Indian bankers count on HK's advantages (hktdc.com)


	State Bank of India CEO R.G. Subramanian (left) and Vice-President A.N. Dhar explain Hong Kong's advantages for Indian businesses

	India's domestic market is vast, attracting investors from around the world

When the State Bank of India (SBI) opened its Hong Kong office 30 years ago, it was only one of a handful of Indian financial institutions in the city catering to Indian businesses trading in Hong Kong. "Indian banks follow Indian traders. Wherever they go, we follow," said R.G. Subramanian, CEO of SBI, India's oldest bank.

But international financial institutions, including from India, have been expanding operations in Hong Kong and the Chinese mainland, lured by booming trade ties between the world's two largest emerging economies. Sino-India trade grew 56 per cent to US$38.7 billion in 2007. According to Kelvin Lau, an economist with Standard Chartered Bank (Hong Kong), "that's comparable to the size of trade between China and Wal-Mart," the world's largest retailer, and he believes there is more room for growth. The British bank has redeployed staff to respond to the trend, including by posting a senior manager to Shanghai to assist Indian clients in the mainland.

In Hong Kong, some of the more recent financial institutions that have set up base in the city include state lender Union Bank of India and India's largest brokerage, Reliance Money, which has partnered with Hong Kong's Goldride Securities.

"Hong Kong's proximity to China and the ease of doing business here make the city an ideal base to enter not only the Chinese mainland, but the Asia-Pacific," Mr Subramanian noted. "Hong Kong's infrastructure, tax and regulatory structures and its overall pro-business environment are also advantages. Indians are comfortable doing business here." It is perhaps no coincidence then that, according to a report by consultancy Capgemini and Merrill Lynch earlier this year, the greatest concentration of expatriate Indian millionaires live in Hong Kong. Indian banks with a presence in Hong Kong serve about 90 per cent of Indian businesses.

China eyes Indian products

For its part, SBI, which initially focused on India trade, has since diversified into syndicated loans and the treasury business. It plans to open its first branch in Kowloon and is set to be the first Indian bank to offer electronic banking and automated teller machine (ATM) services to Hong Kong customers.

Mr Subramanian likens the opening up of India's economy to China's economic transformation, prompting home-grown businesses to look outward in search of new opportunities. The recent acquisition of marquee brands Jaguar and Land Rover by India's Tata Motors illustrates the growing clout of Indian companies abroad. And Tata can expect the mainland, which leads in luxury car sales, to be Land Rover's number-five market this year and Jaguar's seventh largest.

The two countries have long been complementary trading partners, with each country having comparative advantages in certain sectors, according to A.N. Dhar, SBI vice-president. "Indian firms see China as an important base for low-cost manufacturing, while India is a source for raw material and semi-finished products for China."

But it is the huge domestic market in India that is attracting investors from around the world. Hong Kong companies, such as China State Construction International, are involved in building some of India's major infrastructure projects, including the country's largest international airport in Hyderabad. "India can tap into Hong Kong's technical expertise in large infrastructural projects, such as building highways and underground railways," noted Mr Dhar.

But at a recent Hong Kong Trade Development Council seminar spotlighting business opportunities in India, Consul General in Hong Kong L.D. Ralte noted that businesses need not solely cater to the 250 million urban middle class, but also the emerging middle class. "These people may not be looking for iPods and iPhones, but MP3s. They may not be in the market for luxury cars, but they will be looking to buy motorcycles. The range of opportunity is immense."