Global economic players: opportunities and challenges in India

The business environment of India today

The Indian business environment provides a number of opportunities to foreign investors. These include cheap resources, skilled talent, a massive national market (population 1.2 billion) and a middle class exceeding 350 million with increasingly stronger purchasing power, and one of the youngest populations in the world.

India boasts one of the most diverse populations in the world. With a democratic political structure, a free press, and a judicial system, which despite being slow is known to be robust.

India today has shown the capacity to absorb the global financial crisis ripples, and is characterised by:

  • the enhanced contribution of the private sector
  • indigenous entrepreneurship
  • increased support to encourage both foreign direct investments and entry of multinational companies
  • contributions from non-resident Indians to India’s foreign reserves (through remittances sent from overseas)
  • increasing global leadership of sectors including information technology, software, business and knowledge process outsourcing, pharmaceuticals, research and development.

The nature of the Indian business environment is changing rapidly. As the Indian economy grows, businesses are facing critical issues such as growing competition and increasing pressures to attract and retain talent. Pressure for further reforms; developments in infrastructure; divestments in the public sector; delays in the approval of proposals of foreign direct investments; union policies and practices, can all have an impact on business.

India has thousands of miles of coastline and a diverse topography, bordered by unstable neighbouring countries and border controls, can be prone to illegal immigrants. Potential investors need to devise project plans and strategies that incorporate more than simple ‘business-oriented’ steps.

The key to success in India lies not only in the investor’s own business competencies, but on how best they understand and efficiently function in the business context, which is ingrained into the unique socio-cultural, political, legal and economic milieu of India.