Tuesday 28 January 2014

INVESTMENT IN INDIAN MARKET


Market Trend:
India, among the European investors, is believed to be good for investment despite bureaucratic hassles, shortages of power and infrastructural deficiencies. India presents a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the market. No companies, of any size, aspiring to be a global player can, for long ignore this country which is expected to become one of the top three emerging economies.

Success in India:
Success in India will depend on the correct estimation of the country's potential. Underestimation of its complexity or overestimation of its possibilities can lead to failure. While calculating, due consideration should be given to the factor of the inherent difficulties and uncertainties of functioning in the Indian system. Entering India's market place requires a well-designed plan backed by serious thought and careful research. For those who take the time and look to India as an opportunity for long-term growth, not short-term profit- the trip, will be well worth the effort.

Market potential:
India is the fifth largest economy in the world and has the third largest GDP in the entire continent of Asia. It is also the second largest among emerging nations. India is also one of the few markets in the world which offers high prospects for growth and earning potential in practically all areas of business. Yet, despite the practically unlimited possibilities in India for overseas businesses, the world's most populous democracy has, until fairly recently, failed to get the kind of enthusiastic attention generated by other emerging economies such as China.

Lack of enthusiasm among investors:
The reason being, after independence from Britain 50 years ago, India developed a highly protected, semi-socialist economy. Structural and bureaucratic impediments were vigorously fostered, along with a distrust of foreign business. Even as today the climate in India has seen a sea change, smashing barriers and actively seeking foreign investment, many companies still see it as a difficult market. India is rightfully quoted to be an incomparable country and is both frustrating and challenging at the same time. Foreign investors should be prepared to take India as it is with all of its difficulties, contradictions and challenges.

Developing a basic understanding or potential of the Indian market, envisaging and developing a Market Entry Strategy and implementing these strategies when actually entering the market are three basic steps to make a successful entry into India. The Indian middle class is large and growing; wages are low; any workers are well educated and speak English; investors are optimistic and local stocks are up; the country presses on with economic reforms. But there is still cause for worries.

Infrastructural hassles:
The rapid economic growth of the last few years has put heavy stress on India's infrastructural facilities. Problems include power demand shortfall, port traffic capacity mismatch, poor road conditions. Only half of the country's roads are surfaced. The projections of further expansion in key areas could snap the already strained lines of transportation unless massive programs of expansion and modernization are put in place.

Indian Bureaucracy:
Although the Indian government is well aware of the need for reform and is pushing ahead in this area, business still has to deal with an inefficient and sometimes still slow-moving bureaucracy.

Diverse Market:

The Indian market is widely diverse. The country has 17 official languages, 6 major religions, and ethnic diversity as wide as all of Europe. Thus, tastes and preferences differ greatly among sections of consumers. Therefore, it is advisable to develop a good understanding of the Indian market and overall economy before taking the plunge. Research firms in India can provide the information to determine how, when and where to enter the market. The general economic direction in India is toward liberalization and globalization. But the process is slow.

Before jumping into the market, it is necessary to discover whether government policies exist relating to the particular area of business and if there are political concerns which should be taken into account. There are also companies which can guide the foreign firm through the entry process from beginning to end performing the requisite research, assisting with configuration of the project, helping to develop Indian partners and financing, finding the land or ready premises, and pushing through the paperwork required.

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