Generalizes on the best strategy to enter the market, e.g., visiting the country; importance of relationships to finding a good partner; use of agents.
Last Published: 7/25/2017

Strategic planning, due diligence, consistent follow-up, and perhaps most importantly, patience and commitment are all prerequisites to successful business in India. This market necessitates multiple marketing efforts that address differing regional opportunities, standards, languages, cultural differences, and levels of economic development. Gaining access to India's markets requires careful analysis of consumer preferences, existing sales channels, and changes in distribution and marketing practices, all of which are continually evolving.

Finding Partners and Agents:

New-to-market businesses must address issues of sales channels, distribution and marketing practices, pricing and labeling, and protection of intellectual property. These issues are best addressed through and with an Indian partner or agent. Relationships and personal meetings with potential agents are extremely important. Due diligence is strongly recommended to ensure that partners are credible and reliable.

Market Entry Options

There are many foreign companies eyeing opportunities in India. For entry into the Indian market, it is essential to identify the target market and find good partners who know the local market well and are completely acquainted with procedural issues. Foreign investors should also explore various market options in India that could include forming subsidiary relationships or joint ventures with an India-based company.

Some of the important points for market entry in India are: the ability to understand the diverse market and strategies towards specific regions and income groups (target segment); crafting offerings according to the target group in order to gain early acceptance; integration of the informal sector into the core business model by gaining access to relevant networks; consistency in approaching the market; obtaining mandatory licenses and approvals; understanding the import procedures is one of the key issues for first time export to India.  Proper documentation and understanding of the Indian import procedure will ensure smooth entry of products into the Indian market.
 
Geographic Diversity

According to International Monetary Fund World Economic Outlook (October-2016), GDP (nominal) of India in 2016 at current prices is $2,251 billion. India contributes 2.99% of total world's GDP in exchange rate basis. India shares 17.5 percent of the total world population and 2.4% of the world surface area. India is now 7th largest economy of the world. The growth rate of the industrial sector is estimated to be down to 5.2% for the fiscal year ending March 2017 from 7.4% last fiscal year ending March 2016. This is primarily due to the demonetization drive in November 2016.  India has also firmly established itself as a lucrative foreign investment destination.  Foreign Direct Investment (FDI) inflows into India in 2016 calendar year jumped 18% to a record $46.4 billion at a time when global FDI inflows fell.  This is higher than the $31 billion inflow in 2015.  Data from the Department of Industrial Policy and Promotion (DIPP) showed FDI inflows in 2016 were strongest in October with $6.2 billion inflows followed by $5.1 billion in September 2016. 

As stated, U.S. companies, particularly small and medium-sized enterprises, should consider approaching India’s markets on a regional level. Good localized information is a key to success in such a large and diverse country. The U.S. Commercial Service offices in New Delhi, Mumbai, Chennai, Ahmedabad, Bengaluru, Hyderabad, and Kolkata provide valuable local information and advice and are well connected with local business and economic leaders. Multiple agents are often required to serve the various geographic markets in the country.

The country can be broadly divided into four economic regions:

North India

North India, with a population of nearly 370 million, is home to 30% of India’s total population and comprises the second largest consular district in the world.  The region includes the states of Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh and Uttarakhand, the Union Territory (UT) of Chandigarh (which is the capital of both Punjab and Haryana states), as well as Delhi/National Capital Region (NCR). Northern India’s per capita incomes vary greatly, with several states including Delhi, Haryana, and Punjab well above India’s average per capita income of $1539, and others like Jammu & Kashmir and Uttar Pradesh significantly below.  Outside of the National Capital Region, which includes the business centers of Gurgaon and Noida,   North India, in general, is not as economically and commercially developed as Southern or Western India, although certain sectors including agribusiness, renewable energy (especially solar), machine tools, automotive and medical/consumer goods are well represented.  Education, travel & tourism, and trade and investment promotion are particularly strong opportunities given North India’s significant population and wealth.  Punjab, in particular, has very strong ties to the United States, with an estimated 350,000 Punjabis living in the U.S.  Punjab also has a strong consumer culture, and is one of India’s top markets for luxury goods.

One of the Modi administration’s top priorities is Smart Cities.  The United States is supporting Smart City engagement in three Indian cities, with two of them – Ajmer, Rajasthan and Allahabad, Uttar Pradesh – falling in North India.  With significant infrastructure needs across the regions, this activity will focus primarily on integrated urban development. Another economic growth priority is to increase states’ competitiveness and improve the overall business climate.  Since September 2015, India’s Department of Industrial Policy and Promotion (DIPP), in conjunction with the World Bank, has done an annual Ease of Doing Business (EODB) assessment and ranking of India’s 36 states and UTs under the Government of India’s Business Reform Action Plan.  For 2016, Haryana was the highest ranked North Indian state at #6, followed by Rajasthan at #8 and Uttarakhand at #9.  In the middle of the pack are Punjab, Uttar Pradesh, Himachal Pradesh, and Delhi, at #12, 14, 17, and 19 respectively.  Jammu & Kashmir ranked #32, followed by Chandigarh at #33. 

In February/March 2017, the Bharatiya Janata Party (BJP), Prime Minister Modi’s party, won legislative assembly elections by an overwhelming majority.  Uttar Pradesh (UP) is the largest state in India with a population exceeding 200 million.  The BJP’s victory in UP, along with simultaneous victories in three other states, is testament to the strength of the BJP and led to a majority for the party in Parliament’s Rajya Sabha (Upper House) and Lok Sabha (Lower House), giving Prime Minister Modi a mandate to legislate at the national level.

The U.S. Commercial Service (CS) in New Delhi oversees North India.

Western India

The Western India Region comprises five states: Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, and Goa. The region is highly industrialized, with a large urban population, a land area of 951,488 square kilometers, and a regional population exceeding 279 million. The region is anchored by Mumbai, the financial, business and entertainment capital of the country.  Other major cities include:  Pune, Nagpur, and Aurangabad in Maharashtra; Ahmedabad, Surat, Vadodara, and Rajkot in Gujarat; Indore, Bhopal, and Gwalior in Madhya Pradesh; Panaji in Goa; and Raipur in Chhattisgarh.

The Western Region is an economic powerhouse in a wide range of sectors: conventional and renewable energy, chemical and allied products, electrical and non-electrical machinery, textiles, petroleum and allied products, wine, jewelry, pharmaceuticals, engineering goods, machine tools, steel and iron castings, and plastic wares.  The Western Region leads in the production of petrochemicals, textiles, diamonds, and pharmaceutical products and is home to some of India’s – and the worlds – best known corporations, such as Reliance, Tata, Aditya Birla Group, Godrej, and Mahindra & Mahindra.  Most major American companies are head quartered in Mumbai. 

In addition to this manufacturing might, the Western Region is recognized as the hub of the growing services sector in India. Several large, global banks and financial institutions are located in Mumbai, including the Reserve Bank of India (central bank), the two largest life and general insurance companies (LIC & GIC), and the two largest Stock Exchanges (BSE & NSE.) 
CS offices in Mumbai and Ahmedabad oversee Western India.

South India

The South India commercial district covers six states: Tamil Nadu, Karnataka, Kerala, Telangana, Andhra Pradesh, and Odisha; and the Union Territories of Puducherry (Pondicherry), Lakshadweep Islands, and Andaman & Nicobar Islands. The region has a collective population of 290 million and an area covering 791,457 square kilometers. Per India’s DIPP and the World Bank’s Ease of Doing Business assessment and rankings of India states, Andhra Pradesh and Telangana were the top ranked states (tied for #1), followed by Odisha at #11, Karnataka at #13,  Tamil Nadu at #18 and Kerala  at #20.

Tamil Nadu has four major and 44 minor ports, and serves as an important gateway to Southeast Asia.  The state is an important manufacturing center and the capital Chennai is home to many Indian companies, mostly engaged in the automotive, healthcare, information technology (IT) and financial services sectors. The state is considered as an educational hub for India as well.  In addition to the United States, countries such as Japan, Korea, Germany, and France have invested largely in Tamil Nadu.  Investments are mostly in automotive, consumer electronics, and heavy machinery sectors from companies such as Ford, Caterpillar, Dell, Hyundai, Saint Gobain, Renault, Nissan, BMW, Visteon, Toshiba, Hewlett Packard, and Mitsubishi.  The other two major cities in Tamil Nadu are Coimbatore and Madurai.  A large number of textile mills and engineering units are located in these two cities. 

Bengaluru (Bangalore), the capital of Karnataka, is the hi-tech hub of India and one of the principal commercial and industrial centers in South India.  Home to numerous high-tech companies, including domestic giants like Wipro and Infosys Technologies, Bengaluru is popularly known as the 'Silicon Valley' of India.  The clustering of aerospace, defense, machine tools, electronics-related industries, and biotech companies in Bengaluru has also made it the aerospace and bio-tech center of the country. The city has a booming retail market and is the first destination of many global consumer brands, especially luxury labels.  Increasingly, the city is also seeing high growth in the healthcare, textiles/apparel, automotive, and construction industries. The other major cities of Karnataka are Mangaluru and Mysore.

Major business sectors in Kerala include construction, shipbuilding, transportation, shipping, seafood and spices, chemical industries, IT, tourism, health services, and banking. Kochi (Cochin) is widely referred to as the commercial capital of Kerala.  The availability of electricity, fresh water, a long coastline, backwaters, good banking facilities, presence of a major port, container trans-shipment terminal, harbor terminal, and an international air terminal are some of the factors that have accelerated the industrial growth in the city and its adjoining districts.  In recent years the city has witnessed heavy investment, thus making it one of the fastest-growing tier 2 cities in India. Thiruvananthapuram (Trivandrum) is the state capital.

Telangana is India’s newest state, created in 2014 after Parliament voted to bifurcate the state of Andhra Pradesh.  Hyderabad, its capital, is known as a center for IT and other industries such as biotechnology, pharmaceuticals, aerospace, and defense manufacturing. 

After the bifurcation, the residual coastal area and inland region retained the state name Andhra Pradesh. The capital of Andhra Pradesh, Amaravati, is under construction. In the interim, government functions take place in Amaravati’s neighboring city, Vijayawada, an hour flight from Hyderabad. The coastal region is historically known as “The Rice Bowl of India,” and contains India’s second largest source of minerals.  The state’s largest industrial hub is around Visakhapatnam (Vizag). The city’s natural deep water ports, proximity between Chennai and Kolkata, and access to highways and rail networks have allowed heavy industries in the areas of petroleum, steel and fertilizers to flourish.

Odisha (Orissa) was once the poorest state in India but rapid economic growth during the past decade has greatly reduced poverty. Still, there are many economically depressed regions in the state. Driven by political stability and investments in the mining, power, steel and port sectors, major industries related to steel, aluminum, coal, and other minerals are present in Odisha. Recent developments in the IT industry have led to the development of IT Parks. Bhubaneswar is the capital.
CS South India has offices in Chennai, Bengaluru, and Hyderabad.  CS Chennai in collaboration with the U.S. Embassy in Colombo also oversees Sri Lanka.

Eastern India

The states covered under the Eastern India commercial district include West Bengal, Bihar, Jharkhand, Sikkim, Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Tripura, and Manipur. The total land area of Eastern India is 524,866.27 square kilometers with a population of approximately 270 million.

Mining, metals and minerals, agriculture and agro based industries, service sector, oil & gas, petrochemical, paper, power generation are the major sectors in this region.  Among the states of Eastern India, West Bengal and Jharkhand are the most industrialized.  West Bengal is the fifth largest economy in the country and the main economic engine of Eastern India.  It has fertile land, good reserves of coal, iron ore, limestone, and other minerals. It is India's largest producer of rice and jute fiber and second largest producer of tea after Assam.  Key industries include engineering, chemicals and petrochemicals, coal, iron and steel, tea processing, jute products, and finished leather goods. IT, construction and real estate, hospitality, healthcare, food processing are growing sectors.  Jharkhand is the largest producer of coal, copper and mica in the country and also has considerable iron ore, bauxite, and uranium reserves. Steel making, automobile manufacturing and ancillary industries, and other engineering units are some of the leading industrial activities of the state. 

Major festivals of this region include Durga Puja, Diwali, Bihu, Hornbill festival. Chhau dance is performed during spring festival of Chaitra Parva. The region has good tourism potential with attractive destinations located on the sea coast, in the mountains, national parks and heritage places.  The region is the only place in the world to have one-horned rhinos and also features a variety of flora and fauna.

What makes this area unique from a business perspective is that it is a developing region with ample natural resources and well trained manpower to serve industrial needs. The region borders Bangladesh, Nepal, Bhutan, Burma, and China.
CS Kolkata covers the Eastern India region and also oversees the partnership post in Bangladesh.
American Business Corners (ABCs)

To expand the reach of the U.S. Commercial Service in India, we have built partnerships with key Indian chambers of commerce in 13 Tier 2 cities across India, by establishing American Business Corners (ABCs). The ABC program is a major initiative in support of advancing business and trade cooperation between U.S. and Indian companies and aims to increase U.S. commercial engagement in tier 2 cities where the U.S. government does not have a physical presence.

ABCs provide a focused point of engagement for U.S. trade promotion in India’s up and coming tier 2 cities and offer opportunities to Indian importers in these cities to learn about our services and programs and make connecting with American businesses as easy as A.B.C. 

These centers provide resources to assist Indian companies with doing business with the United States and inform them of upcoming business opportunities.  For U.S. companies, the ABCs enable structured outreach to untapped markets with potential outside of the bigger metropolitan cities.

Currently, ABCs have been launched in the cities of Madurai, Coimbatore, Salem, Vizag, Kochi, Mangaluru, Guwahati, Patna, Ranchi, Bhubaneswar, Surat, Pune and Jaipur. For more information on how the American Business Corners can help your firm, please go online.

Border Countries:
India shares borders to the northwest with Pakistan, to the north with China, Nepal, and Bhutan, and to the east with Bangladesh and Myanmar. To the west lies the Arabian Sea, to the east the Bay of Bengal, and to the south the Indian Ocean. Sri Lanka lies off the southeast coast, and the Maldives off the southwest coast.
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



India Trade Development and Promotion