Democracy, Demographics and Domestic Growth – the three driving factors that drive India, towards incredible growth in the next decade.
India has been one of the top performing economies in the world, in the last few years and especially in the last 12 months. Though several countries around the world saw major political and economic upheaval due to global issues like the Brexit, trade wars between the Chinese and the US, India has not just been holding its place, but progressing forward.
In the 2018 World Economic Forum, the Indian Prime Minister Narendra Modi declared that India’s economy (currently the fifth largest in the world) would double to reach $5 trillion by 2025. With that said, one often comes across news articles online and offline how India will never attain success like China.
What does that mean for Global Firms looking to Invest in India?
Yes, there’s true that India is a challenging market for doing business. But, that doesn’t mean you can discount the country as a lucrative investment option.
Here, in today’s post, we highlight market research and the top three reasons why global firms should invest in India.
- Massive Growth in Infrastructure Spending
India is seeing monumental infrastructure growth at a staggering pace like never before. In the last 3 to 5 years, the country has significantly increased its spending on roads, ports, airports, hotels, power plants, hospitals, cities and more.
For instance, the newly partitioned state of Andhra Pradesh is building a brand new capital city that has attracted massive investments for its infrastructure. India has also been increasing its solar energy capacity exponentially in the last five years. It even managed to achieve the solar power target of 20GW ahead of schedule. Not just solar power, the country is focused on increasing all types of renewable energy production.
Not just domestic players, international firms like General Electric, AECOM, Cummins, and JCB, are investing in India’s infrastructure boom and making huge profits. For instance, JCB recently reported that nearly 50% of its global profits are made in India.
Economic studies indicate that India will require around $5 trillion infrastructure investment in the next few years, to sustain its economic growth. This opens up a world of lucrative opportunities for multinationals with core competencies in modern infrastructure solutions.
- A Strong, emerging Middle Class
Next, to China, India has the biggest economically strong middle class. This is the reason why global FMCG companies like LG, Samsung, Unilever, Xiaomi, Hyundai, Toyota, Suzuki, Colgate – to name a few have been able to establish a strong foothold in the Indian market. Not just creating a presence in the Indian market, several multinational FMCG companies have been doing spectacularly well here.
Let’s illustrate this point with a few examples. Though Amazon was known worldwide, it was a late entrant to the Indian e-commerce market. The global e-commerce giant entered the Indian market only in 2013 when there were already several Indian companies like Flipkart and Snapdeal dominating the market.
In spite of this delayed entry, Amazon today has risen to become India’s top online retailer in a short span. The customer acquisition rate for Amazon in India surpasses the country’s customer acquisition rate, anywhere else, including the US. Following Amazon’s massive success in the Indian market, Walmart another giant US corporation has recently taken over Flipkart.
Just like Amazon, Renault another global corporation entered the Indian market only recently. The popular French auto-maker introduced Kwid in 2015 in India. This was at a time when Hyundai and Maruti held over 70% of India’s subcompact car market share. Within a short span of just two years, Kwid has grown to hold 15% of this market. Following Kwid’s success in India, Renault has introduced the model in other continents like South America.
These two examples prove that global firms customizing their products to cater to the needs and budget of the growing Indian middle class is sure to taste success in the country. Companies looking to succeed in India must be willing to redesign their products to cater to the middle of the pyramid of the Indian market.
- India is Witnessing a Major Startup Boom
This is one of the most important reasons why global firms should fix their sights on the Indian subcontinent. While the size of the Indian market plays a crucial role, it isn’t the only factor. India presents multinationals with a unique opportunity to participate in a dynamic, and one of the most innovative startup ecosystems in the world.
India’s startup ecosystem is now the third biggest in the world and is growing rapidly. The startup domain is no longer occupied by copy-cat firms. India’s innovative startups have attracted a massive $20 billion in the last three years alone.
Two main reasons are driving the growth of startups in India. One – the Indian government and tech giants’ commitment to launch “India Stack.” This is a set of APIs that provide developers with a common digital infrastructure on which they can launch and develop their business. The push to a digital economy – digital payments, unified identity using the Aadhaar, increased internet penetration, availability of affordable smartphones – all contribute to the growth of the startup scene in India.
The second main reason for the boost in the Indian startup ecosystem is because India has a large number of consumers, who are young, educated, earn disposable incomes and well-versed in English. The Indian demography makes it one of the main reasons fuelling its economy.
Final Thoughts – India is a Land of Paradoxes
Not just culturally, but also in the business world. India presents massive opportunities, while there’s no denying the fact that doing business in India comes with its fair share of challenges and obstacles. This is where VEDAS SHAAKHA comes into the picture.
With accurate insight into how India works and moves and a deep understanding of the global market, we are your perfect Indian partners to help you get business start-up services in India. Whether you are looking to invest in India or partner with other Indian corporations directly – we offer you all the support and assistance you need. We have a proper market research report in the country.
Get in touch with our experts and start enjoying handsome returns from the ever-growing Indian success pie.