Entering the Indian market can offer your business various new opportunities. India’s economy has accelerated throughout the 21st century to become the sixth largest globally and a significant global player. India had nominal GDP in 2021 of 2,946 billion US dollars, equating to 3.10% of the global economy. A growth rate of 9.50% made it the world’s fastest-growing economy, while Goldman Sachs predicts that by 2035 only China and the US will have economies larger than India’s.
The Republic of India in South Asia is the world’s seventh-largest country by area, second-largest by population and the most populous democracy in the world. Its geographical location is an ideal launch pad for companies to expand further into Asia, the Far East and the Pacific Rim.
Foreign Direct Investment (FDI) is expected to reach between 120-160 billion US dollars annually by 2025. According to statistics from the Department for Promotion of Industry and Internal Trade, this proves a significant attraction for foreign companies planning expansion. The computer software and hardware industry attracted the highest FDI between April and Statistics from the Department for Promotion of Industry and Internal Trade.
Opening a business in any overseas territory brings issues and entering the Indian market is no different. Moving staff worldwide means lengthy processes to obtain visas and work permits. Once employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Drawing up an expansion blueprint is not enough. Your business plan will have to answer all these questions.
India is a magnet for increasing levels of foreign investment, but companies face multiple registration procedures and an employment market where employment laws are being updated and rationalised. Where will you find manufacturers, offices and distributors? There is a simple and effective alternative. By partnering with a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in India. Here we set out some of the necessary steps.
International companies entering the Indian market to hire staff and run payroll can otherwise establish a legal entity as a subsidiary. The most common route into India’s economy is to open a private limited liability company under the Companies Act (2013), which establishes rules on incorporation, shares, directors and officers, accounts and other provisions. The registration procedures include the following:
India is a big country with big ambition and with just cause. Its economy accounts for a 3.1% share of the global market economy with a GDP of US$2,946 billion. However, it is also a mixture of the very best and challenging. But with low costs, inexpensive accommodation and plenty of room for opportunity, foreign companies are attracted to its vast consumer base with growing disposable income.
In 2000 India introduced Special Economic Zones (SEZ), which offer incentives to businesses, including duty-free and tax breaks. They had exponential success in some areas, such as IT, with web-enabled services showing increased exports in IT software, electronics and circuit boards. However, September 2022 sees a re-vamp to be more inclusive with new legislation to draw in all 28 states to partner in the ‘Development of Enterprise and Service Hubs’. There will also be reforms for customs administration systems and providing state-of-the-art infrastructure to ease business in a new ’employment and economic enclave’.
Mumbai, formerly Bombay, is a metropolitan city with an eclectic mix of cultures, religions and ethnicities. It is the capital of Maharashtra and the vibrant financial centre of India. It is one of the largest ports and a principal hub for international freight. Great for start-ups and is officially the best hub for business opportunities in the March 22 budget, start-ups and new businesses benefited from increased tax incentives.
Bengaluru (formerly known as Bangalore) is known as India’s tech capital and host to many Fortune 500 businesses, but it is also famous for its nightlife and green spaces. Between 2014 and 2020, this ‘Silicon Valley and Startup Hub’ of India saw 11,000 new start-ups. Bengaluru Mission 22 showed plans to make the city “one of the best in the world” with investment in infrastructure to improve the environment, services and transport for its citizens.
Hyderabad has an ecosystem already primed for the IT business. Delhi and Bengaluru welcome expatriates, Kolkata is suitable for heavy industry, and Nagpur is home to many top manufacturing companies such as Procter and Gamble, Unilever, Colgate-Palmolive and Tata Motors.
Where to locate your office in India depends on your market, accessibility, suppliers and available talent. India is a vast country, and doing the research will take a lot of local ‘know-how’. Bradford Jacobs has that know-how, and ensuring your business office is in the best possible location for your company is our job. We are the oil to your business machine, lubricating the wheels of your expansion into India.
Some advantages of entering the Indian market include the following:
Some challenges of entering the Indian market include:
For more information, download our free guide or get in touch with our consultants here