IPL boost for India Inc.

As the curtains came down on the DHL Indian Premier League (IPL) cricket carnival in Johannesburg, South Africa, on May 25, President Jacob Zuma, in his closing ceremony speech at the glittering Wanderers, summed up the impact of the 39-day extravaganza on his country and people.

“A few months ago, only a handful of South Africans had heard of the Kolkata Knight Riders, the Deccan Chargers or the Delhi Daredevils. Today, they are household names across the country. In little more than a month, the Twenty20 cricket series has worked its way into the hearts of South Africans and become a firm favourite,” he said.

Coming to the brass-tacks, he acknowledged the benefits that had accrued to South Africa from the extravaganza. “The IPL has revitalised our economy with over Rand 1 billion (Rs 600 crore) being spent. Our country has benefitted from the advertising spend, the tourism potential and global exposure that the tournament has brought. We would not be amiss to hosting the tournament again should the need arise…,” said the President.

While prospects of another IPL in South Africa appear bleak, the engagement between Indian and South African businesses looks set to prosper in its aftermath. Indeed, many Indian businesses are now considering how much more aggressively they could tap into South Africa’s vast potential, building on the friendship generated by the IPL and the historical links between India and South Africa’s ruling party dating back to the beginning of apartheid in 1948.

Indian business leaders agree that the country’s wonderful climate, infrastructure and ability to successfully stage a tournament of the magnitude of IPL could be a springboard to more business. Raman Dhawan, CEO, Tata Africa, and Chairman, Indian Business Forum, says the IPL has helped Brand India to take shape in South Africa. “It showed South Africans that there were innovative Indian businessmen with sound ideas and that they had the ability to put on a show of the magnitude we have seen. South Africans are very enlightened about India already… but the spin-offs from the IPL are that it will change their mindset in terms of how they react to India,” he says.

In fact, many Indian business leaders, who had flocked to South Africa for the IPL, according to Dhawan, took time off cricket to talk business on the golf course with their South African counterparts. “There will be opportunities from South Africans to take their skills to India in building of hotels, for example, and plenty of other opportunities for joint ventures,” says Dhawan.

However, for now, as India’s Consul General in Johannesburg Navdeep Suri says, the IPL has had spin-offs for South Africa, rather than India. “The ad spend on marketing the tournament amounted to Rand 140 million (Rs 84 crore), while the total benefit, according to President Zuma, was in the region of Rand 1.2 billion (Rs 720 crore). It can be likened to a fiscal stimulus package,” he says, adding: “Certainly, it rubs off positively as far as doing business with India is concerned, but trade was booming before and will continue to do so. Given the size of some of the Indian companies, such as Reliance, I don’t think IPL is a watershed, it is a catalyst, a boost.”

Clearly, the potential for more is there, and especially after the IPL. According to Atul Gupta, Chairman and Managing Director, Sahara Computers, while on the one hand the IPL has enhanced “the brand value (of India), instilling high awareness among customers” about not just the cricketing teams but also their sponsors such as DLF, India Cement, GMR and others, it has dropped the barriers (if any) in dealing with Indians and created a platform for interaction between companies of the two countries on the other.

Business has been growing between India and South Africa over the past few years. Exports to South Africa have grown from $352 million (Rs 1,690 crore) in 2001-02 to over $2.66 billion (Rs 10,374 crore) in 2007-08, and includes mineral fuels, automobiles, iron & steel, machinery and instruments, organic and inorganic chemicals, drugs and pharmaceuticals, cotton yarn and fabrics and rice and other cereals.

Project exports are also picking up, with software firms like TCS and Satyam, and those in the power sector like KEC and Jyoti Structures, winning sizeable contracts. India’s imports (gold, aluminium, copper, organic chemicals, diamonds, among others) from SA have also grown from $1.44 billion (Rs 6,912 crore) in 2001-02 to almost $3.61 billion (Rs 14,079 crore) in 2007-08. Besides, there are already significant investments in South Africa by big Indian businesses such as the Tatas, Mahindras, Ranbaxy, Cipla, among a host of others.

But now, there is an upsurge of interest in South Africa among all sizes of Indian businesses. Jardine Omar, Economic Counsellor, South African High Commission in New Delhi, told BT: “We are inundated with requests from small- and mediumsized Indian businesses to help them set up shop in South Africa. Many of them are eyeing South Africa as a place to do good business, and especially a great country to base their African operations.”

South Africa’s attractions are obvious: a stable and developed economy with excellent infrastructure, a highly skilled workforce and a business friendly bureaucracy. “Besides, South Africa has a long-established Indian diaspora, which makes Indian businesses comfortable at a level. Africa is the continent that holds the biggest economic promise in the coming years and Indian companies are well-poised to take advantage,” says Omar.

Indeed, while the investment scenario in South Africa has remained conducive for long, there has been a huge change in perception of Indian businesses about doing business there as well as the receptivity of South Africans towards Indians. Says Sundru Pillai, a Durban businessman who owns a travel agency: “The IPL has brought greater respect in South Africa for Indians, showing them to be astute businessmen already involved in major industries in this country. I was privileged to be in the Presidential Box at some of the games and can tell you that there were some serious deals being tied up. While watching cricket, plenty of business was discussed.”

Now that the IPL is over, we may see some of those discussions translate into real action. Pillai has already made a beginning: he is planning to host a business event for 25 Indian property developers soon.