Despite President Donald Trump's chastise against U.S. companies for offshoring American jobs and his potential restrictions on the H1-B working visa program, both of which could significantly affect Indian businesses, U.S. tech companies are seen recently pumping up resources or speeding up plans to launch in the Indian market.
Outsiders might be confused by the strategic moves of companies like Action Alerts PLUS holding Apple Inc. (AAPL - Get Report) , which has been particularly active in expanding its presence in India, but experts believe that the earlier these companies manage to penetrate the Indian market, the better poised they are to win for the long term.
Elon Musk, Chief Executive of electric car maker Tesla Inc. (TSLA - Get Report) , also seems eager to grab this opportunity and tweeted on Tuesday that he hopes to enter into the Indian market this summer.
"These companies are going in at the right time. The India opportunity isn't massive yet but the growth suggests that it could be in 5 to 10 years. Coming in early helps position them for that," said Kartik Hosanagar, Professor of Marketing at The Wharton School of the University of Pennsylvania.
Santosh Rao, Head of Research at Manhattan Venture Partners, believes that Tesla's push into India makes strategic sense. "The market opportunity is too compelling to ignore," said Rao. "India has a growing middle class with rising disposable income. The manufacturing cost will also be relatively lower."
The Indian opportunity, represented by a huge population, growing middle class, large burgeoning upper class and deep smartphone penetration, has already attracted many companies ahead of the likes of Apple and Tesla.
According to data from the WorldBank, India has a population of 1.311 billion and a $2.095 trillion GDP as of 2015. Annual GDP growth is projected at 7.74% in 2018.
Jeff Bezos, disappointed by Amazon's (AMZN - Get Report) failure to capture the massive Chinese market, has invested a total of $5 billion in Amazon India since July 2014 to not only compete with its nemesis Alibaba (BABA - Get Report) but also local rivals Flipkart and Snapdeal. Meanwhile, Alibaba also upped its ante in India by acquiring local e-payments provider Paytm for $680 million in September 2015.
Consumer companies like Coke (KO - Get Report) , Procter & Gamble (PG - Get Report) and McDonald's (MCD - Get Report) have had success in the region as well and now more high-tech companies are entering the region.
Even the Canadians are getting in on the action. On Monday, Canada's Blackberry (BBRY) , which has a substantial presence in the U.S., announced it had inked a licensing deal with Indian telecom firm Optiemus Infracom to "design, manufacture, sell, promote, and support" BlackBerry phones in India, as well as in Bangladesh, Nepal and Sri Lanka.
The next big investor in India seems to be Apple where CEO Tim Cook has already planned for it to be the next growth market in the face of a slowdown in China. The company was reported to have been negotiating with the Indian government for concessions to start manufacturing in India, which came after a previous proposal to sell used iPhones in the country that had met with severe resistance.
"It has to be seen relative to their options in China, which is a natural competitor to investment in India," said Anindya Ghose, Professor of IT and Marketing at New York University Stern School of Business.
"The average Indian consumer does not need as much as 'localization' in high tech and high value assets as the average consumer elsewhere, such as in China. What that means is what works in the US will also, for the most part, work very well in India," said Ghose. "Relatively speaking the average Chinese customer requires a lot more localization and customization in products and services, which naturally increases costs for the firms."
But whether these tech firms will succeed In India or not depend on their strength in relation to that of local competitors, added Ghose, who thinks the glass may already be half full for many of these companies.
Here is the exchange on Twitter:
@goel_ishan Hoping for summer this year- Elon Musk (@elonmusk) February 7, 2017