If you receive errors when attempting to view this white paper, please install the latest version of
"Avenir is a result oriented, 100% delivery focused management consulting company working with its clients to significantly increase cash flow and profits and sustain the same over a long time frame making the so called “business cycle” irrelevant."
Source: Avenir Management Services Pvt. Limited
Entering the Market in the World's Largest Democracy
is also known as :
Foreign Investment Opportunity
Attract Foreign Investment
Foreign Investment Service
Attracting Foreign Investment
Best Foreign Investment
India Foreign Investment
Direct Foreign Investment Policy
Best Foreign Investments,
Foreign Investment Issues,
Foreign Investment Companies,
Define Foreign Investment,
Direct Foreign Investment,
Direct Foreign Investments,
Encourage Foreign Investment,
Foreign Direct Investments,
Foreign Investment Analysis,
Foreign Investment Capital,
Foreign Investment Company,
Foreign Investment Decisions,
Foreign Investment Expert,
Foreign Investment Firms,
Foreign Investment GDP,
Foreign Investment Incentives,
Foreign Investment Income,
Foreign Investment Law,
Foreign Investment Laws,
Foreign Investment Limit,
Foreign Investment Limits,
Foreign Investment Opportunities.
BASIC UNDERSTANDING OR POTENTIAL OF THE INDIAN MARKET
Let me tell you Currently India's approximate population is 1.0009 Billion.
The Indian middle class is large and growing; wages were low and now it is best
in the various industry segments; many workers are well educated and speak
English; investors are optimistic and local stocks are up; despite political
turmoil, the country presses on with economic reforms. But there is still cause
With a billion people, the Republic of India is the world's largest
democracy. With a population nearly four times that of the United States; India
modeled its government on the British parliamentary system, with a healthy dose
of influences from the United States and the rest of Europe.
Let me share an example without taking the name of the organization, one
organization in India did a massive campaign on Milk. Requesting people and
children with the advantage of the drinking Milk. As a matter of fact their
sales of milk got increased by way of increase in consumption per person per day
per family. Resultantly prices of Milk were increased in other part of world
including USA because of the raise in demand in the largest democracy of the
world. This is off-course the power of the demand.
There is enough market in India for any product you take of any category.
Indian government has opened gates for world to come to India and explore the
power of demand. Only thing is needed is the right company with the willingness
to do the business with a long term goal.
Today, during the time India has emerged as a super power in IT, software and
IT enabled services.
India has undergone a paradigm shift owing to its competitive stand in the
world. The Indian economy is on a robust growth trajectory and boasts of a
stable annual growth rate, rising foreign exchange reserves and booming capital
markets among others.
Quarterly GDP at factor cost at constant (1999-2000) prices for Q2 of 2008-09
is estimated of showing a growth rate of 7.6 per cent over the corresponding
quarter of previous year. The economic activities which registered significant
growth in Q2 of 2008-09 over Q2 of 2007-08 are, ‘manufacturing' at 5 per cent,
‘construction' at 9.7 percent, ‘trade, hotels, transport and communication' at
10.8 per cent, ‘financing, insurance, real estate and business services' at 9.2
per cent, and ‘community, social and personal services' at 7.6 percent. The
growth rate in ‘agriculture, forestry & fishing' is estimated at 2.7 per cent in
GDP at factor cost at current prices in Q2 of 2008-09, is estimated of
showing an increase of 18.7 per cent. The wholesale price
index (WPI), in respect of the groups, food articles, fish, minerals,
manufactured products, electricity and all commodities, has risen by 6.6 per
cent, 3.3 per cent, 19.3 per cent, 11.1 per cent, 1.4 per cent and 12.4 per
cent, respectively during Q2 of 2008-09, over Q2 of 2007-08.
The consumer price index for industrial workers (CPIIW) has shown a rise
of 9.0 per cent during Q2 of 2008-09 over Q2 of 2007-08.
There is ample reason for India's viability as a destination for foreign
investment. In addition to the above-mentioned macroeconomic indicators, higher
disposable incomes, emerging middle class, low cost competitive workforce,
investment friendly policies and progressive reform process all contribute
towards India being an appropriate choice for investors.
The Indian Government is committed in its efforts to maintain a healthy
growth rate and provide a conducive policy environment to the enterprises, both
public and private, to invest
and grow their business in the country. To this
end, the Government has liberalized the foreign investment regime substantially
over the last decade. Today, foreign direct investment is allowed in almost all
sectors barring a few sensitive areas such as defense. Further, FDI is allowed
in most of the sectors under the automatic route, except a few, where approval
from the Foreign Investment Promotion Board is required.
India's foreign trade policy has been formulated with a view to invite and
encourages FDI in India. The process of regulation and approval has been
substantially liberalized. The Reserve Bank of India has prescribed the
administrative and compliance aspects of FDI.
The FDI policy rationalization and liberalization measures taken by the
Government have resulted in increased inflows of FDI over the years.
Foreign direct investment (FDI) inflows during
2007-08 stood at $24.57 billion, up 56.50 per cent compared with $15.7 billion
in 2006- 07. If reinvested earnings and other capital inflows are also included,
the total inflows in 2007- 08 add up to US$ 32.43 billion compared to US$ 22.08
billion during the same period last year.
During the period January-September of the Financial Year 2008, the FDI
inflows have been US$ 29.09 billion as against US$ 13.70 billion received during
the corresponding period of year 2007, registering a growth of 112%.
FDI can be divided into two broad categories: investment under automatic
route and investment through prior approval of Government. The pick up in FDI
inflows further reflects growing investor interest in the Indian economy on the
back of strong fundamentals and simplified procedures.
The 10 sectors attracting highest FDI into India are: Service sector,
Computer software & hardware, Telecommunications, Construction activities,
Housing & Real estate, Automobile Industry, Power, Metallurgical industries,
Petroleum & Natural gas and Chemicals. The 10 top investing countries are:
Mauritius, Singapore, USA, UK, Netherlands, Japan, Germany, Cyprus, France and
In addition to FDI, Foreign Institutional Investment
(FII) is also flowing into India. Qualified foreign entities (other than
those predominantly owned by non resident Indians) seeking to undertake
portfolio investments in India are regarded as Foreign Institutional Investors (FIIs).
Eligible institutional investors that can register as FIIs include asset
management companies, pension funds, mutual funds, banks, investment trusts,
nominee companies, incorporated/ institutional portfolio managers, power of
attorney holders, university funds, endowment foundations, charitable trusts and
HASSLES & ADVANTAGE:
The rapid economic growth of the last few years has put heavy stress on
India's infrastructural facilities. The projections of further expansion in key
areas could snap the already strained lines of transportation unless massive
programs of expansion and modernization are put in place. Problems include power
demand shortfall, port traffic capacity mismatch, and poor road conditions.
However, most of the project for road widening, and making of the Express way
for National highway are near to completion. Indian Bureaucracy Although the
Indian government is well aware of the need for reform and is pushing ahead in
this area, business still has to deal with an inefficient and sometimes still
slow-moving bureaucracy. Diverse Market The Indian market is widely diverse. The
country has 17 official languages, 6 major religions, and ethnic diversity as
wide as all of Europe. Thus, tastes and preferences differ greatly among
sections of consumers.
Therefore, it is advisable to develop a good understanding of the Indian
market and overall economy before taking the plunge. Research firms in India can
provide the information to determine how, when and where to enter the market.
There are also companies which can guide the foreign firm through the entry
process from beginning to end --performing the requisite research, assisting
with configuration of the project, helping develop Indian partners and
financing, finding the land or ready premises, and pushing through the paperwork
- Progressive movement towards delicensing and deregulation.
- India is the world's largest democracy.
- The gross domestic product grew by 8.9 percent in the first quarter of
- Large pool of young skilled labour force, cost effective production
facilities, large domestic market.
- Capacity up gradation in infrastructure, industrial base and
- Progressive tax reforms.
- Progressive opening of the economy to FDI.
- Portfolio investment regime liberalized.
- Liberal policy on technology collaboration.
- Investor friendly policies.
- Acceleration of the privatization process and restructuring of public
- Good network of research and development.
- Economic and political stability.
Manufacturing is the backbone of the economy. Global competitiveness in
manufacturing fosters growth, productivity and employment and strengthens the
agriculture and service sectors. India has the potential to become a
manufacturing hub for textiles, automobiles, steel, metals and petroleum
products for the world market. India has emerged as a premier global
manufacturing hub with the foray of a number of Multi National corporations such
as General Motors, Ford, Suzuki, Hyundai, Coco Cola, etc.
The current scenario portrays significant improvement in the performance of
beverages and tobacco, cotton textiles, textile products, basic metal and alloy
industries, non metallic mineral products, transport equipment and other
manufacturing industries. Services Since the beginning of the tenth five-year
plan, industry and services have acted as twin engines propelling overall growth
of the economy. Service sector growth continued to be broad based. Among the
three sub sectors of services, trade, hotels, transport and communication
services continued to lead by growing at double-digit rates since 2003-2004.
Impressive progress in the railway passenger network and production of
commercial vehicles, rapid addition to the existing stock of telephone
connections, particularly mobiles, growth in the financial services (banking,
insurance and real estate) and the construction boom were some of the driving
segments of the service sector Healthcare Industry: The Indian healthcare
industry is expected to increase in size from its current € 12.72 billion to €
29.6 billion by 2012. Healthcare in India is achieved through a mixture of
Public sector, private players and Public - Private Partnership. India will
spend € 33.8 billion on healthcare in the next five years as the country, on an
economic upsurge, is witnessing changes in its demographic profile accompanied
with lifestyle diseases and increasing medical expenses. Revenues from the
healthcare sector account for 5.2 per cent of the GDP and it employs over 4
million people. By 2012, revenues can reach 6.5 to 7.2 per cent of GDP and
direct and indirect employment can double.
The government has identified healthcare as a priority section and hence have
taken some measures to promote one of its most important segment "Medical Device
These are :
- Import license requirements have been cancelled, majority-owned
subsidiaries are possible, and dividends can be paid out abroad.
- Reduction in import duty on medical equipment from 25 per cent to 5 per
- The Union Health Ministry has mooted a proposal to set up a series of
‘Medical Parks' all over the country to enable domestic health industry to
manufacture health equipment at large scale.
- Around 15-20 Health Cities are expected to come up in India in the next
- Health Cities are looking at catering to larger populations by offering
facilities such as hotels, residential facilities, recreational facilities
of spa, gym and even golf courses.
- India is promoting the "high-tech healing" of its private healthcare
sector as a tourist attraction. It's a developing concept in India wherein
people from the world over come to India for their medical needs.
- It has been found out that an operation in the US is 6 times more
costlier than in India with the same expertise and hence Medical tourism is
catching up fast in India.
Is there a need for the products/services/technology? What is the probable
market for the product/service? Where is the market located? Which mix of
products and services will find the most acceptability and be the most likely to
generate sales? What distribution and sales channels are available? What costs
will be involved? Who is the competition?
Check on Economic Policies
The general economic direction in India is toward liberalization and
globalization. But the process is slow. Before jumping into the market, it is
necessary to discover whether government policies exist relating to the
particular area of business and if there are political concerns which should be
taken into account.
It is quite important and necessary for any organization to plan its entry in
a very structured manner.
PLANNING & WAY FORWARD:
One should have a proper planning and implemented in the right structured
Business Assessment, comprising of
- Environmental Assessment
- In Depth understanding of the business environment i.e. Market size,
Demand drivers, Competition, Customers, Pricing etc.
- Understanding of the key factors impacting entry
- Framing key strategic decisions and developing strategic options
- Valuation of each Strategic option and recommendation for the best
- Partnership Strategy (JV, Acquisition, Greenfield etc.)
- Understanding the key risk and opportunity drivers
- Business Plan with P&L, Cash Flow and Fund flow analysis.
Identify the right partners
- Agreement on the expectations from partnership
- Develop criteria for partner selection
- Identify prospective partners
- High level organization analysis
- Short listing partner candidates
- Due diligence of management capabilities
- Legal & Financial Due diligence
- Develop a win-win offer for the partners
- Business Road map and milestones
- HR Strategy for India
- Purchase, Marketing and Sales Strategy
- Taking the facts of Custom, excise duties and VAT/Local Sales Tax,
Central Sales Tax etc.
- Consideration of the labour law and other related laws and government
Creation of the company by way of JV/Collaboration/Acquisition etc.
- Basic Understanding
- Hassles & Advantage
- Market Study
- Planning and way forward