1
1. MARKET OVERVIEW
The market potential of India over
the medium- to long-term is second
only to China’s. Since 1991, the
Indian economy has been
transformed from its protectionist
“Licence Raj” system into a
competitive, open economy with
leadership in a wide variety of
sectors. When one thinks of India
today, one thinks of Information
Technology (IT). Indian IT and IT
Enabled Services (ITES) firms such
as Infosys, Wipro and Tata
Consultancy Services (TCS) are in
the vanguard of global innovators
that are revolutionizing how
information is used and processed
to create value for their clients
around the world.
With a GDP growth rate averaging
6.2% in the last 10 years, many
economists have argued that India’s
potential rate of GDP growth is in
the 6-7% range. We expect India to
maintain this potential rate of GDP
growth in the medium term with
some slowdown expected in the
next two years due primarily to a
global slowdown.
One of the most important features
of Indian policy-making is a
commitment on all sides of the
political spectrum on the need to
continue India’s economic reforms
begun in 1991. We have seen both
the Bharatiya Janata Party (BJP)-led
and Congress-led coalitions
accelerate economic reforms that
have seen a progressive liberalization
of India’s trade and investment
regimes. As India continues to
liberalize its economy, foreign direct
investment (FDI) and domestic
investment (especially in
infrastructure sectors) alone will
likely drive up India’s potential
growth rates to the 7-8% level in the
medium term.
India is also becoming an important
player in global trade. During the
1994-2003 period, Indian exports
grew on average by 12.8% annually
(in nominal terms). This compares
favourably with export growth rates
of 10.2% and 6.9% respectively
experienced by exporting
powerhouses like South Korea and
Malaysia. In its New Foreign Trade
Policy (NFTP), the Indian government
has set a target of more than
doubling India’s share in world trade
to about 2% by 2010. Instrumental
in this will be the IT/ITES sector.
According to the National
Association of Software and Service
Companies (NASSCOM), India’s IT-
ITES sector has experienced an
explosive 28% growth since 1998,
with revenues expected to reach
US$28 billion in 2005.
IN
DIA
Population 1,070 million
GDP (US$ billion) US$617.24
GDP per capita US$577
GDP Growth, 1993-2004 6.2%
BC Export Growth, 2000-2004 6.1%
TABLE 1 INDIA IN 2004
Source: International Monetary Fund, Ministry of Commerce (India) and Statistics Canada.
2
India’s stock of inward FDI was
US$30.8 billion in 2003 — a sharp
increase of 21.3% from the previous
year but still far below mainland
China’s inward FDI stock of
US$501.5 billion. While India has
not been a major destination of FDI
in Asia in the past, recent global
surveys have suggested that it is
increasingly becoming one of the
most attractive investment
destinations in the world. For
example, A.T. Kearney’s 2004 FDI
confidence index put India as the third
most attractive FDI destination (after
China and the United States). On
some factors such as India’s highly
educated workforce, management
talent, rule of law, transparency and
regulatory environment, India was
ranked more favourably than China.
Despite India’s sometimes difficult-
to-understand political landscape,
we view India’s internal political
outlook as being stable over the
medium-term, one factor in the
rising level of inward FDI. The one
issue that may arise from time to
time to disturb investor confidence
is India’s foreign relations with
neighbouring Pakistan and the two
countries’ dispute over Kashmir.
While the two countries have made
significant progress in furthering
peace talks in the recent past, it is
not clear what the end game in this
dispute could be. Positions of both
sides are deeply entrenched and as
frustrations in Pakistan grow with
the time that it is taking to resolve
the Kashmir dispute, we will likely
see a ramping up of tensions that
will affect overall investor
confidence in India, as happened in
1998 after tit-for-tat nuclear
explosions on the South Asian
subcontinent in 1998.
At US$913 million in 2003, India’s
stock of outward FDI is lower than
that of many other Asian
economies. However, recent
announcements in the oil and gas,
pharmaceuticals, biotechnology and
IT sectors are likely the beginning of
a trend that will see Indian
conglomerates make acquisitions,
greenfield investments, or sign
partnership agreements in markets
like Canada’s to take advantage of
the unique value propositions
offered by Canadian and British
Columbia firms and assets.
2. BRITISH COLUMBIA’S
RELATIONSHIP
WITH INDIA
British Columbia firms have benefited
from India’s IT advantage with firms
like Pivotal Corporation and
Momentum Technologies establishing
software development centres in
India. While BC firms are engaged in
India’s IT/ITES sector, there are other
sectors in which British Columbia
firms are playing an increasingly
prominent role. BC’s largest exports
to India have been in the forest
products sector with all of the large
BC forest companies — Abitibi-
Consolidated, Canfor Corporation,
Howe Sound Pulp & Paper, West
Fraser Timber Co. Ltd., and
Weyerhauser Canada — engaged in
the India market through agency
relationships. Other sectors in which
BC companies are increasingly
involved in the India market include
education services (e.g., University
College of the Fraser Valley,
Malaspina University College),
construction and real estate (e.g.,
The Kryton Group, Minaean
International Corporation, Royal
Indian Raj International
Corporation), and Oil & Gas (e.g.,
Terasen Inc. and Westcoast Drilling
Supplies, Inc.). Further, small and
large BC-based consulting firms are
also involved in the Indian market
with services ranging from export
market consulting (IPCS Project
Coordination Services) to consulting
engineering services (e.g., Lea
International Ltd.).
MERCHANDISE TRADE1
Raw material exports have
traditionally formed the vast
majority of BC exports to India. In
2004, the top-five exports from BC
to India accounted for 89% of all BC
exports to India (see Table 2). BC
exports represented 15.9% of
Canadian exports to India in 2004.
There are no significant structural
differences in BC exports to India
compared to other provinces. Like BC,
Canadian merchandise exports to India
also tend to be concentrated in raw
material exports. However, it is
significant that BC is the primary
Canadian source to India for three of
its top-five Canadian-sourced products
— 99.6% of ore, slag, and ash exports;
97.1% of mineral fuel, oils, and wax
exports and 43.6% of wood pulp.
BC’s top-five exports to India are
sectors of opportunity for BC, given
that they represent BC’s comparative
advantage in the Indian market. As
we outline below, India’s demand
for forest products, ores, mineral
fuels, and infrastructure (more
broadly) will increase substantially as
the country continues to grow. In
3
each of these sectors and in a wide
range of associated services sectors,
there will continue to be significant
opportunities for BC-based companies
to provide value-added services to
BC’s portfolio of exports to India.
Forest Products
Forest products, including rolled and
sheeted newsprint and wood pulp of
various types have traditionally been
the largest export from BC to India. In
2004, products in these two
categories accounted for 63.3% of BC
shipments to India.
Rolled and/or sheeted newsprint (HS
480100) was the largest export from
BC to India in 2004 at $46.3 million
(36.2% of BC exports to India). All of
the major BC forest products
companies have ongoing
relationships with partners in the
India market. Abitibi-Consolidated
Inc. is a major BC exporter of
newsprint to India with the Times of
India (India’s largest-selling English
language daily) printed on Abitibi
paper. Canfor Corporation has also
been engaged in the India market
with its Mumbai-based distributor,
Pratik Panels Ltd., which supplies
Canfor brand panel woods in the
Indian market. Howe Sound Pulp &
Paper Ltd. is represented by J.N.
Ravanuss (India) Pvt. Ltd. based out
of Gurgaon, Haryana where it has
sold bleached kraft pulp. West Fraser
Timber Co. Ltd. also has a liaison
office in India with Stora Enso India
out of Gurgaon near New Delhi.
Weyerhaeuser Canada has also been
engaged in the Indian market over
the years with contracts announced
for the sale of hemlock, Douglas-fir,
alder, western maple, western red
cedar, and white birch in the last
two years through its Agent in India,
LS Sundher Ltd.
Mining, Minerals and Fuels
Copper ore and concentrate has
traditionally been the second most
important export from BC to India. In
2004, BC exported $14.2 million of
copper ore and concentrates to India,
making up 11.1% of BC exports to
that market. Most of this ore and
concentrate is sourced from Teck-
Cominco’s copper and molybdenum
operations at Highland Valley.
Teck-Cominco has an interesting
history in India. Binani Zinc, which
is today the single largest private
sector manufacturer of high grade,
special high grade and super special
high grade zinc in India, was
actually formed as a joint venture
between Cominco Ltd. and Binani
Metals in 1962, with a capacity to
produce 14,000 tonnes of
electrolytic zinc per annum.
Cominco withdrew as financial
collaborators of the company in
1991 as part of its global strategy.
Mineral fuels and oils have not
traditionally been major exports
from BC to India. In 2004, however,
they formed the third-largest
category of exports from BC to
India with shipments of bituminous
coal accounting for $6.4 million
(5.0% of total BC exports to India)
with a further $6 million in calcined
petroleum coke (4.7% of BC exports
to India). Three BC coal mining
companies — Teck-Cominco,
Fording Coal, and Luscar — visited
India and presented technical
results to the Steel Authority of
India Ltd. (SAIL) in 2002-03. As a
result of those visits, the pilot
shipments of low ash content coal
took place in 2004 (although it has not
TABLE 2 BC’S MERCHANDISE TRADE WITH INDIA, 2004
BC IMPORTS FROM INDIA BC-ORIGIN EXPORTS TO INDIA
Rank Merchandise Classification ($M) % Rank Merchandise Classification ($M) %
1 Knitted or crocheted apparel 26.0 15 1 Paper and paperboard 46.4 36
2 Woven clothing and apparel 17.3 10 2 Wood pulp and other pulp 34.7 27
3 Other textile articles 13.1 7 3 Ores, slag and ash 14.6 11
4 Fish, crustaceans, molluscs 12.1 7 4 Mineral fuels, oils and waxes 12.4 10
5 Pearls, precious stones/metals, etc. 11.6 7 5 Electrical machinery and parts 5.6 4
Total BC Imports from India 177.2 100 Total BC Exports to India 128.1 100
Indian Imports as % of BC’s Total: 0.5 Indian Exports as % of BC’s Total: 0.4
Note: Canadian import statistics are collected in terms of the province of clearance, not province of final destination.
Source: Trade Data Online. Industry Canada. 24 August 2005. <http://strategis.ic.gc.ca/sc_mrkti/tdst/engdoc/tr_homep.html>.
4
each represented about 30% of
Canadian services exports to India
over the last decade (see Chart1).
The structure of Canadian services
exports to India is similar to Canadian
services exports to other emerging
markets. Analysis by APF Canada has
found that over the past decade, the
share of commercial services exports
to India was no different from its
share in other significant emerging
markets of importance to Canada like
China, Brazil, Mexico and Malaysia.
However, when we look at growth
rates of commercial services, India
stands out. In work done by APF
Canada for International Trade
Canada2, it was found that at 27.6%
average annual growth rates, India
was one of the fastest growing
markets for Canadian commercial
services exports to the world with
growth exceeding China and Russia
and at par with more advanced
markets like Singapore, Mexico and
Thailand. More significantly, the
variability of this growth of
commercial services to India was the
lowest among the ten emerging
markets studied. This finding is
significant because it means that
growth in commercial services exports
to India is certainly more stable than
in markets like Brazil, Malaysia,
Mexico, Thailand, Singapore, Russia
and Indonesia. It could also mean that
commercial services exports to India
were likely distributed more widely
than in other emerging markets.
Contrary to our findings on Canadian
and BC merchandise exports to India
(which tend to be concentrated), this
signals that a wide range of
commercial services form a solid base
of Canadian services exports to India.
It is widely recognized that even if
official data on BC’s services exports
been revealed which of these
companies exported coal to India
in 2004).
Advanced Manufacturing
Technologies
Advanced manufacturing
technologies encompass a wide
variety of goods (and services) with
several BC-based firms already
engaged in the India market. While
most activity may not register in the
official trade data, there is significant
evidence to indicate that BC-based
firms are providing a wide array of
goods and services in the Indian
market. In October 2004, Vancouver-
based Cummins Westport Inc. and
Cummins India Limited (CIL)
completed their licence and supply
agreement that grants CIL an exclusive
licence to manufacture, sell and
service Cummins Westport’s natural
gas engines. Manufacture of these
engines began in mid-2005. Applied
Microsystems Ltd., a Sidney-based
manufacturer of oceanographic
instruments, recently sold one of its
Argus II Geothermal heat probes to
India’s National Geophysical Research
Institute based out of Bangalore.
Saanichton-based Power
Measurement Ltd. is a leading
provider of enterprise energy
management systems for energy
suppliers and consumers. Through its
agents in Mumbai, CMS Computers
Ltd., Power Measurement provides
web-ready software, metering and
control devices that help manage
complex energy contracts, improve
power quality, reduce energy costs
and keep operations running
enterprise-wide. In 2003, Tata Power
Company Limited (TPCL), India’s
oldest and largest private generating
and distributing company, upgraded
its Jojobera Power Plant located in
Jamshedpur with an ION(R) enterprise
energy management system from
Power Measurement.
Other firms producing advanced
manufactured goods (and services) and
engaged in the India market include:
Langley-based Knelson Concentrators
(precious metals processing
technology); Mission-based Interwrap
Industries Corp. (packaging solutions);
Richmond-based ComNav Marine Ltd.
(marine navigation and automation
systems); Ebco Industries Ltd. (metal
fabrication), Minaean International Ltd.
(specialty construction and services);
Spectrum Signal Processing, Inc.
(wireless equipment and services); the
Kryton Group (construction materials);
and Syndel Laboratories, Inc.
(pharmaceutical and animal health
products).
SERVICES TRADE
It is in services trade that BC’s
relationship with India is most dynamic
and will see the greatest growth in the
medium- to long-term. Official
statistics for BC’s trade in services with
India are not available. The overall
Canadian data together with work
done on services by the Asia Pacific
Foundation of Canada (APF Canada)
provide an indicator of likely BC
services trade activity with India.
In 2003, total Canadian services
exports to India was $254 million,
down from $283 million in 2002 —
representing a –10.2% annual
decline. Commercial services formed
the most important component of
Canadian services exports to India.
For the 10-year period 1994-2003,
commercial services exports
represented 40% of Canadian
services exports to India. In 2003,
commercial services exports to India
were $116 million. Travel services and
government/transportation services
5
to India were to become available,
this data would continue to
underestimate both the scope and
volume of services transactions. There
are two important reasons for this.
First, unlike merchandise exports, a
BC services firm can deliver its
services from anywhere in the world.
Second, most service delivery can
only occur if there is close and
regular contact with customers that
in turn often requires some form of
physical presence and investment.
The implication of this services-
investment linkage is that BC services
firms may be very active in the Indian
market but most of it would not be
recorded in Canadian statistics.
An example will clarify this point.
Pivotal Corporation, a leading
customer relationship management
(CRM) software firm with a focus on
mid-sized enterprises, started
operations in Bangalore, India in
November 2002 with a development
centre. This development centre is
fully integrated with Pivotal’s global
operations and forms the base for
Pivotal’s sales strategy in not only
India but regionally as well. However,
internal transactions between Pivotal
(Vancouver) and Pivotal (Bangalore)
would go unrecorded in official
services data because they are internal
to a Canadian firm. However, such
transactions would be recorded in
official trade data had they occurred
between Pivotal (Vancouver) and an
outsourced service provider in India.
Further, transactions between Pivotal
(Bangalore) and a third-party in India
would go unrecorded in BC services
export data even though the actual
service is being performed by a
company beneficially owned in BC.
In an attempt to capture these types
of services transactions, APF Canada
was contracted by International Trade
Canada to provide estimates of total
commercial services sales by
Canadian firms in India. In that
study3 we found that in 2002,
Canadian firms sold $336 million in
commercial services in the Indian
market. This was about 2½ times
greater than commercial services
exports reported by Statistics Canada.
For this report, we have gone back
into our database to capture the
share of BC-based firms in Canadian
commercial services exports. As we
can see in Table 3, we estimate that
total BC commercial services exports
to India were about $27.8 million
with about 40% focused in two areas
— ICT services and consulting
services. In the consulting area, there
were a wide variety of firms engaged
in providing services including legal
services, engineering consulting
services, travel and immigration
services, and trade market consulting.
The other important sector was the
housing and building products sector
with firms engaged in areas ranging
from real estate development to
specialized construction services. This
sector made up a significant 11.2%
of total services transactions by BC
firms in the Indian market.
250
200
150
100
50
$M
CHART 1 CANADA’S SERVICES EXPORTS TO INDIA
Source: Adapted from Statistics Canada, Canada’s International Trade in Services with
Selected Countries, CANSIM Database Table 376-0036. 19 August 2005.
<http://www.dfait-maeci.gc.ca/eet/pdf/intern_trade_in_services_2005-en.pdf>,
<http://cansim2.statcan.ca>.
Transportation and Government Services
Commercial Services
Travel
0
300
1995 2000 2001 20021990 2003
(32)
(17)
(31)
(40)
(50)
(35)
(85)
(97)
(67)
(74)
(128)
(83)
(72)
(146)
(64)
(81)
(116)
(57)
Sector Value Share of total, %
Information & Communication Technology 11.9 42.8
Consulting Services 11.3 40.6
Mining, Minerals Equipment & Services 0.4 1.4
Housing & Building Products 3.1 11.2
Other 1.1 4.0
Total 27.8 100
TABLE 3 SERVICES SALES BY BC FIRMS IN INDIA, 2002 ($M, imputed)
Source: Asia Pacific Foundation of Canada
6
meter reading (AMR) systems in
several states in India. Wireless Nova
currently manufactures, distributes
and supplies a GSM-based AMR
solution for industrial utility
consumers and now has IntraCoastal’s
PLC AMR system to address the larger
market of residential consumers in
India. This followed a piloting of
IntraCoastal’s offering with the
Karnataka Power Transmission
Corporation of Bangalore in 2001.
Other BC-based ITC firms involved in
India-related activities include: Sierra
Systems Group (IT consulting), and
MidNet (Canada), Inc.
(communications). Several BC-based
software developers have been
successful at placing orders in the
Indian market. Vancouver-based
S.C.S. Solars Computing Systems
Inc., a provider of reservation
systems for the travel industry,
established its operations in India in
2001. Vancouver-based Datawest
Solutions Inc., a provider of banking
and payment technology solutions,
sold its ConCentre software system
to India Switch Company (ISC) and
HMA STARware Ltd. ConCentre is a
value-added product that is
designed to monitor applications
running on various platforms in a
transaction processing network.
Under the contract, Datawest
provided installation, project
management and training of
personnel during the on-site
implementation of ConCentre in
Mumbai and also monitors the 150
ATMs and the connections of ISC’s
10 member banks. Datawest
Solutions Inc. has also sold its
proprietary ATM network monitoring
system to IDBI Bank Ltd. in India. In
2002, Surrey-based Serebra Learning
Corporation, a provider of e-learning
software, signed a franchise
agreement with India-based Indata
Com Pvt Ltd. through which Serebra
will provide key e-learning solutions
to the Indian education sector.
Indata will use Serebra’s courses as
well as its Serebra.Net Hosted
Learning Management Solution in
order to produce teaching packages
on IT skills and improve training
offered to students in India.
Engineering Consulting Services
Engineering consulting services are
also an important element of
services activity by BC-based firms in
India. Surrey-based Aplin & Martin
Consultants Ltd. was contracted to
provide a master plan schematic
design and design development for
a new upscale, state-of-the-art
10,000 population township in
Haryana state. The firm was also
contracted to provide project
management and engineering
services for the town’s wastewater
treatment facility. In 2003,
Vancouver-based AldrichPears
Associates, along with its
consortium partners, received
funding from the Canadian
International Development Agency’s
Industrial Cooperation Program to
undertake a feasibility study to
provide professional services to
Pushpa Gujral Science City project in
Punjab. Vancouver-based IPCS
International, a project management
and marketing company, led the
Canadian consortium for an initial
concept-planning workshop in
Chandigarh to support the Punjab
government’s initiative to develop a
world-class Science Centre.
AldrichPears provides planning and
creative services for museums, science
centres and interpretive centres.
Vancouver-based CMC Engineering
and Management Ltd. has extensive
Information and
Communications Technology
There are several BC-based ICT firms
involved in India-related services
activities. On the outsourcing side,
Vancouver-based Pivotal Corporation
established its development centre in
Bangalore in 2002, as noted. Pivotal’s
first entré into the India market was in
partnership with GrapeCity Inc., a
Noida-based systems integrator.
Vancouver-based Momentum
Technologies, Inc. (recently acquired
by UK-based Newell & Budge)
established its development centre in
Noida in 2000.
In the wireless sector, Vancouver-
based Sierra Wireless, Inc. announced
in June 2004 that it had selected
Adino Telecom Limited, India’s
premier broadband solutions
company, to distribute the AirCard
750 wide area wireless PC Card and
the MP 750 GPS modem, for use on
GSM (Global System for Mobile
Communication) and GPRS (General
Packet Radio Services) networks, and
the new AirCard 775 PC Card for
EDGE (Enhanced Data rates for Global
Evolution) networks, to customers in
India. This agreement marked Sierra
Wireless’ first entry into the Indian
market. Subsequently, Sierra Wireless
also announced an agreement with
Tirumala Seven Hill Pvt Ltd. to
distribute its AirCard 555 wide area
wireless network card to enterprises in
remote areas in India. Richmond-
based Empower Technologies, Inc.
signed a distribution agreement with
India’s Experience Wireless Fidelity for
distribution of Empower’s PowerPlay
series of PDAs and upcoming mobile
smart communication devices. In
2002, Vancouver-based IntraCoastal
System Engineering Corporation
signed an agreement with Wireless
Nova of Mumbai to install automatic
7
experience in India dealing with
foodgrains production, storage,
handling, transport, distribution
and value-added processing. In
2003, the company signed a
Memorandum of Understanding
with India’s Central Ware Housing
Corporation (CWC) under the
Ministry of Consumer Affairs, Food
and Public Distribution for the
construction of modern cold
storages for various agricultural and
poultry products and studies and
design adaptations in technology
for the construction of a cold
corridor from Jammu and Kashmir
and Himachal Pradesh to Mumbai.
The cold corridor is part of the
Indian government’s plan to
preserve horticultural and
agricultural products for export.
Toronto-based Lea Consulting Ltd.
specializes in transportation and
urban infrastructure projects with
an emphasis on transportation
planning, traffic operations, and
highway, bridge and municipal
design. With a major office in
Vancouver, Lea Consulting Ltd.
established Lea Associates South
Asia Ltd. (LASA) in 1993. LASA has
won over 100 projects in various
disciplines across India and now
has 15 branch offices covering
almost every major city in India and
a total staff strength of 520
employees in India.
Another Vancouver-based firm that
has undertaken considerable
engineering consulting work in India
DELIVERING ENGINEERING SERVICES IN THE INDIAN MARKET:
EXPERIENCES OF LEA INTERNATIONAL, LTD.
Established in 1993, Lea Associates South Asia Pvt. Ltd. (LASA), part of the Canada-based LEA Group of
Companies, is an infrastructure development and management consultancy firm. LASA provides specialized
services in highway planning, engineering, design and supervision; traffic engineering and transportation
planning; bridge and structural engineering, design and supervision; environmental and social planning and
engineering; urban, regional and tourism development and planning; irrigation and water resource management;
and training and technology transfer.
LASA is headquartered in New Delhi and has branch offices in almost every major city in India. An example of
services delivered by LASA includes its recently completed Strategic Options Study (SOS) for the state of Gujarat.
As the result of the massive earthquake in Gujarat on January 6, 2001, LASA was awarded a contract, funded by
the World Bank, to carry out services such as assessment of existing bridges, ranking of bridges, detailed
topographical survey and sub-soil investigation, preparation of detail design/drawings, finalization of repair and
rehabilitation strategy, preparation of BOQ, specifications, cost estimation and bid documents. LASA has also
been actively involved in a complex tourism project in the state of Kerala, which required the balancing of the
development of tourism along with ecology, fishing and the environment.
LASA considers its entry into India in 1993 and its continued commitment to quality as its biggest strengths in the
market. Since India is a vast market and its infrastructure resources have been stretched to the limit, there is
considerable need for improvement. LASA foresees huge opportunities for itself in road infrastructure
development and it also expects opportunities in the railway and general infrastructure development sectors.
LASA considers its commitment to quality as its primary strategy for its future and current success. LASA invests
substantial time in evaluating a project to determine its feasibility and quality commitment from the client before
agreeing to work on a project. The firm’s project offices in India are the most important and critical avenue of
service delivery. LASA also undertakes numerous programs to train its customers by bringing them to Canada.
CASE STUDY 1
8
is ND Lea Consulting Ltd. With
offices in Kamloops and Williams
Lake, ND Lea specializes in
management, planning and design
of transportation infrastructure,
urban development and
environmental assessments. In India,
the firm has undertaken several
projects in the roads sector including
work for the Asian Development
Bank, the states of Gujarat and
Madhya Pradesh and a wide variety
of feasibility studies, particularly for
the key Faizabad-Noida-Ghaziabad
expressway.
Environmental Goods
and Services
An important sector for BC-based
SMEs in the India market will
continue to be environmental
services with several BC firms
engaged on a variety of projects in
India. Victoria-based Hydroxyl
Systems Inc. has provided its
offering of full spectrum wastewater
services including scientific
investigation, in-house treatability
testing, design and construction.
North Vancouver-based Aqua-Guard
Spill Response Inc. and Richmond-
based Versatech Products Inc.
provide a complete range of oil spill
containment and oil spill recovery
equipment. These offerings have
been sold in the Indian market.
There are also several BC-based
environmental consulting firms that
have engaged in contract work in
India. These include: EVS
Environment Consultants Ltd.
(engaged in environmental policy
consulting work with the
Confederation of Indian Industries as
part of a Canadian International
Development Agency project), and
PN Enterprises Ltd. (waste
management services).
There is also significant potential in
the India market in the area of clean
energy. As noted, Vancouver-based
Cummins Westport, Inc. has begun
manufacturing its natural gas engines
in India. Vancouver-based Palcan
Power Systems, a developer and
manufacturer of proton exchange
membrane fuel cell systems under 5
kilowatts, sold its hydrogen storage
systems in 2004 to Bharat Petroleum
Corp Ltd. to be tested by Bharat
Petroleum Corp. in three-wheel and
small vehicle configurations. Questair
Technologies, Inc. and Ballard Power
Systems are actively looking at
entering the Indian market with
distribution and joint venture
agreements. In 2000, BC Hydro
International entered into an alliance
with DSCL Energy Services Company
of India to work on energy
conservation projects. DSCL Energy is
a division of DCM Shriram
Consolidated. The alliance began with
projects in the building sectors,
specifically hotel, hospital, and
commercial complexes, and now
works on projects in the power-
intensive paper and sugar industries.
INVESTMENT
Like services data, there are no
official investment data at the
provincial level available. On a
Canada-wide basis, the total stock
of Canadian direct investment in
India in 2004 was $251 million
while the stock of Indian direct
investment in Canada was $62
million. Like statistics on trade in
services, these estimates of FDI
underestimate the total stock of
Canadian (and BC) investment in
India. By Indian accounts, total
approved FDI in India from Canada
from 1991 to 2003 was Rs. 28.8
billion or $834 million. Therefore,
the broadest estimates of Canadian
FDI in India are likely between $251
million and $834 million.
It is important here to provide some
context on FDI definitions used by
Statistics Canada and how these might
have an impact on recorded BC
investments in India. Statistics Canada
applies internationally accepted
definitions of FDI. There are two
significant elements to this definition.
First, is the 10% rule — if a Canadian
firm has ownership of at least 10% of
the voting equity in an Indian firm,
then the FDI relationship is recorded in
Canada’s balance of payments
statistics. The second element is the
book value rule — Canadian direct
investment abroad is measured from
the books of the associated firm and
not from the books of the Canadian
investing firm.
While these definitions are commonly
applied internationally, they do create
perverse FDI statistics. For example,
Canada’s FDI stock in Barbados in
2002 was $23.9 billion — 2½ times
Canada’s FDI stock in Germany and
Japan, 1½ times Canada’s FDI stock in
the entire continent of Asia, 36 times
Canada’s FDI stock in China and 166
times Canada’s FDI stock in India,
probably because of the 10% rule. On
the Indian side, proposed FDI
approvals from the Sub-Saharan
African country of Mauritius were four
times larger than approvals from
Germany, three times larger than
approvals from Japan, and 12 times
larger than approvals from Canada.
This is likely due to the book value
rule. In fact, if we go by Indian
approval data, Mauritius was the
second-largest source of FDI in India
by a wide margin!
To get at the current state of play,
APF Canada was contracted by
9
International Trade Canada to take a
closer look at Canadian Investments
in India. In that study, we estimated
that for a very limited sample of only
43 Canadian firms, total Canadian
FDI stock in India was $284 million. It
should be noted that our sample of
firms did not include some significant
Canadian investors, particularly in the
oil and gas, telecommunications and
health care sectors.
Further, we were able to obtain
Foreign Investment Promotion Bureau
data on the basis of approvals by
company for Canadian (and BC) firms
invested in India between 1999 and
2003. As can be seen from Table 4,
the total approved Canadian FDI in
India between 1999 and 2003 was
$216 million. Investments in the ICT
sector accounted for the largest
chunk at $121 million or 56% of
approved investments. It is interesting
to note that FDI approvals in the
health care and transportation sectors
were larger than in financial services.
This is likely because Indian FDI
approval data does not account for
reinvested earnings and short- and
long-term claims of foreign investors
that tend to be a large component of
investments by financial services firms.
Also noteworthy is that there were no
approvals of FDI in the oil and gas
sector which we believe from
anecdotal evidence is not accurate.
The one important conclusion from
this approval data is that Canada’s
FDI stock in India in the ITC sector is
likely much larger than indicated by
official Canadian statistics. The stock
of FDI in the IT sector was a tiny $4
million by official measures (in 2003).
However, the FDI approvals data
suggests that the likely figure is at
least an order of magnitude larger.
Table 5 shows investment approvals in
India by Canadian province. BC’s share
of Canadian investment was 12.9% or
$28 million in 2003. The top
destination of intended investments by
BC firms in India was New Delhi ($21.5
million by the Verus Group in the
transportation infrastructure and
services sector). This is followed by the
mining sector at $4.9 million. We note
that important investments by BC firms
that we know established operations in
India after 1999 are not included in
this FDI listing (e.g., Pivotal Corp.,
Momentum Technologies).
TABLE 4 CANADIAN FDI APPROVALS IN INDIA, 1999-2003 (IN 2003 $)*
Sector # of FDI Share of
suppliers ($M) total, %
Advanced Manufacturing Technologies 11 1.96 0.9
Aerospace & Defence 1 0.08 0.04
Agriculture & Food Products 3 0.27 0.1
Consulting Services 4 0.72 0.3
Consumer Products - - -
Drugs, Pharmaceuticals & Health Care 4 37.1 17.2
Electric Power Equipment & Services - - -
Environmental Goods & Services 3 0.08 0.04
Housing & Building Products 2 0.06 0.03
Information & Communications Technology 16 121 56.0
Insurance, Banking & Financial Services 3 18.8 8.7
Mining, Minerals Equipment & Services 8 10.2 4.7
Oil & Natural Gas - - -
Transportation Infrastructure & Services 2 21.6 10.0
Other 22 4.0 1.8
Total 79 215.9 100.0
* Figures are based on approval data only and do not include reinvested earnings, short-
and long-term claims and exits from the Indian market. Data includes FIPB approvals for
1998. Exchange rate: 1 Indian Rupee = $0.02863 as at December 30, 2003.
Source: Asia Pacific Foundation of Canada
TABLE 5 INDIAN FDI APPROVALS OF BC-BASED COMPANIES, 1999-2003 (2003 $)
Name of Firm Destination in India Sector $
Proam Explorations Private Ltd. Chennai Mining, Minerals
Equipment & Services $42,945
Can Achieve Consultings Ltd. New Delhi Consulting Services $715,750
S.C.S. Solar Computing Systems Inc., New Delhi ICT $35,215
M/S Meridian Peak Resources New Delhi Mining $2,175,880
Verus Group, Canada. New Delhi Transportation $21,544,075
Pebble Creek Resources Ltd., Canada Pithoragarh (Uttar Pradesh) Mining $254,807
Kryton Holdings Inc, Canada Rewari (Haryana) Other $239,919
BHP World Exploration Inc, Canada Mining $2,462,180
Source: Foreign Investment Promotion Bureau (FIPB), 1999 – 2003 data.
10
IMMIGRATION
According to the 2001 Census, India
was the third largest source of
immigrants to British Columbia after
the United Kingdom and Mainland
China. In 2001, BC was home to
92,430 immigrants from India or
about 29% of the 315,000
immigrants who had come to
Canada from India. It is significant
that 77% of these immigrants to BC
from India arrived after 1990.
Immigrants from the Punjab state
are the main source of Indian
immigrants to BC. In fact, British
Columbia is home to the largest
Punjabi-speaking community in the
country (see Chart 2). Punjabi-
speakers were the third-largest
community after English-speakers
and Chinese-speakers in the
province.
One of the important effects of the
high-level of immigrants from India to
BC is the significant development of
education services in BC catered to the
needs of Indo-Canadian students. In
the coming years, we expect to see a
number of university colleges and
other institutions actively establish
programs in India and/or recruit
Indian students to attend BC
institutions. Abbotsford-based
University College of the Fraser Valley
(UCFV) will be offering its Applied
Business Administration degrees at
Punjab University in Chandigarh
starting in September 2006. Students
enrolled in the Business
Administration program have the
option of completing the entire
program at Punjab University or
complete the first two years in
Chandigarh and finish the program at
UCFV or at other Canadian
institutions. UCFV also signed an
agreement with Punjab University in
November 2004 to establish a
Canadian Studies Centre where both
institutions would collaborate in
research and promote faculty
exchanges. In addition, Kwantlen
University College, the British Columbia
Institute of Technology (BCIT), and
Malaspina University College all have
active recruitment efforts in the India
market and undertake coursework for
students in India.
In 2001, the Vancouver Film School
(VFS) announced that it signed a
joint venture agreement with
India’s Modi Enterprises to open a
school in Mumbai. According to
that announcement, the nine full-
time programs and 60 part time
programs of VFS focus on
industries that use moving images,
graphics, sound and text as
fundamental components for
communicating information and
story. The Modi VFS Institute
planned to offer courses in new
media and 3D animation. It is not
clear whether this project is
currently underway.
It is also noteworthy that for the
immigrants from India who arrived
in BC in the last decade, more than
80% were in the Family Class (see
Chart 3). Skilled workers and
business category immigrants to BC
made up 15.3% and 0.8%
respectively of immigrants from
India to BC in the past decade
(1994-2004).
CHART 2 BC IS HOME TO THE LARGEST PUNJABI COMMUNITY IN CANADA
Source: Detailed Mother Tongue. Ottawa: Statistics Canada. 2001 Census of Canada.
Catalogue number 97F0007XCB01001. 11 December 2002.
<http://www12.statcan.ca/english/census01/products/standard/themes/index.cfm>.
40,000
0
80,000
120,000
160,000
Ontario Alberta Quebec ManitobaBC
(121,740)(110,545)
(22,540)(9,900) (5,415)
CHART 3 INDIAN IMMIGRANTS TO BC BY CATEGORY
Percent
80
60
40
20
0
Source: Citizenship and Immigration Canada (2005).
100
1994 1996 1998 2000 2002 2004
Other
Family Class
Business
Skilled Workers
11
3. SECTORALOPPORTUNITIESFOR BC BUSINESS
FOREST PRODUCTS
India’s per capita consumption of
paper is around 4.00 kg, which is
one of the lowest in the world. With
the expected increase in literacy rates
and continued growth of the
economy, an increase in per capita
consumption of paper is expected in
the medium- and long-term. The
demand for upstream market paper
products, like, tissue paper, tea bags,
filter paper, light weight online
coated paper, medical grade coated
paper, etc., is also growing rapidly.
Further, the associated services
related to the paper industry are
SECONDARY WOOD PRODUCTS MARKET IN INDIA: The role of BC Wood Specialty Group
BC Wood is a not-for-profit trade association dedicated to growing British Columbia’s secondary wood-products
manufacturing industry. Established in 1989 as a partnership between industry and government, BC Wood
provides marketing programs to over 600 registered value-added manufacturers, which includes cost-shared
participation in international tradeshows and events, out-going and incoming trade missions, lead generation
through the World Wide Inquiry System (WWIS) and networking opportunities.
BC Wood’s India program is focused on three major cities — Mumbai, Bangalore and Delhi. BC Wood’s business
strategy is to focus on making successful introductions of “Made in BC” finished wood products by supporting its
members in trade shows and by facilitating inquiries from Indian industry.
In 2003, as part of a project contracted to APF Canada, we interviewed Bill Downing — CEO at BC Wood — on the
opportunities and constraints faced by BC forest products firms in the India market. According to Mr. Downing, BC
firms wanting to engage in the secondary wood products market in India face stiff competition from low-value
Chinese producers and high value European manufacturers. On the regulatory side, India’s high import tariffs on
finished wood products and its multi-layered bureaucracy continue to remain a problem for BC-based firms. As an
example of this regulatory issue, the container carrying BC Wood’s Lifestyle Showcase, which was shipped to India
late 2002 was not released until mid-2003 — a significant delay for BC Wood’s marketing campaign in India.
In terms of business practices, brand familiarity with BC wood products was rated by Mr. Downing as the number
one factor restricting BC value-added wood exports into the Indian market. Finding reliable partners was also
rated high as a constraint to continued operations in India.
CASE STUDY 2
likely to see an upswing in India as
Indian manufacturers ramp up
production. Vancouver-based
Sandwell Engineering, Inc. is
currently performing a detailed study
for the planned expansion and
modernization of the Nagaon and
Cachar paper mills operated by
Hindustan Paper Corporation (HPC).
Despite these growing opportunities,
due to India’s high tariff rates for
value-added paper and wood
products, we expect that primary
wood products will continue to
dominate the BC merchandise
trading relationship with India in the
short- to medium- term. Further,
because of the high degree of
fragmentation and commoditization
in the global paper and pulp
industry, the highly cyclical nature of
supply and demand, and multiple
distribution steps in the supply chain,
almost all BC exporters rely on
representatives in the region that are
responsible for sourcing raw
materials and have extensive industry
contacts on the demand side.
Therefore, while we can expect
demand to be cyclical, the relative
ranking of BC wood product
exporters to India is not likely to
change dramatically.
Besides newsprint and wood pulp,
Canadian secondary forest product
firms are increasingly looking at the
Indian market for sales of various
types of value-added wood products.
12
The BC Wood Specialty Group — a
public-private partnership is a
dedicated resource to provide
market information and assistance
to BC wood products firms looking
to enter the lucrative but
competitive Indian wood products
sector. Cascadia Forest Products Ltd.
(which was established as a result of
Brascan Corporation’s May 2005
acquisition from Weyerhaeuser of
certain assets) and Coast Clear
Wood Ltd. (a division of the Probyn
Group which has Tom Sundher — a
principal at LS Sundher Ltd.— as its
general manager) are thought to
have sold value-added wood
products to India in the recent past.
Here too, however, interviews
revealed a number of constraints
facing BC value-added wood
exporters in the Indian market. As we
show in the Case Study on the
previous page, India’s high tariff
rates for value-added wood products,
the emphasis of BC industry on
softwood (rather than hardwood
which is popular in India), and lack of
brand equity are all important
constraints for BC value-added wood
exporters in the Indian market.
MINING, MINERALS AND FUELS
A review of recent mineral forecasts
by BC-based mining firms point to
the expectation that rising demand
for minerals from India (and China)
together with supply constraints will
continue to benefit BC firms engaged
in non-ferrous metal and mineral
mining in BC. However, the most
important positive impact will likely
be indirect price effects. More
significantly, there are some
structural constraints in the Indian
mining sector that spell opportunity
for BC-based firms. Most Indian
mines have very little automation and
this restricts the quantity and quality
of ore produced. Further, supportive
infrastructure for a growing metals
industry — such as roads, logistics,
ports, etc. — is sorely lacking.
A number of BC-based firms are
engaged in the mining sector in India
both on the exploration side and in
providing mining-related services. On
the exploration side, Pebble Creek
Resources, Ltd. has been long
engaged in the India market through
its Indian subsidiary, Adi Gold Mining
Private Limited, which holds 100% of
mineral rights covering the Askot
deposit of copper, gold, silver, zinc
and lead in Uttaranchal State in
Northern India. North Vancouver-
based Proam Explorations Corp. has
also invested in India, in Chennai, for
mineral exploration rights in Tamil
Nadu, Andhra Pradesh, Madhya
Pradesh and Kerala states. Other
firms involved in mining exploration
in India include Meridian Peak
Resources Corp. and BHP World
Explorations, Inc. (while BHP Billiton
is an Australian company, BHP’s
Indian venture is recorded in Indian
approval data as a Canadian
investment out of Vancouver).
Vancouver-based Golden Patriot
Mining Inc. announced the signing of
an agreement with Binani Industries
Ltd. and RBG Minerals Industries Ltd.,
for the development of the Ambaji
copper-zinc-lead project located in
the states of Rajasthan and Gujarat
in 2004. Under this agreement,
Golden Patriot will have the right to
earn a 32.5% interest in the Ambaji
project. Its equity contribution will
amount to US$3.7 million, and it must
identify and arrange US$11.6 million in
debt financing for the project.
In addition to these exploration
companies, BC-based firms have also
benefited from mining-related goods
and services demand from India.
Langley-based Knelson Concentrators
produces a wide array of precious
metals processing equipment that
has been sold in the Indian market.
Richmond-based Seabulk Systems
Inc. installed a self-unloading sea
bulk transhipper in Marmagao, Goa,
where it is being used to transfer iron
ore into cape size ocean-going
vessels. Delta-based Westcoast
Drilling Supplies Ltd. has also
supplied the Indian oil and gas
exploration market with drilling
fluids, equipment, and accessories.
13
4. CHALLENGES
AND PROSPECTS
India represents an increasingly
important market for BC and this
market is bound to grow in the
medium- to long-term. While BC
merchandise exports to India have
been dominated by forest products
and mineral ores, our past analyses
have shown that official trade data
do not effectively capture the
dynamic nature of Canadian business
activity in India. The same is the case
for commercial activity by BC-based
firms in India. In Annex 1 we provide
a listing of about 80 BC-based firms
and institutions that have been
involved in India-related trade and
investment, including some of BC’s
largest and most dynamic firms. The
implication of our analysis is that BC-
based firms are fully aware of India’s
market potential and have taken
steps to ensure that they tap into this
opportunity.
At the same time, an analysis of
current business activity may not
reveal future potential areas in which
BC-based firms can participate in
India’s growth. Here, we identify
three sectors in which we feel that
there may be further potential for
BC-based firms to engage in the
India market.
TELECOMMUNICATIONS
By 2010, India’s investment
requirement in its telecom sector is
estimated to be around US$ 70
billion. The stated objective of India’s
National Telecom Policy is to increase
India’s tele-density to 15% by 2010
(from the current 7% land-line
density and 3.5% mobile density).
This translates roughly into
infrastructure and service
requirements for an additional 90
million land-lines and mobile
subscribers in the next five years.
Growth in the mobile telephone
market and investments by India’s
business process outsourcing (BPO)
industry catered to the telecom
industry will be particularly rapid.
India will soon be the third-largest
mobile phone market in the world.
The total mobile subscriber base in
India touched 43.3 million in May
2005 according to the Cellular
Operators Association of India
(COAI) with 1.3-1.5 million new
subscribers signed up each month.
At present, the Indian market is
ranked sixth after US, Britain,
Germany, China and Japan.
Responding to this large investment
and demand requirements, India has
increased the FDI limit in the telecom
sector to 74% from 49%. Mergers
and acquisitions in
telecommunications are expected to
gather momentum after the
government’s decision to hike FDI
caps and the likely sale of Reliance
InfoComm, India’s largest GSM
operator. In practice, many telecom
operators actually have 74% overseas
equity since India already allowed
49% direct foreign stake and another
25% through a complex holding-
company route. Import duties
totaling 15% on mobile switching
centres were eliminated in last year’s
budget and specified items used in
the manufacture of mobile handsets
have also been exempted from
import duties.
Pending regulatory changes will
further encourage increasing
domestic and foreign investment in
this sector. On the demand side, the
telecom industry lobbied hard for the
recommendations of Telecom
Regulatory Authority of India (TRAI)
last year to reduce charges on
domestic leased lines by as much as
62%, in order to boost Internet and
broadband usage in India. On the
supply side, the telecom industry
welcomed the government’s move to
slash licence fees for national telecom
infrastructure providers to 6% of
their gross revenues from the
previous 15%. The hotly competitive
telecom sector is heavily taxed by the
government, which collects close to a
third of the industry’s revenue as
various taxes, including permit and
spectrum costs. These changes are
expected to boost demand for
telecom services.
As noted, there are several BC-based
firms engaged in this sector that will
likely see increased demand for their
goods and services, including Sierra
Wireless, Empower Technologies and
IntraCoastal System Engineering
Corporation. However, the sheer size
of demand and growth in India’s
telecom space provides significant
opportunities for firms ranging from
systems integrators to software
developers to hardware
manufacturers to invest in and supply
the Indian telecom market. Simply
put, the list of BC-firms engaged in
this sector needs to be much longer.
ENTERTAINMENT
When one thinks of India, Bollywood
is as much an icon of India’s image
overseas as the Taj Mahal or the
Bengal tiger. India leads the world in
the output of movies, with more
than 800 produced annually. These
films command a religious following
within India and are increasingly
becoming popular abroad,
particularly in West Asia, Europe and
North America. But the
entertainment sector in India is much
14
larger than just films and the highest
growth potential exists in emerging
sectors like television and animation
in which BC-based firms are
considered to be industry leaders.
In 2003, revenue of the Indian
entertainment industry grew by 15%
to an estimated US$4.3 billion.
According to a study by Ernst &
Young, revenues in India’s
entertainment sector are projected to
increase by over 120% by 2008 with
some of the largest increases
occurring in the film (124%) and
television (124%) segments.
Underlying this growth are some key
trends that bode well for BC
companies and institutions.
The way in which Bollywood films
and Indian television is funded has
changed significantly since the first
Indian movie was filmed in 1896.
Long the domain of India’s
underworld, there is a significant
trend toward new and transparent
sources of financing. These include
equity financing; financing by cable
and satellite television networks;
venture capital financing; financing
by foreign institutional investors
(including Canadian); and film
insurance. One of the first foreign
financing arrangements in the Indian
entertainment industry was the
Caisse de dépôt et placement du
Québec’s (CDPQ) 31% equity stake in
UTV two-and-a-half years ago valued
at US$ 9.4 million. UTV is considered
to be a leader in the Indian
entertainment sector and is involved
in TV content, movies, and
animation.
This move toward corporatization of
India’s film and television segments
has led to other important trends
that will continue to have an impact
on BC suppliers and investors. One of
these is the so-called “multiplex
phenomenon.” Starting with one
multiplex in Delhi in 1997, it is
estimated that there are now over
115 multiplexes in India today with
another 45 planned for the years to
come. Feeding into this trend is a
Canadian firm, the IMAX
Corporation, that expects six IMAX
theatres to be open in India by 2006.
In April 2003, IMAX signed an
agreement for three theatres which
represented the largest international
multiple theatre deal that IMAX has
made in the last three years.
Another trend that will have an
impact on BC firms is the advent of
digital technology for the projection
of films in theatres. In 2002, the
Indian government reduced the basic
duty on certain studio equipment
following which it is estimated that
roughly 90 cinemas have been
converted to digital projection. Digital
projection provides distributors faster
time to market, a wider release of
films, anti-piracy technology and
significantly lower costs.
A final trend that will have an impact
on Canadian firms and educational
institutions is in India’s high growth
animation sector. A recent survey by
India’s National Association of
Software and Service Companies
(NASSCOM) suggests that the size of
the Indian animation industry is only
about US$500 million with an
estimated 3,000 trained animators.
This can be compared to an estimated
40,000 trained animators in South
Korea and the Philippines and about
8,000 trained animators in China.
As Indian animation houses begin to
evolve from the traditional model of
low-value added outsourced
animation work to animation co-
production, they will be looking for
established international partners
and trained technicians capable of
delivering creative animation services
to international standards. Here
again, BC is at the leading edge. Not
only is Canada’s co-production
framework viewed as an opportunity
by Indian industry analysts; BC’s
animation educational institutions
are highly regarded in India and
around the world. Our industry
analysis suggests that a number of
educational institutions are actively
looking at establishing partnerships
with Indian institutions to deliver
animation training in India. An active
and sustained BC government-
industry-educational institution
collaboration in the animation sector
will yield significant dividends for
BC’s commercial ties in a fast-
growing sector of the Indian market.
BIOTECHNOLOGY
If trade shows, industry reports, and
newspaper articles are any indication
of growth prospects, India’s nascent
biotechnology sector is at the cusp of
what has been described by many as
India’s “gene revolution.” According
to a report published recently by
India’s Association of Biotechnology
Led Enterprises (ABLE), the
biotechnology sector in India
achieved a 39% growth rate in 2003-
04 with a turnover of US$700
million. This finding is confirmed by
Ernst & Young’s 2004 Global
Biotechnology Report in which
analysts expect India’s biotechnology
sector to register US$5 billion in
annual revenues by 2010.
The Indian biotech industry is
expected to cross the psychological
US$1 billion mark in 2004-05.
Biopharma continues to be the
15
largest sub-sector within India’s
biotech industry, with 76% of total
sales. Bio-services was the next
biggest segment (8%), followed by
bio-industrials (8%), bio-agriculture
(5.5%) and bio-informatics (2.5%).
Industry sources suggest that Indian
biotechnology firms have the
potential to follow in the footsteps
of India’s IT firms to become the
next growth engine for Indian
exports. For example, Indian firms
were responsible for submitting
nearly 21% (73 of 350) of all
abbreviated new drug application to
the US Food and Drug
Administration (FDA) last year.
Indian companies also accounted for
25% of submission to FDA’s Drug
Master File (DMF) in the fourth
quarter of 2003. DMF approval is a
prerequisite for exporting a drug to
the US, providing details about a
company’s facilities for
manufacturing, processing and
storing drugs. India also has 70
FDA-approved plants and 200
manufacturing facilities certified as
having good manufacturing
practices, more than any other
country outside the US.
To be sure, there are three
important secular trends taking
shape in India that point toward an
increasing role for the country in the
global biotechnology value chain.
First, India is gradually building the
critical mass in terms of the human
capital crucial for this sector. It has a
large scientific talent pool of some
15,000 bio-scientists employed in 40
National Research Laboratories.
Further, it has 300 college-level
institutes offering degrees and
diplomas in biotechnology, bio-
informatics and the biological
sciences.
Second, India has a relatively low
cost base. Salaries of skilled
professionals and PhDs are as much
as 90% lower in India than in the US.
This low cost base has a particularly
important impact on the cost of drug
development, which is largely
attributable to the expense of
conducting clinical trials and
research. Here, Indian Clinical
Research Organizations (CROs) have
been actively developing partnerships
with global pharmaceutical firms in
anticipation of policy changes that
will enable clinical trials to be carried
out in India on equivalent lines to
those conducted elsewhere.
Third, the Indian biotech sector is
poised to benefit from some
significant regulatory changes
currently underway in this sector. The
recently announced Foreign Trade
Policy provides for the setting up of
Biotechnology Parks (BTPs) across the
country. Firms located in these parks
would have the advantage of being
treated as Export-Oriented Units and
would be exempt from paying the
service tax (which was raised to 10%
in the most recent budget).
Biotechnology firms in these parks
would also be eligible to import
capital equipment on a self-
certification basis, and biotech
exporters with a minimum turnover
of about US$1 million and a good
track record are exempted from
showing bank guarantees. Further,
changes in clinical trial regulatory
policies are promoting, in one
executive’s words, a “clinical research
culture” in India. These include:
regulatory changes to promote Good
Clinical Practice training, removal of
India’s import duties for clinical-trial
related equipment, freeing of
restriction on simultaneous global
clinical trials, and speedy study start-
up times. To address lengthy study
approval times, India’s Drug
Controller General, a division of the
Ministry of Health is also streamlining
its trial approval process.
What this means for BC-based
biotech firms is that India offers not
only a market for exports of
pharmaceutical products but a
source to reduce costs involved in
drug research and development. Few
BC-based biotech firms have yet
looked at the Indian market in this
manner, and again, focusing on this
sector will be an important strategic
issue for the province in its efforts to
promote BC as a knowledge
economy.
16
ANNEX 1: BRITISH COLUMBIA COMPANIES ACTIVE IN INDIA
COMPANY NAME CORPORATE HQ LOCATION INDUSTRY SECTOR
� Global Fruits Inc. Davao City, Philippines Agriculture - Fruits
� Okanagan Similkameen Cooperative Growers Oliver Agriculture - Fruits
� Intrusion Prepakt BC Ltd. Mission AMT
� Kryton Holdings, Inc. Vancouver AMT
� Ram-Pac Industries Ltd New Berlin, Wisconsin AMT
� Power Measurement, Ltd. Saanichton AMT— Energy Management
� Cummins Westport, Inc. Vancouver AMT— Engines
� Ebco Industries Ltd. Richmond AMT— Equipment
� Minaean International Corporation Surrey AMT— Housing/Construction
� Applied Microsystems Ltd. Sidney AMT— Marine Instrumentation
� ComNav Marine Ltd. Richmond AMT— Marine Instrumentation
� Knelson Concentrators Langley AMT— Metal Processing Technology
� Interwrap Industries Corp. Mission AMT— Packaging Solutions
� Spectrum Signal Processing Inc. Burnaby AMT— Wireless Networks
� Cranberry Construction Services Ltd Powell River Construction
� Pacific Institute of Holistic Living Vancouver Consulting
� TTA Technology Training Associates Ltd Vancouver Consulting — Human Resources
� Campbell AgriBusiness Strategists Vancouver Consulting — Management
� Maradadi Pacific Powell River Diversified
� Canadian International College North Vancouver Education Services
� Kwantlen University College Surrey Education Services
� Malaspina University College Nanaimo Education Services
� School District #42 (Maple Ridge – Pitt Medows) Maple Ridge Education Services
� University College of the Fraser Valley Abbotsford Education Services
� Vancouver Community College Vancouver Education Services
� Terasen Inc. Vancouver Energy
� AldrichPears Associates Vancouver Engineering Consulting Services
� Aplin & Martin Consultants Ltd Surrey Engineering Consulting Services
� CMC Engineering Group Vancouver Engineering Consulting Services
� Lea International, Ltd. Toronto/Vancouver Engineering Consulting Services
� ND Lea Consulting Ltd. Vancouver Engineering Consulting Services
� Sandwell Engineering, Inc. Vancouver Engineering Consulting Services
� Seabulk Systems, Inc. Richmond Engineering Consulting Services
� Trow Consulting Engineering Ltd Burnaby Engineering Consulting Services
� Aqua-Guard Spill Response Inc. North Vancouver Environmental Goods & Services
� EVS Environment Consultants Ltd North Vancouver Environmental Goods & Services
� Hydroxyl Systems Inc. Victoria Environmental Goods & Services
� NORAM Engineering & Constructors Ltd. Vancouver Environmental Goods & Services
� PN Enterprises Ltd. Surrey Environmental Goods & Services
� Versatech Products Inc. Richmond Environmental Goods & Services
� Rogers Foods Ltd. Armstrong Food — Consumer Goods
� Abitibi-Consolidated Inc. Montreal Forest Products
� Canfor Corporation Vancouver Forest Products
� Cascadia Forest Products Ltd. Vancouver Forest Products
� Coast Clear Wood Ltd. New Westminster Forest Products
� Howe Sound Pulp & Paper Ltd. Port Mellon Forest Products
17
ANNEX 1:
� Norske Skog Lysaker, Norway Forest Products
� West Fraser Timber Co. Ltd. Vancouver Forest Products
� Weyerhaeuser Company Federal Way, Washington— USA Forest Products
� Ansatel Communications Inc. Vancouver ICT — Telecommunications
� Sierra Systems Group, Inc. Vancouver ICT— Consulting
� Momentum Technologies Vancouver ICT— Outsourcing
� Pivotal Corporation Vancouver ICT— Outsourcing
� Datawest Solutions Inc Vancouver ICT— Software
� S.C.S. Solars Computing Systems Inc. Portland, Oregon— USA / Vancouver ICT— Software
� Midnet (Canada), Inc. Reno, Nevada / Vancouver ICT— Telecommunications
� Empower Technologies, Inc. Richmond ICT— Wireless
� Sierra Wireless, Inc. Richmond ICT— Wireless
� Can Achieve Consultants Ltd. Vancouver Immigration Consulting
� Royal Indian Raj International Corp Vancouver Infrastructure Technology
� Borden Ladner Gervais Vancouver Legal Services
� BHP World Exploration Inc. Vancouver Mining
� Golden Patriot Mining, Inc. Vancouver Mining
� Meridian Peak Resources Corp. Vancouver Mining
� Proam Explorations Corporation North Vancouver Mining
� Teck-Cominco Vancouver Mining— Copper
� Pebble Creek Resources Ltd. Vancouver Mining— Exploration
� Westcoast Drilling Supplies Ltd. Delta Oil & Gas
� International Play Company, Inc. Langley Other (Play Structures)
� Singh, Abrahams and Joomratty (SAJ) Surrey Other Services (Legal)
� Syndel Laboratories, Inc. Vancouver Pharmaceuticals and Animal Health Products
� IPCS International Inc Surrey Project Management and Marketing
� Quester Tangent Sidney Transportation Infrastructure & Services
� Verus Group Vancouver Transportation Infrastructure & Services
� Uniglobe Travel (International) Inc. Vancouver Travel Services
ANNEX 2: BUSINESS-FOCUSED INDIA-CANADA ORGANIZATIONS IN BC
ASSOCIATION NAME CONTACT PHONE
� Canada India Business Council (BC Chapter) Valli Chettiar, President 604-661-1006
� Fraser Valley Indo-Canadian Business Association Andy Sidhu, President 604-852-2288
� Indo Canada Chamber of Commerce (BC) Ab Berar, President 604-266-8073
� Indo Canadian Business Chamber Vivek A. Savkur, Chairman 604-303- 0509
� Indo-Canadian Business Association Ken Dhillon, President 604-377-9015
� North American Association of Asian Professionals - Vancouver Bernard Seo, President 604-515-5771
� Punjabi Market Association Daljit Sidhum, President 604-324-5711
� Sino-Indo-Canadian Business Association Hardev Bal, Director 604-327-5696
� The Indus Entrepreneurs (Vancouver) Randy Garg, President 604-878-1843
� The Society of Punjabi Engineers And Technologists
of British Columbia Ted Singh, President 604-785-5023
18
NOTES
1. Merchandise trade statistics are adapted
from Trade Data Online. Industry
Canada. 24 August 2005.
<http://strategis.ic.gc.ca/sc_mrkti/tdst/
engdoc/tr_homep.html>.
2. Assanie, N. and Woo, Y.P. (2003).
Maturing Canada-India Services and
Investment Linkages. APF Canada:
Vancouver.
3. See Assanie, N. and Woo, Y.P. (2003).
What Works, What Doesn’t in the
Indian Market. APF Canada: Vancouver.