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India entry strategy requires a focused approach arising with in depth evaluation of the various market opportunities followed by creating a deliberate scheme for their entry and at last the effective implementation of the suitable and recommended strategy to achieve the desired results and to make strong presence in India. Hence, it can be correctly said that an effective and efficient market entry strategy can be achieved by going through the following stages:
- Exploring Opportunities in Indian Market
- Formulation of Appropriate Strategy
- Implementation of strategy
Exploring Opportunities In Indian Market
To make a pure “take it or leave it” decision on this aspect, it requires a measured assessment of on the aspects of competition, legal and technical barriers, pricing, business cultures, sales and distribution, etc.
Market Exploration requires a thorough analysis of:
- Prevalent Market Opportunities
- Growth potential of Indian market and its risk
- Technology trends
- Demand and Supply
- Business culture
- Products/Services to be Launched
- Competition
- Entry Barriers
- Government Policies and Regulations
- Sales and Distribution networks
- Potential Customers and Partners
- Location Benefits
- Pricing Policies
Formulation Of Appropriate Strategy
It includes evaluation of suitable India Entry Strategy options and preparation of actionable business plan taking into account various aspects involved considering success, failure and prevailing best business practices.
Exploring Opportunities in Indian Market
- Understand the growth potential of Indian market and its risk
- Select right entry mode
- Identify the right partner
- Determine the products/Services Launch
Implementation Of Strategy
An effective strategy will rule in the market in long run if it is duly and successfully implemented. It enhances the value and standing of the brand with reduced risk and compacted growth time frame
- India is ranked among the top 10 attractive destinations for inbound investments.
- Foreign Direct Investment (FDI) inflows Foreign direct investment inflows hit an all-time high of $40 billion in 2017 and $22 billion of FDI flows in the first half of 2018
- FDI policy reforms directed at ease of doing business.
- 7th largest economy of the world having 17.5 percent (1,316.896 million) of the total world population That means a huge market for products & services.
- Capital, Dividends and Interest are repatriable.
- Enhanced Government Initiatives
- International Finance Corporation (IFC), the investment arm of the World Bank Group, planning to invest about US$ 6 billion through 2022 in several sustainable and renewable energy programmes in India.
- Government of India allowed 100 per cent FDI in single brand retail through automatic route.
- India has become the most attractive emerging market for global partners (GP) investment for the coming 12 months, as per a recent market attractiveness survey conducted by Emerging Market Private Equity Association (EMPEA).
- The World Bank has stated that private investments in India is expected to grow by 8.8 per cent in FY 2018-19 to overtake private consumption growth of 7.4 per cent, and thereby drive the growth in India’s gross domestic product (GDP) in FY 2018-19.
Entry Mode
| As an Indian Company | As a Foreign Company |
|---|---|
| Wholly owned subsidiaries | Liaison Office |
| Joint Venture with an Indian Company | Branch Office |
| Merger and Acquisition | Project Office |
| Limited Liability Partnerships (LLPs) | Licensing and Franchising |
Taxation
The investor is required to pay tax on net income earned in India. The rates of taxes differ among structures.
| Particular | Tax |
|---|---|
| Company | 25% tax (in case their turnover is upto Rs. 50 crore)+ surcharge + education cess on net income earned |
| Branch office/ Project office/ Liaison office | 40%+surcharge + education cess |
| Limited Liability Partnerships (LLPs) | 30% + surcharge + education cess |
Repatriation Of Your Investment
| Repatriation | Particular |
|---|---|
| Repatriation of Dividend | Dividends are freely repatriable without any restrictions (net after tax deduction at source). |
| Repatriation of Capital | Remittance of sale proceeds of a security to the seller of shares resident outside India, provided the security |
| Repatriation of Interest: | Interest on fully, mandatorily & compulsorily convertible debentures is also freely repatriable without any restrictions |
Foreign Direct Investment (FDI)
Sectors under Automatic Route with Conditions
| Sector/Activity | Cap |
|---|---|
| Plantation Sector | 100% |
| Mining of metal and non-metal ores | 100% |
| Mining – Coal & Lignite | 100% |
| Manufacturing | 100% |
| Food Product Retail Trading | 100% |
| Broadcasting Carriage Services(Teleports, DTH, Cable Networks, Mobile TV, HITS) | 100% |
| Broadcasting Content Service – Up- linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels | 100% |
| Airports – Greenfield | 100% |
| Airports – Brownfield | 100% |
| Air Transport Service – Non-Scheduled | 100% |
| Air Transport Service – Helicopter Services/ Seaplane Services | 100% |
| Ground Handling Services | 100% |
| Maintenance and Repair organizations; flying training institutes; and technical training institutions | 100% |
| Construction Development | 100% |
| Industrial Parks -new and existing | 100% |
| Trading – Wholesale | 100% |
| Trading – B2B E- commerce | 100% |
| Duty Free Shops | 100% |
| Railway Infrastructure* | 100% |
| Asset Reconstruction Companies | 100% |
| Credit Information Companies | 100% |
| White Label ATM Operations | 100% |
| Non-Banking Finance Companies | 100% |
| Pharma – Greenfield | 100% |
| Petroleum & Natural Gas – Exploration activities of oil and natural gas fields | 100% |
| Petroleum refining by PSUs | 100% |
| Infrastructure Company in the Securities Market | 100% |
| Commodity Exchanges | 100% |
| Insurance | 100% |
| Pension | 100% |
| Power Exchanges | 100% |
For other sectors and permissible ratios please Contact MUDS!
WHY MUDS?
- Are you aware about the regulatory Requirements of India entry?
- Are you able to identify the appropriate Entry route?
- Is your business Really viable in India?
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