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Market Entry Strategy - Southern India


A sample market entry strategy document looking into a company moving into Southeastern India. Hyderabad and etc. This Market Entry Strategy outlines a marketing analysis based on regional and …

A sample market entry strategy document looking into a company moving into Southeastern India. Hyderabad and etc. This Market Entry Strategy outlines a marketing analysis based on regional and product assessments. A number of strategies are considered and the marketing plan recommends entering the market independently or with assistance. The risk factors and regulatory compliance are also considered.
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  • 1. STRATEGIC BUSINESS PLAN Market Entry into South India 2012NGM Team 1Shannon Rushe –James Dellinger –Patrick Greene –Stephanie McGreehan – TABLE OF CONTENTS PageExecutive Summary................................................................3
  • 2. Section 1. Strategic Focus............................................................................ 4 2. Regional Analysis........................................................................6 3. Market Analysis.......................................................................... 8 4. Products.................................................................................... 16 5. Marketing.................................................................................. 20 6. Strategy................................................................................25 7. Recommended Strategy.............................................................27 8. Risk Factors and Regulatory Compliance..................................30 9. Plan Improvement.....................................................................33Appendices..............................................................................34Bibliography............................................................................54 EXECUTIVE SUMMARYThere is a great business opportunity for First Touch Technology (FTT) to extend its unique deskdesigns into other regions. India has a large market, a growing middle class with substantial 2
  • 3. purchasing power and a massive amount of existing and developing academic institutions. It has along established legal and accounting system, an independent judiciary, a free and vibrant press,and a strong tradition of entrepreneurship. The use of English is widespread in business andcommerce. Indian engineers, scientists, technicians, managers and skilled personnel are widelyregarded as among the best in the world. Procedures are being simplified and streamlined to helpglobal companies like FTT to do business in India. Real Estate in India shows every sign ofemerging as one of the fastest growing sectors, second only to agriculture in terms of employmentgeneration.This Market Entry Strategy outlines a marketing analysis based on regional and productassessments. A number of strategies are considered and the marketing plan recommends enteringthe market independently with assistance from Enterprise Ireland, who has an office in New Delhi.The risk factors and regulatory compliance are also considered. 3
  • 4. SECTION ONE STRATEGIC FOCUS The BusinessJoe Griffin is Head of First Touch Technology (FTT).The company was registered in 2000, but the business name was not registered until 2005(Companies Registration Office).FTT currently is situated in two locations: Meath, Ireland and Lincoln, UK.FTT were recently part of the BETT show in London 2012 with Hewlett Packard. They haveworked with clients across a range of industries including government and universities.In 2008 they made enquiries to Enterprise Ireland about entering the India market but this was notprogressed further. The Aim of this PlanFirst Touch Technology wants to assess to attractiveness and potential of the market in SouthIndia. Our MissionFirst Touch Technology is dedicated to transforming the office environment by providing solutionsdriven by the application of our core values.Clients range from large corporations, including government departments, and schools to the homeoffice user; each is provided with a product tailored to their needs. 4
  • 5. At the centre of out product range is the e-space space management system, the solution forcreating office spaces that are more productive, cost effective and healthier.FTT provides solutions to enable cost saving, space saving, and a healthier working environment. Core Organisational CompetenciesUnique e-space desk designs, which are patent and design protected.FTT personnel can allow you to re-use your existing furniture and retrofit e-space designs to fitaround your current space; refurbish your current workspace with new worktops or design anentirely new office space for you. Organisational ValuesCore values: innovation through design, user focused and environmentally friendly. 5
  • 6. SECTION TWO REGIONAL ANALYSIS(See Appendix 2.0 for detailed analysis by region)GeographyKerala, Karnataka, Tamil Nadu and Andhra Pradesh are the four regions, which make up the wholeof Southern India. Some parts of all these regions make up the southern coastline. Each region ismade up a number of districts and all displaying a diverse geology, which includes vast plains,desserts and numerous mountain views. The line created by the Narmada River and MahanadiRiver is the traditional boundary between northern and southern India (South India Tours.com).The three major rivers within South India are the Kaveri, the Godavari and the Krishna, are locatedalong the Bay of Bengal. With these brings ports, which enable imports and exports through cargoand thus distribution made easier.PopulationThe approximated population of South India is 233million people. With a population as big as thisthere are a vast amount of religious, cultural and ethic outlooks. The main religions followed areHinduism, Buddhism, Jainism and Sikhism. 60% of the population lives in permanent housing.Life expectancy is from the age of 64-68 years of age. “Indias high population growth results inincreasingly impoverished and sub-standard conditions for growing segments of the Indianpopulation.” (About.com/Geography)EducationThe education system throughout Southern India has reached new heights in recent times withGovernment initiatives, public – private partnerships. (Digital Learning.in, 2009) As Karnataka isone of the main regions for IT development the skills and expertise which students acquire benefitsthe economy further. Teaming up with IBM for certain initiatives this is a real area of opportunityfor the population of South India and further contributing to the growing economy.InfrastructureInfrastructure within Southern India is adequate they have a selection of airports, which seeinternational airlines avail off, a rail system, which connects most major towns and citiesthroughout. There are also a number of ports, which again enable the ease of export and imports 6
  • 7. through the use of cargo ships.Political StructureThe regions are made up of different constituencies. They all adhere to rules and regulations of theNational Government. “Indias independent judicial system began under the British, and itsconcepts and procedures resemble those of Anglo-Saxon countries.” (Global Edge) InternationallyIndia is held with high stance, due to its size population and growth prospects, foreign directinvestment here has a lot of potential.Economic StructureDespite the global downturn India has had growth yet in recent times it has seen a slight reductionin their economic growth rate. The expected annual growth is 9%. Although Southern India hasquite a ‘rich’ economy, the north of the Country is the poorest part with a high percentage livingoff less than US$2 per day. This highlights the huge discrepancies within India and the reason whysocial class is often the topic of some political agendas. Corruption, rising fuel and food cost, andinequality can be witnessed within this economy, yet over all they are still quite productive. 7
  • 8. SECTION THREE MARKET ANALYSISMarket Size & AttractivenessCavusgil et al.’s (2004) assessment of the attractiveness and potential of markets ranked India 21stout of 88 countries (Appendix 1.0), ahead of EU countries Portugal and Italy and other growingdeveloping markets such as Brazil and Russia, highlighting the increased appeal for foreigninvestment there. Although India is ranked 42nd in terms of ‘Risk’, it is also favorably ranked interms of ‘Market Growth’ and is the highest ranking of the developing nations to be listed.Furniture Market IndiaThe Italian Trade Commission’s Report (2009) states that India’s furniture industry is growing(currently 25-30% per annum and set to rise) due to the large and increasing middle class(population 400m) whose purchasing power is growing also.India’s ‘furniture sector makes a marginal contribution of 0.5% to India’s GDP’. It is worthUS$8bn and employs 30,000 people. Although it is a growing market, it is highly unorganized,with just 15% classified as ‘organised’ (‘mainly imports and a few Indian manufacturers who aremostly into the office furniture segment’).‘The office furniture segment boasts of better companies from the point of view of better size aswell as technological innovations’.Malaysia External Trade Development Corporation (Matrade) announced earlier this year thatIndian furniture market is highly promising for the Malaysian furniture segment ‘apart from theexpanding middle class, a boom in the construction industry and growing demand for office spacein major cities offer good market potential for Malaysian furniture industry players’. 8
  • 9. Internal Marketing Strategy AnalysisValue ChainExternal Marketing Strategy AnalysisPESTEL AnalysisPolitical:Transparency International ranked India at 95 out of 182 countries (with 1 being the least corrupt)(www.guardian.co.uk, 2011). Doing business in India is still fraught with difficulties as it is such alarge country with governance coming from a central government and there are uniquely differentstate and local governments and political power players in each state.Economic:A 2011 report from the Economist Intelligence Unit said that ‘Indias real GDP grew by 7.7% yearon year in April-June, the slowest pace of expansion in six quarters, and down marginally fromgrowth of 7.8% in January-March’. Although growth has dropped slightly, it is still growing andso, is still a highly attractive market.Socio-Cultural:Indias population is estimated at more than 1.1 billion and is growing at 1.55% a year. It has theworlds 12th largest economy, ‘large numbers of well-educated people skilled in the Englishlanguage to become a major exporter of software services and software workers, but more than halfof the population depends on agriculture for its livelihood’ (GlobalEdge Report). 9
  • 10. Technological:There are 39 million Internet users in India and this figure is growing in line with increased accessto broadband. ‘India is now ranked as the seventh-largest global market for social networking. Thetotal Indian social networking audience has grown by 43% in the past year, more than tripling therate of growth of the total Internet audience in India’ (Euromonitor Report, 2010).Educational:Southern India’s educational capacity is growing, with existing campuses expanding and newuniversities being developed to cater for the growing number of students there (Lewin T., 2012).With 150+ universities and growing, there is massive potential for FTT to maximise on the needfor modern desk design.Legal:A recent EconomyWatch (2010) analysis states that ‘legislation on various ways of setting upbusiness and on intellectual property rights exists as well as a lot of advantages for foreigncompanies to establish business alone or with partners in India. Indian government is continuouslytaking steps to minimize entry-exit barriers for foreign companies and government is facingpressure to liberalise the duty structure’.The e-space range of fittings is patent protected, but the regions that are covered by this patent arenot mentioned. FTT should ensure that products and logos are patent protected in India beforeentering the market.FTT have used the trademark symbol alongside their logo on their site but it is unclear whetherthey have trademarked their logo or name, and they should also ensure these are protected in Indiaalso. 10
  • 11. PORTER’S FIVE FORCESSuppliersFirst Touch Technologies are not heavily reliant on suppliers; the most valued asset is the designcapability of the team and the e-space designs that they have patented.The materials needed to build can be sourced from any country, many different suppliers: timber,glass, handles, locks.Buyers  Educational: There are numerous universities and schools in South India.  Corporate/Office: There are numerous multinational companies with offices in South India.  Domestic: India’s rapidly growing middle class are yielding increasing buying powerNew EntrantsL3p recently launched the D3sk ‘a casemod which hides away cables and ... computer parts into asleek, thin desk, attached to the wall’ (Fish, 2011). This high level of design would appeal todomestic users, and is expensive, but shows the direction desk design is moving towards. 11
  • 12. SubstitutesIn terms of smart design, there are many companies offering improved space management andworking environment. One such company is Dornob. Their corner standing computer stand wouldbe ideal for the classroom or office, and the 3D touch screen computer and desk design shows howworking at a desk is changing rapidly. 12
  • 13. Competition –First Touch Technologies believe that they have competitive advantage over other current deskdesigns in the market. They are dismissive of the benefits of other desks, however, and theergonomic benefits of other desks.There are quite a few competitors for office furniture in Southern India, both domestic and foreigncompanies such as Dubai-based Al Reyami (see Competition section below). 13
  • 14. SWOT Analysis  Strengths:1.Increasing demand in modern, clean, minimalist designs2.Educated and skilled workforce3.Good track record with clients in Ireland and England4.Innovative design – patented  Weaknesses:1.Lack of experience in market2.Lack of awareness of our products  Opportunities:1.Big potential market in growing education and corporate market segments2.Lower labour costs in outsourcing3.Premium office furniture segment growing4.Large market in southern India and potential to expand  Threats: 1. Attractive market to other larger foreign organizations, such as the Al Reyami Group 2. Corruption common in Indian business and politicsCompetitionFTT’s competition in Southern India is made up of existing Indian business and the many externalcompanies that have entered the market, or are planning to.The massive international corporation, Tata - now designing and manufacturing office furniture -(Agrwal 2009) and dedicated national office furniture manufacturers and retailers Durian, Godrej& Boyce and Featherlite have the ability and experience to reach top-level decision-makers and gettop contracts and understand the unique obstacles to doing business in India.Other key competitors in the premium office furniture market are outlined below.Al Reyami Group 14
  • 15. The Dubai-based Al Reyami Group announced in 2010 that they were going to set up three officefurniture facilities in Southern India (The Economic Times, 2010). They are now well-established.Al Reyami Office Furnishings & General Trading (ROF) is the flagship company of the Al ReyamiGroup, which consists of 27 companies with more than 5,000 employees, and offices in India andChina, employing over 800 people.The Reyami team in India designs and installs quality office furnishings, operating from officesand showrooms in Bangalore, Chennai, Hyderabad, Madurai, Coimbatore, Kochi and Mumbai;planning to open in New Delhi soon also.JMLifeStyleBased in Cochin/Kochi, premium office and home interiors, South India.Dedicated team of creative designers and experienced work force.ERGOMAXXCorporate furniture solutions provider based in Chennai, Tamil Nadu, South India. In business forover two decades; manufactures furniture for open office systems, modular furniture, Aditoria,Classroom seating, Workstations, Chairs & tables, Complying with ISO standards. Ergomaxx hasrich experience in delivering sophisticated seating solutions for a variety of industries- Software,BPO, Education, Retails, Public sector, Government, etc. 15
  • 16. SECTION FOUR PRODUCTSCurrent & Near Future ProductsFirst Touch Technology’s current products are developed adhering to the core value of:‘Innovation without Compromise’, which epitomises the versatile design and layout of FTTproducts to date.Their current products would enhance every scenario within where it deemed suitable; FromClassrooms to Conference calls, auditoriums to test centres. The Conference Room Examination CentreAll of FTT’s products are highly versatile and adaptable to any position. This is a real uniqueselling point for the product in any country; the product can be adapted to the person or much casethe country’s cultural behaviour patterns.FTT offer a variety of layouts to choose from: 16
  • 17. They then offer multiple Desk option typesAnd finally a choice of positioning for the Monitor:Monitor SetupEspace space management systems is at the centre of FTT’s product range; the solution for creatingoffice spaces that are more productive, cost effective and healthier is a niche in the market that theyhave acted upon effectively and now in order to go global they are looking at a market such asSouth India to outsource its manual labour.Competitive AdvantageCompetive advantage is derived from FTT’s core values such as innovation through design, beinguser focused and of course environmentally aware. The versatility of the products to multipleenviroments is also appealing. 17
  • 18. Benefits & ValueNew design: Neater, more productive work space. Ergonomically sound.Health & Safety Benefits:Natural PostureCorrect Viewing AngleCorrect Viewing DistanceHealth & Safety standards compliantReduced dry-eye syndromeAllows correct and comfortable desk heightKeyboard tray can be placed at correct heightUser benefits:Contemporary look and feelIncreased comfortReduced desktop clutterConfidentiality and privacyTouch-screen friendlyFully adjustableCan be mounted left-side, right-side or centrallyVideo-conferencing availableOrganizational Benefits:Reduced PC maintenanceMultifunctional rooms and workstations 18
  • 19. Increased productivityStandards CompliantHigher securityGreater Occupancy DensitiesSave costs by retrofitting to existing desksUniversal VESA compatible fittingCable management made easyEnvironmental & Social considerationsBy setting up a presence in South India the usual social impacts on the region would be rise inemployment, better standard of living. Social implications would include a healthier environment,better standard of living, less “out with old, in with the new mentality” Superior savings by FTT.They would be able to sell their products to region that is occupied by many world leaders in ITand car manufacturing.Regulations & StandardsFTT are ISO certified in Ireland.The Indian Government sets Standard on Occupational Health & Safety (OH&S) managementsystems. It is called as the IS 18001:2000.At what stage is each product in its life cycle?FTT’s range of products is currently at the growth stage of the product life cycle. They haveintroduced their products to the market in Ireland and England and they have yet to get moretraction in those markets. 19
  • 20. SECTION FIVE MARKETINGTargetingPrimary Target: EducationThe rapid expansion of universities and educational facilities in southern India offer the greatestopportunity. FTT already have a proven track record in providing smart desk design foruniversities and should be able to use their contacts to establish meetings with relevant people totry to sell their designs.Secondary Target: CorporateSouthern India and its cities are also developing rapidly as commercial hubs, with a number of newinternational airports now opened in cities such as Kannur, and recently opened airports such asThiruvananthapuram expanding. Office space is growing and FTT should be able to leverage theircontacts and experience in education to get corporate contracts.Product benefitsFTT’s e-space designs can be implemented in any space; office, commercial space, boardroom,lecture hall. They offer a comfortable, clean and modern design and as a result, a more productivework environment.Product distributionFTT will need to utilise current staff to design and construct the desks. Local staff can be used tomanufacture the parts needed to spec, unless FTT decide to import the parts: wood, handles, glasstops etc.Product promotionFTT already have established relationships with universities in Ireland and the UK and have aproven track record. These universities will have contact in some educational facilities in India andwhere possible, these relationships should be used. Meetings should be arranged to establishinterest and perhaps get advice. A promotional plan should then be designed, perhaps focusing onadvertising in educational and business magazines and trade magazines that specialize in furniture.There are a lot of benefits with advertising, which allow the publicity of your product or service.Benefits include, informing the consumer of your product and how it may be what they want tosuit their values, lifestyle or within organisations. Advertising gives a better range of value and 20
  • 21. choice to perspective customers (Value of Advertising.org, 2008). To ensure the business has agood footing within Southern India it is important that the company becomes known. For this tohappen, various advertising channels must be explored to highlight FTT within the Market. Thefollowing are options, which FTT could consider within their marketing plan; they include onlineresources, Television, Newspapers and Radio. India is said to be one of the most creative countrieswhen developing marketing ideas (India One Stop.com, 2009-2010). With regard tonewspaper/magazine advertising there are a vast amount of options to chose from for example, TheTimes of India Bangalore Business Standard, Economic Times, Business India and Business Worldto name a few. The cost of this service can range from 1430- 3855 Indian Rupees across India yetone of the costliest is The Times of India Bangalore, which is 2485/sq cm colour (Release MyAd.com, 2010). The western channels influence a lot of the television within Southern India.Indian channels which probably would be the most effective to avail off would be Zee and SonyTV again the cost of these could be up on 350000 Indian Rupees for just a ten second slot. Thecost of this could be a deterrent for companies to advertise using this source yet the benefit for FTTwe believe would out weigh the cost as they need to become well known within the SouthernIndian Market, so reaching people in their homes, business’ educational organisations is crucial.The final medium of advertising is social media. FTT already have a substantial website yet otherresources they could avail off when conducting online advertising are for example; Ozone Mediawho deal with clients in diverse sectors, Komli/Pubmatic who are international publishers withinthe Indian audience and AdMagnet who deal with various actions such as media, campaignmanagement, SEO and interactive marketing (Pluggd.in, 2008). All aspects of advertising shouldbe looked at by FTT to choose the best fit for their business.Customer communication, interaction and feedbackClient testimonials are a central part of FTT’s offering. FTT will use the work that they have donepreviously to inspire confidence in the product and offer expectations of what deliverables can beachieved.Product support for the life of the productThe e-space design can be updated and altered during the lifetime of the product. The clean designallows for expansion at any time of existing models.Product pricing and purchasingWe have no information on pricing and will adapt pricing plan to market and materi 21
  • 22. Market Entry Experience in IndiaClearly, any entry into a new market requires a certain degree of tailoring to its specific needs andconditions. But FTT must start to rethink their product range and test if it will offer dailyimprovements to businesses in India, cost structures should also be looked at along withdistribution and management teams. Companies that successfully tap into the promising Indianmarket often ignore conventional wisdom, including the need for joint ventures.The reason why many multinationals have not experienced the success they have had in otherregions is because they just replicated their product offerings to the market in India, however theproducts and price points that are competitive in India are often considerably different from thosethat work well in other countries. Below is a list of recommendations that FTT should explorewhen planning their market strategy in India.Adaptations: 1. Reach into the middle and lower-end segments or they may end up as niche high-end players, with insignificant revenues and profits. 2. Indian Consumers will pay a premium if the value of superior features and quality is seen too far outweigh their cost. 3. Develop completely new products to compete at target price points. 4. Localize their product offerings to meet Indian consumer preferences. 5. Re-engineer its supply chainExamples of Companies that adapted to the Indian Market successfullyCompanies trying to break into the Indian market must understand the Indian consumersexpectations and price sensitivities.Electronics Industry: Appeal to the lower & middle classLG Electronics, for example, reengineered its TV product specifications in order to develop threeofferings specifically for India, including a no-frills one to expand the market at the low end and apremium 21-inch flat TV for the middle segment. By keeping the price of the latter offering towithin 10 percent of the price of TVs with conventional screens, LG persuaded many consumers to 22
  • 23. buy it. These innovations have led the company to a top-three position in the countrys consumerdurable-goods and electronics market in a little over three years, with revenues of nearly a billiondollars in India.Retail Industry: Develop new ProductsVery often, however, companies need to develop completely new products to compete at targetprice points set by local competitors, as Hindustan Lever Limited (HLL), a part of themultinational Unilever, did with its low-priced detergent brand, Wheel. Responding to localcompetition, HLL lowered the active detergent content of its existing product, decreased the oil-to-water ratio, and then launched the new detergent at a 30 percent discount to the price points of thecompanys more traditional detergents. Today, Wheel accounts for 45 percent of HLLs detergentbusiness in India and for 8 percent of total HLL sales.Automobile Industry: Localise their productsIn other cases, companies must significantly localize their product offerings to meet Indianconsumer preferences. Because Indian consumers attach significant importance to lifetimeownership costs, Hyundai reduced the engine output of the to keep its fuel efficiency high, pricedits spare parts reasonably, and made more than a dozen changes to the product specifications to suitIndian market conditions. In contrast, other global automakers entered the market with vehiclesthat had low gas mileage and high repair rates and after-sales service costs.We also recommend hiring an Indian CEO as part of local operations.Supply ChainCompanies can bolster their profitability by reengineering their supply chain both Hyundai andLGE have built global-scale manufacturing facilities to capture economies, making India a globalmanufacturing hub that can serve other markets as the local market develops.Support for BusinessThe following are resources that FTT or any other potential business could avail off when needinginformation and assistant when entering the Southern Indian market. • India Business support.comThey offer open seminars, training packages, further information on culture manners and customs,information on sourcing, • DUNYA GroupThey are a support for business’ providing advice, training in intercultural management and 23
  • 24. communications within the workplace. • ucityindia.com“Fruticious offers a variety of services to ensure your first steps into India are well guided and onfirm footing”They set up office, company formation, human resources, sourcing, advertising etc. Help withsupply chain. • Enterprise IrelandEnterprise Ireland have an office in New Delhi and offer services such as market research and canassist in setting up meetings etc. Being an Irish agency, they will also understand any culturalbarriers that need to be overcome. 24
  • 25. SECTION SIX STRATEGYA number of the most attractive market entry options for FTT are discussed below:Option 1: Strategic AllianceGonsalez (2001) states that strategic alliances are suitable for any business type or industry, and arebecoming more successful as the world becomes more networked; the principles are the same.Strategic alliances can allow for faster growth as organic growth may not be sufficient, and speedto market is crucial. Partnerships can also lessen the degree of risk, and allow for greater access tonew markets.However, partnerships need a great deal of ongoing commitment and time in order to make themwork, and it is crucial hat the organizations are properly aligned to begin with.FTT could try to establish a relationship with another company that possessed the same corevalues: innovation, design, and adaptability. Perhaps a furniture manufacturer that wanted tobranch into or extend their reach of the office furniture segment.Option 2: Joint VentureA joint Venture is when “two or more businesses joining together under a contractual agreement toconduct a specific business enterprise with both parties sharing profits and losses. The venture isfor one specific project only, rather than for a continuing business relationship as in a strategicalliance (Small Business Notes.com).Joint Ventures can be structured in many ways it depends on the parties involved. With this optionFTT would have to find a suitable company with which to enter a venture with. The agreement ofoperations would include such this as, shares, management structure, competition issues andwarranties or indemnities. Relations between both parties, regarding legalities, divisions of powerexist. These issues must be addressed (Lavelle Coleman Solicitors, 2009).For FTT if considering a joint venture then teaming up with a resident Indian manufacturingcompany would be the best option. This would carry huge advantages as they have the design andthe manufacturer could then produce their designs. Availing of an indigenous company will bringease of doing business as they obviously are already exposed to the culture and would have a vastamount of contacts. 25
  • 26. Option 3: Go it AloneFTT are a small company with big potential. India is an unfamiliar market and it will be difficult toget to meet the right people. However, the potential and need for FTT’s product is great, and thereis a lot of assistance available.Enterprise Ireland has offices in New Delhi where is serves Irish companies in India, Sri Lanka andNepal. They can assist in research and in preparing a customised programme of meetings when inIndia, the cost for setting up a full programme (along with other pre-mission market research onopportunities for your product/service) can be calculated based on FTT’s individual requirements.Should their move into India not be successful, FTT can choose when they want to leaveindependently, without having any obligation to contracts with others. 26
  • 27. SECTION SEVEN RECOMMENDED STRATEGYFTT should strongly consider entering the Indian market. The potential far outweighs the risk andwe believe that FTT should go it alone, with a view to finding joint venture should a suitableopportunity arise. The recommended strategy is outlined below:Our financial office for the region subsidiary with be in Mauritius to take advantage of theirstronger rule of law and ability to enforce international contracts, and the investment treaty withIndia that allows profits made in India to be treated at the Mauritian tax rate of 15% instead of themuch higher Indian rate. Some have argued, that Mauritius is a ‘tax haven’; however, given theeconomic relationship between the Mauritian and Indian governments are very strong, this is notthe equivalent of Bermuda and or the Cayman Islands based firms investing in the United States,but more like firms investing in Ireland to invest in greater Europe.Our operations and implementation and legal offices will be based in Bangalore, but our logisticsoffice will be based in the port city of Chennai to handle any issues that may come about as ourmaterials arrive at the port and are transported to their final destination.We plan to target South India because of the trends that have this particular region of Indiagrowing faster and attracting the young and upwardly mobile members of the new service sectoreconomy. In order to support the dramatic growth in business process outsourcing (BPO) servicesalong with the countless new office parks the south of India has seen the majority of newUniversities being founded buy the national and state governments over the last 20 years. More arelikely on the way and now American and European universities are attempting to set up campusesin Southern Indian states. As millions of new workers join the service sector and many are of aBPO, high tech, or software nature, millions of new office desks and other furniture will beneeded.This is where FTT comes in. A vigorous pursuit of a suitable local joint venture partner should beattempted. Obviously our above office locations may change, if a partner is found. However, if onecannot be found, in an acceptable timeframe, FTT should go it alone in targeting this growing 27
  • 28. market for office furnishings.Primary target: EducationFirst we will target testing centers like for example those run by Pearson Vue India,(http://www.pearsonvueindia.com, 2012) and other testing companies running higher educationand English language certification testing for those attempting graduate level education at homeand abroad and the Universities they often operate out of or in conjunction with. We think ourproduct is optimal for the testing environment and it shows its strengths over tradition desk forthese high-pressure situations where absolute confidence is desired in attesting to rigid academichonesty codes of conduct.Testing centers and companies are among the lowest hanging fruit. Next, we see our productsselling well in academic settings looking to boast similar confidences in academic honesty,ergonomic, and quite modern. The number of Colleges and Universities in only Southern India toTarget include:  Andhra Pradesh - 42  Karnataka - 40  Tamil Nadu - 55  Kerala - 14  Pondicherry - 2There are roughly 153 academic institutions of higher learning that we could persuade to possiblypurchase our desks, as their campuses grow and develop, with more Indians pursuing highereducation each year. We do not see this growth in new institutions of higher learning slowing, forexample Hyderabad only got an Indian Institute of Technology (IIT) in 2008. Not to mention, thefuture new campuses are that coming from foreign Universities the likes of Georgia Tech andVirginia Tech and others (New York Times, 2012) (USA Today 2010).To round out of academic sector we would target private secondary schools, which numbers aregrowing, albeit much slower that the tertiary education system in our targeted southern Indianstates.Next, we will be attacking the modern outsourcing campuses along with western multi-nationalorganization’s large new growing research and development campuses that spread from Bangalore 28
  • 29. to Chennai and Hyderabad. Our modern, ergonomic office furniture design would go with theimage being projected by India’s growing corporate economic might at home and abroad (NewYork Times, 2012).We will begin by targeting new companies first arriving in Southern India via trade fairs forEducation and India-sourcing looking to set up new modern offices or expand into newconsolidated campuses. In other words persuading customers when the are freshly thinking of theirnew office spaces corporate image projection instead of attempting to sell new office furniture tofull office spaces humming at full speed.Secondary Target: CorporateFinally, we will target large growing publically listed state companies, local and state DevelopmentCorporations and local governments as the change and grow into new modernizing office buildingsand get more image conscious, about projecting their part of the new Modern ‘India Rising.’ 29
  • 30. SECTION 8RISK FACTORS AND REGULATORY COMPLIANCEThe risk and regulatory compliance within India are those that some companies may find difficultto consent to. The culture is far distinct from any other part of the continent (Amritt Inc), whichcauses grave difficulty to foreign firms to adapt too. The political risks that arise also can be adeterrent for foreign companies because the in recent times there have been claims of corruptionwithin the Indian Government (Telegraph UK, 2011). Other risks which could affect companiesare Currency depreciation, Systemic Risks, Liquidity Risks, and Sovereign Risks. These may notbe an issue at the moment but may arise in the future, keeping an eye on the current markets arecrucial. With regard to regulatory compliance the main issues arise when talking about the Taxsystem in South India and also the requirements on entry to the Country by foreign firms.First we will analyse the possible risks, which could become apparent for firms. As every countryis vastly different in many respects this will inevitably be a concern for foreign firms. Thedifferential cultural aspects of doing business in South India will have to be addressed by FTT.Relationships are held in a higher context then the actual business dealings itself and is said to bethe most important part of the business cycle. Also within Indian Culture hierarchy within thebusiness is respected and the Boss is the ‘Boss’ (World Business Culture.com, 2012). Withoutaccurate research a company could be taking a huge risk in entering South India without knowingthe lay of the land.The political make up within India is mainly on the discussion of the social make up of groups andtheir major distinctions and interests. Since the difference in income inequality is at an all timehigh within some groups and states, according to the World Bank 76% are living on less than US$2per day. (Euromonitor.com) However, the southern Indian states we are targeting are among thewealthier ones in the nation and even more so if you are using a purchasing power parity (PPP)basis and not absolute earnings.Also there have been alleged corruption scandals regarding the leading Political Party and has leadto the soaring food and fuel prices (Telegraph UK, 2012). Another risk that is highlighted forSouth India and the whole Country are the peace negotiations with Pakistan, this heightens India’svulnerability for a war. This would be a major discouragement for any possible firm. 30
  • 31. Now to highlight the regulatory compliances which every foreign investment firm needs to knowwhen entering South India. Firstly the following are relevant entry implications for any non-resident company.Every potential company must receive the approval of the Reserve Bank of India, RBI. Once theyget the go ahead then the company is free to commencement commercial activity.Liaison offices are required to be open by foreign corporations, this office will act as acommunication channel between them and foreign companies and Indian companies. It is in fact amarketing tool for the company (Ernst & Young, Section D).Branch office is also required if the company wishes to export or import goods, acquiringconsultancy services, carrying out research, tendering technical support. It is NOT allowed tocarry out retail trading or manufacturing. It is taxed at a rate of foreign companies. (Ernst &Young, Section D)Contracts in India are governed by a law which is called Indian Council of Arbitration or ICA,companies should be aware of this resource if contractual relations occur to ensure all details areknown for both parties if a disagreement occurs.Also Visas required on entry to India there are a few different types yet the following would applyto those doing business and are non resident or native to India - business and employment Visa (valid from 1-5years)As every country has a tax system which differ, it is important to understand the tax brackets yourcompany will fall into and that are required to be paid. South India’s tax year is from 1st April to31st March. All corporations are liable for tax on worldwide income arising from all sources ifresident. FTT are non resident within South India so they would be taxed on income that theyearned from a business connection in India or from other Indian sources. The effective tax rate forFTT as a foreign corporation if taxed under Indian law would be 42.23%. Excise duty within Indiais payable by the manufacturer the rate of this effective duty is 8.24% in some case credits may beavailable which enables relief yet companies must check this for their own specific situation.Within each state in South India there are certain entry taxes which have to be paid, it differs in allareas yet in recent times in has come under some constraints. Stamp duty is also applicable onpurchase of land, lease mortgage – it is dependent from state to state. (Ernst & Young, Section L) 31
  • 32. However, if we chose to entire the Indian market via a Mauritian subsidiary the effective tax ratewould be in the 15-18.5% range as Indian law allows Mauritian based firms to choose which taxjurisdiction and rates it wishes to pay for income purposes (not import and export taxes tariffs andfees.)Legalities also need to be adhered to for ease of business within South India the following are afew examples from a report by Ernst & Young, of Acts, which apply: - The Designs Act 2000 encourages and protects those who produce a new idea - Registered design - Artistic copyright - This act will enable FTT to ensure the security of their ideas.The Indian Patent Act 1970 “provides for the grant, revocation, registration, license, assignmentand Infringement of Patents in India.”International Labour Organisation- provides a good working environment for labour and protectsthem. – industrial disputes act 1947 – trade unions act 1926 – payment of bonus act 1965 (on basis of profits or level of production, considering there are 20 or more employed) – payment of gratuity act 1972 – work mans compensation act 1923 – minimum wage act 1936 – factories act 1948 (governs health and safety of factory workers) – maternity benefit act 1961 – contract labour (regulation and abolition) act 1970 (employed as contract labour when he is hired in connection with the work of an establishment by or through a contractor) 32
  • 33. Anti – trust regulations ensure the competitiveness in Indian markets.The importation of technology through a foreign collaboration carries a 5% CESS (Tax)There are some state level incentives to encourage investment; - rebate on cost of land/cost of land - employment subsidies The above examples of Legal Acts within IndiaTo conclude on this analysis of Risks and Compliance, firms should conduct in-depth research onthe particular Country. For FTT in South India’s case the above information should help with thedecision. Although some of the content may be off putting, a lot of benefits can be sought fromthis growing economy. 33
  • 34. Appendix 1.0 34
  • 35. Appendix 2.02.1 KeralaPopulation 33.4mArea 38,863 km2Capital City ThiruvananthapuramLargest City ThiruvananthapuramLanguage MalayalamGeographyKerala is situated at the lower southwest side of India and is bordered by the regions of Karnatakato the north and northeast and Tamil Nadu to the east and south. Kerala climate is humid equatorialtropic.Situated between the Lakshadweep Sea and the Western Ghats, it also lies near to the centre of theIndian Tectonic Plate and is subject to very little seismic and volcanic activity.The state has a coast of length 590 km and the width of the state varies between 11 and 121 km.Geographically, Kerala can be divided into three climatically distinct regions: the eastern highlands(rugged and cool mountainous terrain), the central midlands (rolling hills), and the westernlowlands (coastal plains).The state of Kerala is divided into fourteen districts, which are further divided into three regionsdepending on their geographical, cultural and historical similarities.These regions are classified as follows:North Kerala:Kasaragod, Kannur, Wayanad, Kozhikkod, MalappuramCentral Kerala: Palakkad, Thrissur, Eranakulam, Idukki 35
  • 36. South Kerala: Thiruvananthapuram, Kollam, Alappuzha, Pathanamthitta, KottayamKerala has 44 rivers, all of which begin in the Western Ghats; 41 flow west and three rivers floweast.PopulationThe majority of Kerala’s 31.8m population are of Malayali descent, with the rest made up ofJewish and Arab populations; a small minority indigenous tribe Adivasis consist of 1.1% of thepopulation.Malayalam is Kerala’s official language; Konkani, Tamil, Kannada, Hindi and various Adivasi(Tribal) languages are also spoken.Kerala is home to just 3.5% of India’s total population but is one of the most densely populatedregions of India. Kerala’s decadel growth is less than half of the average for India, but with anageing population, even with very high morbidity rates, this could lead to problems. Femalescomprise 51.42% of the population; males form the remaining 48.58% of the population.Keralas principal religions are Hinduism (56.2%), Islam (24.70%), and Christianity (19.00%). Incomparison with the rest of India, Kerala experiences relatively little sectarianism. (Wikipedia,2012)Keralas human development indices (primary level education, health care and elimination of 36
  • 37. poverty) are among the best in India. According to a 2005–2006 national survey, Kerala has one ofthe highest literacy rates (95%) among Indian states and life expectancy (74 years) was among thehighest in India in 2011.EducationAt present there are seven universities in Kerala with many affiliated colleges. The government,private trusts, or individuals run schools and colleges, and the government aids many of the schoolsowned by private sector. The majority of the public schools are affiliated to the Kerala State Board.Other educational boards are: Indian Certificate of Secondary Education (ICSE), the Central Boardfor Secondary Education (CBSE), or the National Institute for Open Schooling (NIOS). English isthe language of instruction in most self-financing schools, while government and government aidedschools offer English or MalayalamInfrastructureKerala has 145,704 km of roads (4.2% of Indias total). This includes 1,524 km of Nationalhighway (2.6% of nations total), 4341.6 km of state highway and 18900 km of district roads.Traffic in Kerala has been growing at a rate of 10–11% every year, resulting in high traffic andpressure on the roads.The Indian Railways’ Southern Railway line runs through the state, connecting most major townsand cities except those in the highland districts of Idukki and Wayanad.Kerala has three major international airports, at Thiruvananthapuram, Kochi and Kozhikode, with afourth under development at Kannur.Kerala, with numerous backwaters, is one of the States in India, where waterways are successfullyused for commercial Inland Water Transport. The transportation is mainly done with country craftand passenger vessels. There are 41 navigable rivers in Kerala. The total length of the InlandWaterways in the State is 1687 km. The main constraints to the expansion of Inland Watertransport in the State are lack of depth in the waterway.Political StructureKeralas Government is based on rules and regulations determined by the Government of India. 37
  • 38. The Governor of Kerala is the constitutional head of state, and is appointed by the President ofIndia. Kerala’s last governor M.O.H. Farook passed away at the end of January 2012, and theGovernor of Karnataka is currently overseeing the region.The Government of Kerala has a secretariat of its own. It is the highest echelon of stateadministrative structure offering locus for the exercise of authority by state Government. Thesecretariat refers to the complex of departments. So the government departments are classifiedaccording to the functions defined: Secretariat departments and Field Departments.Its political heads are ministers while the administrative heads are secretaries to the Government.The entire administrative machinery of the state is divided into several departments. This sectionprofiles the various departments of the state.Each district (North Kerala, Central Kerala and South Kerala) is headed by a DeputyCommissioner who is over all in-charge of the administration in that particular district. He has toperform triple functions as he holds three positions: at once he is the Deputy Commissioner, thedistrict Magistrate and the Collector. As a Deputy Commissioner he is the executive head of thedistrict with multifarious responsibilities. As the District Magistrate he is responsible formaintaining the law and order situation in the district. As the Collector he is the Chief RevenueOfficer of the district, responsible for revenue collection and recovery. The Police administrationin the district is under the control of Superintendent of Police (SP).Economic StructureKerala is managed as a democratic socialist welfare economy. The state treasury is sufferingmassive losses due to regular hartals or strike actions, which restrict infrastructure and services.The service sector (including tourism, public administration, banking and finance, transportation,and communications—63.8% of GSDP in 2002–2003) and the agricultural and fishing industries(together 17.2% of GSDP) dominate the economy. 38
  • 39. 2.2KarnatakaPopulation 61.3mArea 191,976 km²Capital City BangaloreLargest City BangaloreLanguage KannadaGeographyKarnataka is one of the regions in South India. It is situated along the Western coastline. It isboarded by the Arabian Sea to the left, Goa to the northwest, Maharashtra to the north, AndhraPradesh to the east, Tamil Nadu to the southeast and Kerala to the southwest. Karnataka is dividedup into different natural regions; Karnataka Northern Region, Karnataka Coastal Region,Karnataka Central Region and Karnataka Southern Region. There are 27 districts withinKarnataka. The region has a vast selection of mountains having the highest peak in all of India,1500ft. There are several river systems, one of which flows into the Bay of Bengal. Karnatakaenjoys a tropical climate with some places experiencing temperatures of up to 28degrees Celsius allyear round.PopulationKarnataka is the eight largest states in India with regard to its population. The population density inBangalore has risen by 47%, the increase in industrialisation is said to be a factor in the high populationcount. “The increased growth in population is a result of adding six new fringe areas to 39
  • 40. Bangalore.” (T.N. Bhat, ISEC) Also there is a higher count of males than females. As regard thereligious composition of the population, 83% of the are Hindi, 12.2% are Muslim, 3.1%are Christian, 0.8% are Jains, 0.7% are Buddhist, <0.1% are Sikhs, and remaining belong to otherreligions.EducationWithin the region of Karnataka there are quite a lot of opportunities for educational development.The literacy rate is 67%. The education system in Karnataka is made up of four sections; - Primary and Secondary Education which has three kinds of schools within, Government, Aided and Un-aided Private. - Pre University Education consists of a two-year pre university course or a three year diploma which enables you entrance into a degree course. - Baccalaureate Education are institutions which are run by the Universities, There are 481 degree colleges - Technical Education involves engineering and Bangalore was one of the first in the Country to have such a college.InfrastructureKarnataka has quite a developed set of infrastructures in place. There are 7 airports with anexpanding air sector, 3000km rail network and 11 ports all, which are connected to Bangalore.The two main airports Bangalore International Airport and Mangalore International Airport havegreat connectivity internationally with such airlines as British Airways and Lufthansa flying thereregularly.Political StructurePolitics in Karnataka is ruled by three parties; Indian National Congress, Janata Dal and theBharatiya Janata Party of which the Government is formed. Nationally there are 28 parliamentconstituencies and from there 28 members are elected. The subject of politics here is often basedaround language issues and caste. Karnataka has gained a position within the political field as ithas brought a lot of power, in the form of economic and resource to India as a whole. The Nationalpolitical parties do not have a major role to play in Karnataka Politics. Regional parties have moreof an influence. 40
  • 41. Economic StructureKarnataka is a high growth region of South India with GDP of 8% in 2011, yet this rate has hit aslump. Growth is not as rapid as it used to be. Reasons for this may due to the rising land prices,labour shortages. Although there seems to be a decline Bangalore has been called the SiliconValley of India, this comparison yield benefits as the IT industry can remain to flourish in such anarea with the relevant resources. Like most economies Karnataka is divided into three sectors;Primary – agriculture, which was quite prominent but not so much in the 21st Century.Secondary – manufacturing, mining which still contribute to the economyTertiary – transport, education, Real Estate this sector it would argue gives the most to theKarnataka economy at this point in time.2.3Andhra PradeshPopulation 76.2.mArea 275,069 sq kmCapital City HyderabadLargest City HyderabadLanguage Telugu and UrduGeographyAndhra Pradesh is situated at the southeast side of India. The state has a coast of length 590 kmand the width of the state varies between 11 and 121 km. Andhra Pradesh is bound on the north byOrrisa and Chhattisgarh states, on the west by the states of Maharashtra and Karnataka, on thesouth by Tamil Nadu State and on the east by the Bay of Bengal with a coastline of around 974 41
  • 42. km.Hyderabad the capital city and largest city spanning 583 km squared (including its smaller twincity) and has a population of 5,300,000 inhabitants. (Wikipedia, 2012) Visakhapatnam, AndhraPradeshs primary port, is the second largest city. Two major rivers flow through Andhra Pradesh,the Godavari and the Krishna. The state of Andhra Pradesh is divided into twenty-three districts.PopulationBelow are some examples of census data from some of the state’s districts and below that is a mapof the various districts that make up Andhra Pradesh. (indiafacts.in, 2011) 42
  • 43. EducationA quality primary and secondary education is still a struggle in Andhra Pradesh; however, thenumber of Universities is growing as well as interest in setting up satilite and research campusesoutside Hyderabad for some American and other international Univerisities. (New York Times,2012) (USA Today, 2010)InfrastructureGood access for FTT staff and freight via the airport and ports there + the direct flights frominternational business transit countries (UK, UAE, and USA0. Including in this category is the newinternational airport in Hyderabad completed in 2008.Political StructureThe political scene of Andhra Pradesh has a combination of the parties at the national level andparties at the state level. The state has five prominent "National Parties" and two "State Parties,"that have contributed towards the development of the state.Here is a list of the National Parties of the state of Andhra Pradesh: - Bhartiya Janta Party (center right) - Bahujan Samaj Party - Communist Party of India - Communist Party of India (marxist) 43
  • 44. - Indian National Congress (center left)Here is a list of the primary State Parties of Andhra Pradesh:Telugu Desam Party: (center right Telugu center right nationalist party)Telangana Rashtra Samity: Both the state parties work towards the growth of the Telugu language,culture and tradition. (Much more culturally conservative and independence orientated than theDesam)These parties do not compete in other state elections. The Telugu Desam Party has led the stategovernment for many years however at this it is currently being run by the Indian NationalCongress party.Economic StructureThe economy of Andhra Pradesh is primarily agriculture. The Godavari and Krishna rivers provideirrigation. Rice, sugarcane, cotton, mango and tobacco are the usual mix of local crops. Recently,crops used for cooking oil production such as sunflower and peanuts are being planted. AndhraPradesh was among the Indian states, which went with the Green Revolution in rice cultivation inthe 1970sAndhra Pradesh, India is also a mineral rich state, ranking second in India in terms of mineralwealth. It accounts for about 93 percent of Indias total production of Barites. Other importantminerals in the state are copper ore, manganese, mica, coal and limestone (Wikipedia, 2012).The state ranks first nationwide in hydro electricity generation with national market share of over11%. The offshore gas Krishna-Godavari basin reserves of 60+ Trillion cubic foot.Andhra Pradesh has a robustly growing information technology and biotechnology services sector.In 2004–2005, Andhra Pradesh was at the Seventh position behind Maharastra, New Delhi,Karnataka, Tamil Nadu, West Bengal, and Gujarat in the list of top IT exporting states of India.The IT sector is expanding quickly every year. The service sector of the state already accounts for43% of the GSDP and employs 20% of the work force as of the mid 2000s. (Wikipedia, 2012)Andhra Pradeshs IT industry is advanced enough to have had the Satyam Computer Servicesscandal in 2011 which has been referred to as Indias Enron scandal. As it was to be confessed that 44
  • 45. the company’s public accounts had been falsified (the books were cooked.) (Wikipedia, 2012)However these setbacks have not stopped many from opening up technology R and D andoutsourcing offices in Hyderabad in and around HITEC city (the campuses of corporatedevelopments in Greater- Hyderabad.)Facebook has even found a home for its India based operations and Google is among the manymultinational companies that have an office in or around Hyderabad (Facebook corporate page,2012) (watblog, 2010)Many others have as well, for example here are a few: - Ananth Technologies (Ananth Info Park) - Computer Maintenance Corporation (CMC) Campus - Convergys Campus - DELL Campus - CyberCity I.T. Campus[12] - E-Park I.T. Campus (Currently leased by TCS) - Franklin Templeton campus - Honeywell Campus - Hindustan Petroleum Corporation Limited. IT Data Centre - HSBC Campus - Capgemini Campus - iLabs Centre - Infosys Campus - Infotech Enterprises Campus - Microsoft Campus - Motorola Campus - Oracle Campus - Polaris Campus - Satyam Cyber Space Campus - Satyam Infocity Campus - Satyam GateWay Campus [My Home Hub - Bldg 1 & 2] - Sierra Atlantic Campus - Soft Sol Campus 45
  • 46. - Tata Consultancy Services (TCS) Campus (Deccan Park) - UBS (now Cognizant) - ValueLabs Campus - VSNL campus - WIPRO Campus - Zensar technologies Lt2.4Population 72,138,958Area 130,058 km2Capital ChennaiCityLargest ChennaiCityLanguage Tamil & EnglishGeography:Forests take up more than 17% of the states geographical area with numerous wildlife parks andbird sanctuaries. 54% of the state’s population lives in an urbanised area. Capitol City is Chennai,which is the largest urbanised city in India. Since it is the most southern state in India with a longcoastline, it is the meeting point of the Arabian Sea, Bay of Bengal and the Indian Ocean. The 46
  • 47. coastline itself is 910 km long but it is only the 3rd largest coastline in India.West and North of Tamil Nadu have lofty hills while the east and south have coastal plains. Kerala,Karnataka and Andhra Pradesh to the north. To the east are the Bay of Bengal, Arabian Sea and theIndian Ocean all meet at Kanyakumari the southernmost tip of India. Tamil Nadus coastline borethe brunt of the 2004 Indian Ocean Tsunami when it hit India, which caused 7,793 direct deaths inthe state. (thinkquest.org, 2004). Tamil Nadu falls mostly in a region of low seismic hazard withthe exception of the western border areas that lie in a low to moderate hazard zone. Tamil Nadu isentirely dependent on rain for recharging its water resources so if monsoon season is not plentifulthere is a risk of water shortage and drought. (unsystem.org)Education:Tamil Nadu has 37 universities, 455 engineering colleges, and 566 arts and science colleges,34,335 elementary schools, 5167 high schools, 5054 higher secondary schools and 5000 hospitals.(India Today, 2007)Population:7th largest by population with 555 persons per sqkm . The life expectancy is 65.2 years for a maleand 67.6 years for female.LegislationIndia is a fast growing economy and attracting foreign firms despite certain uncertainties. EnteringIndian market is a task that can be taken up through various ways. The ways have been listedbelow. Setting up a base in India requires some steps that make the Indian Entry process a bit easy.Tamil Nadu is one of the states where law and order has been maintained largely successfully.The Tamil Nadu Police Force is over 140 years old. It is the fifth largest state police force in India.Government SanctionsWell before setting up operations; several central and state governmental approvals are sought byThe Reserve Bank of India (RBI) and Foreign Investment Promotion Board (FIPB). The projecthas to be registered with the Registrar of Companies (ROC).At the time of creating a joint venture or subsidiary, the company is supposed to be incorporatedand get hold of a certificate to start business. To set an office, registration ought to be done with 47
  • 48. the concerning regional ROC.Other ApprovalsAs soon as the entry plan get nod from the Central Government and registered appropriately,several State clearances like building planning, land use, environmental clearance, powerclearance, etc. have to be kept before finally starting the business.LanguagesThe language Tamil is over 200 years old and it is spoken by 89.9% of the population howeverEnglish joins it as the official language of the region. Tamil is one of the remaining few classicallanguages left in India and the language forms a strong bond amongst the population.Cuisine:The Tamil cuisine is perhaps the oldest representative of the continuous vegetarian cultures of theworld. The delicious dishes from the state are relished all over the country and abroad. There is awide range of rice and vegetable preparations. The Tamil food is of great value and good quality.The meals are traditionally served on banana leaves.Tamil Nadu is known for having a rich tradition of rich literature, song and dance. In fact musicand dance are the essence of Tamil Nadu; National festivals like Independence Day, Republic day,Gandhijis birthday etc. are celebrated throughout the state.Muslim festivals like Eid-ul-Fitr, Eid-ul-Adha, Muharrum, Birthday of Prophet Mohamed andChristian festivals like Christmas, Easter, and Good Friday etc. are celebrated harmoniously as inother regions of the country. Including the Karagram dance where the performer wears a pot ontheir head. Carnactic music is the classical form used in South India.TradeIndustrially the state has made rapid strides: Agriculture is the dominant source in the economy.Foods such as rive, Jowar, Ragi, Sugar, Coconut, Coffee and Tea play a vital role in the economy.Hides and skins are very popular exports aswell as other leather products. Tamil Nadu has the mostreserves in India with almost 90% of Indias Lignite reserves, 45% of Magnesium and over 40% ofGranite is found there.Political Structure 48
  • 49. Tamil Nadu State has at present 32 Districts. District Collector is the head of the DistrictAdministration.Districts are divided into Taluks for the purpose of Revenue Administration. Tahsildar is the headof taluk level administration. Taluks consist of a group of Revenue Villages.Development administration in a district is coordinated by the Panchayat Unions (also called asBlocks) for the rural areas. Panchayat Unions consist of a group of Panchayat Villages.In the case of urban areas, the development administration is taken care by the urban local bodies.The urban local bodies are called as Municipal Corporations, Municipalities and TownPanchayatsdepending on the size of the town.Economic StructureTamil Nadus gross state domestic product for 2011 is estimated at US$ 97.970 Billion in currentprices (rediff.com, 2011). The state experienced a GDP growth rate of 12.1% for 2007-08.(indiaedunews.net) It was the third largest economy among all states in India ]and also the mostindustrialised state in India. It ranks third in foreign direct investment approvals next only toMaharashtra and Delhi.It is the fourth largest contributor to India’s GDP. It is home to many natural resources. It has hillyrich fields with vegetation and in the east it has fertile plains. Tamil Nadu is one of the leadingstates in livestock, poultry and fisheries production. .Tourism is a major industry as it has 8 UNESCO World Heritage Sites. It is well developed and isthe second most popular destination in the country with ancient temples and natural beauty hillwalks, not to mention the Tiger conservation nature parks.Tamil Nadu has seen major investments in the automobile industry over many decadesmanufacturing cars, railway coaches, battle-tanks, tractors, motorcycles, automobile spare partsand accessories, tyres and heavy vehicles. Major global automobile companiesincluding BMW, Ford, Renault-Nissan, Caterpillar, Hyundai, MitsubishiMotors and Michelin. DaimlerChrysler AG Company established a new plant in Tamil Nadu.Electronics manufacturing is a growing industry in Tamil Nadu, with many telecommunicationsgiants like Nokia, Flextronics, Motorola, Sony-Ericsson, Foxconn, Samsung, Cisco, MoserBaer and Dell having chosen Chennai as their South Asian manufacturing hub. 49
  • 50. Tamil Nadu is the second largest software exporter by value in India, second only to Karnataka.InfrastructureTamil Nadu is connected to all parts of the state via its road networks. In total it has 28 highwaysand 532 railways stations in the region. Added to that there is an international airport that has 169direct flights per week. This is the third largest Airport in India. There are also three majorseaports.Market Size and AttractivenessUnlike China, the Indian legal system provides some protection of patents and while India is pricesensitive, they will pay for the right quality product. We would recommend using an integratorwith offices in India who will set all your offices up in India. Good access for FTT staff and freightvia the airport and ports there + the direct flights from leading countries. Naturally is there is ademand in sales from Southern India we would set up there too.Chennai is the capital and it is the major commercial, cultural, and educational centre in SouthIndia. Chennai is divided into four broad regions: North, Central, South and West. North Chennaiis primarily an industrial area. Central Chennai is the commercial heart of the city and includes animportant business district,. South Chennai and West Chennai, previously mostly residential, arefast becoming commercial, home to a growing number of information technology firms, financialcompanies and call centers. The port of Chennai is the second largest in India. According to the2011 Census there is 4.6 million people living in Chennai city and approx 8.9 million living insuburbanised towns.The majority of the population’s people in Chennai are Tamil. Tamil is the primary languagespoken in Chennai. English is spoken primarily and largely by white-collar workers and students.Chennais economy has a broad industrial base in the automobile, computer, technology, hardwaremanufacturing and healthcare industries. The city is the centre of information technology andbusiness process outsourcing services. It is located on the south–eastern coast of India in the north–eastern part of Tamil Nadu 50
  • 51. Commercial and domestic broadband Internet services are provided by four service providers and amajority of the mobile network providers. Chennai was the first Indian city to have the Wi-Fi facility in a widespread manner.Chennai serves as a major gateway to southern India, and the Chennai International Airport is thethird busiest airport in India with approximately 10.5 million passengers per year. The city isconnected to major hubs across Asia, Europe, and North America through more than 30 nationaland international carriersSeaThe city is served by two major ports, Chennai Port, one of the largest artificial ports, and EnnorePort. The Chennai port is Indias second busiest container hub handling automobiles, motorcyclesand general industrial cargo. The Ennore Port handles cargo such as coal, ore and other bulk androck mineral products.RailChennai is the headquarters of the Southern Railway. The city has two main railwayterminals. Chennai Central station, the citys largest, provides access to other major cities as well asmany other smaller towns across IndiaRoad 51
  • 52. Chennais transportation infrastructure provides coverage and connectivity, but growing use hascaused traffic congestion and pollution. The government has tried to address.Other Issues such as Cultural factorsAs I write this report there is a threat of a global trade war over a European Union scheme, whichwants to control airlines’ carbon Indian airplanes, emit by imposing carbon emission charges. Butthe Indian Government will not give them the figures on how much pollution their airplanes emit.India could hit back via any of the following forms of retaliation halting talks with Europeanairlines on new routes, retaliatory levies on EU airlines and even fees for overflying countries.However the European Parliament could hit back at India by blocking a Free Trade Agreementwith the country.High drop-out and low completion of secondary schools continue to hinder the quality of trainingin the population. Other problems include class, gender, inter-district and urban-rural divide- it hasa high level of poverty especially in the rural areas.The Oxford Poverty & Human Development Initiative ranks Tamil Nadu to have aMultidimensional Poverty Index of 0.141, which is in the level of Ghana among the developingcountries (oneworld.net, 2012). Corruption is a major problem in the state with TransparencyInternational ranking it the second most corrupt among the states of India (rediff.com, 2011).Tamil Nadu is now allowing other industries that they previously didn’t want in the region enter.This will facilitate companies such as Walmart and Tesco to set up in the region. 52
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