Posted on Tuesday 21 December 2010 byUlster Business
Hanif Lalani with Enterprise Minister Arlene Foster and Invest NI’s Jeremy Fitch
Northern Ireland’s new investment ambassador Hanif Lalani is impatient to get more Indian companies investing in the province and tells Symon Ross that the opportunities for firms that partner with them are potentially huge
Hanif Lalani is a man who likes to get things done quickly.
A little over a month after his appointment as an investment ambassador for Northern Ireland, the former senior executive at BT was in India to promote investment in, and trade with, Northern Ireland.
On the week-long trip in September, Lalani and Invest NI chief executive Alastair Hamilton held meetings with CEOs, CFOs and Chairmen from 16 of the sub-continent’s leading companies, including both the massive “tier one” conglomerates and smaller players with global potential.
“I was in a hurry. I said let’s not waste time because these things have a shelf life,” Lalani told Ulster Business.
“If we look at the global economy, there are only two big powerhouses – India and China. If you are not in any way working with them or partnering with them then the chances of success over the next 20 years are minimal.”
Certainly it is hard to look on India as just an emerging economy any more, given the country has a GDP growth rate of almost 9%. And Indian corporates already own some of the UK’s best-known brands, including Jaguar Land Rover, Corus Steel and Tetley Tea.
Invest NI runs regular trade missions to India, many of which have been led by the Honorary Indian Consul in Northern Ireland Lord Rana. But while many Northern Ireland firms have won export business there and several Indian-owned companies already have outposts here, Lalani believes there is massive untapped potential for some local companies to partner with Indian firms.
“What we found in India is that they are awash with cash. We couldn’t have hit it at a better time. While in the past they have been looking inward, now they are looking to spend it outside,” he says.
“The message I got is ‘we’ve got lot’s of money, we’re happy to throw some of it at Northern Ireland’. The majority of them said we’re in a rush, give us an operation to buy and we’re in. We’ll put a team on it and be up and running in three months. Their focus was on a quick start – give us an existing business we can use as a base to grow from.”
The former BT man understands this might cause concern about the loss of locally-owned enterprises, but he believes that for some firms with ambitions of competing on the world stage it could be the fastest way to achieve that goal.
“The Indian companies are not looking to close local businesses, they want to use their capabilities. This is about how do we partner with them, work with them. At the end of the day if you come away with a small percentage of the growth they have it would be great for our economy,” he explains.
“The one thing that would help me is people saying I’ve got a small business here – be it in mining, aerospace, IT, whatever – and I want to be part of a bigger company. They’ve maybe got £5m turnover – I could help them move to £30m or £40m by becoming part of a bigger group. That’s the quickest way to grow the economy.”
Lalani is remembered in local business circles from the years he spent as Head of BT Northern Ireland in the late 1990s and early 2000s. Since leaving BT late last year after stints as group finance director and chief executive of BT Global Services, Lalani has pursued several projects, including working with private equity firms Apax and Blackstone.
His role as an investment ambassador is a voluntary one which he expects to fulfil for “two to three years”, using his experience and global connections to open doors and “bring some benefit to the people of Northern Ireland”. Lalani was awarded an OBE for services to business in Northern Ireland in 2003 and it is clear he still has a real affinity for the province. He believes that having lived and worked here he is able to give a true representation to Indian firms of what they can expect.
“The feedback from some of the meetings we had was that when I said go and do business in Belfast, I wasn’t pushing it because I was paid to push it. I’m doing it because I believe in it. If people see that passion you have for a place it rubs off on them as well,” he says.
“Having been in Northern Ireland I can actually convey to people what it is to live here, I can convey the culture, the education system, I can give my personal experiences and I can describe the growth of the Asian population in Belfast. When I came we couldn’t fill a hall for a Sunday movie, and now ten years on the population has gone up to 4,500 or 5,000,” he adds.
While many people think of Indian investment in Northern Ireland as being purely IT, business process outsourcing or call centres, many of the companies Invest NI met with were the big family-run companies whose business interests span other sectors such as engineering and manufacturing.
“We are very good at IT and software in Northern Ireland and they know that, which is why they want to come here. You have to have a USP and everyone in NASSCOM knows that IT is strong here. But it is not only IT,” he says.
“I can tell you of the leaders we met none of them saw India as their only market. They have many different businesses operating around the world.”
While relishing his role, Lalani says he does not want to tread on the toes of Invest NI’s teams in Northern Ireland and India. He notes that the staff in Mumbai have already made a good impression with the Indian business community and are creating an identity for Northern Ireland separate to the other UK regions competing for investment.
He will be back in India in February at a big event run by NASSCOM – the organisation representing the Indian software industry – where the intention is to have follow up meetings with the C-level executives met in September and move the process on.
“The ability to get to the big players in India and to make sure we have the entry level conversation at the board level, is easy for me to make happen,” says Lalani, who has high level contacts from his time with BT, which was among the biggest IT importers from India during his time there.
“What I want to ensure is that having made the introduction and put my reputation on the line by introducing those guys, I want to make sure that the follow through happens and we deliver what we promise to the customer.
“We’ve got the strongest pipeline we’ve had with India over the last 10 years, following the last visit. The difficulty now is, like every opportunity, converting some of that pipeline.”
India: what are the opportunities?
Population: 1.2 billion, including an estimated middle class population of 300 million.
Trade: Bilateral trade between the UK and India is £ 12.6bn. India’s economy is one of the fastest expanding in the world, with a rapidly expanding consumer class. The UK has strong ties with India, and UK companies are well positioned to take advantage of this growing export and investment market.
Growth: Economic liberalisation, including reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country’s growth, which has averaged more than 7% per year since 1997.
The Indian Infrastructure sector has the potential to absorb US $500bn in FDI by 2012.
The Indian telecom industry is growing at the fastest pace in the world and India is expected to become the second largest telecom market by 2010. Around 10 million mobile handsets are sold per month, second only to China.
India’s automobile industry is predicted to be among the top five vehicle producers by 2014.
Sectors offering greatest opportunity for NI firms: Advanced Engineering; Agribusiness, Food and Retail; Creative & Media; Defence and Security; Education & Skills; Energy; Financial & Professional Services; ICT; Infrastructure; Life Sciences.
Strengths of the market: India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India’s output, with only one-third of its labor force.
India has capitalised on its large, educated, English-speaking population to become a major exporter of information technology services and software workers.
India escaped the brunt of the global financial crisis because of cautious banking policies and a relatively low dependence on exports for growth. Domestic demand, driven by purchases of consumer durables and automobiles, has re-emerged as a key driver of growth, as exports have fallen since the global crisis started. India’s fiscal deficit increased substantially in 2008 due to fuel and fertilizer subsidies, a debt waiver program for farmers, a job guarantee program for rural workers, and stimulus expenditures. The government abandoned its deficit target and allowed the deficit to reach 6.8% of GDP in FY10. Nevertheless, as shares of GDP, both government spending and taxation are among the lowest in the world.
Challenges: India’s long term challenges include widespread poverty, inadequate physical and social infrastructure, limited employment opportunities, and insufficient access to basic and higher education. Over the long-term, a growing population and changing demographics will only exacerbate social, economic, and environmental problems.