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How to Plan India Entry Strategy for Your Business

With the rollout of the ongoing Union Budget, India has now permitted 100 percent FDI (foreign direct investment) in single brand retailing to help fuel the growth opportunities for both foreign retailers as well as the domestic market. 

India: An Attractive Destination for Business

Today, India stands as one of the largest contributors to global economy. Government has always been consistent in supporting business sector improvement be it through trade liberalisation, tax ratification or open approach towards foreign investments.

According to World Bank Data (2016), India is a home to 1.324 Billion people and the world’s largest democracy with the GDP of over USD 2.274 Trillion. India is one of the fastest growing emerging economy in the world. The Indian economy is constantly evolving, and growth opportunities are present across multiple sectors.

As per IBEF, the India’s retail market in anticipated to increase by 60 percent to cross USD 1 Trillion by 2020 owing to factors like changing consumers lifestyle, rising incomes and growing middle class population. In 2017, the organised sector in the retail market contributed 7% of the total sector while the unorganised sector contributed the rest 93%.    

Known facts about India…


                                                                          

Investment Scenario in India:

According to Department of Industrial Policies and Promotion (DIPP), the retail industry of India has received FDI (Foreign Direct Investment) of USD 1.4 Billion from April 2000- June 2018. With growing consumers demand for goods and services, many companies have invested in the retail industry of India.

Road Ahead:

According to IBEF, (India Brand Equity Foundation)-

  • Owing to growing digitalization, urbanization, technological advancements, globalization, favourable demographics & increasing household income, India’s GDP is anticipated to reach USD 6 Trillion by 2027.
  • To generate energy, India is focusing on renewable sources and planning to achieve 40 per cent of its energy from non-fossil sources by 2030.
  • Owing to shift in consumer behaviour & expenditure pattern, India is expected to be the third largest consumer economy as its consumption may triple to USD 4 trillion by 2025.

 Factors dominating the Indian Market Entry:

There are many foreign companies eyeing opportunities in India. For an Indian market entry, they need to be careful about certain points. These include:

The real worth of the Indian Market can be illustrated in the following manner:

  • Smart planning
  • Finding good partners who know local market well and are completely acquainted with procedural issues
  • Contacting apt agents and distributors
  • Identifying the target market
  • Promotion of products and services

With these, the foreign investors also need to explore various market options in India that include forming subsidiary relationship or a joint venture with an India-based company. It also comprises setting up of a branch office or a liaison office.

Many directors/organizations lack an intelligible roadmap for creating their strategic plan, let’s have a look at the major steps for India Market Entry:

If you are planning to enter the Indian market, you need to consider some important steps:

  • Creating strategies for market entry
  • Identifying potential of the market in India
  • Developing a fair knowledge of the market

While entering into Indian market, it is very important to develop a basic knowledge of the potential market in India. This process, in turn, should be supported by a sound market entry strategy. The job does not end here. It requires proper implementation also for desired results.

Other important points to keep in mind before entering the Indian Market:

                                                                          


How to Enter the Indian Market:

A foreign company planning to set up business operations in India has the following options:

  • As an incorporated entity
  • Wholly owned subsidiaries
  • Liaison Office
  • Branch Office
  • Joint venture
  • As an office of a foreign entity through

For foreign companies, it is significant to consider right mode of entry to do business in the Indian market which can be evaluated in terms of short and long-term business plan, nature of business activity, size of investment, tax & legal liabilities. There are two options to consider:


                                                     

Foot-in-the-Door Strategy:

Making a local existence in India is strongly advised, yet if your organization isn't prepared to set up a branch office or an auxiliary, you can get this on-the-ground presence by appointing an agent or wholesaler. Remember that India is a huge and diverse country, with more than 30 regional languages. It is strategically important to think about adopting a regional approach. If your product/item, has a wide market appeal, finding regional representatives and wholesalers is suggested.


                                                                           

Strategic Planning to Enter the Indian Market:

Strategic planning, consistent follow-up, due diligence, and perhaps most important commitment to successful business in India. To enter the Indian market, you would require multiple marketing efforts that address differing regional opportunities, languages, cultural differences, standards, and levels of economic development.

An international company can start its operations in the country by setting up a company according to the Companies Act. The total amount of foreign direct investment that is allowed in such companies is 100%

  • An international company can start its operations in India by forming collaboration with an Indian partner.
  • An international company can start its operations in India by establishing a subsidiary that is wholly owned in such sectors where foreign direct investment up to 100% is allowed
  • An international company can start its operations in India by setting up branch office, representative office, and project office.

What are the key businesses related legislations in India?

  • the Companies 2013 Act- this act governs the incorporation management, restructuring and dissolution of companies
  • the Competition Act (which regulates combinations (merger control) and anti-competitive behaviour)
  • the Income Tax Act (which prescribes the tax treatment of dividend, capital gains, mergers, demergers and slump sales).
  • the Indian Contracts Act- this act basically lays down the general principles relating to the formation and enforceability of contracts
  • the FEMA - Foreign Exchange Management Act, 1999, it regulates the inflow and outflow of foreign exchange and investment into/from, India including sector-specific requirements
  • the SEBI Act, Securities and Exchange Board of India, SEBI has consistently tried to lay down market rules in line with the best market practices. It enjoys vast powers of imposing penalties on market participants, in case of a breach
  • the SCRA, Securities Contracts Regulation Act, 1956, it governs listing and trading of securities on stock exchanges in India and the Listing Agreement with stock exchanges

How TechSci Research’s consulting team can help you in implementing the market strategies?

Although the market is booming, energizing and openings are boundless, entering the Indian market poses many challenges for organizations. A profound understanding of the country’s multi-faceted market elements and thoughtful experiences into the Indian buyer states of mind and desires is important to your achievement in India.

TechSci Research understands what it takes for international companies to be fruitful in India. To make a reasonable technique on the best way to distinguish and approach your target buyers you require to combine analysis of the numerous data existing – a work which can only be done by market experts who really know India.

Our company, TechSci Research, brings clients a fresh perspective on strategic opportunities in India. We help with market entry strategy by using our extensive market research (Primary and Secondary Research), data analysis and threats & opportunities assessment. Our company consistently brings fast, creative and acceptable solutions.

Gaining access to India's markets requires careful analysis of consumer preferences, existing sales channels, and changes in distribution and marketing practices, all of which are continually evolving. Our consulting engagement model is modular, scalable and accretive, achieving high return on investment and value for you.


                                                                          

TechSci Research’s key Business Advisory service offerings include:

  • Business consulting including market research, strategy and operations
  • Technology and risk consulting
  • Transaction advisory including M&A, valuations, due diligence, economic analysis
  • Strategic initiatives management and special projects
  • Financial and process consulting

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