As a cross-border investor, here’s why the EU-India trade deal is making me even more excited about the India-to-the-world tech story:
1/ Should provide a fresh set of tailwinds to the India export story. This was much needed after the lacklustre results of the “Make in India” initiative over the last decade.
2/ In the past decades, the Indian offshore services story, the software exports story, and the cross-border SaaS story have been heavily reliant on the US. While the EU is nowhere close in terms of depth of market & innovation-buying behavior, its addition as a viable market derisks the Indian tech story to some extent.
3/ Given EU countries are leaders in critical technologies, in addition to being potential customers for the next-gen of Indian deeptech companies, I also expect them to engage as valuable “partners” across the board including in aspects like technology transfers that enable indigenous manufacturing, joint ventures in areas of mutual interest, and perhaps, increased collaboration between research institutions and organizations too.
4/ India still needs enormous foreign capital to get to the $10,000 per capita GDP mark. In addition to long-term US capital, which I expect to remain committed to India both on the private and public side (despite recent FII selloffs), deep sources of patient capital that reside in EU universities, endowments, insurance companies, century-old corporates, and multi-generational family offices should also step in and provide much-needed FDI for India.
5/ On enterprise software and deeptech, I have been underwriting the ability of Indian startups to serve the “Global South”, which largely remains under-covered by US companies. Now, with the EU being added as an open market for Indian exports, the TAM for Indian startups just goes to another level, which should ultimately translate into larger exit outcomes.
Of course, dealing with EU customers will have its own set of challenges compared to the US:
– Large and/or fast-growing markets like Germany, France & Italy aren’t native English speakers. Adapting to each language and culture is challenging.
– Constituent markets are quite fragmented, have really different cultures that have been at loggerheads in the past, and therefore, while it’s called a Union, serving it as a homogenous bloc might not be easy.
– EU customers aren’t classical early adopters and move really slowly in buying cycles.
– Many constituent markets have stifling regulations around things like data privacy, security, environment & labor, increasing inertia to innovate.
– EU operates on different labor norms, stronger worker protections, and stricter work-hour expectations that can slow execution compared to vibrant markets like the US, India, and China. Overseas companies, especially younger ones, might struggle to adapt & serve the expectations shaped by strong labor protections.
– Overall, I have observed over the years that EU customers are more skeptical of dealing with Indian companies and talent compared to, say, the US.
Nevertheless, this is a great development, and kudos to the Indian government and negotiating teams for pulling off a masterstroke. Now comes the hard work of turning legal clauses into tangible business outcomes for both sides.
The real test will be whether founders, investors, and operators can move fast enough to capitalize on this opening.
