If one is following current affairs or has kept oneself abreast with the developments happening in our country from an economic standpoint, then one would also know that there is a general uptick in the number of businesses from around the world looking to enter Indian markets. And there are several reasons that have resulted in this – from strong economic reforms enacted by the present Government of India under the stewardship of Shri Narendra Modi to the extensive marketing of the opportunity known as ‘India’.
But all of this is not just well thought through and executed marketing campaigns. The fact is that the economic ecosystem and demography of today’s India present an opportunity for all those who are enterprising in nature to be a part of a growth story that is in the writing.
But we have not gotten here simply as a matter of evolution. There has been a conscious effort to elevate the current socio-economic standards in the country and as an outcome Indian markets have become a potent playground.
Doing business in India has gotten easier
Anyone who has lived in India – or specifically done business in India – since the past few decades will know of the change that has been consciously brought about by successive Governments to make India a business-friendly destination year after year. I would think that since the advent of liberalisation in some sectors starting from the 1990s, there has been a ideological shift in how Indian markets were promoted. But it is the recent-most efforts particularly – those over the past 3-4 years – that have been the most distinctive of all.
For example, let us look at the entire ‘Make in India’ campaign that has been widely promoted by the present Government. Under the stewardship of Indian’s Prime Minister, Shri Narendra Modi, there has been extensive global coverage and talk of Indian markets opening up its doors for businesses to set themselves up and grow, both locally as well as from around the world.
And to a large extent I feel the Government has worked to deliver on what was being sold. From major policy reforms and taxation reforms, to implementing procedural changes through technology – a lot has been undertaken by the Government of India. The consequent rise that India made in the World Bank index of Ease of Doing Business from rank 137 in 2016 to rank 100 in 2017 was simply an inevitability. This indicator in a larger sense is an apt reflection of the evident transition that has happened not only in the ideology to welcome new businesses into the market but also the concrete steps that are being taken with respect to policies and regulations.
A digital transformation and path-breaking tax reforms
One of the major hurdles of doing business in India was the bureaucratic bottlenecks owners and promoters faced in their pursuit to setup their businesses in India. Compliances and permissions were rich sources for corruption at several levels – this aside from the arduousness of the process and the time needed to get things done. But when you bring technology into the game, things change. And so with the digitisation of many Government departments and processes, the need of human interaction was done away with. This brought in a new era of how work would be done at the Authorities’ levels in India. From quicker and more efficient ways to apply and to transparent execution, the advent of digitisation has been one of the biggest underlying transformations that has happened. The benefits of this can be availed of at most stages when one looks to setup a business in India.
Another key were tax reforms – specifically the implementation of the Goods and Services Tax (GST) – that have been implemented to enable businesses to streamline and optimize financial strategies for increased efficiency. The tax reform has resulted in many businesses from unorganised sectors to come under the regulatory fold thereby increasing the overall productivity of the economic ecosystem. GST impacted the various sectors that came under its purview differently; therefore, we will subsequently publish a series of posts that will be industry-specific so that you can learn of what concerns you the most by understanding the implications of GST on your line of business.
These strong tax reforms coupled with the digitisation of processes increased efficiency in taxation and compliance. For example, with GST-filing and now e-Assessment being digital processes, productivity as a consequence of these has started on a strong growth curve.
The policies of change
But simply saying there is potential in Indian markets and that it is a good opportunity, is not enough. Access to all this potential is needed. And the policy-makers in India have gotten to the task excellently. The introduction of the Insolvency and Bankruptcy Code (IBC) in 2016 and change in the Foreign Direct Investment (FDI) policy have been such distinctive steps taken in the right direction. Through IBC it became easier for financially distressed businesses to find a way out and in parallel the opening up of 25 sectors to 100% FDI resulted in the possibility for global investors to enter India markets. With a large number of NPAs up for the taking, the ‘potential’ everyone talks about now got a number and tangibility. This too can be seen reflected in a global index that continued to rank India at first place as a Greenfield FDI destination. To know more about the sectors open for FDI and recent developments, a very good resource is the Invest India website itself.
An India for the Future
But the elevation of India as a market is not related only to the policy changes and digitisation. There has been continual increment for some years now on the development of Infrastructure in the country – and with good reason as well, because as an economy and society the country will never truly enjoy betterment unless there is sound infrastructure to back the progress and ensure sustainability.
With this in mind, there has been a tremendous push on infrastructure projects. The ambitions of the Government have translated into historic projects from rail corridors and roadways, to smart-cities and transport hubs. These developments by themselves present innumerable opportunities for businesses to setup at any of the different nodes of the ecosystems that will create these projects. Coupled with the policy shifts on FDI and the new processes for company formations, compliances, and regulatory guidelines, these opportunities not only become more lucrative but also much more achievable.
And this growing India we speak off has not disregarded a critical global need-of-the-hour, Renewable Energy. From projects in the space of infrastructure supporting renewable energy to creating policies supportive of businesses working in this sector, the Indian market is growing increasingly favourable for such companies.
The human potential
Amidst all this talk of the potential in Indian markets and business opportunities, one aspect that does not always get its due importance is the rich human capital available. Basis demography, India has one of the largest working populations in the world. From literate professionals to skilled labour, this pool of resource can be a powerful tool for businesses to leverage in their growth at execution levels. Particularly in the manufacturing and engineering sectors, scaling operations becomes much easier – especially with costs associated to employing labour in India is much lower than most parts of the world.
Another side of the large working populace is the consumption market that they inevitably create. With household incomes increasing and accessibility easing up, Indian consumers are wanting more and better – which has become a great area for businesses to engage in a healthy market competition and positively impacts the entire economic ecosystem.
Play it to win it
Fueled by the Make in India initiative by the Government of India and the proactive work being done by the Invest India team, there is a lot of information and news abundantly available – especially on the internet – for all those interested in establishing their business presence in India. But setting up a business also involves detailed consideration and sufficient knowledge of all types of entities that can be formed, tax compliances, funding mechanisms, and so on. Therefore, it is important to understand – at least on a holistic level – all the aspects involved in doing business in India
Although it has gotten much easier to do business in India, there are frameworks and guidelines to understand so as to go about doing the rights things in ways that not only are the most appropriate but also can be the most profitable. Because starting on a strong footing makes all the difference.
To make this possible and to ease the process for businesses to setup in India while guiding them through every step of the journey right up till execution, has been a continuous endeavor for us at Coinmen. And if you would like to discuss the potential opportunities and possibilities for your business to enter Indian markets, please feel free to connect with us. We will be happy to help!
Written by Shõan Shinde
Shõan Shinde is the Brand and Marketing Manager at Coinmen Consultants LLP