India still excites as emerging market
OPPORTUNITIES abound for Yorkshire businesses in India despite the country failing to reach the heights of growth expected by some.
Mike Redfern, partner at Grant Thornton, profiles the opportunities for Yorkshire businesses and suggests four considerations for entering this BRIC country.
Although slowing down ever so slightly recently, with growth at 5%, India’s economy is still flourishing compared with the Western world. With declining poverty, improving standards and agricultural growth, India remains appealing to foreign businesses.
But what India offers in particular for regional businesses is market access to a huge, growing middle class of more than 300m people. Add that to the demographic of a country in which more than 50% of the population is under 25 years old, and India is a very attractive proposition.
So where are the opportunities?
Hunger for Western products and services among India’s young middle classes is creating a great opportunity for UK business – not least because English is also widely spoken.
Although the retail industry is, in some circumstances, restricted to major UK corporations, individual brands and retailers certainly have the opportunity to capitalise on the demand for luxury goods and services.
There is also great demand for some of the business services that operate around the financial sector, such as broking.
Healthcare and education are strong areas of opportunity, as is the infrastructure sector and services relating to the development of infrastructure. These are also areas where the UK is strong and makes a good match.
The UK-India relationship
Many UK businesses are now beginning to take advantage of the opportunities India has to offer and, after some years of reluctance on the part of UK companies to enter India, the market is far from saturated.
In 2011, UK exports to India increased by 45% making India the UK’s largest non-EU market, and the UK and India aim to double bilateral trade to around £26bn by 2015. Also India is the third-largest investor in the UK and out of the 1,200 Indian companies in Europe, 700 are located in the UK.
The Indian market is very relationship-driven and success can depend on building relationships and partnerships with other businesses. As a result, Grant Thornton has seen an increasing number of Yorkshire businesses seeking guidance in this area.
Like any new market, it can take a little time to enter India but, once you have taken the decision to do so, it is a relatively straightforward process to invest or to set up a venture or a partnership there.
Our top four issues to consider when taking your business into the Indian market are:
1. How to take advantage of the opportunity
India is a very exciting emerging market offering excellent opportunities but companies need to ensure they do their homework when structuring their business, choosing the place, partner and product, and deciding how to staff their operations.
2. Cultural understanding
India is a very relationship-driven and hierarchical society. It is important that investors understand the cultural differences and have the patience to deal with the implications.
3. Regulating framework and bureaucracy
While barriers are coming down and most sectors are open, India does still have a fair amount of regulations and bureaucracy that need to be navigated.
4. Setting up in India
Setting up in India is a relatively easy process; investors have two choices which need to be carefully evaluated. They can set up either as a foreign entity through a branch or project office, or as an Indian entity, which is wholly owned or joint venture with a local partner depending on the sector the company is in.
