New Book in November 2016 by EUFAJ Author Sourajit Aiyer: Capital Market Integration in South Asia – Realizing the SAARC Opportunity

Lee Kuan Yew, credited for converting Singapore into an economic success, once described ASEAN as “Unpromising Start, Promising Future”. This phrase can also describe SAARC, the South Asian Association for Regional Cooperation of countries around India, Pakistan and Bangladesh, which has seen few successes as geopolitics slowed progress. Institutional investors use acronyms for groups of developing countries, but all is not rosy with these groups either. At such times, SAARC doesn’t look too bad. SAARC is a combination of sizable Emerging and Frontier markets with low correlation. While India is the largest in size, the other SAARC markets have seen decisive improvement in their metrics relative to India. Return on Equity and Profit Margins of top companies in Pakistan and Bangladesh has improved relative to India; while Sri Lankan companies have seen buoyant topline growth. The combined package should help counter volatility of single-market exposure. Investors may argue why they should look at SAARC asset class, and it is better to look at India or Frontier markets (FM) separately. But India benefits from the returns and low-correlation of SAARC’s FMs, while the FMs benefit from India’s size. A SAARC portfolio can increase the upside from multiple growth enablers, while minimizing the downside due to low-correlation constituents. A SAARC asset class may hasten country-specific funds for South Asian FMs, as current FM funds have only a small allocation to them.

Economic projections show the opportunity of SAARC vs other prominent regional groups like ASEAN, BRICS, Next-11, etc. The incremental economic size SAARC will add from 2014-2020 is next only to BRICS and Next-11. SAARC ranks high in savings growth, savings rate, and aggregate savings as of 2020. Capital market penetration is low, so depth has headroom to expand. Income is more evenly distributed, so investor breadth has headroom to expand. SAARC has the youngest demographics with a near absence of social benefits. Incremental capital formation is amongst the highest in SAARC. Not only is SAARC a large consumer base, it is building production capabilities across sectors.

As this economic story unfolds, it should translate into a financial story. This book discusses possible capital market Products/activities which regional stakeholders could explore to help realize the economic opportunity in this region. Some ideas may be implementable now; while some may be implementable as markets mature further. This book includes extensive data analysis of SAARC’s economic projections, and corporate performance and market indicators.

The purpose is to mobilize investment flows into regional markets, by providing scope for diversification, yield and risk mitigation; building product depth of smaller markets; and reducing information opacity for pricing efficiencies. Ideas are both conventional and unconventional. Unconventional ones convert SAARC’s unique challenges into ideas for capital markets. Specific rationale for institutions and retail investors is written with each idea. Products have to be viable. Hence, a focus is on how to deepen awareness of new products and markets so that asset flows increase.

Any integrated product has to take into consideration ground-realities. Bringing in an anchor partner might help counter implementation challenges in a geopolitically-sensitive SAARC, i.e. from a country that has bilateral interests with SAARC members individually and is looking for returns from overseas investments. Such an anchor may hold sway with SAARC members, which may enable faster agreements. Even if one or member remains disagreeable, the structure of these product ideas has been kept flexible to allow implementation with only few agreeable members.

In a region which is unexplored as an asset class, performance will be the kingmaker. This book includes the author’s CDCF Portfolio basket for the SAARC asset class, which selects the best fundamental-performers on a rolling basis. While this may not give equal representation to all countries, it selects the best performers. Relative comparison of this basket highlights its outperformance on risk-return parameters vs prominent indices of other regions.

It is an opportune time to look at SAARC. Recent years have seen new governments in member countries stressing their commitment towards economic development and regional relations. It makes it a hot iron to strike now. Above all, it is reasonable that SAARC as one of the world’s regional integrations – by the way always supported by the European Union – discusses about itself as a financial market, and this in view also of China. A comparison with Europe shows that it is good to have competing markets.

Sourajit Aiyeis a senior manager in investor relations and corporate planning with Motilal Oswal Financial Services, Mumbai, a leading Indian capital markets company. Previously he worked in equity trading operations with UBS Investment Bank, London; in financial analysis with Reliance Broadcast, Mumbai; and in financial research with Evalueserve, Gurgaon. He has done internships with Tata Motor Finance, Delhi and Grameen Bank, Bangladesh. He has written on over 60 unique topics in over 30 publications across 13 countries, including besides this Blog also European Union Foreign Affairs Journal (EUFAJ). He is also the author of a LIBERTAS Paper „Flying with the Winged Elephant – Niche Opportunities for Global Businesses that May Emerge in India“, see more:

See the new book: 


India’s multi-aligned approach in an increasingly tri-polar world

By Sourajit Aiyer

The author is a seasoned writer for many Major Asian and European papers and news portals. Sourajit Aiyer from India is expert on economy, also being a professional in a Mumbai financial company. Originally published in Society for Policy Studies‘ South Asia Monitor, India.

India wants constructive engagement with multiple nations. But will it succeed in an increasingly Tri-Polar world? In fact, the challenge is not how much India wants to be part of any one group. Rather, it seems to be how much they want India to be part of them, and the extent of co-operation, reconciliation (and arm-twisting) they might just do.

Tri-Polar Troika: USA was the sole superpower after the bipolar Cold-War ended with Soviet Union’s demise. Then, China started flexing its geopolitical muscle using its manufacturing boom-led foreign exchange corpus to woo developing nations. It is fast expanding its military presence in its neighborhood. Russia has also become assertive now in expanding its influence in Eurasian and Middle East regions, backed by the might of its defense establishment. It is quite a coincidence that the superpowers are often the biggest producers and exporters of defense arms. This troika may represent how the world’s polarity will shape in coming years. USA continues to be backed by key allies in Europe and Asia-Pacific, though its ties with a Sunni Muslim ally is in doldrums. Russia is aligning with Shia Muslim nations, and reining together CIS nations as a Eurasian block. Its military adventures in Ukraine made the West skeptical; who placed economic sanctions to sort-of control its ambitions. China is a game-changer and making the US establishment most insecure. It has substantial economic partnerships with Asian and African nations, where it is building ambitious transport and energy infrastructure through engineering-cum-funding deals. This is also creating long-term consumer markets in those nations for China’s vast production output. Its military excursions in regions like South China Sea and South Asia are causing concern amongst the incumbent powers, even as they maintain friendliness on the surface.

India’s Approach: India’s Modi has rightly maintained a multi-aligned stance, and has spent effort to win partners in each group. In fact, the challenge is not how much India wants to be part of any one group. Rather, it seems to be how much they want India to be part of them, and the extent of reconciliation, co-operation (and arm-twisting) they do!

USA has been working to recognize India as a partner of equal status, despite being pro-Pakistan during the Cold War. This about-turn in US approach to India is in contrast to how Nixon-Kissinger viewed India, and shows the extent of reconciliation the USA is willing to do to adapt to changing times when its ties with Pakistan hit a low due to issues relating to Pakistan’s handling of terrorists. USA is trying to step up its defense partnership with India including arms exports and technology transfers, possibly as it is the only country in this region that can balance China. Given its size, India remains lucrative for US businesses, although offshoring remains contentious. Partnering with a secular India is a good bet to combat a rise of radical Islamization. However, the US condemnation of India for testing a submarine missile shows a higher-hand attitude. India has to be watchful that this reconciliatory approach from USA does not cost India its own interests. Bringing India to its side can help US break the unison of a sizable economic bloc like BRICS, which India cannot allow. Keeping a multi-nation approach can help India eke the best terms for partnerships.

Russia was dominant in India’s defense supplies, and its co-operation is extending to transfer of critical technologies. Even the US has hesitated on this with Korea, its close ally. USA is insisting on end-user agreements with India, but Russia is becoming agreeable to partner without such agreements. With India keen on defense manufacturing, such technology-transfers may augur well in the long term, but India needs to watch it does not compromise on the terms. Also, Russia’s exports are of latest technologies. Given the leeway it is willing to give, it can help India negotiate with other countries. Keeping a multi-nation approach can help India eke the best terms for procurements!

Modi has made efforts to create inroads with China. While it has opened doors to Chinese companies, China wants deeper access into India. It has been vying for the BCIM Corridor and extending Nepal railway link into India. Given China’s links with Pakistan, India has been cautious not to compromise on national security in any manner. But given the slowness from India’s side, there seems to be some arm-twisting, possibly with the objective to make India agree. Both nations know China’s influence over Pakistan is the best bet to control militancy from Pakistani soil to India, given Pakistan is disproportionately dependent on China today. This seems a pawn China is indirectly playing. While several countries and UN branded Pakistan-based elements as terrorists, China seems to be selective. China blocked India’s appeals against Maulana Azhar and Zaki-ur-Rehman Lakhvi, citing UN provisions. These tactics seem to suggest that if India comes on China’s side, it may use its influence over Pakistan to rein in such elements. It is also opposing India’s entry to the UNSC and NSG, despite the world agreeing. One cannot say if these are true or just a fancy, but China’s expanding assertiveness across Asia raises questions, since India forms a critical component of the continent. India fears if it agrees to China, it may compromise its internal set-up to security threats from Pakistan, or a lifetime of paying Chinese debt, or a free-flow of cheap Chinese imports which can cannibalize India’s own production. Keeping a multi-nation approach can ensure India does not pay a price by disproportionately engaging with only one group.

In conclusion, this multi-aligned approach may show India as a “swing-state”. But in a world seeing such polarity, India needs to create adequate supplies at best-prices for the investments, technologies and critical imports it needs.

The View from India: Four Trends that could Change the Way Businesses Work

By Sourajit Aiyer (Mumbai, India)

Gartner, the IT consulting major, said at a recent conference that a digital disruption to business is occurring approximately every three years. Current discussions at the World Economic Forum on the 4th Industrial Revolution also speak on similar lines. However, this article is not about digitisation, per se. Rather, it is on how I believe these factors may change the way we look at, and measure, our businesses, whether as an owner or as an employee.

Profitability maintenance vs. profitability growth

Businesses may eventually measure profitability maintenance, rather than profitability growth. Frequent disruptions to business models means that the average life of a product in the market is shorter. The time a product has to hit the market, grab the buyer’s attention, notch market share, and make enough sales over-time to increase its profitability from it, is reducing. As such, many products may not even reach break-even before technology evolutions necessitate moving on to the next big idea, throwing the earlier product’s feasibility studies out of the window. In short, few will make profits from their investments and many will simply lose capital.

It does not help that markets are open today, competition is high and business models are getting unbundled, thus increasing the scope for potential disruptors. The competition-induced price war is making most businesses a volume-game, rather than a value-game. Consumers‘ desire today for instant-gratification may be a choice, but business-owners are facing a compulsion to realise instant-gratification from their investments as product/technology shelf-lives shorten, time to realise returns from earlier investments reduces and there exists a constant need to infuse new capital into the next new idea. Add an intensely competitive environment to that, and expecting a sustained growth in profitability may soon be a thing of the past for corporate boardrooms.

Rather than waiting to see if they grow their profits or not, businesses may think of it as an achievement if they can just maintain their profitability, rather than see it decline in comparison to their competitors. Thus, at the rate events are moving in today’s business world, the yardstick to measure profitability may soon shift.

Taxation may move away from wages and profits towards wealth

Recent news tells us the economic inequality in the world is only set to intensify. Few will become wealthier, while many may move lower in prosperity. The access to capital and technology to pursue high-end innovations is available with very few. Those who do not have access to technology may buy it or develop it, but that comes at a high cost and at a lag which may anyway nullify the benefit. Building a competitive edge for those who are short of capital is a thing of the past. At such times when the scope to garner profitability is getting skewed towards those companies who have capital, corporate taxes may move towards those who make moolah through easy access to capital, as only they can create wealth.

The remaining companies will also not be in a position to give sustained increments to workers‘ wages. Hence, income taxes on stagnant wages will only make the public more furious. In democratic nations where vote-bank matters, income tax may even move towards wealth, rather than wages.

On the other side, taxing innovations is also not correct, as it creates a disincentive to innovate. Hence, one may look at a version of an inheritance tax, like that in Britain. This taxes those who gained wealth by inheritance, and not by their own effort. This does not disincentivise the urge to innovate, but rather takes the sheen off the proverbial silver spoon. Inheritance tax does not exist in most countries, but it may replace any shortfall in income tax or corporate tax in quantum, due to the sheer volume of wealth that the few rich, and especially their future generations, may enjoy.

Innovative, non-monetary incentive structures

Today, there is nothing called employee loyalty. Employees know very well that they have leverage if they have specialised skills that can help companies innovate and gain competitive edge. However, the lifetime of a relevant skill and the time to monetise one’s existing skills are getting shorter — just like the life-time of a new product/technology. Attrition for specialised talent will be high as long as the skill is relevant, supply is less, and there is demand for that skill from someone willing to pay more. Companies obsessed with maintaining their profits at the cost of wage growth will bear a fiercer brunt of this attrition, since skilled employees view company-owners as making money on the back of their skills while they are left twiddling their thumbs.

Whether companies are paying too much for talent vis-a-vis the returns generated by them or time-frame till when their skills are relevant is another challenge to measure. Creating a win-win incentive structure is the only way, but its life can also be limited since other companies may be willing to bear a loss in the short term to ensure a talented employee comes on board. Balancing fixed and variable components remains a struggle.

Ownership stakes may work, as long as there is a passion to participate in the company’s growth. Incentives that include training costs to learn new skills may actually have a real relevance for employees, as it prolongs the relevance of their skills. It is surprising to see that very few companies sponsor training and development programmes for their employees, despite it being a non-monetary incentive that people value the most today. Another non-monetary incentive is flexibility in working-hours. A strict 9am-6pm attendance may be difficult for those in tricky family set-ups, but who may still be able to devote the adequate hours to get the job done if they have the flexibility to manage their time. Of course, it works better in singular rather than team-based tasks, but a categorisation of work-needs for employee groups may be needed now more than ever.

Battle for market share rather than market size

Zero customer loyalty in a discount-marketing world means a battle for market-share, not market-size. As customers in a highly competitive and disruptive business world, it is gratifying to see all the discounts being offered to grab one’s attention. The way wage growth and corporate profitability are headed in a high-tax and high-inflation environment, many consumers may eventually not even have the disposable income to pay these discounted prices, but that is a different story.

Coming back to the topic, discount-marketing means customer loyalty is zero and he will switch to the next lowest-priced product once his current brand cannot afford discounts any more. What it means is that most businesses are ending up playing mainly for market share, till the time the competitor has no more capital left to afford the accumulated losses in their balance sheet. While they may claim they are deepening the market-size in untapped segments, the attention to measure market share is becoming all the more crucial, given the short-lives of each product and the desire to derive profits from further discounted prices.

Ignoring market share may throw the company out of the market altogether, despite its efforts to deepen the market itself. In layman terms, a company selling at a price lower than cost is incurring a loss, and regular capital infusion would keep that company solvent. When this tap dries, its future is doomed. All companies in discount-marketing are vying for this

Originally published in Huffington Post, India. The author, Sourajit Aiyer, works with a leading capital markets company in Mumbai/India. Previously, he worked with financial companies in Delhi, London and Dhaka. As a personal interest, he writes for business publications and runs his comics page. He has written on over 60 topics in 30 publications across 13 countries. His news/satire comics page is now on Facebook, “Sourajit Aiyer Comics” LIBERTAS – European Institute GmbH has published his book „FLYING WITH THE WINGED ELEPHANT – Niche Opportunities for Global Businesses that May Emerge in India “ (see more information under

India’s call for ‘change’: The country needs a higher participation from women

By Sourajit Aiyer

The author is a finance professional in India. Views expressed are entirely personal. Sourajit Aiyer is also the author of „Flying with the Winged Elephant – Niche Opportunities for Global Businesses that May Emerge in India“, LIBERTAS Paper 79; see also under In his Blogs and other articles, but also in the above mentioned book (and a longer, multi-faceted contribution on „India: New Business Opportunities“, in EUFAJ 3/2014, p. 88-111, see under or directly:, he raises awareness for India from outside, also pointing not only on inter-cultural issues but also emphasizing the excellent economic cooperation perspectives for all sides, and also awareness for e.g. European perceptions within Indian society.

Controversy rakes up a lot of noise, especially when its cause threatens gender equality. India’s new establishment cannot afford to ignore the challenge a recent such controversy has created, given that Indians voted for this government in the hope of ‘change’. One hopes that the call for ‘change’ includes changes in gender issues as well. The Prime Minister has an economic vision for India, which would need increased participation from women to come into the economic mainstream. However, continued gender issues might just threaten the realization of that end.

Hindu Mahasabha, a right-wing Hindu nationalist group of which Nathuram Godse was once a member, created news in Haryana province by allegedly commenting that young girls should not wear jeans or skirts as that ‘provokes’ mean leading to rape, mobile phones can lead to immoral activities amongst young people, and western clothes spoil Indian culture. The defence given by a prominent member of the group, during a new-debate show on a leading Indian news channel, was that wouldn’t Indian parents want their children to dress in decent, cultural clothes.

However, these controversial comments raise questions on gender issues. One feels it is not so much about whether girls should wear jeans/skirts or talk on mobile phones, as much as it is to do with the tactics of a section of men trying to dominate women by ordering them what they should do or not do. The male ego finds soft targets to boost itself and asserting control over women is one seen in several nations, not just India. One cannot help but think that such comments by right-wing groups might have had similar motivations in mind, as much as they may justify it by talking of protecting cultures. If more Indian women are to enter education and job avenues, and participate in India’s economic vision, then such sections of Indian men need to stop asserting dominance over women, even if they are feeling insecure or threatened by the rise of socioeconomic independence amongst the women.

The alleged comment that appals the most is about the girl’s clothes ‘provoking’ men, thus leading to incidents of rape. While the Mahasabha’s member may defend himself on the TV show by saying wouldn’t Indian parents want their children to dress in decent, cultural clothes, it is horrifying to observe that he did not accord the primary cause for rape to the man’s misconduct. I am sure no parent would want to see their son commit a heinous crime like rape, even more than which clothes are worn. Such comments which potentially indicate that the primary instigator of rape incidents is what the girl wears, raises serious questions on the safety of women. India is already infamous for crimes against women, and it is worrying if men who commit such heinous crimes are not hauled up for their wrongdoing and instead end up finding defence in such immature comments. Another aspect is that if the girl’s tight, western clothes are the main instigator of rape, then how does it explain rape incidents with old women and minors?

No culture is perfect. Every culture has positive as well as decadent aspects, be it western culture or any other. Perhaps that was the sentiment which the right-wing group had in mind when they initially spoke out their views. It can be said that young teenagers specifically may not always have the maturity to understand the possible ramifications that the fast adoption of convenient technology, social media and different clothing has on societies which are ‘in-transition’ – like India. Some boys might interpret wrongly what a girl says, does or wears, due to immaturity of age. Peer-pressure amongst young people is another challenge. One might argue it can sometimes lead to unsavoury situation, even if only as an exceptional case. However, the two observations, about men asserting dominance over women due to feelings of insecurity and placing the primary fault of rape on the girl’s dress instead of the man’s misconduct, are indeed causes for concern.

It was change that Indians wanted when they voted in the federal elections. That change also includes the way in which the society treats its women. If change does not happen, then Indians may get disgruntled. The new federal government cannot afford to ignore such controversies, since the people hope for change from it. It has to swallow the bitter pill by taking on such right-wing groups. Vote-bank politics has already necessitated political parties to appease the rural, ruling communities like ‘khap panchayats’, who are powerful communities when it comes to vote equations. As it is, a leading politician from Samajwadi Party had also courted controversy recently due to immature comments of ‘boys will make mistakes’ while addressing the issue of rape. The new federal government needs to ensure that the hopes and confidence of modern-thinking Indians does not get diluted, as their role is critical for the new government to realize its ambitions for this country. Women comprise almost half of the country, and if their safety, independence and involvement cannot be ensured, then those ambitions will struggle to get realized.

But on a second thought, it might be better to abide by such comments, immature as they may seem. After all, if the Indian society is so immature that it cannot handle women becoming independent socio-economically due to feelings of insecurity, and if it cannot guarantee basic safety and justice to its women against heinous crimes by punishing the perpetrators for their misconduct, then it is better to abide by such comments just so our women stay safe. Safety is something which every Indian todays prays for his daughter, sister, wife and mother in this country. But it will be a sad day indeed, if things really do come down to a situation where abiding is the only alternative.

It is not entirely surprising since this controversy occurred in Haryana province. It has one of the worst gender statistics on aspects like female foeticide and female:male ratio. In any case, any group whosover has no right to order what the people should or should not do. Only the federal and provincial governments have that right. It is ironical to see that same member admitting on that news show that he also carried a mobile phone. The federal government recently had a meeting with the chief of a leading garments maker from Japan, so one expects it does not view western attire as entirely decadent. But one does expect it to act against illogical and immature comments. Right-wing extreme thoughts are a challenge in several countries, including secular, Islamic and Christian nations.

As an ending-note, one might add that the women participants on that same TV news-debate show included Saba Naqvi, Advaita Kala and Shazia Ilmi – each one being an accomplished professional in their own right. India is proud to have daughters like them, and its aspiration should be to have even more daughters like them.


India: Flying with the Winged Elephant

The winged elephant symbolizes the India of the future – a creative, market-oriented but also social India which is open for foreign business. Time for a book which describes this situation!


Mr.Sourajit Aiyer who has published already several blogs here and articles in „European Union Foreign Affairs Journal“ (EUFAJ) has now published this book, as LIBERTAS Paper 79. In this book the young banker who works for a leading capital company of India in Mumbai/India pleads for a knowledge society in his country, for an India „that can…“ and delivers many – also unconventional – ideas for an economic engagement of European (and American) business people who want to diversify their foreign presence. In addition, the business language in India is English, and the legal system is similar to the British common law. Be it SME investment or common activities in Indian infrastructure (highways, inland waterways etc.) or in taking care of retirees from other countries and many others – his hints are valuable and merit to be read.


See more of the booklet under The book is available as e-Book as well as in print edition as LIBERTAS Paper 79. In some days it will also be present for Kindle at Amazon.

EUFAJ 3 / 2014 is out and online. This is the content:

This is the European Union Foreign Affairs Journal (EUFAJ) link to the new issue of 3rd quarter 2014. In this issue which can be downloaded under this link: you can find, among others, the following contributions:

Overseas Countries and Territories (OCTs): Their Current Positions and Relationship with the EU – Ofelya Sargsyan

Ukraine: Can Meaningful Reform Come Out of Conflict? – Marek Dabrowski

Too Blind to See the Threat We Pose to Russia – Andreas M. Bock

The Latest 2014 Standard Eurobarometer: The European Elections Made a Difference

European Year for Development 2015 – The First European Year Dealing with EU External Policy

The Strategic Culture of Authoritarian Regimes: Mountainous Karabakh Conflict in the Limelight –  Grigor Boyakhchyan

Spanish Regional Parliament Recognizes Nagorno-Karabakh’s Self-Determination

EU Commission: New Cooperation Priorities for the Eastern and the Southern Neighbourhood – 5.5 Billion EUR for 2014-2020

Adapting to Arctic ChangeMonica Bjermeland

India: New Business Opportunities – Sourajit Aiyer

Value Africans Place on Education Varies Widely by Country: Africans Often Perceive Personal Connections as More Important to Success – Steve Crabtree 

The whole EUFAJ website can be seen under


India: Packaging the “Package-Tour” Tourism Opportunity

By: Sourajit Aiyer

The author is a finance professional in India. Views expressed are entirely personal. For other contributions of Sourajit Aiyer who lives in Mumbai/India, see the recent blog entries.


Ironically, India features high amongst the Must-See countries of the world, but Inbound and Domestic tourist flows are far less than the potential. Increasing ‘Package-Tours’ for niche tour experiences might be a potential solution to counter some of the challenges to grow Inbound and Domestic tourism in India (Inbound refers to foreign tourists visiting India, while Domestic refers to resident-Indians travelling within India).

Its advantages may counter the industry’s current challenges: The purpose is to stress the advantages of growing the package-tour business. Package-tours may give a more organized look to the industry, which is still largely unorganized and fragmented in India. It may address the opaqueness of practical information that often challenges prospective tourists while planning for Indian destinations. This difficulty in prior planning of an itinerary causes dilemma in the minds of prospects and delays their decision to travel. More often than not, this is a reason why prospects drop India and instead opt for other destinations which have ample planning resources, even if they have fewer sights to offer than India. A more organized industry might reduce harassment that individual travellers often face from local service-providers/touts. Package-tours may deepen the B2B business, which can create incentives for quality adherence and further investments. The potential pie for each service-provider can be bigger due to synergies that B2B business can give, unlike now when the market is too fragmented. Cash-based transactions are common at many Indian destinations and this limits the government’s taxation earnings. Not to mention that cash-based transactions increase the risk for individual travellers due to the need to carry cards/cash. Even the loss of travel cards or travellers’ cheques is a potential loss. Package-tours may increase the transparency and accountability of the earnings of the industry. That would benefit the governments’ earnings and its ability to invest back into developing tourism infrastructure. Investments into much-needed infrastructure like highways, transport and airports in Tier 2 towns would improve the connectivity and access to popular spots. Inbound tourism is a key source of foreign exchange, something which India’s government sorely needs for its current account deficit. Everyone knows tourism is a large employment generator and a more organized industry might make the employment (and related skilling/training) more sustainable and stable. That may also reduce the need of low-skilled temporary workers to constantly migrate in search of livelihood, a major reason for social unrest and crime in India today. As it is, local crime and national security issues are negative publicity. India’s Tourism Ministry has made several initiatives, including overseas promotion from its 14 overseas offices through brochures/collaterals, trade fairs/industry forums, outdoor advertising/TV commercials; E-Recognition facilitation systems for travel service-providers; Campaigns like Incredible India, Colors of India; and a comprehensive National Tourism Policy. However, it needs to ensure faster movement on regulatory issues and project approvals.

Main USP and target customers for this business: The USP of the package-tour business has to be the convenience factor, rather than costs. Target customers for package-tours are often the mid/high-end tourists, as they have a higher propensity to spend. That works well for the business since package-tours can end up being priced higher than an individual budget travel. Budget/backpacker tourists would prefer individual travel as their cost might be lower. But there may be a chunk in this segment too, who may prefer the convenience of a package-tour to visit India. It might open the market to an entire segment of prospects, who are currently undecided about visiting Indian spots. Many expats work in Corporate India today. But many are unable to visit as many Indian spots as they would want, due to the inconvenience of planning and travelling. These expats, and their families who visit them, form a significant chunk of target customers for package-tours. To put all this into the price multiplied by quantity formula, the objective of this article is to increase the quantity variable. Economies of scale might benefit operators in terms of their ROE, while travellers might benefit from competitive pricing in a larger B2B business landscape. One might also add that Services sector typically has higher operating leverage. This would maximize the throughput for the service-provider at lower-than-proportionate incremental cost and Investment.

Niche tours for experiential travel may create differentiation in a mass market: In a mass business like package-tours where customization might be limited, experiential travel might give a scope for more targeted travel plans as per what an individual customer may want. The objective would be that such niche plans provide some degree of customization in terms of what the tourist wants to see and experience in India. That would mean niche tours targeting specific customer groups, rather than a mass bucket of customers that a typical package-tour concept would entail.

Niche, experiential travel that might find favor in India are Ayurveda/Yoga tourism for healthcare addicts, Rural tourism for experiencing customary ways of life, traditional crafts and culture (it would also be alternative to agriculture earnings for the village communities), MICE tourism for trade fairs, events, conferences, sales incentive trips which combine the event with visiting attractive Indian spots, Sustainable Living/Wellness tourism for high-end customers who want an experience of alternate and stress-free living, Medical tourism for patients who prefer high-quality healthcare and facilities at prices more affordable than developed countries, Historical Sites tourism for those interested in history and culture, Buddhist Circuit to Buddhist sites like Sarnath, Bodh Gaya, Kushinagar, Sanchi, Dharamsala, Rumtek, Tawang and Leh for East Asian tourists from Japan, Thailand, Laos, Singapore, etc, and Extreme/Adventure tourism including treks, hikes, camps across extreme terrain which test human endurance.

Educational tourism to familiarize the aspirants to Indian universities/international schools with a first-hand look at the educational facilities India offers. This may require attracting educational consultants and agents from the target markets rather than the prospective students, due to the cost. Economic tourism is another area worth exploring, given that Corporate India is gaining importance amongst global business circles. The objective would be to facilitate first-hand interactions with the Indian industry which would create awareness amongst global businesses of Corporate India’s capabilities in a specific industry. This is something on lines of corporate roadshows/familiarization trips. Homestay tourism is a concept for tourists who seek a more personal and local experience. This is quite similar to a Bed & Breakfast concept, which is quite popular in the UK.

Marketing campaigns by leveraging on Word-of-mouth, Referral prizes, B2B networks, Digital initiatives and Bollywood locales: While trade fairs and industry forums would be conventional platforms for B2B businesses, utilizing word-of-mouth marketing from existing, satisfied travellers might be useful for targeted marketing within the travellers’ community, which would include several prospects. This presupposes that the quality of service standards and expectations of existing travellers were met, since dissatisfied customers can also cause severe negative publicity. A way to incentivize existing travellers towards word-of-mouth marketing might be prizes for referrals who do convert. Incentives for referrals might make word-of-mouth marketing more impactful.  The B2B aspect of this business means extending the reach of marketing by using the network of the various stakeholders, which might be a more targeted outreach. The job of marketing would be shared by more than one, which is always desirable. The stakeholders in a B2B relationship like this would typically be entrepreneurs working on the ground, and their commitment to grow their business would be a critical driver to deepen the industry. Opportunities for tie-ups between stakeholders to form a value-chain of offerings would firm up competition, make pricing and quality more transparent. Digital marketing would be emailers which include comprehensive information for planning, instead of just showing fancy pictures of the Taj Mahal and elephants. This also includes travel planning portals which help prospects explore options, listen to videos of experiences and actually take their final decision to travel. Bollywood shooting locales have been famous for promoting Indian Outbound tourism to Switzerland, New Zealand and Malaysia, and there is no reason to believe the same could not work for boosting Inbound tourism to attractive Indian destinations. Bollywood movies are being viewed globally, not just by the Indian diaspora, but also by a global audience as they are being dubbed in various languages. It can catch as much eyeballs as any other advertising campaign can.

Imperatives for the government and other stakeholders: The Government’s National Tourism Policy has stressed on speedy implementation of projects, developing integrated circuits, capacity building and new marketing strategies. The Reserve Bank of India has made suggestions regarding monitoring the end-usage of foreign receipts and completion of projects within a stipulated period. The Visa-on-Arrival and E-Visa scheme has also gained popularity. E-Visas issued grew from 9,328 in the Jan to Jun 2013 period to 11,953 in the Jan to Jun 2014 period. Other possible facilitations can include single-window clearance for projects to minimize the time taken for approvals, faster decision-making on existing proposals, investment into roads, airports and transport that improve connectivity between key tourism destinations, ensuring that land acquired for hotel projects is not diverted for resale as it can cause a real estate bubble, increasing the supply of hotel rooms across high-end and budget hotels, keeping the pricing of India tours competitive to Asian peers like Thailand, Malaysia, China, and building information channels that reduce opacity of relevant planning information. Last but not the least, a major social imperative that is required is a change in the attitude of local Indians towards foreign travellers (especially women travellers) so that they do not feel uncomfortable, as well as in maintaining the cleanliness of their own tourism destinations.

Investment opportunities abound for foreign investors and strategic partners: Growing the package-tour business would create investment opportunities into several segments. Investment would be useful from strategic partners in the global tourism business, who can bring in specialized knowledge and service platforms which would benefit this business in India. Opportunities can abound for hotel and resort chains, travel planning providers especially those using e-commerce platforms, event planning companies and experiential travel providers, restaurants chains across fine dining, QSR and coffee shops, hard and soft infrastructure like roads, transport and broadband networks, airport developers for smaller, lower cost airports and training centers for skill-creation and knowledge training in the catering and tour services.

In conclusion, the package-tour business can create opportunities for several more segments apart from those mentioned above. If the tourism footfalls grow, it would enhance income, earnings and employment for the industry, and promote further investments into the sector. Global providers might do well to explore this opportunity in India.

India’s unique business opportunity: Becoming a potential destination for affluent retirees from across the globe

By: Sourajit Aiyer

The author is a finance professional currently living in India. He has contributed to this blogsite and also to EUFAJ (forthcoming issue 3/2014). Views expressed are entirely personal.


For many who have not realized, India faces a unique business opportunity as a potential destination for affluent pensioners/retirees from across the globe. Whether India can grab this opportunity or not, it is imperative to appreciate why this is an opportunity for India in the first place.

Home-countries are expensive and inconvenient at old-age: Old-age living in most developed countries is expensive, and moreover, inconvenient. The social structure of extreme nuclear living means many pensioners go through the cycle of daily living by themselves. There are retirement homes and a social system that supports pensioners. However, daily living in the old-age remains expensive and inconvenient for many. To sound anecdotal from my own observations, a visit to any department store in UK or European cities on a typical Sunday morning would vouch this. In contrast, India is a comparatively cheaper place to live in. This is despite the fact that cost of living in India has also grown leaps and bounds in recent years than historical levels. The recent movement in the Indian Rupee also means that every US Dollar can fetch more in Rupee terms now.

Demand for premium, convenient and secure townships: Real estate townships have come up in Indian cities which feature every convenience and facilities that one can imagine. Living in such complexes is relatively secure since professional security agencies are appointed along with daily maintenance of people entering/exiting. Many of these townships are expensively priced and only the affluent fraction of India’s population can afford to pay that premium. Influx of foreign affluent retirees would help enlarge the demand pool for such developers, and help them avoid situations of unsold stock of apartments or condominiums. If demand actually swells, it may incentivize developers to initiate more projects, which would give a fill-up to ancillary industries like steel, cement, transport, materials–which are high employment generators in themselves.

Generics-pharma and Medical-tourism aspirations: India aspires to become a leading generics-pharma manufacturer, as many drugs are nearing the end of their patent periods in Western countries. This means India is competitively placed to cater to the pharmaceutical demands, as one assumes that generics would lower the cost of medication significantly. High cost of medicines is a challenge for the old-aged across the world, and local generics manufacturing might help bring down this cost for global retirees. In the context of medical tourism, India houses state-of-the-art specialty hospitals which offer the whole range of medical care. Indian doctors have made their mark globally. While India was a destination for patients from Asian and African countries historically, focus on medical tourism is now bringing in patients from Europe, USA and Japan as well. So why not get them to live here, so that taking care of their medical needs would become convenient for both the parties concerned.

Employment for professional care-givers: India has adequate manpower to cater to caring for such people. In Indian families, the family members themselves act as care-givers to old-aged ones as most professional care-giver agencies are expensive for Indians. However for foreign retirees, who have typically made their money at comparatively higher income levels in USA, UK, EU, Japan or Singapore might not face this affordability concern in India that Indian families face. Moreover, this serves a major employment opportunity for the country’s vast semi-skilled population.

Rationale for global affluent retirees: Foreigners who want to live relatively inexpensively and maximize the utilization of their corpus should look at relocation. They can stretch their local currencies further in Indian Rupee terms. India now has the infrastructure and facilities to cater to such a population, all of which is available relatively cheaper. With interest rates in developed countries are at lows, the yield earned on their risk-free financial assets is minimal. It makes financial prudence to spend in a relatively low-cost country, so that the earnings-expense equation is favourable. This is the basic rationale why global affluent retirees should look at India. Affluent retirees might be live in India only from the interest income they earn, without even touching their capital or reallocating it to riskier financial assets. Secondly, India is officially home to a number of religions including Christianity, Buddhism, Islam, which most global retirees from Europe, USA, Japan would belong to. One does not envisage issues arising in foreign tourists practicing their own religions. Thirdly, English is the main business language of India. Local media, road signs, information materials are in English, apart from vernacular languages. Even low-skilled workers can converse in broken English. Next, the advantages of care-givers, medical facilities and secure townships have been discussed in above sections. Lastly, India houses fascinating tourism destinations, which might attract foreign visitors. That would incentivize Indian tourism authorities to spruce up their destinations and infrastructure for foreign visitors.

Better quality for foreign visitors: Every country likes affluent tourists as they will spend more on local products and services, as compared to budget tourists. Visa policies of most developed countries are skewed towards this mind-set. But that is correct– since such affluent tourists bring in more foreign currency which supports the local tourism infrastructure. Extending preferential treatment for such long-term visitors within India’s visa policies would help bring in people who will address tourism, medical care, real estate and employment areas for the country. Such long-term visas are issued on showcasing a certain level of financial security, which also gives a level of comfort to the visa authorities on the genuineness of visitors. Competing countries like Malaysia, Thailand, etc have special visa plans to enable long-term stay for elderly retirees from Japan etc.

Addressing risk factors: The biggest risk that tourists face in India is of safety. The good news is that large-scale advocacy by common-Indians has shaken up the government to address this. Safety and security are risks even common-Indians face, not just foreigners. The new government has made the right noises to address women’s safety, etc. But still a lot is still needed. However, one might also add that like any smart traveler, one needs to know which places to avoid. The second risk is availability of information and literature. Tourism websites need to provide information on infrastructure, processes and facilities that global retirees can use to build their decisions, and make their transition smooth. India might team up with professional agencies that cater to people looking to live abroad. Lastly, the investment into local real estate poses a risk. Many retirees might not want to sell their houses in home countries as they may want to return after few years. Garnering the capital to buy units in India might involve liquidating some financial assets which may not be desirable either, despite the outlook on residential prices in India. In such a situation, taking units on rentals is the only way out. But that assumes there are enough affluent Indians available to buy the lot of premium units in the first place.

In conclusion, there is significant business case for India to pursue this opportunity, although a lot is needed yet. Affluent foreign retirees should also look at this option for their advantage. As an ending note, one might add that many global retirees have been business-owners. Being in a high-growth market in India might make them rethink about setting up a business again. India can also gain from the knowledge and insights of their business experiences. All that might sound far-fetched, but the 21st Century is the Knowledge-Century, after all.