Country evaluation process and tools.
Main industries of India
An estimated 1.3 billion people call India home. The territory of the country spans the whole Asian continent, including its western and eastern shores. Coal, oil, and natural gas are just a few examples of India’s abundant natural resources. India’s primary exports are machines and other industrial commodities, and the nation also benefits greatly from remittances made by its residents living abroad. For these reasons, India is a great site for businesses and individuals to put their money. India’s GDP is supported by a wide range of industries, including agriculture and the service sector. Prospects for India’s future prosperity are promising, with the country’s economy predicted to grow by 7.5% annually over the next decade (Agnihotri & Arora, 2019). India’s growing allure stems from the country’s young population and expanding incomes. It’s also worth noting that India’s population is becoming younger. This post, therefore, will be analyzing the benefits of investing in India.
Fig 1.1 India’s GDP expected to grow at 8.5% in 2022:
Source; NASSCOM – Business Today https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.businesstoday.in%2Flatest%2Feconomy%2Fstory%2Findias-gdp-expected-to-grow-at-85-in-2022-nasscom-313603-2021-11-26&psig=AOvVaw2sXcQ1itHvD5i2TK51wdRT&ust=1667933468527000&source=images&cd=vfe&ved=0CBAQjRxqFwoTCKCqqsHenPsCFQAAAAAdAAAAABAT
Some of the most important sectors of the Indian economy include the production of iron and steel, textiles, jute, sugar, cement, paper, petrochemicals, automotive production, information technology (IT), and banking and insurance. Around 33% and 27% of India’s GDP are contributed by the manufacture of iron and steel, making them the two most important sectors in India (Ausloos et al., 2019). The textile and clothing industries also plays a significant role, contributing around 11 percent to the GDP (Ausloos et al., 2019). The jute plant is a major agricultural commodity that is transformed into many different products. Also crucial to the economy is the crop jute. The sugar industry is also very important to India, contributing about 7% to the country’s GDP (GDP). Cement manufacturing is also quite important, accounting for around 5% of the country’s GDP (Ball, 2019). The paper and publishing industry is also quite important, contributing around two percent to the GDP. With over 25% and 20% of India’s GDP coming from the car and IT industries, respectively, these two sectors are among the country’s most important drivers of economic growth (Thakkar, 2022).
International business relevance of India
With so many banks and insurance companies already established there, India is quickly becoming a favorite among multinational corporations looking to expand their operations overseas. Investors should rest easy knowing their money is going toward productive endeavors in India since these industries are crucial to the country’s GDP. A number of factors, including a young and expanding population, high per capita income, and a diverse economic base, offer the country an advantage in the global marketplace (De Soyres et al., 2020). India also has an advanced infrastructure, which includes several airports and seaports that facilitate its involvement in international trade. India is one of the nations with the most advanced IT sectors since it is home to the headquarters of a lot of multinational firms. For example, Microsoft has a big development presence in India, while Facebook has a sizable operations presence in the same country. Students and businesses alike flock to this country to take advantage of its advantageous position as the home of many prestigious universities with a strong international reputation for their programs. Putting money into India’s economy now seems like a good idea, what with all the successful companies and promising economic statistics. The country’s strong banking system and stable administration make it an attractive investment destination. Companies looking to set up shop in India will find its well-established legal system to be an attractive feature. Because of the large number of foreign investors based there, the nation is attractive to businesses looking to break into emerging markets. Therefore, businesses of all shapes and sizes are welcome to establish themselves in India.
These industries matter greatly to global commerce because of how competitive they are on a worldwide scale. In order to succeed in the Indian market, businesses need to provide goods that are both of high quality and meet the needs of Indian consumers. One of the world’s largest consumer markets is in India. Example: the success of the textile and garment industry depends on the fact that the fabrics it produces are both comfortable and aesthetically pleasing to wear (Su et al., 2021). The automotive industry also has a duty to meet or exceed the standards of quality, durability, and efficiency set by Indian consumers. In addition, the Indian auto industry must guarantee that the vehicles it produces are reasonably priced for the average Indian consumer. The car industry has a chance of achieving its goals if it concentrates on the lower price points of the market, where the great majority of its customers are located. In addition, the auto industry may fight for shoppers in the high-end market by producing luxury vehicles at competitive costs. Companies who want to sell in India must provide goods that are both of high quality and meet the needs of the Indian consumer. One of the world’s largest consumer markets is in India. Investing in India makes sense since the country is home to several great companies that can hold their own on a global scale.
Some of the biggest opportunities in investing in India
The Bombay Stock Exchange (BSE) of India is used as a case study in the essay “ustainable investment based on momentum tactics in developing stock markets.” Real estate, technology, and healthcare are three of India’s fastest-growing industries, offering excellent prospects for international investors. Incorporation into India’s real estate market is possible because to the country’s expanding middle class, historically cheap lending rates, and progressive policies towards infrastructural development. Investment opportunities in the tech industry exist throughout international markets because of the proliferation of new tech companies (Spulbar et al., 2019). Since there are so many people and their purchasing power is on the upswing, international financial markets can afford to put money into healthcare as well. Investing in these areas on a global scale offers a number of benefits, some of which are listed below. Healthcare is a fast expanding industry, and the number of people needing its services is rising. Because of the growing middle class and the overall size of the population, international financial markets are now able to fund healthcare projects as well. As a result, the international markets have a good chance of succeeding in this field. The IT industry is booming, creating several investment options. The proliferation of startups and the overall growth of the IT industry have opened the field to investment from international financial markets. Google, Facebook, Amazon, and Apple are just a few examples of these new businesses. A lot of people use their services, and these businesses are quite wealthy (Ball, 2019). Since there is already an established group of people willing to put money into these businesses, it stands to reason that their stock will do well on international exchanges. In addition, these firms are well-known and liquid enough that they may be invested in by the worldwide markets. That’s why these industries are good bets for the global market.
Also Companies from across the world who are prepared to invest in India will have access to a sizable pool of labor thanks to the country’s massive population. Investors are drawn to India because of the country’s robust institutional structure and sophisticated legal system. The nation also boasts a wealth of cultural traditions from which entrepreneurs might draw inspiration (Thakkar, 2022). For instance, there are several religious holidays that may be used to spread awareness of a product or service across the nation. In addition, there is a sizeable English-speaking population in India, which may provide new avenues for export. That’s why it can pay off for multinational corporations to put resources into Indian-specific branding and advertising. India also has a sophisticated infrastructure that can handle a high volume of clients, which may boost business and expand the country’s market share. And with such a large populace, there is a substantial market from which to draw.
The government has also enacted legislation to attract foreign investment, such as the Foreign Investment Promotion and Protection Act (FIPPA), which creates a fair playing field for investors from across the world. In addition, there are a variety of government initiatives and programs in place to attract and retain foreign capital. The Insolvency and Bankruptcy Code (IBC) is an example of a law that helps with the orderly and efficient winding down of enterprises. Also, the country’s infrastructure is rather strong, with advanced means of communication, transportation, and provision of electrical power. Renewable energy sources like solar and wind are being invested in as a means of decreasing the country’s reliance on fossil fuels. In addition, there are a variety of programs in place to encourage company creation in India, such as Startup India, which provides a variety of resources to new companies (Hedau, 2020). The government has also implemented rules and initiatives, such as the Foreign Investment Promotion and Protection Act (FIPPA), that make it an attractive location for foreign investors. In addition, the country’s workforce is highly educated and sought after in international markets. As a result, multinational corporations benefit from investing in a nation with all the above characteristics: a sizable population, a friendly regulatory environment, a diverse cultural landscape, a sizable English-speaking segment of the population, a sizable potential consumer base, and numerous policies and programs designed to attract foreign direct investment (Pettoello Mantovani, 2018).
Fig 1.2 Public Provident Fund (PPF) interest rates
Some of the risks of Investing in India
There are a lot of political dangers associated with investing in India to international markets. Political unrest and leadership changes are always a possibility. Because of this, the value of investments in Indian securities may fall if the Indian rupee falls in value (Ravi et al., 2019). There is also the ever-present threat of terrorist attacks. India’s markets have been severely impacted in the past by political unrest and terrorist attacks. It’s no secret that the value of the Indian rupee and the value of investments in Indian stocks have both dropped as a direct consequence of recent market volatility. Terrorism has not only cost lives but also money and resources. Therefore, anyone considering investing in India should be aware of the possible political dangers. Terrorist attacks, which may cause significant disruptions in the markets, might have a negative effect on the value of an investor’s assets and should be taken into account.
There is a great deal of financial risk involved in investing in India due to the country’s sluggish pace of economic growth and high levels of corruption. As a consequence of these risks, opportunities may be lost and investment returns may suffer. Also, since India is a developing country, its regulatory climate is uncertain. Because of this, running a business in India is challenging, and failure is more likely to occur financially. Therefore, individuals thinking about making financial investments in India should carefully weigh the benefits and risks involved (Liu, & Kim, 2018). There are a number of possible measures that may be utilized to help make a calculated decision. Prospective investors, however, should be cognizant of the widespread corruption in the country and the inherent risk of losing their money there. In addition, businesses find it difficult to keep their operations going in India due to the country’s unstable regulatory environment. In addition, businesses find it difficult to keep their operations going in India due to the country’s unstable regulatory environment
.
Fig 1.3 India Corruption Rank – 2022 Data – 2023 Forecast – 1995-2021 Historical – Chart
Some investors who hold Indian debt might lose money if interest rates in the West continue to climb, which is one of the many competitive risks associated with investing in India. There is also concern that the country’s large trade deficits would lead to a devaluation of the rupee, which would hurt exports and the economy as a whole. It’s possible that India’s economy may suffer as a consequence of the country’s government defaulting on its massive debt load. As a consequence, anyone thinking about investing in India need to carefully weigh the risks as well as the possible returns (Pandey et al., 2021). Another kind of competitive risk is the chance of foreign rivals being established in the Indian market. One example is how China has become an important investor in India and how it has helped it gain a sizable share of the Indian market. The outcome has been a surge in competition, and as a direct result, businesses in India have had to adjust to the new normal. Therefore, the government has instituted a number of measures to aid businesses in their quest to compete on global markets. Policies like this provide funding for energy and agricultural output, as well as infrastructural projects. Additionally, tax rates have been lowered and access to finance has been widened, both of which are positive developments for investors. The investment environment has improved as a consequence of this. The government invests in a number of key industries, including as the pharmaceutical and IT industries. Projects like this aim to reduce trade deficits by encouraging businesses to improve their efficiency. The government has lowered tax rates and increased access to finance, making investments more appealing and improving the economic climate. Companies have increased their productivity and become more competitive as a result of these policies. Laws in India encourage entrepreneurship in a number of different ways, including the establishment of “innovation centers” to help with business launches and the creation of “angel networks” to connect entrepreneurs with financial backing and other resources. These two groups are both essential to the launch of startup companies.
Climate change and the probability of natural disasters are two of the risks that investors in India must be aware of. India is located in a region that is very vulnerable to the impacts of climate change and the occurrence of natural disasters. Consider India; the nation has been hit by both floods and drought in recent years. The major cause of floods is excessive precipitation, whereas the primary cause of droughts is a lack of precipitation (Lyeonov et al., 2019). Damage to crops, decreased agricultural output, and displaced populations all have severe effects on businesses. Natural calamities, such as floods and droughts, not only impede transportation and communication, but may also aid in the spread of disease. In terms of the economy, floods and droughts may cause consumers to cut down on spending, employers to lay off workers, and the government to take in less tax revenue. Business contingency plans for natural disasters like floods and droughts are essential for these reasons. In addition, potential investors in the country should know that it is very vulnerable to natural disasters like floods and droughts. Since these events may have far-reaching effects on the economy, businesses must be ready for them.
I believe investing in India’s economy is prudent due to its bright economic outlook. India is expected to keep growing at a rapid pace, making it one of the fastest growing economies worldwide. Possibile economic drivers for the country include expanding demand and investment at home and abroad, as well as higher exports. Large numbers of young people living in the nation are a major strength. As India’s population grows, the nation will have more of an opportunity to benefit from such developments. At 2030, India’s population is expected to have risen to 1.5 billion, making it the world’s most populous nation by that point (Liu, & Kim, 2018). In 2030, India’s population will be larger than the whole US population. There is hope that India would have an increasing population of individuals of working age since the average Indian age is lower than the average age of a person in other nations. Investors who want to amass riches over the long term may want to think about India. In addition, India is expected to have an increasing population of individuals of working age since the average age of an Indian is lower than the average age of a person in other nations. Increased consumer demand is a key ingredient in economic growth, and this will have that effect. In addition, India’s economy benefits greatly from the country’s comparatively young population.
Entry modes selected by American companies that want to get into this market
Some of the entry modes (strategies) that American companies (or from other
countries) have used to get into the Indian market and the international relevance of this
Acquisitions, joint ventures, and licensing are examples of some of the entrance tactics (strategies) that American corporations (or companies from other countries) have used in order to break into the Indian market. Because they enable corporations to share both the risks and the benefits involved with the endeavor, joint ventures are an effective means through which businesses may enter the Indian market (Spulbar et al., 2019). Additionally, acquisitions may be a smart approach to join the Indian market since they enable corporations to acquire another company that already has a strong presence in the Indian market. This makes acquisitions a potentially viable option to enter the Indian market. However, licenses are an excellent method to join the Indian market since they enable businesses to utilize a brand that is already successful in the Indian market. This makes licensing a smart approach to break into the Indian market. In addition, businesses have the option of using indexes whenever it is deemed necessary. These are advantageous to American businesses since they make it possible for those businesses to locate others in their field of interest in a fast and straightforward manner. In addition, indexes may assist foreign firms in identifying appropriate companies in which to make investments. For instance, the performance of the 100 biggest publicly listed Indian corporations is tracked by an index called the Forbes India 100 (Liu, & Kim, 2018). This index is helpful to multinational corporations since it enables them to locate firms that are worthy of investment in a rapid and efficient manner. Therefore, employing indexes may be a fantastic method for firms to join the Indian market as well as help them discover the proper companies to invest in. Indexes can also be used to assist corporations identify the ideal companies to invest in. The significance of all of this with regard to international business, which should be taken into consideration by companies that are interested in breaking into this market.
Some actual brands that have Joined the Indian market
Uber, Airbnb, and Pinterest are three examples of genuine businesses that have entered the Indian market in the most recent few years. These businesses have entered the Indian market in their own unique methods, and as a result, each one has experienced its own set of advantages and difficulties since doing so. After forming a partnership with an Indian business called Ola, Uber was able to enter the Indian market and begin providing its services to Indian consumers. When Airbnb first entered the Indian market, it did so by providing its services to Indian clients directly (Narayanan, & Sirigauri, 2020). After forming a partnership with an Indian startup called Zomato, Airbnb began marketing its services to individuals based in India. It was a smart move for Airbnb to enter the Indian market in this manner since it gave the company the opportunity to discuss with Indian clients both the opportunities and the constraints presented by the endeavor. In addition, Airbnb was able to provide its services to Indian clients directly, which served as an effective strategy for the company to get into the Indian market. The fact that Airbnb was able to leap over the many regulatory obstacles that are present in the Indian industry is the primary advantage that can be derived from this technique.
Fig 1.4 Uber Statistics 2022: How Many People Ride with Uber?
Source https://www.google.com/url?sa=i&url=https%3A%2F%2Fbacklinko.com%2Fuber-users&psig=AOvVaw30mex5IcyrinuXHrP9GAY3&ust=1667934140536000&source=images&cd=vfe&ved=0CBIQ3YkBahcKEwiIg7iB4Zz7AhUAAAAAHQAAAAAQDA
Lastly, Pinterest entered the Indian market by forming a partnership with an Indian business known as Flipkart. One of the most successful and prominent online retail businesses operating in the Indian market is called Flipkart, which is an Indian corporation. Additionally, Flipkart is one of the organizations that is expanding at the quickest rate in the Indian industry. Because of this cooperation, Pinterest was able to join the Indian market without having to confront many of the hurdles that Airbnb and Uber did when they first entered the country. The fact that these companies are entering the Indian market gives consumers in other countries an alternative to the conventional companies that are now in charge of the Indian economy. This gives these companies international importance. For instance, the “business-to-business” (also known as “B2B”) sector is one of the most time-honored industries that today has the majority share of the Indian market. Businesses that offer their goods and services to other firms are known as “business-to-business” (B2B) companies. Pinterest, on the other hand, has made the conscious decision to pivot away from the typical business-to-business corporate model and instead concentrate on the consumer market. As a result, it has formed a partnership with the Indian business Flipkart in order to sell its products and services to Indian customers. Over the last several years, the online retail platform known as Flipkart has garnered a significant amount of success in the Indian market. Because of this agreement, Pinterest will be able to attract a bigger audience in the Indian market, which is a positive development for the firm.
Some of the challenges of getting into the Indian market
There are a lot of regulatory hoops that need to be jumped through before a company can begin operating in the Indian market, which is one of the reasons why it can be difficult for foreign businesses to break into the Indian market. For instance, the requirement that companies must have a local partner to operate is one of the most difficult regulatory hurdles that companies must clear in order to operate legally. This is a requirement that has been put in place to ensure that businesses are operating within the bounds of the Indian market and are not doing anything to hurt the economy of the area in which they are based. When it comes to entering the Indian market, one of the challenges that international companies face is the fact that the Indian market is dominated by traditional businesses. Therefore, before investing in a company, it is essential for investors to have a solid understanding of the Indian market.
International HR
The most expensive cities for expats in India
Mumbai and Bangalore are the cities in India that have the highest living costs for foreign residents. The fact that these two cities are among the largest and most populated in India is the primary factor that contributes to their status as India’s costliest cities for expats (Gruener, 2022). In addition, Mumbai is a cosmopolitan city, which implies that its population is comprised of people who adhere to a diverse range of cultural traditions and speak a variety of languages. For instance, since a significant number of individuals who originate from the Indian subcontinent make their home in Mumbai, the city is home to a sizeable population that speaks Hindi. On addition, Mumbai is a city that is always teeming with activity, which means that there are a great deal of people and a great deal of congestion in the city’s roads. Because of this, it is difficult for expats to gain the necessary amount of privacy and it is also difficult for them to find work in their new location (Jaiblai, & Shenai, 2019). On the other side, Bangalore is a city that has a more laid-back atmosphere despite its high cost of living. The fact that Bangalore is a city that is home to a large number of global corporations means that there is a great deal of employment chances available to foreign nationals who are living there. The fact that Bangalore is a city that is constantly bustling is, however, one of the drawbacks of choosing to make your home there. Because of this, there is a lot of noise, and there is also a lot of traffic congestion, both of which may be quite annoying for expats.
Fig 1.5 GNIMS Mumbai Placements 2021: Highest Package, Average Package, Top Companies
The cost of living in India
Some people’s notion of India’s cost of living is inaccurate. India’s high cost of living may be attributed in part to the country’s onerous tax structure, which places a heavy burden on businesses and individuals alike. So, living expenses in India are greater than in other nations. Goods and Services Tax (GST) is one of the most pervasive taxes paid by businesses and individuals in India. In India, for instance: (GST). Companies find it difficult to compete in the Indian market due to the Goods and Services Tax (GST), a tax applied on many different goods and services. This means that businesses and individuals alike are subject to uniform GST payment obligations. In addition, businesses need to keep track of the GST that they’ve paid as a result of their activities. They must do this to ensure they are not breaking any tax laws. Additionally, the Indian government requires businesses to file GST filings every three months. Each and every foreign and Indian firm operating in India is subject to this rule. However, there is a vibrant business community in the Indian market despite the heavy taxes applied throughout the country. This is because businesses may find ways to circumvent paying the hefty taxes. Businesses may avoid paying the high taxes that are placed on them by using offshore entities, for example. This is but one method among several. Offshore businesses are companies that operate outside of the Indian economy. This means they avoid the very high taxes that are charged on companies doing business in India proper. To put it another way, this makes it possible for corporations to operate in India’s market without worrying about the country’s high tax rates.
In conclusion, I believe that investing in India is a superb chance for businesses to expand their operations. There is much potential in the country, and many openings for businesses to participate in that development. In addition, the administration shows no signs of collapsing, and the nation is now stable. As a result, I think investors looking for a safe country to put their money into might choose India. Aside from that, the country is growing rapidly, and there are signs that this growth will continue for the foreseeable future. For instance, the nation’s economy is one of the world’s fastest-growing economies right now, and experts believe it will continue to expand in the years to come. The country also has a lot of untapped potential and several entry points for businesses to capitalize on this. Therefore, India is a great place to put money.
References
Agnihotri, A., & Arora, S. (2019). Study of Linkages Between Outward Foreign Direct Investment (OFDI) and Domestic Economic Growth: an Indian Perspective.
Ausloos, M., Eskandary, A., Kaur, P., & Dhesi, G. (2019). Evidence for Gross Domestic Product growth time delay dependence over Foreign Direct Investment. A time-lag dependent correlation study. Physica A: Statistical Mechanics and Its Applications, 527, 121181.
Ball, S. J. (2019). Serial entrepreneurs, angel investors, and capex light edu-business start-ups in India: Philanthropy, impact investing, and systemic educational change. In Researching the global education industry (pp. 23-46). Palgrave Macmillan, Cham.
De Soyres, F., Mulabdic, A., & Ruta, M. (2020). Common transport infrastructure: A quantitative model and estimates from the Belt and Road Initiative. Journal of Development Economics, 143, 102415.
Gruener, A. (2022). Sustainable investing in emerging markets. In Handbook of Banking and Finance in Emerging Markets (pp. 298-320). Edward Elgar Publishing.
Hedau, A. (2020). Value Investing: Evidence From Listed Construction And Infrastucture Sector Companies In India. Romanian Economic and Business Review, 15(4), 104-114.
Jaiblai, P., & Shenai, V. (2019). The determinants of FDI in sub-Saharan economies: A study of data from 1990–2017. International Journal of Financial Studies, 7(3), 43.
Liu, H., & Kim, H. (2018). Ecological footprint, foreign direct investment, and gross domestic production: Evidence of belt & road initiative countries. Sustainability, 10(10), 3527.
Lyeonov, S., Pimonenko, T., Bilan, Y., Štreimikienė, D., & Mentel, G. (2019). Assessment of green investments’ impact on sustainable development: Linking gross domestic product per capita, greenhouse gas emissions and renewable energy. Energies, 12(20), 3891.
Narayanan, E. A., & Sirigauri, N. (2020). ESG investing in India.
Pandey, A., Brauer, M., Cropper, M. L., Balakrishnan, K., Mathur, P., Dey, S., … & Dandona, L. (2021). Health and economic impact of air pollution in the states of India: the Global Burden of Disease Study 2019. The Lancet Planetary Health, 5(1), e25-e38.
Pettoello Mantovani, L. (2018). Legal framework and issues impacting the business environment faced by foreign companies investing in India: challenges and opportunities.
Ravi, S., Gustafsson-Wright, E., Sharma, P., & Boggild-Jones, I. (2019). The promise of impact investing in India.
Spulbar, C., Ejaz, A., Birau, R., & Trivedi, J. (2019). Sustainable investing based on momentum strategies in emerging stock markets: A case study for Bombay Stock Exchange (BSE) of India. Scientific Annals of Economics and Business, 66(3), 351-361.
Su, C. W., Sun, T., Ahmad, S., & Mirza, N. (2021). Does institutional quality and remittances inflow crowd-in private investment to avoid Dutch Disease? A case for emerging seven (E7) economies. Resources Policy, 72, 102111.
Thakkar, K. (2022). The Prospect of Impact Investing in India (Doctoral dissertation, School of Petroleum Management).
