India is one of the fastest-growing economies in the world. With the opening up of the Indian economy in the early nineties, a lot of multi-national corporations have come to India to do business. India is the second-most populous country in the world and the consumer demand is very strong. Unlike China, which is primarily export-oriented economy, domestic consumption in India is very good. With the purchasing power of the Indian consumer increasing, a lot of foreign companies have shown interest in setting up shops in India. However, India is a complex market with a multitude of laws concerning the business. It is, therefore important that companies do proper research before they decide to enter the country. Business set up in India has different structures, and it is very important that companies decide beforehand what structure they want to establish.
Find a partner
In terms of GDP, India is the seventh-largest economy in the world. It has a population of 1.3 billion with a very complex market for business. Most Indian companies find it difficult to do business in India. It is all the more difficult for foreign companies. Companies with a preconceived notion with little or no exposure in international business find the business culture in India quite overwhelming. It is, therefore, important that you find the right local partner to start your business venture in India. The local partner should be aware of the intricacies of doing business in India to navigate through the complex Indian market. The local Indian partner should be able to provide the required assistance to the foreign entrant as they are aware of the domestic competition and the rules and regulations that apply to businesses in India. They can also help you acquire clients with minimal investment.
Your top priority should be to localize your products to suit consumer preferences. India is a big country with diverse cultures and religions. Your effort should be to avoid generalizations and make one product for everybody. People’s behavior varies significantly across regions. Because of this diversity, it is not prudent to offer a single product or service. For instance, international giants in the food business had to change their menu to suit local tastes. Almost 50 percent of Indians are vegetarian, so they started offering more vegetarian foods to satisfy the Indian consumers. Also, they had to remove beef products to avoid hurting the religious beliefs of the Indian population.
Don’t forget the price consciousness
It is extremely important to do the pricing right, more so, if the product or service is intended for the low and middle-class people. Even though the Indian economy is growing at a fast pace and the purchasing power of its population is increasing, India still remains primarily a low middle-income economy. The per capita income in the country is still below $2000 and a majority of people live below the poverty line. Till recently, the government could not provide free education and health care facilities to its citizens and the people had to pay from their own earnings. This meant that people had to save more to cover any eventuality. This leaves them with very little disposable income and, therefore, they have become even more price-conscious.
Plan for a long-term presence
India is not a country where you do business with a short-term vision. If you think that you can start your online business in India, make quick money, and exit the market then that would be the wrong strategy. You have to be prepared to remain invested for a long time if you want to earn good returns on your investment. Though India is a huge market with its large population, it has its own set of challenges. Many businesses see a lot of opportunities in India and are ready to invest, but the competition is tough with many established businesses. Companies look for a long-term commitment in the country and try to firmly establish themselves by gaining market share. However, because of the complex nature of the market, it takes time for foreign companies to understand the market and make a strong foothold by following the correct strategy. You need time to understand consumer behavior and develop the right strategy to survive in this highly competitive business environment.
Prepare for a different legal and regulatory landscape
If you want to have a business set up in India, be prepared for a different legal and regulatory framework. The Indian judicial system is much different from many western countries. Though the state laws vary from state to state, there is a single integrated system of courts to implement both union and state laws. The business laws also vary across states, though there are laws that are applicable throughout the country. Attention should be paid to the different laws before you start your business. Professional advice must be sought before you enter into a formal contract. As the courts are over-burdened by a huge number of pending cases, so every agreement should have a provision for alternative dispute resolution mechanisms, such as arbitration and mediation.
It is important that you meticulously plan your India entry strategy. Tips suggested in this article will certainly help in your planning.