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Accounts Receivable Financing – The India Connection

India is one of the oldest civilizations in the world. Its history dates back more than 10,000 years. India is the largest democracy in the world. As of July 2007, the United States Government’s Central Intelligence Agency estimated the population of India to be over 1.129 million people. In contrast, the population of the United States is estimated at just over three hundred and two million people. That’s 129,000,000 against 302,000,000 people; India has more than four times the population of the US in a geographic area just over a third the size of the US.

India has the third largest economy and the second fastest growing economy in Asia. It has a large pool of professional talent and a huge pool of intellectual capital with a growing middle class.

India’s dense population creates economic opportunities and pressing internal social problems, such as overcrowding, environmental degradation, poverty, and social unrest. The economy and society are in a state of rapid transition. There are pressing environmental problems due to overpopulation, such as air pollution from industrial effluents and vehicle emissions, water pollution from unsanitary conditions, and soil erosion.

According to the World Bank, about 380 million people in India live in poverty on less than $1 a day; this is about a third of the population. Yet middle and upper class Indians have created immense wealth in an economy teeming with opportunity. India’s business climate is changing rapidly.

This social paradox is somewhat similar to the controversy in the US over big box stores and their effect on smaller retailers. The same issue is being debated in India regarding Western-style supermarkets versus mom-and-pop stores. India has a child labor problem; The United States has a problem with illegal immigrants who tend to take the lowest paying jobs in America, doing work that most legal Americans don’t want to do. We live in a world of conflict, change and opportunity.

There are 14 official languages ​​in India. Hindi is the national language. English is a secondary language used for national, political, and commercial communication. India is the largest English-speaking nation in the world. India’s legal system is based on English common law.

India’s economy is growing more than 10% per year with a workforce of more than 500 million people. The Indian retail sector is growing at a rate of 47% per year. Manufacturing is expanding. There are a large number of well-educated people who are fluent in the English language. Today India is a major exporter of software services and software workers. Other major industries include textiles, chemicals, food processing, steel, transportation equipment, cement, mining, and machinery.

In 2006, India exported more than $123 billion worth of textiles, gems and jewelry, engineering products, chemicals, leather goods; only 17% was exported to US partners. Imports for the same year were $184 billion dollars; less than 6% of this import business originated with US partners.

What does all this have to do with accounts receivable financing? The experience of a commercial finance company can be invaluable in helping you succeed in the huge Indian market. If you want to export goods to India, a commercial finance company will check the credit of the company in India you are selling to; this can provide capital for exponential growth to creditworthy clients. If you want to import products from India, purchase order financing combined with accounts receivable financing can help you achieve the same goal of increasing cash flow to grow your business.

Albert Einstein said, “We owe much to the Indians, who taught us to count, without whom no worthwhile scientific discovery could have been made.” Mark Twain said: “India is the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend, and the great-grandmother of lore. Our most valuable and instructive materials in history of man are treasured only in India”.

The bottom line: India is a land of great problems and great opportunities. Accounts receivable financing combined with purchase order financing can help you succeed in this vast democratic English-speaking market.