Market Spotlight: India
India continues to be an attractive emerging market for foreign direct investment, given its nearly 1.4 billion inhabitants. Its ranking on the World Bank’s Ease of Doing Business Assessment is 63 of 190 countries and improved by 14 places in the past year. From 2020 to 2021, India attracted a record in foreign direct investment ($81.72 billion), up by 10% from 2019. This increase may be attributed to businesses shifting away from investing in China, an increase in incentives from the Indian government, and a relatively successful management of the global pandemic.
Starting a business in India takes approximately 18 days, on par with the world average. However, according to the World Bank, it may take up to four years to resolve a commercial dispute, the third-longest rate in the world. Business owners should take this risk into consideration when planning to set up operations in India.
Indian businesspeople are generally friendly and interested in forming a personal relationship with their foreign business counterparts. It is important to get to know your Indian counterpart by sharing personal anecdotes or a meal before discussing business. Third-party introductions may be necessary to secure a meeting, as Indians prefer to work with people they know or trust.
Indian executives enter a meeting space by highest seniority, rank, and importance, and expect their business counterparts to do the same. Successful deals may require several encounters, as the owner or director of the company often makes the final decision. Do not be discouraged if your Indian counterpart answers a phone call, is distracted, or called away temporarily during your meeting. While in Western countries this may be considered as rude, this behavior is normal and should be anticipated.
English is considered an official language in India because Indians are taught English in primary and secondary schools. However, foreigners should not expect Indians to necessarily be proficient, nor fluent, in English. In fact, only about 10% of the population is fluent in English. According to the EF English Proficiency Index, India ranks 48 out of 112 countries, and ranks sixth (of 24 Asian countries) in proficiency. India’s native language is Hindi.
India offers some of the most competitive labor costs in Asia and unskilled workers are widely available for hire. Minimum wages are set by each state or industry sector, and range about $2.40 per day in Bihar to $6.35 in Delhi. India’s workforce is mainly unskilled, with about 1 in 5 workers considered “skilled,” according to the Human Development report. Of note, a large percentage of Indians aged 18 to 23 are not enrolled in the national education system due to lack of accessibility or affordability, which contributes to the large unskilled workforce.
India has emerged as the 6th largest economy in the world, with a GDP of $3.25 trillion. Its economic growth has been impressive in recent years, which may be attributed to its strong democratic society, key reforms, increased local consumption and government investment.
India has achieved a high economic stability ranking with a score of 90 out of 100, and 41 out of 141 economies according to the World Economic Forum’s (WEF) Global Competitiveness Index.
