The Indian market has a lot to offer European companies. It is one of the largest consumer markets in the world, one of the fastest growing economies in the world and an interesting destination for companies looking for a (second) production location. Are you planning to enter the Indian market or expand your activities in the country? These are five reasons to look into starting an entity in India.
1. Exporting to India
Most companies start simple in India, by exporting their foreign-made products. While this is a good first step, in the long run, it is interesting to look at the benefits that having your own entity can offer you.
Personal relationships play an important role in doing business in India. In addition, good and fast service (especially after-sales), quality and direct accessibility of a company are important purchasing arguments for most Indians. Without a local entity of your own, such as an Indian subsidiary or branch, you are not only less accessible, but it is also difficult to assess your market opportunities and therefore unlikely that the sales potential of your product will be fully realised.
Having your own entity gives much more options and flexibility to exporters compared to trading remotely through the standard export model. Read our key tips for companies who want to start selling into India here.
2. Strategic market
For companies operating in an international market, India is increasingly an important strategic market. Think, for example, of the developments in e-commerce, but also of the competitive advantage that a production facility in India can give you.
When outsourcing production, Dutch companies are still quick to think of China, but since the pandemic, more and more companies are realising the benefits of production sites in different countries. There are many advantages to producing in India, for example there is no language barrier because Indians speak English well, salaries in India are lower than in China and there is a large pool of highly skilled personnel available. Read here why these three top Dutch companies chose India.
3. Staff
For successful sales in India, knowledge of the local market and good contacts are essential. Without local staff, it takes years for your organisation to acquire these important elements. But only if you have your own legal presence in India can you hire Indian staff locally. Find out more about the rules involved in hiring staff in India.
Local staff is not only useful for working the Indian market, but Indian staff can also provide low-cost support to the parent organisation in the Netherlands. Think for example of outsourcing accounting jobs, IT work and maintenance and research services. Did you know that India has the largest technical talent pool in the world? Here are five more reasons why India is the outsourcing location of choice.
4. Import levies and taxes
If you want to sell products in India for which import duties are relatively high, local production or assembly is often the only option to serve the Indian market. The government's Make in India campaign is making it increasingly interesting for foreign companies to manufacture in India anyway - also for export to international (European) home markets.
Having an entity in India is also advantageous for European companies in terms of taxes. While foreign companies with operations in India pay more than 40 per cent tax on their income, with a local entity this drops to around 30 per cent. Read more about the tax benefits of having an Indian entity here.
5. Investing in the market
India is a long-term business destination. Since it can sometimes take some time to find the right partners and build up credibility, it does no harm to start working on the market early. This will help you anticipate the inevitable growth of the Indian market.
Workshop: Market entry in India
India is a complex country, but also a country full of opportunities for those companies that understand the market and want to invest in it. Entering the market can therefore be challenging for European companies who are not so familiar with the country. IndiaConnected helps over 100 companies every year with their activities in India. We work with local experts in all sectors and can therefore offer you a helping hand in shaping a successful market strategy for your company in our tailor-made workshops:
We will give you more insight into what is involved in your market entry in India.
You will receive valuable feedback on your current India strategy from independent experts.
Expertise in every field: sales, manufacturing, legal, tax, finance, supply chain, recruitment, etc.
Our workshop usually lasts about 2 hours. Our experts will work with you to explore your issue and formulate possible answers and strategies. Afterwards, you will receive a report.