Promising investment policies established by the Indian government have led to a significant growth in the local Small and Medium-sized Enterprises (SMEs), causing both local and international TMCs to do more to capture this market.
These policies include Startup India, which was launched in January 2016 to support entrepreneurs, build a robust startup ecosystem and transform India into a country of job creators instead of job seekers. Make In India, another initiative credited for helping to boost the formation of more SMEs in India, was birthed in 2014 to encourage companies to manufacture their products in India.
Gaurav Luthra, chief operating officer, FCM Travel Solutions â€“ Indian Subsidiary of Flight Centre Travel Group, noted that these policies have “resulted in some astonishing unicorn startup stories”.
Luthra said: “The Indian SME segment has maintained an average growth rate of over 10 per cent year-on-year. A few years back, large global customers kept global TMCs’ growth rate steady but with the entry of more players, the pace has slowed down. Hence, the focus has now shifted towards SME customers.”
Despite the trend, Luthra said domestic TMCs were to the first to identify the business potential of this huge market.
Recent studies have projected India’s US$40 billion business travel market to grow at a rate of 12 per cent in the financial year 2019/2020. SMEs are expected to play an important role in that rising demand, opined industry players.
To capture the market, both domestic and international TMCs have developed products with the Indian SME in mind.
MakeMyTrip, one of Indiaâ€™s leading online travel companies, launched MyBusiness for the growing corporate travel segment in the country in 2017. In that same year, CWT rolled out CWT For You, a state-of-the-art business travel solution designed for Indian SMEs.
Vishal Sinha, CEO of CWT India, said: “It is estimated that India has close to 50 million SMEs, contributing nearly 40 per cent of the country’s GDP. These SMEs are looking for cost-effective business travel solutions that can help them to grow their businesses.”
However, courting Indian SMEs is no easy task, major TMCs note, as they are used to being serviced by small agencies that have a knack for delivering personalised services. Indian SMEs are also price sensitive and are willing to move their business from one TMC to another just to score a marginal saving.
Luthra added that the Indian SMEs market is “highly unstructured with no clear regulations, policies and expectations defined”. Adding to the challenge of penetrating this market is the high risk attached to extending credit facility to SME customers.
On the bright side, Luthra said there is an increasing number of Indian SMEs starting to see value in relying on TMCs for more complex services, and there are also SMEs that have grown to a “reasonable size and look to TMCs for help in drawing up corporate travel policies, policing compliance, tracking of their internal travellers for security”.