India in recent times has been rated as the third most preferred investment destination globally and many large, mid size and small companies from across the world are doing business here. Liberalised reforms in foreign direct investment, both through direct automatic and approval routes, and release of the revised Foreign Direct Investment (FDI) policy have eased and expedited the investment process in India. Other factors that work in favour of India are its demographics, large domestic market, suitable business climate, lower costs in terms of labour and availability of high-grade talent pool.
India attracted FDI equity inflows of US$ 2,014 million in December 2010. The cumulative amount of FDI equity inflows from April 2000 to December 2010 stood at US$ 186.79 billion. Indian economy grew at 8.75% in 2010. In the years to come, India is expected to witness growth at about 9-10 per cent per annum.
India boasts a bustling and vibrant private sector of business and continues to attract foreign companies.
However, some foreign investors believe that investment in India has too many constraints and will not even consider investing India at all. International Advisory Council can help you with each and every stage of entering the market, setting-up a business and also finding the right business partner in India.
In addition, Indian economy needs to also nurture the foreign investors who have already made investments in India and plan to continue to grow these investments. International Advisory Council through its continuous aftercare services also helps foreign companies to build on these investments to drive further economic growth.
Whether it’s a marketing office or a development centre or setting up an industrial unit, our investment and functional experts help foreign companies with all the steps of running a successful business in India. For Small and Medium Enterprises (less than 500 employees globally), we provide initial 30 – 60 mins consultation for free where our experts can answer basic queries of potential business investors.
Investment in Indian joint ventures by foreign investors is also a growing area, but Foreign Direct Investment is not permitted in certain industrial sectors such as arms and ammunition, railways, multi-brand retail – to name a few. International Advisory Council matchmaking experts can help you find the right partner in India to join hands with. We are approached by a variety of Indian companies in various sectors who are looking for international collaboration and we can also search for specific partner(s) based on the requirements of multinational organisations.
Why to invest in India
Despite political uncertainty, infra-structural deficiencies, and bureaucratic hassles, India presents an optimistic scope for overseas investment and is taking necessary steps to attract more foreign investors. No business, irrespective of its size, that is aiming to become a global player can afford to ignore the Indian market. Three compelling reasons to invest in India are:
India’s GDP is currently US$1.3 trillion, making it the 8th largest economy in the world. However, in Purchasing Power Parity (PPP) terms, which recognises India’s low cost base, the GDP notionally rises to three times this amount (US$3.8 trillion) which places it on a similar size to Japan and, by 2013, it will become the third largest economy in the world (after the US and China) in PPP terms.
However, despite representing 7.5% of Global GDP (on a PPP basis) in 2010, India attracts less than 0.5% of investment inflows. This anomaly is likely to be corrected shortly with India getting its share of global investments.
India’s economy is currently growing by 8.75% per annum (in 2010) and this GDP growth rate is expected to increase to 9% – 10% per annum for each of the next 10 years. India’s GDP will grow five times in the next 20 years, and GDP per capita will almost quadruple.
India’s domestic consumption, generally led by the private sector, has played a significant role in India’s growth and is expected to remain firm as more people enter the workforce and the emerging middle classes. India’s wealthiest consumers (those earning US$1m per annum or more in PPP terms) will increase by 40 million in the next 10 years! Every sector within India’s consumer market is booming, making India far less vulnerable to external shocks and pressures than other emerging markets.
In addition, India has a robust, diversified and well regulated financial system which has allowed it to weather the global financial crisis without any major difficulties and present an image of quality, resilience and transparency. India’s banking sector is strong, with top quality balance sheets, high levels of competition (there are around 80 banks in India) and strong corporate governance.
The Indian economy offers investors exposure to a wide range of opportunities from consumer goods and pharmaceuticals to infrastructure, energy and agriculture. With its strong services sector (comprising 50% of India’s economy), particularly in knowledge-based services (IT, software and business services) India has proved that industrialisation and the export of commodities and resources is not the only path to rapid economic development.
India is also one of the youngest countries in the world, with an average age of 25 and likely to get younger. India’s working-age population will increase by 240 million over the next 20 years. With a population of 1.2 billion, a strong work ethic, high levels of education, democracy, English language skills and an entrepreneurial culture, India is poised to dominate the global economy in the next 20 years.
Types of Investment Opportunities available
Several national priority level and state-specific projects are being implemented across the country. These offer huge potential for investors willing to invest in India. The government is in fact, promoting public private partnerships in many projects opening up new vistas in sectors such as infrastructure, education, healthcare etc.
To put things in perspective, the services sector comprising financial and non-financial services attracted 21 per cent of the total FDI equity inflow into India, with FDI worth US$ 2,853 million during April-December 2010, while telecommunications attracted second largest amount of FDI worth US$ 1,327 million during the same period. Automobile industry was the third highest sector attracting FDI worth US$ 1,066 million followed by power sector which garnered US$ 1,028 million during the financial year April-December 2010. In the same period, housing and real estate sector received FDI worth US$ 1,024 million.
Please refer to the further sections of Vibrant India for more information on business opportunities available in India and its different regions.
However, the success of investment prospects in India will depend primarily on the precise estimation of its potential. Overestimation of its possibilities or underestimation of its complexity can lead to failure. For entering India’s marketplace, companies will need to have a well-planned strategy backed by careful research and serious thought.
International Advisory Council continues to be approached by foreign organisations of all size and sectors that are planning to do business in India. We also advise individuals and corporate looking at India as an opportunity for long-term growth instead of short-term profit, to come on a recce trip before making any significant decisions. We can help in organising such trips in all parts of India.