In the past decade, the Indian economy has been one of the fastest growing economies in the world. By 2025, one-fifth of the world’s working age population will be Indian and by 2030 there will be over 850 million internet users in India. By 2035, India’s five largest cities will have economies of comparable size to middle income countries today. For foreign investors looking to invest in the Indian markets, there are certain peculiarities they should be aware of. In this article we will share some key tips on doing business in India.
- Market Research – The Indian economy is one of the most diverse economies of the world. The population of 1.3 Billion comprises of people from diverse economic, cultural and religious backgrounds. These factors make the Indian markets quite complex. The reason why some investments by multinationals in India have failed in the past, is on account of the failure of these multinationals to do adequate market research. Prior to investing in the Indian markets, a foreign investor must do an in depth study of – market conditions, price points, competitors as well as the region most suited for the products. A physical study and not merely a study of these factors via the internet would be deemed as sufficient.
- Structure – A foreign investor could consider establishing a direct or an indirect presence in India. A direct presence in India can be established through the setting up of a private limited, public limited, partnership, joint venture, limited liability partnership, branch office, liaison office or project office. An indirect presence in India can be established through a distribution or agency agreement or even through several e-commerce marketplaces. Establishing a presence in India is relatively simple and can be achieved in several ways. The decision should be based on the product and the business agenda one has in mind for establishing a presence in the Indian markets.
- An Understanding of the Complexity of Indian Laws – There are many Indian laws and regulations businesses have to comply with while establishing a presence in the Indian markets, moreover, some of the Indian laws and regulations are fairly complex. The labour and land laws in India are very vast and wide in their ambit. While the government are continuously reforming the laws in these two aspects, investors should be prepared for such compliance to be fairly complex and time consuming. That being said, it is critical for an investor to have the right team of advisors with an in depth understanding of the Indian laws and regulations to ease the process of compliance to Indian laws and regulations.
- The Right Team – Having the right team of both employees and advisors can be critical to the success of your investment in India. As mentioned earlier, the Indian markets are quite complex. Therefore, having the right team comprising of people who share the right business ideas and ethics, have many years of experience in the Indian markets and especially in the sector one is investing in is of the utmost importance.
- Patience – India has been going through a series of reforms in the past five years. That being said, it is important for one to understand that things in India, compared to other economies of the world, take time. Building trustworthy and long term relationships with your employees and business partners is vital. Personal relationships have a huge role to play in the Indian market. Unfortunately, this is something which can be achieved only by being patient and investing sincere time and effort. Therefore, having a mindset of being patient and staying invested for the long term can help one achieve returns on their investment as generally speaking, short term returns are difficult to achieve in the Indian markets.
For foreign investors looking to invest in the Indian markets, we at D’Andrea and Partners have a team of advisors who can advise you on several aspects of Indian laws and regulations. Please do visit our website https://www.dpgroup.biz/ for more information.