Canadian business has largely been on the sidelines when it comes to deal-making with India but that doesn't need to be the case — especially since many areas of Canadian expertise are well-suited to the emerging giant, PricewaterhouseCoopers (PwC) said in a report Wednesday.
Although merger and acquisition activity between the two countries has been on the rise, Canada still lags behind the U.S., PwC said in its latest Capital Markets Flash.
Thanks to its educated workforce, growing middle class, strong demand and globally competitive returns, India is arguably the world's most promising emerging market, it said.
"While Canada was principally on the sidelines in the 2005 – 2007 cross-border M&A boom with India, there are a number of reasons why Canada should be front and centre in the next generation of cross-border deal making," said Kristian Knibutat, national deals leader for PwC.
Overall, trends in India point to a very positive investment climate, she said. The Indian government’s commitment to invest billions in infrastructure projects presents an important opportunity for Canadian business. Agriculture experts in this country should also capitalize as India works to industrialize its farming economy. And the population’s immediate need for energy, resources and financial services presents strategic Canada-India partnership opportunities.
Last week, Bank of Canada governor Mark Carney said the private sector has a role in ensuring the recovery continues as threats to economic growth, including Europe’s debt woes, persist.
“New suppliers need to be sourced; new markets opened; a new approach to managing for a more volatile environment developed,” Carney said.
So far this year, consumer discretionary, healthcare, energy and materials sectors have seen the most closed cross-border deals.
Earlier this month, a Quebec-based water treatment company landed a milestone joint-venture in India. H20 Innovation was awarded contracts worth $2.2 million in the Indian states Gujarat and Maharashtra.
The key was using personnel from within the company to establish trusted ties in India, president and chief executive Frederic Dugre said.
India is on track to exceed U.S. gross domestic product within 42 years, PwC found. It is also expected to produce the most new multinational companies over the next 15 years with more than 2,200 Indian companies likely to open operations outside the country's borders.
