business

Bert O'Donoghue has some advice for Gov. Tim Pawlenty and more than 70 other Minnesotans who will arrive in India today.

"Prepare all of your senses. Be prepared for them to be bashed with the sights, the noise, and the smells" of 1.1 billion people, said O'Donoghue, who lives in Bangalore and manages 3M India. "Just the massive humanity there is staggering. ... Still, it's an exciting place and it's a country whose time has come."

That's what Pawlenty is counting on as his trade delegation -- the state's first to India -- begins a nearly weeklong visit to the world's second-fastest-growing economy.

While an estimated 700 million Indians still live in poverty, an additional 300 million to 400 million have climbed into the country's middle class, making that segment of the population about the size of the entire United States.

"India is essentially new territory to Minnesota.... We think the market is largely untapped," Pawlenty said.

The governor would like to duplicate the success of his 2005 trade mission to China, which helped raise the country to second place among Minnesota's trading partners, up from fourth. (Minnesota exported $1.2 billion of goods to China last year.)

India would seem an easier market to crack. English is commonly spoken, the legal system is similar to that of the United States, many Indian firms are familiar with U.S. companies and the country counts itself an ally.

But India's import duties are exorbitant. Laws prohibit foreign chain stores. And, unlike China, India's roads are so decrepit and clogged that businesses regularly threaten to abandon major cities.

"This is not like selling in Indiana. It's India, and it's tough," said Frank Vargo, an economist with the National Association of Manufacturers International. "Nevertheless, this market is growing.... American companies have got to go and sell in India."

Trade with India is growing

Since 2000, Minnesota exports to India have risen 370 percent, to more than $129 million a year, 22nd on the list of the state's top 25 trading partners. But projections call for the state's exports to grow more than 30 percent a year.

Many observers believe that the Indian market could become as important to Minnesota as China's.

Indian businesses -- from software giant Wipro in Bangalore to Mumbai's Tata Group, a conglomerate that makes everything from software to tea to cars -- also are rising into the top ranks of world commerce. Some of them already have invested in Minnesota: Steel firm Essar Global is buying Minnesota Steel Industries, and will invest $1.6 billion to build a taconite-to-steel plant on the Iron Range, while wind turbine maker Suzlon Energy opened a 300-person plant in Pipestone last year. Tata employs 1,000 consultants in Minnesota; Wipro has 450.

"One of the things we have to do better is figure out ways to plug into the world and to figure out ways to prepare educationally, economically and demographically," Pawlenty said.

Gross Domestic Product leaps

India began relaxing its restrictions on foreign businesses in 1991, and the country has been rapidly emerging ever since. Its economy is growing at a 9-percent annual clip, and last year India's Gross Domestic Product (GDP) hit $1 trillion. The incomes of Indian workers nearly doubled between 2000 and 2005, from $12.9 billion to $23 billion, according to the World Bank.

Much of the U.S. attention directed at India has been focused on its role in the outsourcing of American jobs. Indians staff call centers for U.S. companies and perform other services formerly done in this country.

A number of Minnesota firms also boast large Indian payrolls. Minneapolis-based Target Corp. has about 1,000 technology, legal, human-resources and other corporate workers in Bangalore. Maplewood-based 3M Co. has roughly 1,100 Indian workers. In all, Minnesota companies have more than 59,000 workers and about 30 offices and plants in India.