India’s rapid digital growth, young population, and $5 trillion market potential make it a prime target for global businesses, says Srinivas Krishnan of Crown Worldwide Group.
India’s remarkable economic progress, digital revolution, and well-placed demographic dividend have made it the center of attraction for global businesses. However, the nation has markedly changed, and any multinational stepping in has to rethink its approach to gain a foothold in this vast market.
With a customer base growing to over $5 trillion in 5 years, it is no surprise that multiple MNCs are eyeing up a stake in India. With an upward economy, a driven government, and a youthful population, the Indian market offers many possibilities. While it had always been an attractive destination for companies, recent geopolitical tensions and a recalibration of strategies in the wake of the pandemic have made multinationals look more than even at building a prominent presence within India. With a gross domestic product (GDP) of over $4 trillion and the fifth largest rank in the list of global economies, India is poised to climb up to the third rank within the next 5 years. India has undergone a transformative shift driven by rapid digitization, a booming middle class, and an aspirational, young population. This time, it is not just about the market size. The demographic dividend is shaping up for a better tomorrow as well with more than 70% of the population under the age of 30. Multinationals, however, can no longer take the nation for granted; they have to rethink their approach to survive and thrive amidst mature domestic competitors who already boast a local connection.
Global Expertise, Local Implementation
For any global player considering expanding into India, the central tenet should be to avoid imposing global processes but incorporate the Indian way into their operations. The fragmented nature of the nation’s market requires a handoff across multiple channels, with labor laws restricting top-heavy, organized operations. One way around that would be to tie up with local entrepreneurs, which could lead to cost-cutting and greater market penetration. Another viable strategy for manufacturers would be establishing R&D facilities and plants within the country to help them understand the Indian customer better and foster a local connection that makes them more appealing to domestic customers.
This time, having a brand name that people know is not enough; it is more about showing a visible commitment to India through elevating operations and investing in local talent. With the country growing at healthy rates annually and, according to estimates, going to account for a significant consumption chunk in multiple sectors, it is high time decision-makers focus on an execution strategy incorporating the nation’s innate strengths to succeed and establish a place in the market.
Incentives Abound
The Indian government has introduced attractive production-linked incentive (PLI) schemes. In mobile manufacturing, it has announced 4-6% incentives, while for medical devices, it is around 5%, both for 5 years. The number for pharma and food products is higher, with incentives reaching up to 10%. Special areas like Special Economic Zones (SEZs) provide ample opportunities for comprehensive tax relief. Enterprises looking to set up shop in India can also avail themselves of an attractive concessional tax regime. The current effective tax rates in the nation are also mostly at par with other large Asian markets.
Step-by-Step Execution
The planning for any Indian expansion decision needs to be carefully designed and handled at every level.
- Setting concrete expectations is the first step with appropriate local investments. Hiring local leaders who know the market and country well and sending global leadership execs to the country often would be crucial to monitoring and evaluating the progress.
- Gaining a deep understanding of at least 4-5 customer segments, setting growth goals, and tailoring market offerings to suit the Indian consumer.
- It is critical to create localized and innovative business models while building a distribution network that ensures a smooth supply chain immune to minor disruptions.
- Tapping into the local talent, building partnerships and joint ventures within the country, and ensuring that, over time, global operations benefit from the scale and costs of the Indian business.
Aside from a business strategy standpoint, any organization must maintain an active connection with external stakeholders, be aware of evolving regulations and compliance, and offer a compelling business proposition with roots in the Indian psyche that would make it an attractive option for their Indian target consumers.
Planning For A Tech-Driven Economy
Surpassing over 800 million internet users and boasting cheap data rates, all companies must have a concrete digital strategy integrating digital payment systems, an online marketplace, and an omnichannel experience that ensures a consistent touchpoint to customers everywhere. One great success story in this case is Flipkart, an online retail giant with immense popularity and market share within India. What has worked so well for them is their strategy to utilize multiple digital platforms to reach and engage their target audience. Any multinational looking to scale rapidly in India cannot be restricted to any single touchpoint but rather develop an innovative approach to guarantee maximum eyeballs. For a young and tech-savvy generation, visibility is key.
Conclusion
All companies that have set up a footprint in India have enjoyed increasing benefits. Once they get over the initial hurdles, the nation presents immense opportunities. A healthy combination of economic growth, digital innovation, demographic advantages, and policy reforms have transformed India into a market that no aspiring multinational can bypass. This time, the goalposts have shifted. Stiff domestic competition has made it mandatory for global players to step up their game and nurture a deeper connection with the country rather than treating it as simply a market for their goods and services. Adapting is crucial, and MNCs need to adjust to the unique Indian demand by empowering the local business unit. The time to act for decision-makers in boardrooms is now – and they should remember that it is a changed nation than the one they have studied in school.
Attribute to: Srinivas Krishnan, Managing Director, South Asia at Crown Worldwide Group