T here are many foreign companies eyeing opportunities in India. The United Nations Conference on Trade and Development (UNCTAD) has stated that India’s economy could prove the most resilient in South Asia and that it will continue to attract FDI even in Covid-19 crisis. For entry into the Indian market, it is essential to identify the ideal target market, right entry strategy and partners who understand the local market well and are completely acquainted with all the procedures.
The following are a few important points to ponder over to ensure that you have an advantage over your opponents as you make the first steps towards success in India.
Businesses with a pre-determined mindset and less exposure to international markets might find the commerce culture in a country with a population of 1.3 billion people too intimidating.
Finding the right partner goes a long way in helping you navigate through the multifaceted market environment. A local partner will have the knowledge and expertise needed in valuable market insights, existing competition, the complex rules and regulation of the land and other important issues. Different business priorities, divided short term and long-term goals and business models that do not suit the industry are usually the reasons for fallouts with partners and a short stay in India. Therefore, it is important that foreign businesses evaluate their Indian partner carefully before signing up with them.
By 2020 the Indian economy is predicted to be the second largest in the world! It is also supposed to be increasing its global GDP from around 7% to 15% in the same time period. India still has much to offer to the world and though the market and the growth is huge, it is important that international businesses understand and narrow down the right opportunity for them in this diverse market. This is essential to ensure that they take accurate investment decisions. This may pose to be an impossible task due to India’s complicated market structure, the horde of unorganised players and lack of reliable data.
To this end, it is pivotal that international businesses work alongside their Indian partners to collect and build a strong information base for the market they wish to expand into consisting of facts about market size, industry dynamics, and future growth path.
India is vast and has a pluralistic, multilingual society and this is why a one solution fits all approach doesn’t work. It is a land that has multiple languages, cultures and business opportunities and consequently, the needs of B2B and B2C customers are distinctive and varied from one region to another. Therefore, international businesses approaching to expand and establish in India should study and attain deep and meaningful insights about their target market and design custom models that will best suit the target audience.
At this stage, it is also imperative to understand that price sensitivity is extremely important for a new entrant into the Indian market. Though there is a visible and consistent growth in the economy and the middle class, India is still considered a low-middle income nation with a per capita income of $2,338 and with much of the population still under the poverty line.
The Indian government does not pay for education nor does it provide healthcare coverage for its citizens. This expenditure along with the disposable income left after covering basic amenities doesn’t provide a lot of room for the middle-class man to spend extravagantly. Therefore, it is imperative that the pricing for the products and services are set appropriately for them to be welcomed and spent upon!
The following is a list of the best, most opted for strategies in the expansion of businesses globally and based on the nature of the business, its perspectives and goals, one of these will be employed.
The mergers and acquisitions market is booming in India and tax reforms, digital strategies and Merger and acquisition technology tools are those that are driving this growth. But for financial, operational and logistical reasons joint ventures and strategic alliances are better.
Many organisations from around the world are opting to set up a Greenfield facility in India, to manufacture goods at cost-effective rates and also to overcome the constraints they faced in the previous infrastructure.
To make vendor selection a success, the business must constantly work with the suppliers and service providers to make decisions and agreements that will benefit both companies mutually. It is always a win-win situation for both companies involved in a successful vendor selection business.
One of the major advantages of piggybacking is that it is a low- cost market entry strategy, because one firm represents another’s complimentary, non-competitive products in their market.
This technique is used by industrial companies that work in complex production technologies. Turnkey projects are a great way of earning economic returns from the asset. The strategy is particularly useful when FDI is limited by host-government regulations. Also, a turnkey strategy can be less risky than conventional FDI.
The Indian legal landscape is massive! There are so many intricacies and it is bound to be confusing to understand. This is another important reason why it pays off to partner with a good local company, as they will have the expertise and connections needed to understand and navigate through the law. It is also vital to seek proper professional guidance while drawing up the paperwork and before entering into any formal agreement. It cannot be stressed enough but the sheer size of the populace affects everything in the country and court is one such sector. Court judgements are usually if not always delayed because of the huge backlog of cases. So, it is wise to not always bring your corporate issues to court but to write up an agreement that allows for alternate dispute resolution mechanisms.
Over the years many international companies and countries have found great success in India. The United States, Japan, the United Arab Emirates, Germany and France are some of the countries that are making it big in India.
Some of the prominent American businesses in India are Amazon, Citibank, Coca-Cola, Ford India, Google, American Express, Pepsico, Hewlett Packard, IBM, JP Morgan Chase, Adobe Systems Incorporated, Apple Inc., Microsoft Corporation, Cognizant and Oracle.
Japanese companies were one of the first ones to enter India and an incredible 1,305 Japanese companies are registered here. Japan has proposed to triple its infrastructure orders to about US$300 bn by 2020. A few renowned Japanese companies established successfully in India are Hitachi, Mitsubishi, Toshiba, Canon, Toyota, Yamaha, Panasonic, Honda, Sony and Suzuki.
India has strong bilateral ties in the middle east. The United Arab Emirates plans on employing India as a food security base and is in the works of investing in the agricultural sector in India. They have also decided to enhance the import of more food grains and horticulture goods. Emaar, DP World, Abu Dhabi’s National Petroleum Construction Company, Abu Dhabi National Energy Company, Drake and Scull International are some of the well-known UAE businesses operating in India.
The Indo-German trade story goes way back to the 16th century when the German companies started manufacturing in India. Currently, Audi India Ltd, BASF India Ltd, Daimler India Commercial Vehicles Pvt Ltd, Deutsche Bank, DHL Express India Pvt Ltd, Metro Cash And Carry India Pvt Ltd, Mercedes-Benz India Pvt Ltd, Robert Bosch Engineering and Business Solutions Pvt Ltd are Volkswagen Group Sales India Pvt Ltd are some of the many key German companies in India.
2020 marks the 20th anniversary of the strategic partnership between India and France. Capgemini India Pvt Ltd, Pernod Ricard India Pvt Ltd (Seagram), Saint-Gobain India Pvt Ltd, Schneider Electric India Pvt Ltd, Sodexo Food Solutions India Pvt Ltd, Airbus Group India Pvt Ltd, BNP Paribas India Solutions Pvt Ltd, CWT India Pvt Ltd, Renault India Pvt Ltd and Roquette Riddhi Siddhi Pvt Ltd are some of the successfully established French businesses in India.
Apart from these companies, the U.K, Singapore, Mauritius, the Netherlands and South Korea are also some of the main countries, investing in India.
FDI inflows hit an all-time high of USD 51 billion in 2019 according to UNCTAD. India ranks 12th among the top 20 host economies for FDI and is the biggest host in the subregion. It is also ranked 63rd out of 190 countries in “The 2020 Doing Business” report published by the World Bank and this is a significant development from 2019 when it ranked 77th. India is on the list for 10 most improved economies, a title it has been holding for 3 years now!
The Indian economy is steadily growing and the veterans at Auroma Global Connect will help build you a comprehensive roadmap to enter into this constantly evolving market by formulating strategies that is specific for your company’s unique needs. We have the proficiency to guide you every step of the way when it comes to the entry, establishment and growth of your company in India and with our time-bound milestones and periodical reviews, our go-to-market entry strategy will get you up and running in no time, to take your venture to the next level!
