Taking place within the shadow of China’s well-documented economic growth is a surge in economic activity in India, attendees of a session at the Institute of Scrap Recycling Industries Inc.’s (ISRI) Annual Convention learned.
Scrap trader Vikram Kochar of Universal Metals Inc., Great Neck, N.Y., remarked that India’s gross domestic product is currently the fourth largest in the world and its growth rate of 7 percent is second only to China’s in terms of annual growth.
The booming economy is driven by entrepreneurs “who want to make money,” said Kochar, as well as by massive foreign investment that has allowed India to surpass the United States to become “the second most preferred spot to invest in (after China).”
Although India’s reputation is as the “back office to the world” while China is the “manufacturing plant to the world,” Kochar noted that auto maker BMW recently invested in a new plant in India while steelmakers Mittal and Posco are investing considerably in steelmaking capacity in the nation.
Nonetheless, there are roadblocks in India’s path to industrial growth, Kochar noted, including a “crumbling infrastructure” that makes it difficult to transport both raw materials and finished goods, and a “heavily layered and complex government system” that can make it very difficult to site a new manufacturing plant.
The Indian government is beginning to address the infrastructure problem, says Kochar, although some $150 billion will probably be needed to begin having an impact on the upgrading of roads, ports, utilities and rail networks. “The government is finally stepping up,” said Kochar, pointing to a recent $10 billion highway project to connect India’s four largest cities.
The people of India have a generally favorable view of the United States and American people, says Kochar, making it a suitable investment climate for American companies.
Tom Mele of Connecticut Metal Industries, Monroe, Conn., has been visiting India since the mid-1970s and has been pleased to see the nation “getting away from the [Soviet-style] controlled economy” that it used to favor.
Mele noted that in terms of scrap purchasing, Indian consumers are familiar with and have adopted ISRI terminology, as has the customs agency in India.
In terms of documentation, Mele says India is not especially difficult to trade with, and that the nation has “solid banking and legal systems” that are based on Anglo-American models. Additionally, Indians involved in international trading probably speak English.
Culturally, though, Americans must adjust to a bartering mentality that involves negotiating that can start from a very low point. He said many Americans “find the way pricing is approached aggravating and insulting.”
In such cases, agency agreements that allow an Indian resident to conduct the price negotiations can be “an excellent way to go,” says Mele.
Also at the session on India, ISRI President Robin Wiener urged attendees to consider taking part in a scheduled ISRI Study Mission to India, which will take place Jan. 14-19, 2007.
The ISRI Annual Convention was held in the first week of April at the Mandalay Bay Resort in Las Vegas.