All eyes on India: TCI offers bright prospects for a booming economy

March 28, 2024
Business is booming in India. Propelled by major domestic spending and manufacturing exports, it’s become the fifth-largest world economy. In this context, trade credit insurance (TCI) is more important than ever.

As an emerging market, India’s economy is growing rapidly. In fact, it will be the second largest economy in the Asia-Pacific region by 2030. And even in the face of socioeconomic headwinds, India has proven its resilience both domestically and internationally. The reasons for this are multifold. Among them, favorable demographics and the country's status as a manufacturing powerhouse.

With a growing-age population, improvements in living standards and a rising middle class, demographics can play a significant role in economic growth. As well as these, employment rates are on the up with the emergence of startups and fintech companies across the country. This means expanded and higher consumer purchasing power – and increased consumption.

India is also home to some of the world’s largest manufacturers, from pharmaceuticals and electronics to textiles and automobiles – it’s worth noting that only 3% of consumer goods are imported today. Demand for these goods is growing domestically, while foreign business bolsters the country’s export market.  

However, even in an economy that’s on the up, there are still risks that new and existing businesses must navigate. In India, TCI is gaining momentum as a reliable tool to help companies mitigate and manage those risks.

This trend is backed by governing bodies. For example, in 2014 the Indian government introduced a reform initiative  aligned with the World Bank’s Ease of Doing Business index. It aims to improve the accessibility of both business licenses and financing options, in part by allowing banks and financial institutions to become TCI policy holders. This enables them to effectively manage the non-payment risk associated with a trade financing portfolio and, therefore, back companies of all sizes and maturities.

Companies spanning multiple sectors and profiles are realizing the benefits of TCI, too. Take Indian agricultural players, for example, that need a reliable monsoon season. Increasingly beset by the impacts of climate change, these businesses are employing TCI to safeguard their cashflow and maintain resilience. 

We’re also seeing many large multinationals moving their manufacturing operations to India. These companies often have TCI policies in place in their other hubs, and continue to uphold this best practice in their new market.

The uptick in TCI policy requests in India from this latter type of company looks set to continue as further incentives are introduced. For example, the Indian government has established a business zone (GIFT CITY) in Gujarat that has its own, independent financial regulatory body. This area gives international businesses the flexibility to get a foothold in India with policies that meet their specific needs.

At Allianz Trade, we are continuing to grow our presence in India. Our team, which has been in place for 19 years, consists of TCI experts that both know the business and have established strong partnerships with a network of local partners. With a trusted, reputable brand at their side, companies in India can trade with confidence. 

Imran Khan

Country Manager, India

Allianz Trade in Asia Pacific