Skip to main content

How foreign companies can enter the Indian market successfully.

Posted in
How foreign companies can enter the Indian market successfully

India is one of the fastest-growing economies in the world, placing it among the most attractive investment destinations for businesses across the globe. Foreign companies are attracted to the Indian market mainly due to its simple investment procedures, multiple tax incentives, and skilled workforce.

However, this business opportunity comes with its own challenges (such as dealing with the complex corporate, legal and tax systems) that prevent foreign businesses from going ahead with investments.

So, if you are among those looking to establish your business in the thriving Indian market but still feeling apprehensive about the risks of tapping into a new country, this article will provide you with some helpful insights that should aid you in making the right decision.

Key takeaways

  • India is one of the fastest growing economies in the world with great market potential, abundant resources, availability of labour at relatively lower wages, a competitive tax system, and an extensive trade network
  • There are multiple strategic options for a successful market entry. Among them are:
    • Adopting a local way of doing business
    • Conducting thorough research prior to the market entry and adjusting the business plan in light of the research findings in order
    • Opting for the right ownership structure

Why you should consider doing business in India

India is one of the most progressive countries in the world with great market potential, a large consumer market with a population of 1.39 billion individuals and a GDP of around USD 3.17 trillion.

Due to these factors, along with the abundance of resources, availability of labour at relatively lower wages, competitive tax system, extensive trade network government stability and specific investment privileges such as various tax exemption programs, etc. trends suggest that the FDI inflow in India is going to keep growing annually.

Undoubtedly, entering a new market entails unexpected threats and risks, but with a strategic approach and thorough market research, it is not difficult to effectively penetrate the Indian market and win over both the riches and messes alike.

Get our in-depth guide covering everything you need to know about starting and managing your business in India.

  • Discover foreign registration options & restrictions
  • Learn about available government incentives & promotions
  • Understand all compliance requirements
Incorporation Playbook

Entry strategies into India for foreign businesses

To successfully do business in India, international companies should focus on changing their perceptions and creating a business strategy that considers the local market while maintaining their global model. Thorough market research, hiring a specialist, choosing the right ownership structure, and empowering the local management team are essential steps to reducing risk and achieving long-term success.

Adopt a new way of doing business

The primary aspect that international businesses should focus on is changing perceptions about conducting business in India. Since India has a very diversified consumer base with specific requirements, adopting a global business strategy, there may not produce the same outcomes and could turn out to be disastrous.

The objective is to create a business strategy that takes into account the local market while maintaining the global company model’s value proposition. Additionally, foreign businesses must be devoted to the evolving Indian consumer landscape and tailor their services to the locals in order to successfully translate their brand value and achieve long-term success in the Indian market.

Research and adjust

A required business practice prior to establishing a planned approach is doing in-depth market research and adjusting the business plan in light of the research findings in order to reduce the risk associated with the decision to enter India. While traditional research methods from secondary sources are useful for gaining general insight, it is important to conduct thorough market research and testing via surveys and pilot projects to incubate companies. Before launching the business on a broad scale, this will assist in reducing the risk of the proposition.

It might be a good idea to hire an Indian market entry specialist who can triangulate data from various sources, provide customised research methodologies by interviewing key stakeholders from regulatory bodies, competitors, and end-customers to collect real-time data, as well as benchmark the performance of successful competing companies to understand the complexities of various businesses.

Choose an ownership structure

After a business plan has been developed and the complexity of the Indian market has been addressed, it is crucial to establish a roadmap for entering the market and choosing the best channel. What ownership structure does a foreign company want to follow? Will it establish a joint venture (JV), which is a common way to enter a new market, or will it operate alone? According to market data, corporations that enter India independently rather than through a joint venture typically perform better.

Yet again, employing a market entry specialist can aid in determining the best course of action. They will provide a comprehensive explanation of the advantages and disadvantages of each channel, suggest a go-or-no-go strategy, and suggest the optimal entry channel.

Offer the reins of power to the local management

To develop a successful business in the country, you must empower the Indian management team and involve them in the decision-making process. Multinational corporations frequently become caught up in the struggle for control between Indian and foreign management. It’s crucial to realise that in order to conduct business the local way and to become successful within the local market, it’s necessary to provide Indian management with the authority to develop a long-term strategy and make crucial operational decisions.

How Acclime can help

Foreign businesses willing to succeed in the Indian market must be committed to localising, empowering, and adapting their business models to the local way of doing things. Although it could seem difficult, working with an entry specialist with expertise in research and entry options could make the process seamless.

To learn more about various market entry options for your business, contact our expert at Acclime.

Acclime is a premier provider of professional formation, accounting, HR & advisory and tax services in India. We focus on offering high-quality consulting and outsourcing services to our international clients in India and throughout the region.

Related guides

About Acclime.

Acclime helps established multinational companies and startups start and operate their business in India and beyond. By seamlessly navigating our clients through the complexities of the local regulatory systems, we maximise opportunities while ensuring compliance and good governance.

Explore other guide categories