Both the EU and the U.S. are in recession, China is in a serious economic slowdown, and on top of that we also face a very tight labor market in the West, especially when it comes to technical staff. Time for European companies to look across borders for new growth markets and smart solutions to our staffing problems. Here are three reasons why European companies want to keep an eye on India:
1. India is the fifth largest economy in the world
Still described as a "developing market economy," India's economy is in the top five largest and most influential global economies. The country's current GDP, according to World Bank data, is $3.4 trillion and is expected to grow to $5 trillion by 2024. India is one of the only countries that continues to show economic growth. In fact, India's economic growth will accelerate from the 6.1 percent it showed in the January-March quarter to 8.5 percent in the April-June period of the current fiscal year.
India is just too big and too influential to ignore any longer.
2. Made in India, the new making country
The manufacturing industry is growing at lightning speed in India. This is not surprising: the Prime Minister of India, Narendra Modi, launched the 'Make in India' program and invested big money to put India on the map as the world's new manufacturing hub. Under the Make in India program, foreign companies in more than 25 sectors benefit from attractive tax breaks. It's convenient for India that labor costs are rising in China and the trade war with the U.S. is heating up: that only strengthens India's cards. Manufacturing companies from around the world have noticed this too. GE, Siemens, Toshiba and Boeing, are just a few of the thousands of foreign companies that have opened production sites in India in recent years. They benefit from the abundance of technical personnel and also have access to a huge market for their products made in the country. Those who manufacture in India can serve the internal market better and more cheaply.
3. Spread risk
The growth engine of the European economy is exports. European exports are under increasing pressure due to the US-China trade war, the war in Ukraine and an overall slowdown in the global economy. ING advises with good reason that companies should open international offices to continue to benefit from economic growth across borders. The question is where to go? The EU, U.S. and China are obvious, but those are also highly competitive markets. For many companies, there is still a world to be gained in India, a market with healthy and steady economic growth. High time, therefore, to start exploring India.
What is your India strategy? These are your options
Your company sees opportunities in India. Not only as a potential market of 1.3 billion consumers, but also because there are options to make your production process cheaper and more efficient. But what all do you need to consider to make a successful start in India?
1. Invest with a long-term vision
India is a subcontinent with many different cultures, languages and therefore customer needs. It is therefore essential to have a long term planning and a lot of patience when entering the Indian market. Most Western companies that have made a successful start in India in recent years, by moving their production or opening a trading office, only really reaped the benefits 3 to 5 years later.
2. Define success
When you enter a new market, and specifically the Indian one, you need to define your goals and (real) financial expectations well and back them up firmly with data. It sounds a bit obvious, but we still see many companies leave the market prematurely because they start with too loose an idea of what success in India means to them. Firmly defining your goals will help you achieve a good starting budget that can handle the biggest surprises.
3. Starting smart with low costs
For many companies, finding a reliable business partner or working with a distribution partner, is the best start. If you are not yet sure if India is the right market for your business and want to test the market, it is wise to start with a business incubator. This gives you the opportunity to explore the market without immediately setting up a business and incurring the associated costs. Whatever you choose, the format should feel like a natural extension of your business and bring in the right local market knowledge. This will help you better understand the complexities of the market and overcome the initial hurdles during the start-up period.
4. Recruit the right sales managers
We all know the importance of having the right people on our team, but that counts even more when you are entering an unknown market. If you want to become a success story in India, you need people who are knowledgeable about your product, can build good relationships with partners and customers, and understand the local market. But where do you find these pearls in a country you don't know? Work with a reliable partner who has experience in this field and can support you in recruiting the right people.
5. Choose the right distribution partners
India has 28 states and is almost as big as the European Union. How will you sell your products there? And more importantly, distribute them quickly and efficiently? You will probably need regional wholesalers to help you distribute your product further to local sales outlets. Finding the right distributors involves a lot of work: background checks, verification, making appointments. Each of these steps is essential. For example, for many foreign companies, it is unclear how many distributors they would need to partner with to cover all of India. A local consultant with a good understanding of your market and experience in shipping your product can be of great help. This is an important step that often results in a successful start in the Indian market.
6. Don't forget the after-sales
The key to success in the Indian market is to offer a customized product or solution and a solid service network. You will always have to compete with low-cost producers from China in India, but that is precisely why you will have to distinguish yourself with excellent service. European products are rated much higher than Chinese products in India.
Workshop: Sales and distribution in India
India is a complex country, but also one full of opportunities for those companies who understand the market and want to invest in it. Get a better understanding of what you need to think about if you want to sell and distribute in India in a workshop tailored specifically for your business:
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