How to launch your business in India
For its latest trip abroad, Business Leader gives you an insight into what it takes to launch a business in the world’s second most populous country.
In the last year alone, India has risen to become the world’s third largest economy with many experts predicting that by 2040 it will have surpassed the USA and only sit behind the might of China.
In the last year, exports from British companies to India rose by 17%, with India importing £360.5bn worth of goods and services. This highlights the ever-growing potential to launch a business venture in India.
So how can UK businesses launch in India?
Whilst India does show great promise as a business destination for UK companies, there are challenges that companies must face.
Corruption, poor infrastructure, and vast cultural differences can all play a part in an unsuccessful business launch, which is why getting to know India and the region you may be operating is vitally important.
So which sectors are most active in the country?
Currently, the primary focus in Indian business is on manufacturing, agriculture and professional services. However, there are now also emerging tech and pharmaceutical sectors.
Indian real estate billionaire PNC Menon believes that his nation is a great place for UK companies to launch a business venture within these industries.
He said: “India is an international country where the people are extremely warm. It is a very accepting place for outsiders looking at starting new ventures.
“In recent years, all major sectors have become increasingly active in India. This has led to the nation currently going through a growth phenomenon. The general economy is buoyant with money being pumped in all sectors to boost the economy.”
One of those British companies that have made a successful move into the Indian market is Caldwell, a glass and glazing industry specialist that has recently expanded its operations in India.
Market Development Director Tim Ferkin comments: “Although there are issues within India relating to quality assurance, payment terms and industrial processes, it has provided many opportunities for Caldwell.
“The people in India never put up barriers to doing business. It’s a very entrepreneurial culture, and in my experience, local companies are really keen to learn from British, European and American businesses.”
So, what prompted Caldwell to invest in India?
Tim explains: “We already dominated our sector in the US and UK, and needed a new market to expand into. India was the obvious choice for three key reasons.
“One, we’re already well-established in the area – our products have been sold in the region for years – and now we’ve just taken the natural next step. Two, there’s no language barrier – English is the official language of business in India.
“And three, it’s one of the most dynamic economies on the planet. The growth rate is currently running at over 7% a year, which is faster than China’s, and by 2050 it’s expected to be the world’s second largest economy.”
Guilia Simonelli works for Newable, a company that supports British SMEs that trade internationally.
She recently led a trade mission to Mumbai, and whilst there she noticed several differences that businesses need to be aware of.
She explains: “The first challenging part was many decisions are made very last minute and this can lead to operations being dis-organised. Business logistics and ‘getting a date in the diary’ can be a challenge in India.
“Face-to-face meetings are vitally important but due to the transport links and distance between offices, this can be very difficult to organise and stick to the schedule. In the UK, we are used to being a lot more efficient with our meetings and time spent in them. It made it clear that having a physical presence in the country would be key to future success.”
Tim echoes these sentiments and believes that in-depth pre-visit research is needed to make sure that moving into the Indian market is the right move for any business.
He comments: “India is a vast, culturally diverse place – and it’s hard to make generalisations about a country that’s home to more than a billion people. If you’re coming here to do business for the first time, you need to do at least a bit of basic research into the specific region you’re looking to work in.
“India is a very religious place, for example. Nearly 80% of the population are Hindus, but there are significant Muslim, Christian and Sikh minorities. Find out which is the dominant faith in the area you want to work in.
“Two other things to remember – health and safety often isn’t a top priority in India. And it’s important to pick your partners carefully.
“When foreign investors are in town, some local companies just see dollar signs. They’ll be very eager to ingratiate themselves with you, but often their businesses aren’t great. Take your time and choose wisely.”
How can your business succeed?
As Tim has explains, getting the right local contacts is vital when first scouting out a region and potential business venture.
He comments: “We have worked with a local company to carry out a thorough analysis of the Indian market, which has given us a huge amount of valuable knowledge.
“But personally, I flew to India once a quarter for over seven years. In the past two, I’ve been going over once every four to six weeks. That’s the sort of commitment you need to make if you’re going to get something like this off the ground. It’s been more than worth it, though, and I’m really excited about what the future holds.
“Culturally, legally and economically, India is a world away from what we’re used to in Europe and America. Some of those differences can be challenging, and you have to get your head around a very different set of business regulations and legal requirements.
“Initially, that red tape is frustrating. But once it’s dealt with, it’s actually very easy to do business in India. If I was going to give one key piece of advice, though, it would be to find a strong local partner. In my view, that’s the key to success.”
Another success story in India is PocketApp – a mobile technology business set up by Paul Swaddle. Paul grew the team from three to 50 in the first two years of trading, and now has offices in London and Mumbai.
He comments: “One of the things that can make India tricky is that lots of things appear similar – for example the laws are broadly similar. However, the similarities are often in fact only surface deep. Take the law and wider legal system – on the surface they look similar but in truth the time it takes for a case to get to court makes it quite useless.
“You do need someone with local knowledge to ‘translate’ for you. There are numerous public holidays in India and in individual states, but not all are actually given to all employees so you need to know how this may impact your business. There is so much to learn but so much opportunity.”