6%

Argentina 1 1 1 6 3%

US $ Billion

Source: UNCTAD, Central Bank of Brazil, DIPP, Jai Group Analysis

Brazil mainly invests abroad in Europe, India’s main investors are from Anglo-saxon geographies and Japan

J


Brazilian Companies Invested and Present in India

63Source: Jai Group Analysis

Who ? When Entered ? What did they invest in and how much ? Quantitative Indicator of Returns

Gerdau 2007 USD 71 million Gerdau agreed to a second wave of investments (USD 50 millon) to increase production in India

Marcopolo 2008 USD 44 million

Marcopolo is producing 11000 business in India. Local plant is expected to beat Brazil in the next years in terms of the

number of buses produced in a year, Delhi Government has given an order of 600 buses and they are already plying the

streets of New Delhi.

WEG2006 for commercial

sales, 2011 for investment

USD 170 million Have tasted India selling over USD 100 million from Brazil

COFAP 2009 USD 14 million Business grew to USD 10 to USD 15 million in 2011

Vulcabras 2011 USD 20 million Too soon to say as the deal has just closed

Brazilian companies have invested in India …..

J


64

SERVICES S

ECTOR

TELE

COMMUNICATI

ONS

CONSTRUCTI

ON ACTI

VITIE

S

COMPUTER S

OFTW

ARE & H

ARDWARE

HOUSING &

REAL

ESTATE

CHEMICALS

DRUGS & P

HARMACEUTICALS

POWER

AUTOMOBIL

E INDUSTR

Y

METALL

URGICAL

INDUSTR

IES

HOTEL

& TOURIS

M

PETROLE

UM & N

ATURAL

GAS

TRADIN

G

ELECTR

ICAL

EQUIPMENTS

INFO

RMATION &

BROADCASTI

NG

CEMENT AND G

YPSUM PRODUCTS

MISCELL

ANEOUS MECHANIC

AL

CONSULTANCY S

ERVICES

INDUSTR

IAL

MACHINERY

PORTS

NON-CONVENTI

ONAL ENERGY

AGRICULT

URE SERVIC

ES

FOOD P

ROCESSING IN

DUSTRIE

S

HOSPITAL

& DIA

GNOSTIC C

ENTRES

ELECTR

ONICS

SEA TRANSPORT

TEXTI

LES (I

NCLUDIN

G DYED,P

RINTE

D)

FERMENTA

TION IN

DUSTRIE

S

MININ

G

PAPER AND P

ULP

0

5

10

15

20

25

30

35

32

1311 11 11

109

7 76

3 3 3 3 3 3 2 2 2 2 1 1 1 1 1 1 1 1 1 1

Top 30 Sectors for FDI Inflow into India Cumulative(2000-2012)US $ Billion

Source: DIPP, Jai Group Analysis

COFAP,Endurance, Marco Polo

Gerdau

WEGPerto

Petrobras

Some of the investments have been in the top 30 sectors where India invites FDI

J


65

US $ Billion

Source: Central Bank Of Brazil, Jai Group Analysis

Financ

e

Mini

ng a

nd q

uarry

ing

Met

al an

d m

etal

prod

ucts

Trans

port,

Sto

rage

& C

omm

un

Busine

ss a

ctivi

ties

Food,

beve

rage

s & to

bacc

o

Who

lesale

& re

tail t

rade

Petro

leum

Chem

icals

& Che

mica

l pro

duct

s

Electri

city,

gas

and

wat

er

Mot

or v

ehicl

es &

oth

er tr

ansp

ort

Electri

cal a

nd e

lectro

nic e

quipm

ent

Coke,

pet

roleu

m, n

uclea

r fue

l

Const

ruct

ion

Woo

d& w

ood

prod

ucts

Mac

hiner

y an

d eq

uipm

ent

Non-m

etall

ic m

inera

l pro

duct

s

Rubbe

r and

plas

tic p

rodu

cts

Unspe

cified

terti

ary

Agricu

lture

and

hun

ting

Hotels

and

rest

aura

nts

Textile

s, c

lothin

g an

d lea

ther

Fores

try a

nd F

ishing

Comm

unity

, per

sona

l ser

vice

Publis

hing,

prin

ting

of re

cord

ed m

edia

Public

adm

inist

ratio

n an

d de

fenc

e

Unspe

cified

sec

onda

ry

Other

man

ufac

turin

g

Educa

tion

Precis

ion in

stru

men

ts0

5

10

15

20

25

30

35

30

2625 24

21 21 20 20

13 13

11

76 6

4 4 3 3 2 2 2 1 1 1 1 1 1 1 0 0

Top 30 Sectors for FDI Inflow into Brazil Cumulative (2001-10)

Torrent Pharma, Dr ReddysLabs,Glenmark, Zydus Cadila, Neelam America,Pidlite, Aurobindo Pharma, Stride Arcolab,

Wipro, Infosys, TCS, Hcl, Mahindra Satyam, Genpact

Renuka Sugars

Aditya Birla Novelis,

L&T

Mahindra Automotive, TVS, Motherson Sumi, Minda

Vijai Electrical, Crompton Greaves, KEC, Kalpataru

ONGC CRI Pumps,Thermax

Aditya Birla Carbon Black United

Phosphorus

Indian investments have been more wide spread and several Indian companies function in Brazil

J


66

India FDI Inflow Average

2010 & 2011

Average Share of Sector

Brazil FDI Outflow Average

2009 & 2010

Average Share of Sector

Agriculture 323 1% 0 0%

Mining 153 1% 24782 47%

Petroleum and gas 617 2% 2312 14%

Food, beverage 371 1% 2176 8%

Chemicals 2608 9% 48 0%

Construction 1251 5% 27 0%

Textiles 215 1% 62 1%

Metallurgy 1773 5% 1090 5%

Rubber 104 0% 0 0%

Other Manufacturing 10441 36% 968 6%

Trade retail + wholesale 645 2% 496 3%

Finance and Insurance 0 0% 2530 15%

Services to Companies 7311 27% 0 0%

Others services 4133 15% 800 5%

Only IndiaOnly IndiaCommonCommon Only BrazilOnly Brazil

Source: UNCTAD, Central Bank of Brazil, DIPP, Jai Group Analysis

Brazilian outflow strong in Finance, Food and Beverages, Mining and Metals, Petroleum and Gas and, Indian track record in these areas attracting investments has been limited

J


AGENDA








J


TRADITIONAL INITIATIVES

68

Traditional Initiatives

Useful when ? Limitations

Exhibitions and Trade Fairs

Use funding lines availableGood excuse to make a trip

General purpose India fair probably makes less sense than specialized industry fair

Buyer Seller meets New product, where Brazil imports and India exports to ROW

If not backed by research could be wasteful expenditure

Funding Journalists to go to India

Cheap way to get attention to India Often journalists are badly briefed and do a poor job

Sending students for free to India

Relatively inexpensive Wrong kind of students could go

General purpose credit lines for exports

Easy, plain vanilla credit, that relies on local bank for targeting sectors

Banks do not push Indian credit lines which give them low returns

Traditional initiatives of trade promotion have significant limitations

J


INITIATIVE PROS AND CONS ( 1/3)

69

New Initiatives Intensity of Examples/ What is it Exactly ? Why and when to use ?

Effort Money Relations

Webinars and Databases on trade that can be searched

High Low Moderate Recent Webinars , Cheat sheets that are being prepared as part of this project

Improve awareness and knowledge

CEO Dinners High Moderate High CEO dinner on Banking and Telecom for IT services firms

B2B sales is key , India needs investment in these sectors, keep high level connections alive

Close connection to Investment Banks and Private Equity Shops

Low Low High India- Brazil innovation fund, large Pharma deals which may need Govt support, Telecom deals, Infrastructure deals, where Government can be a catalyst/ investor

Open to new ideas,influential players with capital, having access to deals

“ Culture in Workplace” Workshops

High Moderate Moderate Inhouse workshops for large companies who can buy Indian IT services

Confront fear of the unknown : “ working with Indians who are aliens and strange people” in a corporate setting and with comfort

Sensitize Indians on how to deal with Brazilians

Press Relations High Moderate Low Press articles, interviews to help Brazilians think about India on friendly terms

Constantly create an agenda in collective psyche that suits Indian interests, confront fears and false propaganda at the idea level among Brazilian elites, crusade on specific issues of visas, imports of services, anti dumping etc, in sophisticated ways

Several new initiatives could be utilized instead (1)

J



70

Strong Feedback and Analysis System

High Low Low Understand what do visa applicants actually do in India and where they needed help, also track whether they were influenced by any of the programs of the consulate

Provide a fact based index of performance and a way to measure impact of multiple initiative

Guided Tour with the Consul

High High Low High powered and select set of Executives chaperoned through India / Brazil

Annual tour where the Consul General and his consultants show the lay of the land to visitors, whether Indian or Brazilian

Big Initiatives with Government Support

High High High • Indian Pharma to reduce health care costs , through direct distribution

• India teaches Brazilian tourism professionals English for Olympics/ World Cup

• India provide expertise for bottom of pyramid goods

Set a bold agenda for industry ( Pharma and BPO) , a publicly visible program where India and Brazil work together where commercial objectives of both are met

On Line communities

Moderate

Moderate

Low • A place on line, for specific sectors of the industry, where Indian and Brazilian businessmen could chat / compare notes, qualify/ black list business practices, where content is created in a collaborative manner.

• A place where manufacturers can advertise their products, creating supply chain integration

Useful for new industries, where mutual knowledge is limited and terms of trade, reliable suppliers etc are difficult, instead of consulate being responsible for content, it just provides a space for people to post comments, it can add as a moderator and remove bad comments, something like Amazon book review, e-bay credibility rating

Sao Paulo- Mumbai CEO roundtable video webinar

Moderate

Low High Periodically beating the tyranny of distance using tools of technology, to connect decision makers, real time, who may not travel to Brazil often, to push major agenda in the corridor

Every three months, good way to distribute ideas among the powerful


J



71

Innovation Fund High High High Using small budgets, unlike China, Engage India and Brazil productively in a value creating activity that is highly coveted by Brazilian Industry, which could convert India’s image as a friend

Areas such as seeds, bio tech, medical devices, urbanization, renewable energy etc, where India and Brazil have significant expertise and needs, but have not really worked together

Engage the Diaspora to connect to Brazil

High Low Moderate Use silicon valley and other parts of the world with active Diaspora to connect to Brazil with greater glamor

Work together with the Overseas Indian ministry to open eyes of Brazilian business to the power of India abroad and through them open more doors

Personal Letter to Buyers with facts and figures/ Direct Mailing done tastefully

Moderate Low Low Use the high office of consulate to bring attention of powerful decision makers to the benefits of trading in specific items with India, elevating a commercial promotion message in the rank of attention, through the symbol of state power delivered in a personal, written communication

Useful for new industries where Brazilians are not aware of Indian strengths

Industry / Specialized Newsletter

High Low Moderate Generate a Portuguese news letter by specific industry, rather than general purpose news, for industries which India wants to push in Brazil among buyers

Useful for new industries, a better way to get attention of practical people who are interested in specifics of an industry than global trends

Kiosks/ Showrooms/ Store in store display

High High Moderate Create display space for B2C products to attract attention of Brazilian consumer, even raffle a trip to India, like Pao de Acucar is doing for Portugal

Useful to show case Indian products and very effective if combined with promotional activity for tourist season to India

State specific partnerships, “ Adopt a Brazilian State”

High Moderate High Compensate for size through focus, by adopting and investing in a specific state, channeling Indian investment , such adoption could change every 3-4 years

Allows India a larger than life presence in small geographical entity


J


What can the Consulate do

72

Segments ExamplesProblem Description

Drivers for Solution

Types of Government initiatives that will work

Specific Actions the Consulate can take

Products where India already has significant

market share

Pharmaceuticals, Synthetic Yarn, Organic Chemicals

“ Boldness and Creativity”We risk plateauing despite high potential, because strategies are too me-too, and need bold innovation and big moves

1. No bold moves at an industry level

2. New strategies

3. Greater depth of alliances

1. Government level alignments with Federal and State Governments to solve a Brazilian problem say in healthcare

2. Start engaging bigger banks actively, and connecting them with Indian CEOs , catalyzing interaction

1. Work with Sao Paulo Government health care to identify key problems in Brazilian health care I that India can help solve, involve local firms to dis-arm protectionist tendencies

2. Start cultivating relationships with strong Brazilian investment banks and private equity shops

Consulate should tailor specific measures for specific product niches, helping define bold initiatives at Government to Government level, involving Indian private sector is one good idea

J


73





Products where India is beginning to make an

entry

Insecticides, transformers

“ Lack of broad awareness” We risk not capitalizing on some initial victories, because not many Indian firms know that others have succeeded and the firms who have succeeded may not know how much more they can succeed if they can continue investing

1. Lack of knowledge of existing victories

2. Additional investments

3. Broadening the product portfolios

1. Publicize the success of Indian firms in specific industries through a new letter/ webinar

2. Identify key issues and show how Indian companies have solved them

3. Find ways to stimulate co-operative behavior that could benefit every one

a. Common problems every one faces

b. Lobbyingc. Sharing leads and

consortiums ( way the Spanish did)

4. EXIM Bank and other sources of capital

5. Promote small groups within the Chamber to share experiences

1. Industry specific webinars2. News Letters that are specific to

industry3. Regular industry specific work

sessions on line4. Community building on line

a. Who are the bad creditors ?

b. Which companies do not honor commitments

c. What are the upcoming tenders in the sector etc

5. Targeted credit lines to stimulate adoption


Consulate can promote crowd learning, on line communities and study groups to attack common problems, identifying what they are is a good first step

J


74





Products where India has not even started, but

has strengths

bags and trunks, gen sets, Tourism

“ Lack of knowledge on “ low hanging fruit”Indians have been selling to the rest of the world, but not to Brazil, it is new and unknown

1. Lack of industry understanding/ customer segmentation

2. Who are the first customers for India ?

3. Which are the first suppliers from India

1. Build awareness about Indian alternatives among Brazilian buyers

2. Collect market intelligence on what sells in Brazil, under what terms and why ?

3. Create an atmosphere of comfort and trust for first deals to happen

4. Transfer credibility of consulate to worthy Indian businessmen

5. Assistance on logistics, trade terms

1. Webinars to Brazilians2. Personalized Letters to buyers3. Customized marketing campaigns,

direct mailing4. Select dinner meetings on

product categories that involve B2B selling

5. Buyer seller meets6. Guided Tours of Brazil and India7. Specific fairs


Detailed market knowledge can help in specific sectors

J


75





Products where India

has potential but there is/

will be resistance

IT services

Brazilians know Indians are good, Indians are here, but business is not just happening“ Trust needed, concrete win-win opportunities and multi-cultural comfort needs to be built

1. Lack of Trust2. Focus on

competition rather than co-opetition

3. Indian success elsewhere has made them less flexible and a wee bit arrogant

4. Brazilian worries has made them over protectionist

1. Articulate 2-3 platforms where Brazil and India can work together

2. Communications to the wider media that India is not a threat, but a friend

3. Actively promote real time, hands on interaction between Indian and Brazilian executives under a comfortable and trusting environment, institutionalize a “ introduction to Brazilians/ Indians at the work place ” training module together with schools like FGV

4. Actively court Brazilian Government to provide Indian solutions for Brazilian problems

5. Engage the Indian diaspora in United States as a way to bridge main land India with Brazilian self-perception of a “Western Society”

1. Use the cultural center to organize Workshops that involve Indian and Brazilian senior executives to build cultural connect, using professional coaches, organized through the chamber of commerce, subsidized by Indian IT companies/ Nasscom, without having to explicitly state it

2. Sponsor in-house workshops in Banks, Telecom and Retail companies on working with India

3. Hire a Press relations agency and re-define national debate in press and Television

4. CEO round table between Mumbai and Sao Paulo involving IT , Banking, Telecom executives and clients

5. India- Brazil, innovation fund6. Guided tour to Silicon Valley


Trust building is needed in some sectors, Press relations is one specific area which the consulate is underutilizing today

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