Expanding a Business in India
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Why Expand to India?
Not considering expanding a business to India means ignoring one of the most promising (if not the most!) new markets of the decade to come. India's economy is one of the fastest expanding in the world, with a rapidly expanding consumer class. It is a gold mine of business opportunities, in a very wide range of sectors.
Economy forecasts paint India as the fifth largest consumer market in 2025. Nowadays the Indian middle class counts 300 million people, comparable in size to the entire European Unions market. If the economy will follow the trends pre-crisis, the numbers are going to increase.
Located right in the middle of South Asia, India has a population of approximately 1,200 million people. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. It has the world's second largest labour force, with approximately 520 million people. It is a huge pool of skilled manpower, professional managers and semiskilled and unskilled labour available at a comparatively moderate cost, often just a fraction of the rates prevailing in developed countries. However, what happened to many companies that have already expanded in India is that they went there for the costs, then stayed for the quality and they are now investing for innovation on a global scale.
In terms of output, the Indian agricultural sector accounts for 28% of GDP; the service and industrial sectors make up 54% and 18% respectively. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry; fish. Major industries include textiles, chemicals, food processing, steel, cars, transport equipment, cement, mining, petroleum, machinery and software.
According to the Planning Commission of India, over US$500 billion of funding is needed for new power stations, airports, roads, railways, seaports, waterways and urban infrastructure over the next five years. Keep in mind that India is evolving in such a fast pace that it is actually difficult to take a snapshot of it today that will be valid tomorrow. Licensing, incorporating and registering a business in India are all valuable options.
Attractions for UK business
With bilateral trade between us still growing despite the difficult global trading conditions, the UK-India relationship is one of the biggest strengths we have to meet our countries ambitions for the future.
The UK has strong ties with India, and UK companies are well positioned to take advantage of the growing Indian export and investment market.
The UK is the biggest European investor in India and India last year overtook Japan to become the biggest Asian investor in the UK by number of projects. Over 600 Indian firms are represented in the UK, of which about two thirds are in information technology or software. Setting up a business in India is an operation which will find open doors and plenty of incentives.
According to the most updated analysis, the best prospects for UK companies expanding a business in India emerge in the following sectors:
Airport (caviation ground-handling services, MRO and training, consultancy, assistance with tender and bid preparation and due diligence activities, engineering design expertise, airport operational management, project management, Information Technology for airport management systems to support operational processes, safety & security of the airport, specialist technologies such as Navaids, baggage systems, cargo-handling systems, ground support equipment, furniture and fittings)
Civil aerospace (components to the main domestic producer (Hindustan Aeronautics Ltd: HAL tenders can be found on www.hal-india.com; sheet metals and forgings, aerospace-related software, Maintenance, Repair and Overhaul (MRO) of civil aircrafts, simulation and simulators, training and consultancy in all aspects of aviation, private jets, cargo services)
Biotechnology and pharmaceuticals (clinical trials, pharmaceutical generics, diagnostics and pathology laboratory equipment)
Construction (retail development: malls and multiplexes, hospitality industry, healthcare, Special Economic Zones, integrated townships, green buildings, regeneration)
Creative and media (marketing of UK location, high-technology cinematographic equipment, joint venture productions, dubbing, project management expertise, multiplexes, post-production and animation (2D, 3D, Flash productions, distribution); Radio studio equipment and content developers, pre-production and post-production technologies and software, recording equipment, music managers; Design; English books, E-Publishing)
Education & Training (diploma, graduate degree, post graduate and research degrees in following subjects: Engineering and technology, architecture, hotel management and catering technology, pharmacy applied arts and crafts, Post Graduate Degree in Management (MBA), Post Graduate Degree in Computer Application (MCA), Franchises and distance learning, potential to open campuses in India, equipment for schools in the early years and primary segments)
Environment (air pollution control: AAQS, dioxins/furans monitors, high-temperature-small capacity bag filters technology for vehicular pollution, continuous ambient air and gaseous emission monitors; hazardous waste management: design, engineer, project-manage, operate and maintain secured landfill sites, biomedical waste management, high-efficiency incinerators, recovery and reuse systems, associated equipment; waste-to-energy and waste-to-compost projects from municipal solid wastes; spent acid recovery and contaminated land remediation; environmental training and consulting: cleaner production, waste minimisation, due diligence, TQEM, environmental auditing; green buildings; energy management: renewable energy projects in solar photovoltaics, wind energy, micro-hydel, geothermal, OTEC, tidal; energy-efficient equipment such as pumps, fans, compressors, lighting systems, combustion systems, WHR systems and consulting and training; plant control software, heavy metals recovery systems, package treatment plants for metal-finishers, oil recovery systems for refineries, anaerobic processes for sugar & distillery, paper industries)
Financial and legal services
Healthcare and medical (hospital infrastructures, health insurance, diagnostic centres and pathology laboratories, medical equipment, emergency medical services and trauma care, niche medical consumable, telemedicine, medical education and training, retail healthcare)
ICT (applications, solutions and tools into the SME segment, software testing and quality assurance tools, software and automation consulting in legacy segments such as core-banking, finance, legal and healthcare; gaming and creative content, training and Certification, E-governance consulting and implementation, IT Security)
Mining (supply of equipment and technology in all areas of the steel value chain: iron ore mining, mineral processing and beneficiation, blast furnace, design, capacity enhancements and retrofitting, steel making and continuous casting (slab/billet) facilities, advanced process control and automation systems, energy optimising processes, high quality refractory materials, and environment management technologies; low ash metallurgical coal and various grades of steel scrap such as HMS1 & 2 and shredded scarps, razor blade strips, high-tensile and special alloy steel rolled sections and plates, tool steels, cold-rolled grain-oriented and non-grain oriented (CRGO/CRNO) steels, high-pressure seamless-steel pipes for oil and gas industries, and corrosion-resistant steel sections for off-shore drilling rigs. Aluminium sector: mining (equipment), furnace technologies, refractory materials and instrumentation & process control, coal mining and washing, retrofitting of boilers and turbines)
Oil and gas
Power (technology, technical support, equipment and services for energy-efficient retrofits, clean coal, energy-efficiency equipment, maintenance services for power plants, civil nuclear energy: technology collaboration, advisory, specific equipment supply, training, fuel handling and waste management; solar, small hydro power, wind both onshore and offsore, collaboration and joint R&D activities
Water (environmental instrumentation: potable water quality, groundwater contamination measurements, on-line wastewater treatment plant measurements, toxic gas detection and measurement instruments, mine air quality and safety instrumentation, Ultrafiltration and RO membrane application for drinking water)
Good tools to navigate the plethora of business opportunities in the country are provided by the UK India Business Council and the UK Trade and Investment agency, both committed to promote bilateral business between in India and UK. Constantly updated, their websites may provide more specific sector analysis, organized across Indian regions.
However growth continues to be unevenly distributed, the States of Karnataka, Andhra Pradesh, Tamil Nadu, Gujarat, Maharashtra, and West Bengal continue to grow at a faster rate than their populous counterparts such as Bihar, Madhya Pradesh and Uttar Pradesh. Before starting a business in India, make sure you choose the right location: the country is huge.
According to a recent survey the following are the ten top Indian cities for starting a business in India. In decreasing order: Mumbai, Chen, Bangalore, Chandigarth, Mysore, Pune, Hyderabad, Coimbatore, Delhi, Thiruvanthapuram.
Expanding a business in India means facing different cultures and languages, different business etiquettes and practices. As a general rule, you should make sure you gather as much information as possible about the country you are targeting, for example speaking with business men who have already experienced a similar adventure as you are planning.
In the specific case of India, keep in mind that in the country approximately the 39% of people live with less than $1 per day. Problems with the country's roads, railroads, ports, airports, education, power grid, and telecommunications are obstacles for India's economy to grow to its full potential, and they may become challenges for your business plan.
The liberalization policy in the country started in the early 90s, however some sectors remain of difficult penetration, in particular in the infrastructure area. In addition, India's customs tariff and excise tax system remains confusing and laden with exemptions. Bureaucracy may be burdensome and in the recent past government inefficiencies and corruption have also discouraged foreign investors from setting up a business in India. Things are gradually changing, however when licensing, incorporating or registering a business in India be ready to face procedures that are not as easy as in Western countries.
Do seek help locally, from British institutions and Indian agencies, which provide indispensable local information and advice. They are certainly better plugged in with local business and economic leaders than you.
Finally, thinking about starting a business in India do not consider the country as a single entity: it is strongly recommended that companies consider regional plans, focusing on multiple locations and markets within India and finding the appropriate partners and agents within each region.
Organisations that can assist with Entering the Market
PEO Worldwide is an international PEO offering employer of record, payroll, employee benefits management, HR and compliance services throughout the world.
Need to register a company or setting up a company?
Do you need advice from an expert in your field, on the ground? Need help finding the best route to market for your product or service?
Nangia & Co is in existence for more than 35 years and we are regarded as a highly professional and ethical firm in our fraternity. We have been consistently rated as one of the best group in India for Entry Strategy, Taxation, Accounting & compliance over the past 5 years
Finding office space abroad poses one of the most difficult changes that many start-ups face. Location, costs, and transport all need to be considered. And, more crucially of all, what office will allow a new business to attract and retain the best staff?
Simplified Global Payroll Companies with global employees often find that managing payroll in multiple countries is complicated - different systems, laws, and languages in each country, lack of reporting, and constantly changing laws and regulations each year. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, aggregated reporting, and a hybrid service model in 135+ countries around the world.