India Business Opportunities
(Updated on Dec 27, 2016)
Driven by the average growth rate of 7-8% over last decade and 350 million strong & growing middle-class with increasing purchasing power, the Indian market today is reshaping the world's economy. India's GDP crossed the trillion dollar mark in 2007 and is currently in 3rd position (PPP) after US and China. Investment in almost every sector (Education, Food, Energy, Health Care and Retail) of the Indian economy has a promise of high returns that has caught the attention of investors and businesses across the world. Considering that restaurants keep you waiting, malls are packed, movie theatres are full, and airlines and hotels are over-booked showcase the increasing appetite of the Indian consumer. As an example, recognizing that Indian youths strongly favor branded clothes, Levis introduced a special brand 'Spykar' for India that is a runaway success.
So far only Multi National Companies (MNCs) with their vast resources, know-how and the right connections have been the major beneficiaries of this phenomenal growth in India. Small and Medium Enterprises (SMEs) and Entrepreneurs are just becoming aware of the growth story of India.
A simple analysis, taking into account the increasing population (See side box), growing consumption and the shrinking agricultural land, shows that there is a very lucrative market for US companies with products or technologies in the following areas:
- Food & Beverages: food processing, food packaging, food warehouse and transport, health drinks, etc.
- Home based: home decor products, kitchenware essentials, bed and bath, etc.
- Healthcare: diagnostics and testing, medical equipment, health supplements, clean air and water products, etc.
- Education: medical/nursing, 'train the teacher' programs, automotive mechanics, medical technicians, advanced courses in the upcoming fields of genetics and nanotechnologies. For human resource and skill requirements in the healthcare services industry, your can download a full report by National Skill Development Corporation of India at entryindia.com/files/Healthcare/healthcare.pdf
- Consultancy Services: engineering, business development, product development, security analysis, etc.
- Infrastructure: waste management, solar and wind technologies, temperature controlled warehouses, air and noise pollution control technologies, towing trucks, and automated parking lot equipment.
Similar business prospects abound in other sectors such as home land security, media & entertainment, hotel/motel, financial investment services, etc.
One of the business formats that is rapidly gaining acceptance is "Franchising" which is growing at a rate of 30% annually. While legal infrastructure and ecosystem are in place in India, one must do a thorough research, and due diligence of the potential Franchisee and create binding agreements covering all important aspects of the Franchising before making any investments. One must also understand business norms of India and seek professional help in navigating the paper trail, IP protection, and Tax implications etc. before undertaking partnership agreements with the Franchisee. Top sectors with franchising opportunities are Education and Healthcare due to a huge mismatch between supply and demand now and in the coming years. You may want to take advantage of the fact that US Commercial Service (Dept. of Commerce) regularly takes Trade Missions of US Franchisors to India.
Another popular model is Public Private Partnership (PPP) with the Government of India through a 'tender' process. In the Infrastructure sector, for example, India is expected to invest $1.2 trillion in revamping or upgrading its ports, roads, bridges, energy plants, etc. Again the US Commerce Service can be instrumental in making the opportunities in this area available to US companies in a timely fashion and help with responding to the RFPs and with the required paperwork.
All of the above present a historic opportunity for the SMEs and Entrepreneurs in the US to expand beyond borders to India. US companies with the right know-how have almost unfair advantage for success for several reasons:
- President Obama's National Export Initiative has set a target of doubling US exports to $2 trillion by 2015. To meet this objective, the US Administration has initiated huge incentives to support US exports. Commerce Dept.'s International Trade Administration (ITA) budget is raised by 20 percent to $534 million and 300 international trade specialists are added to help US companies export US goods and services.
- Indians have a very favorable view (76%) of the US according to a Global Attitudes Survey. Indian Government officials make regular visits to the US to meet with the industry experts and to promote business and trade opportunities.
- The government of India offers multiple incentives to US companies doing business in India. Government incentives include duty free import of capital goods and raw materials, reimbursements of Central Sales Tax, Tax holiday for specified period, 100 per cent repatriation of profits for subcontracting facilities and more.
The following are some selected resources to begin your India strategy:
a. US Commercial Service's 'Country Commercial Guide' on India: http://www.export.gov/india/build/groups/public/@eg_in/documents/webcontent/eg_in_089638.pdf
b. India Development Update, Oct 2015, by World Bank: Click here
a. US Commercial Service: http://www.export.gov/India/doingbusinessinindia/index.asp
b. India Brand Equity Foundation: ibef.org
c. India: Data, Projects and Research by World Bank: http://www.worldbank.org/en/country/india
d. entryindia.com for information and services for SMEs and Entrepreneurs
- India Business and Travel Guide, indiabusinessandtravelguide.com