India Market Entry Strategy – Why India Works

February 24, 2017

India has become a very compelling investment destination, as a result of the size of the population and the current relatively low GDP per capita. All facts and figures are conducive to growth of investment in India, provided strategies are made bearing certain points in mind.

Economic growth is driven by the increasing consumer spending power of the Indian population. The coming years India will become one of the largest consumer markets in the world; and hence a market entry strategy into India is worth considering.

India is also an attractive destination for Foreign Direct Investment (FDI) due to its first-class outsource destinations, which offer cheap and skilled labour pools. Moreover, the Indian government focuses on implementing investor-friendly policies, which enhances the attractiveness of the Indian market. Numerous multinationals have already entered the Indian market successfully. Formulating an inclusive India market entry strategy can help you to become successful in the Indian market, whether you are looking to invest in production facilities or to target the consumer or b2b market.

India has a large infrastructure that is continuously expanding. Furthermore, due to its central location companies can easily reach Middle-Eastern, African and South-Asian countries as well.

According to National Sample Survey Organisation (NSSO), India is witnessing a drastic decrease in Below Poverty Line (BPL) population supporting a favourable demographics. In addition,  India’s demographics make it an interesting market with remarkable future chances. Due to its relatively young population (median age is 26.7 years), it has a large consumer market potential. This, besides the fact that around 17% of the world population lives in India. This is further strengthened by the still expanding middle class – that is expected to reach 1 billion by 2040. As a result of further liberalisation of the Indian market, it has become more easy for investors to enter. However, due to country-specific complexities of doing business in India, it remains a challenging business environment  It is important to be aware of sector-specific initiatives and regulations, legal entity types, the business registration process, local tax structure and cross-cultural issues when devising an entry strategy.

Consumer spending in India grew from US$ 549 billion to US$ 1,060 billion between 2006 and 2011, putting India on the path to becoming one of the world’s largest consumer markets by 2025.  India’s consumption is expected to rise 7.3% annually over the next 20 years. By 2040, nine out of every ten Indians will belong to ‘the global middle class group’ with daily expenditures ranging between US$ 10 and US$ 100 per person in today’s purchasing power parity terms.

All these figures point to why a concrete India market entry strategy is crucial to the success of any business venture.

 

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