India market entry strategy for your business: Winning with MBG
July 28, 2021
Why every market entry strategy leads to India : The Opportunities
At over USD 60 Billion, India was the fifth largest FDI recipient in the world in FY 2020, an increase of 27% over 2019. These numbers from the UN reflect the obvious fact that every market entry strategy leads to India. The reasons are equally well known. Consider only the following five of many:
- Size, scale, and growth: India is the fifth largest economy in the world. It is home to a 400 million + middle class consumer base and a nearly 500 million-strong labour force. It is also amongst the fastest growing large economies in the world, having averaged over 5% p.a. GDP growth over 2010-2020 (6.8% p.a. excluding 2020). It is still expected to be one of the fastest growing post-Covid economies in the world.
- Political stability: Beyond the economics which alone places India in the recommendation lists of market entry consulting services firms, India is a free and vibrant democracy blessed with peace and political stability, the cornerstone of any market entry strategy.
- Strong institutions and systems: India’s economic and legal institutions are strong and well entrenched, protecting both business and citizen interests. The economy is powered by a robust financial system with free markets, liberal interest rate and exchange rate regimes, and the fifth largest Forex reserves in the world – over $600 billion in June 2021.
- Investment friendly vision: Fast improving ease of doing business is a core driver of India Market Entry Strategy. While governments have changed over the last 30 years, the commitment to economic liberalization and reforms to attract more foreign investment has continued to grow. While Ease of Doing Business ranking is still relatively low, India jumped 79 places in five years to 63 rank in 2020.
- Strong infrastructure: Another key market entry strategy component, India has a large, well established and diversified manufacturing base and massive industrial and logistics infrastructure developing along a high-priority growth path.
- Knowledge Economy powerhouse: India is one of the leaders of the global digital revolution with a highly developed ICT sector, a critical driver both of the modern global economy and global companies’ India market entry strategy.
No wonder Market Entry Services providers and market entry strategy consulting firms around the world have India at or near the top of their investment-destination lists.
During Apr-Dec 2020, the computer software and hardware sector attracted the highest FDI inflows of USD 24 Bn.,- nearly 50% of total- followed by infrastructure and construction (USD 7 Bn.), Services (USD 4 Bn.) and trading (USD 2 Bn.).
Entry strategies of MNCs in India : The Challenges
However, no business or India entry strategy consulting firm can ignore the challenges involved. These must inform the Entry Strategies of MNCs in India. While ease of doing business and infrastructure are improving rapidly, much remains to be done. Similarly, the sheer size and cultural diversity of India can be daunting for foreign investors.
The following are a few broad challenges that an India market entry strategy should tackle:
- Setting up and ease of business: It takes over the double the time to set up a new business in India than the OECD average. There are numerous procedures involved and approvals and permits can be hard to obtain. Engaging strong market entry services is therefore critical.
- Infrastructure gaps : Power, transport and logistics, connectivity, etc. can be major bottlenecks in India, especially outside of the big urban centres. A 2019 government body estimate pegged infrastructure investment requirement at USD 780 Bn. by 2022 for sustainable development.
- Size and diversity: India’s 1.3 billion people speak over 20 officially scheduled languages and over 1000 dialects and follow many faiths. Its 28 states and 8 Union Territories are each unique in terms of sociocultural and political identities and have widely differing economic, business and investment environments. India entry strategy consulting firms must help navigate these.
- International geopolitical uncertainty: India is located in a geopolitically sensitive, nuclear armed and often unstable neighbourhood which can potentially offset its own domestic political stability. India entry strategy consulting firms must have strategic insights into this factor.
Developing an India market entry strategy must address these challenges, and more.
India Market Entry Strategy development: Key Considerations
Market entry services are an important part of the business set up process anywhere in the global economy, and perhaps nowhere more so than in India. Engaging a professional market entry services firm is critical to your India business launch and investment plans.
At MBG Corporate Services, our Market Entry Consulting Services follows a robust framework that includes initial market research to begin with as well as the on-ground entry modalities of execution.
- Market Feasibility Study: Comprehensive study covering Market size and potential, Customer and Competition analysis, Product mix strategy, Price build-up, Regulatory environment, Demographic landscape and trends analysis
- Market Entry Strategy Evaluation: Recommending the best business setup types and operational support, such as
- Mergers & Acquisitions or Joint Ventures – due diligence, valuation, integration
- Importer/Exporter/distributor/supplier search – longlisting, shortlisting, and selecting best partners based on business need
- Legal Structure : Wholly owned subsidiary, liaison office, branch office, project office, manufacturing setup
These are the necessary steps a good Market Entry Strategy Consulting Firm must take in the right strategic direction. However, the crucial link in the chain is executional strength derived from in-depth market insights. Again, that is true everywhere but perhaps more so in India - the market entry consulting services firm must be ‘Indian’ enough to understand the complexities.
Why Us? Winning with MBG Corporate Services’s India entry strategy consulting practice
MBG Corporate Services is one of the leading Market Entry consulting firms in India. Our two-pronged framework of market feasibility study and entry strategy evaluation has been appreciated by MNC clients we have helped set up in India and is widely respected by our peers. It comprehensively covers everything from identifying business objectives and strategic priorities to setting up an operational entity in India.
Our India entry strategy consulting practice brings together experts across Business Setup & Company Formation, Strategy, Legal, Tax, Risk Management, M&A, and other related domains to ensure the best ‘hard skills’ solutions for entry. However, it is also the ‘soft skills’ component that gives our solutions the edge over our India entry strategy consulting competitors.
At MBG Corporate Services, our India market entry consulting services are the best of “Glocal” = Global + Local. We are deeply rooted in India. We have intimate knowledge of India as an economy, a market and as a culture. We understand its geo-cultural diversity inside out. Unlike other Market Entry consulting firms in India, however, we are also a global organization with well established presence in Europe, Middle East, and Asia. This ‘Glocal’ strength ensures that we set up your business in India smoothly, securely, and within stipulated deadlines.
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