Indian Economy is the third largest Economy by Consumption. India also has the largest pool of technically qualified professionals outside of USA.
There are many ways an International Organization can make an Entry into the Indian Market. These include Local Office, Franchising, Joint Venture, Master Franchisee, Contract Manufacturing, Licensing, Direct Exports, Indirect Exports, and Wholly Owned Subsidiaries.
Conceptualization
Market Sizing
Startups
Strategic Planning
Business planning (Formulate business Growth Plan and Business Strategy for 3-5 years)
Feasibility studies
Site Analysis
Identification of Local partner, India Representative
Recruitment of Senior Talent and Country Managers
Competition Analysis and Benchmarking
Product Testing,
Channel Strategy and Distributor Negotiation
Corporate Structure, Taxation, Subsidies
Organizational Structure Running A Successful Business
INDIA ENTRY STRATEGY SERVICES FOR MARKETING TO INDIA / SET UP BUISNESS IN INDIA / DO BUSINESS WITH INDIA
1.
2. Population is 1.21 billion (as of 2011 census)
India is a republic, governed by a parliamentary system,
consisting of 28 states and 7 union territories
India is the 7th
largest and 2nd
most populous country in the world
India has 18 official languages, with Hindi and English been
predominantly used throughout the country
Currency is the Indian rupee
Main industries: textiles, chemicals, food processing, steel,
mining, petroleum, machinery, pharmaceuticals and software
Major economic Centers: Mumbai (Bombay), Chennai (Madras),
Hyderabad, Bangalore, Delhi, Kolkata
One of the youngest countries in the world, average age 25
Each year 19 million students enroll in high school and 10 million
in pre graduate degree course across India. 2.1 million
Graduates and 0.3 million post graduates pass out of India’s non
engineering colleges
3. The Indian economy is
10th
by nominal GDP, and
3rd
by purchasing power
India’s GDP grew by
9.7% 2010-11, 6.2% 2011-
12 and 5% 2012-13 and is
expected to grow by
5.7% in 2013-14 (RBI
forecast)
There has been an
average annual GDP
growth rate of 5.8% over
the past two decades
Over 100 of fortune 500
companies have R & D
facilities in India
The Bombay stock Exchange
lists 6600 companies, only
NYSE has more
Labor force of 498.4 million
Low cost labor
Political Stability and
government policies
Sources: The World Bank, Indian
Ministry of Finance Wikipedia,
4. Rates as the 2nd
best
destination for
manufacturing projects
and the most attractive
investment destination
(IBM)
3rd
in UNCTAB report on
world Investment prospects
(2009)
Rated among most
favorite Investment
destinations (JETRO, JBIC,
EIU, Deutsche Bank, etc)
Operates under English
common law and based
on English style justice
system
Largest democracy in the
world
2nd
largest English speaking
nation in the world after
USA
Projected to be 3rd
largest
economy by 2050
Harmonized IP rights laws
2nd
largest pool of scientists
and engineers in the world
Superb banking systems
and well developed
financial systems
Favorable business policies
& political outlook
5. Route Description
Local Office Create a base in India with limited capabilities
Franchising Parent company allows franchisee to use companies
strategies and trademarks
Joint Venture Partnership between host and home firms, in which home
firm has an equity and management voice within the firm
Contract Manufacturing Product is produced in India by a local producer.
Licensing Give licensee in India patent and trademark rights,
copyrights and know-how on products and process
Direct Export Uses agent, distributor, overseas subsidiary or act via
government agency.
Indirect Export The products are exports though trading companies, export
management companies.
Wholly Owned Subsidiaries Buy a company already in India or build a new facility.
6. Advantages
Direct contact with
customers
Improved credibility
in market place with
customers
Disadvantages
Cost of establishing
an office is higher
than using an agent
and/ or distributor
Don’t have a local
partner with
contacts and
expertise
7. Advantages
Rapid international
expansion
Group purchasing and
advertising
arrangements
Relatively inexpensive
way of expanding
High levels of
consumer demand
and relatively low
levels of competition
Disadvantages
Difficulty adapting
franchised chain to
local market tastes
Limited revenue
growth as only receive
a percentage of
profits
8. Advantages
Decrease the capital risk
involved
Leverage the local companies
facilities, in manufacturing,
distribution and retailing
Leverage the local companies
managerial capability in the
local environment
Leverage the local
company’s contacts with the
government to get green
signals
Disadvantages
Complexity in coordinating
policies, decisions and
execution with a different
company.
Difference in culture
Difference in managerial styles
Difference in the motivation
behind the participation
Communication problems
Selecting right partner
Complications at time of exit
Safety of intellectual property
9. Advantages
Low capital required
Low managerial Risk
Focus on core
activities
Less Complicated exit
problems
Less Complicated
division of
responsibilities
Disadvantages
Chance for a lack of
control on certain
parameters
Differences in quality
Standards, lead to
negative initial
experience for
customers
Scalability of problems
Selection of vendors
10. Advantages
Import and investment
barriers
Legal protection possible in
target environment
Low sales potential in
target country
Large cultural distance,
licensee lacks ability to
become a competitor
Rapid entry into foreign
market
Virtually no capital
requirements
Returns realized faster
Disadvantages
Control over use of assets
may be lost over
manufacturing and
marketing
Licensee has to obtain
approval from international
vendor for product design
and specifications, as not a
representative of
international vendor
Could create future
competitors.
Have to reveal secrets,
intellectual property
11. Advantages
Most tradition and well
established form of operating
in foreign market.
Simple with low
cost/investment and risk
Can obtain knowledge of
foreign market
Increased utilization of
domestic plant
Disadvantages
Significant investment in
marketing strategy
High transport costs
Tariffs
Problems with local agents
Less controls of distribution
Exchange rate fluctuations
Customs duties and taxes
Costs to gain exposure, set up
sales and distribution networks
Product might need to be
modified or redesigned to
meet local requirements or
customer preference
12. Advantages
Full ownership
Greater control over
operations
Higher profits
Can keep company
secrets (patents) to
yourself
Able to dictate
quality in brand
Disadvantages
Larger investment
Higher risks
Harder to exit
13. Market Assessment •Market size, growth rate and trends
•Regulatory framework
•Barriers to entry
•Location and distribution channels
•Possible exit strategy
Competitive analysis •Intensity of competition
•Key players and their positioning
•Competitive strategies and benchmarking of key parameters
Consumer Analysis •Consumer segmentation
•Consumer Behavior
•Identification of un-met needs
Option Generation •Exhaustive option generation
•Option evaluation
•Shortlist potential opportunities to suit individual
G0-to-market Strategy •Detail financial modeling
•Go-to-market strategy covering value proposition, product
detailing, pricing, target customer, operating model and mode
of entry.
•Detail implementation roadmap
14. Obtain PAN number from Income
Tax department
Open a current account
Register a Limited Liability
Partnership
Register Your Company
Register for service tax
Register for VAT/Sales tax
Excise Duty (if applicable)
Customs duty
File entrepreneurship
Memorandum at DIC
Apply for TAN
Find State Specific guidelines &
Procedures
Obtain DSC (Digital Signature
Certificate)
Form No.1 - it states that all the
requirements of the incorporation
have been complied with
Form No. 18 – Notifies the address
of the registered office of the
proposed company
Form No. 29 - This is a consent
obtained from all the directors of
the proposed company to act as
directors of the proposed
company. (Not required for pvt ltd
company)
Form No. 32 – This states the
appointment of the proposed
board of directors from the date
of incorporation of the company
and is signed by any of the acting
directors
15. The major regulations of law in India affecting foreign
investment are:
The Foreign Exchange management Act of 1999
("FEMA") – regulates foreign collaboration and equity
participation in India
The Companies Act of 1956 – regulates corporations and
their management in India
The Industries Act of 1951 – governs industrial regulations
The Monopolies and Restrictive Trade Practices Act
of 1969 – governs restrictive and fair trade practices
The New Industrial Policy of 1991 – lays down the policy
and procedure for foreign investment
16. The corporate income tax effective rate for domestic
companies is 35% while the profits of branches in
India of foreign companies are taxed at 45%.
Companies incorporated in India even with 100%
foreign ownership, are considered domestic
companies under the Indian laws
India has entered into tax treaties with a number of
countries including, Australia, Belgium, Canada,
Denmark, France, Germany, Indonesia, Japan,
Korea, Mauritius, Singapore, the United Kingdom and
the United States. These treaties endeavor to avoid
double taxation and attract know- how and
technology. In many treaties the withholding tax on
royalties and fees for technical services coming from
India is lower than the general tax rate
17. The New Export-Import Policy of 1992 provides substantial
tax incentives for investments in Export Oriented Units
("EOU's")
Concessional rent for lease of industrial plots
Preferential power allocation and supply
Exemption from import duty for capital goods and raw
materials for power sector industries as well as for trading
companies primarily engaged in export activity
And industries located in the Export Processing Zones
("EPZ's")
Import duty exemption
Complete tax holiday
Decentralized "single window clearance”
18. Remain Competitive
High Performance Management and
Benchmarking
Management Audit & Review
Joint Ventures, Partnerships & Strategic
Alliances
Assistance in Private Equity Investments
Identification of Key Managerial
Personnel
Market Research & Feasibility studies
M&A advisory
Acquisition
Infusion of Private Equity Investments,
HNI’s, Venture Capital Funds
Due Diligence,
Post-Merger Integration
Build
Conceptualization
Market Sizing
India Entry Strategy, find which is best
route.
Startups
Strategic/Business planning (Formulate
business Growth Plan and Business
Strategy for 3-5 years)
Feasibility studies
Identification of Local partner,
representative
Grow
Corporatization & Professionalization of
Entrepreneurial firms
Sales and Marketing Strategy
Generate capital raising alternatives
Prepare investment kit for fund raising
Management support for startup
ventures
19. Commencement •Understand vision
•Missions and goals
•Discuss assumptions and plans
Industry Analysis •Current industry status
•Future opportunity
•Market, consumer and competitor analysis
Business Unit analysis •Corporate structure
•Culture
•Processes and operations
Validation •Validation of key findings
Strategy Formulation •Use multiple techniques to be future ready
Delivery •Presentation and delivery of the report
Implementation •Assistance in implementing the strategies
20. Senior partners involved in every
assignment
Specialized expertise
Higher degree of confidentiality
Less bureaucratic, more flexible thus faster
delivery and turnaround times
Identify key personnel
Review of current business model