Global companies in India: what makes them salivate?

Global companies in India

Let’s take a quick look at the basic attributes of the Indian market that makes it so attractive, that every global name worth its salt has created a presence for itself here. Whilst 1.2 billion people would seem attraction enough, the real reasons that make companies salivate are – an educated youth population and an upwardly mobile middle class with high disposable income who together make up almost 50% of the population; a fast growing class of millionaires and billionaires willing to spend to get what they want; a robust and evolving industry segment that is fast acquiring global proportions; and last but not the least, the rural market that in itself presents huge opportunities that is yet to be tapped to its full potential.

Add to this the changes that technology is bringing to the lifestyles and aspirations of the man on the street. Internet use is expected to grow exponentially from around 150 to about 348 million by 2017; there were 550 million mobile users in 2012 and expected to reach 950 million users this year; industry is fast adopting various technologies to make them more efficient and globally more competitive; the Indian automobile industry is the sixth largest in the world and expected to see around 4 million vehicles roll out in 2015; inadequate infrastructure needing huge investments from private entities; a fast growing Information and Bio Technology sector that has gained global recognition; reaching technology, infrastructure and a well networked distribution system to the rural market etc. are some of the factors that attract global businesses to this honey pot. This is the difference, among other things, between India and China.

Domestic Demand
India’s ever-growing domestic demand, which now expects global standards thanks to the widely travelled and savvy buyer, gives Indian companies the opportunity to first test their products and concepts locally before stepping out to explore other markets. There are enough Indian success stories globally, as a result. These very reasons also make India a very relevant market for global players too.

The potential is huge, both for the B2B as well as B2C players. With businesses growing and going global, their need for innovative technologies to help maintain their competitive edge is on the rise and they are not averse to big multi-million dollar spends to avail these. But the biggest market here is the SME’s. This stands at around 30 million right now and growing rapidly. Considered the backbone of the Indian economy contributing 45% of the industrial output, 40% of exports, employing 60 million people and producing around 8000 quality products for the Indian and International markets, they too realize the need for contemporary technologies to stay ahead of the curve. This in itself presents a huge potential. Last but not the least is the exciting start-up eco system. There are around 500 start-ups born every year, with exciting and innovative products and services, which present a huge opportunity for companies to co-opt and invest in these ideas. This has spawned a large community of investors, mentors and advisors and is forcing global venture capital companies to make tracks to India.

Till as recent as a decade ago, multinationals tended to dump obsolete technology and products that were past their shelf life elsewhere. But now they know that they will bite the dust if they do not offer what is contemporary. More important, these companies have realized that they need to revisit their marketing and product concepts if they want to do business in India. It’s called Indianization. Biggies like KFC, McDonalds, Microsoft and many others have learnt it the hard way and have adjusted their business model and products to suit the local requirements and this has paid them huge dividends. All these companies have seen exponential growth and still growing and are planning big investments to sustain that growth.

The cultural, social and religious diversity of India makes it a fairly complex and at the same time very attractive market to do business in. The reason why global enterprises are headed India way.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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