Riding the success of economic reforms, the Indian Market as a whole is presenting ample opportunities of growth to its foreign investors. India owes much of its credit to the policies encouraging Foreign Direct Investment (FDI) that have been formulated by the present government.
In order to make a successful entry into the Indian Market , the following steps should be taken care of:
- Development of a basic understanding of the potential of the Indian Market .
- Formulation of a sound strategy before entering India Market .
- Successful implementation of such a strategy.
Potential of the Market of India
India is being seen as a most deserving place for investment by the developed countries of the world. The economic ambiance of the nation is favoring the entrance of a number of foreign players into her market. Rated as one of the fastest emerging economies of the world, India is no longer being ignored by even her strongest critic of yesteryears.
A company's success in India will depend on the correct estimation of the nation's potential. Overestimation of possibilities and underestimation of complexities that a company might face may lead to its failure. Due consideration needs to be given to the inherent difficulties and functional hazards that a company might encounter while working in the Indian system. The entry into the market of India necessitates the formulation of a well-designed plan which in itself should be a product of thorough research. Above all, the company's should bear in mind the objective of growth in the long run and not profit in the short run in order to make their stay in India a permanent one.
The real worth of the Indian Market can be illustrated in the following manner:
- India is the fifth largest economy in the world (ranked above France, Italy, the United Kingdom and Russia).
- The Gross Domestic Product (GDP) of India is the third largest in Asia.
- India ranks second among the emerging nations of the world.
[The above indicators are based on purchasing power parity]
Besides, the Indian Market is also one of the few in the world that offers high opportunities for growth and earning potential in virtually all areas of business activity.
In spite of all such positive attributes, investment in India has been hindered by the following forces:
- Highly complex and inelastic social structure.
- Bureaucratic impediments.
- Infrastructural limitations.
Since her independence in 1947, India has evolved as a highly protective, semi-socialist economy. Because of its diversified cultures, no change in social structure or financial reform has been accepted unanimously. All such alterations had been subjected to time by the authorities implementing them.
All business activities in India have encountered the inefficiency and corruption prevalent in the Indian bureaucracy. Lately, the government is addressing the issue with strict supervision.
The rapid economic growth in the past few years has revealed the India's deficiency in providing infrastructural facilities to investors. The most significant areas of such shortcomings include poor network and conditions of roads, shortfall in availability of power and mismatch among port traffic capacity.
The market of India is also diversified by the presence of consumers having a wide variety of tastes and preferences. It is therefore advisable to every investor before undergoing Indian Market Entry, to undergo a thorough introspection of what exactly the company is willing to achieve in India, to what extent and in what time. The introspection should be backed by a detailed investigation to know the possible pros and cons that a company might face in the process. In this regard there a a number of firms who assist foreign investors from beginning to end.
