Time and again, India has been considered a lucrative market for doing business. The volume of foreign investments is an indicator of the promising future of the Indian economy. Among the emerging markets, China and India are the two nations that are likely to be instrumental in boosting global trade. As a result, an increasing number of international conglomerates are keen on investing in these markets, especially India.
One of the challenges faced by entrepreneurs in developed nations is that they are constantly competing with local players. For these businesses, getting a unique idea to enter the market is nearly impossible, and there are greater chances of multiple players operating on similar concepts. It is, therefore, more viable for such businesses to explore international markets for expansion.
The Indian economy offers a favourable business environment, wherein companies can make the most of their expansion plans by identifying their growth opportunities at a granular level. Doing business in India has several advantages because of its development-friendly reforms.
Here are the top advantages of starting a business venture in India:
1. Scope for sustainable business
In the coming years, economic growth in India will centre in the emerging cities, with some of the largest development plans for infrastructure. McKinsey Global Institute(MGI) estimates that by 2025, 69 cities in India will have a population of over one million each. This is going to translate into a greater need for businesses to support livelihoods.
Further, the transition from the rural to the urban areas will mean that a greater portion of the population will join the middle-income strata. As per the report by MGI, Mumbai’s economy is likely to become a huge market of US$245 billion in consumption by 2030.
Companies entering India in the near future can easily sail through the favourable conditions. The business opportunities offered in India should be one of the key reasons to establish one’s venture in this country.
2. Organised employability
Employability is undoubtedly the deciding factor for any business starting operations in a new market. India boasts of a labor force of nearly 530 million, of which the majority is under 30 years of age.
The proportion of the Indian population in the working age group (18-59 years) is likely to reach more than 64 per cent by 2021. In fact, the median age in India is 27.6 years, compared to the U.S.’s 37.9, which means that more years of service are available in the Indian market. Further, the aspirations of the Indian youth have changed. They are now looking for opportunities beyond agriculture or daily wage jobs. Businesses can leverage this opportunity by generating employment and increasing productivity.
3. Economical operational costs
With the Central Government of India’s developmental goals, the ease of doing business in this country has increased rapidly. Foreign direct investment of up to 100 per cent into a private limited company or limited company no longer requires the Central Government’s intervention. This reduces the overall cost of setting up a business in India.
The cost of the basic amenities required for businesses is lower in India, whether it is investing in infrastructure, labour, food, transportation, Internet, or even taxes. Everything is much more affordable, compared to setting up a company in the U.S., the U.K., or even Singapore.
Additionally, India’s urban transformation represents a huge opportunity for international businesses to avail the combination of providing capital, technology and strategic knowledge to the workforce, along with a customer base for the goods/services produced.
4. Presence of a startup ecosystem
For any new organisation, the business culture of the economy is very important. Introducing a differentiating aspect in the business idea can be tough, but it differs globally. India is a hub for certain kinds of startups, including technology, e-commerce, and financial services. The fact that the Indian market is open to accepting new business ideas makes it easier for new businesses to enter it. Of course, you need to ensure that you have the right strategy as that can guide you through the tough times, as well.
5. Business-friendly laws
A lot of countries are skeptical of privatisation. As a result, more companies from developed nations are establishing new operations in countries where they don’t have to deal with stringent policies. In the recent years, several important bills that are beneficial for most industrial sectors have been passed in the Indian Parliament. Starting from the Goods and Services Tax Bill to the Direct Taxes Code Bill, these bills are going to introduce transparency and uniformity in the Indian economy.
Additionally, the Indian government’s Make in India initiative focuses on 25 industrial sectors and aims at building best-in-class manufacturing infrastructure by enabling foreign investments, promoting innovation through skill development, and focusing on intellectual property protection.
These business-friendly laws make it easy for international players to actualise their plans of entering India. On implementation, these Bills will increase the efficiency in the movement of products across India. But, the most important law is the Land Acquisition Bill that promotes the twin objectives of social justice and industrial development in the country.
Starting business operations in new markets is not a decision to take lightly. You need to give a lot of consideration to this move because it can easily go wrong and businesses can be compelled to incur grave losses. Because of its several advantages, foreign businesses can clearly take advantage of what the Indian economy has to offer, in order to execute growth and expansion strategies.
(Opinion piece by Pratik Dholakiya – Co-Founder & CMO of E2M, MoveoApps and Preceptist)