Emerging Markets – Opportunities & Threats: India
by Sterling J. Scott, Marketing Communications Coordinator, MHI | @mhi_sterling
Opportunities
Narendra Modi, of the Hindu nationalist Bharatiya Janata Party, was recently announced as India’s new Prime Minister, resulting in increased investor confidence in the country. As an emerging market and one of he world’s largest consumer markets, India presents great investment opportunities as businesses try to tap into the country’s large population and growing middle class. Economic growth was 8.5% in 2009 and 10.3% in 2010 before dipping to 6.6% in 2011 and 4.7% in 2012.
Threats
Regulations are some of the greatest risks and barriers in regard to the Indian market. Some industries require joint ventures, which involves finding a trusted. local partner company as well as a negotiation process. Bribery and corruption are also issues facing firms in India even as the country tries to crack down on them. One of the greatest risks in India is the risk to intellectual property rights. The Indian government does not offer the same level of protection for patents as the United States and Europe, which is a deterrent for companies in many industries, especially the pharmaceutical industry.
Conclusion
India presents a great opportunity with its large population and growing economy; however, it depends on the industry in which one wants to invest. Government regulation often requires the establishment of a joint venture partnership and can also override and remove patents, allowing what would be considered elsewhere as an intellectual property violation. The new Prime Minister, Modi, is viewed as being very business-friendly and progressive in regard to economic development. Investors are displaying confidence in the Indian market, which is expected to experience greater growth.
More information on supply chain trends, recommended strategy, and innovations that drive supply chains are available in the 2014 MHI Annual Industry Report which can be downloaded at www.mhi.org.
