Business Opportunities for European Companies In Indian Market
As per the reports presented in the 5th India-Europe 29 Business Forum, India and Europe can exploit massive business opportunities across several industrial sectors and gain unmatched ROI. Countries in Central Europe and India can coordinate their efforts in segments like IT & IT-enabled services, artificial intelligence, urban infrastructure, clean technology, and pharmaceuticals. Such business collaborations and business opportunities in India can pave the way for USD 10 trillion partnerships and boost economic growth across the world. In order to increase investment of European countries and drive robust industrial growth, the Indian Government is also extending several incentives and deductions in corporate tax. Furthermore, the massive and dynamic market of 1.3 billion people also acts as a competitive advantage for European countries investing in India.
Let’s take an overview of why European countries are optimistic about business opportunities in India
The EU Is One of India’s Largest Sources Of FDI And Trade
According to recent data, the EU continues to be one of the largest Foreign Direct Investment (FDI) sources for India. The FDI inflows from the EU to India were valued at USD 88.32 billion from Apr 2000 to March 2021. In this same period, the FDI flow from EFTA and other European Countries is valued at USD 35.89 billion.
Owing to this massive, impressive record of FDI from European countries, the Indian Government has engaged in various negotiations to catapult the business scopes.
Some ongoing trade agreements and negotiations include:
- EU and India have agreed to resume talks on a Comprehensive and Balanced Free Trade Agreement.
- A Trade and Economic Partnership Agreement has begun between India and EFTA to decide upon the scope of foreign investments in the future.
India and the UK have collaboratively signed a ‘Declaration’ to launch an Enhanced Trade Partnership [ETP] on 4 May 2021. The sole intent is to negotiate and implement a comprehensive Free Trade Agreement along with a consideration of Interim Trade Agreement to boost early gains According to the reports of the Indian Brand Equity Foundation, EU companies comprised 50% of the total MNCs in India. This is because investment in India yields high returns and most companies see India as key to their long-term global growth and competitive advantage. In fact, currently, the EU is India’s 3rd largest trading partner that accounted for about USD 71 billion worth of trade in goods and around USD 37 billion trade in services as of the financial year 2020.
The main driving force behind such investments in India are:
- Massive Domestic Opportunity– The rising global middle class in India creates a massive opportunity for European MNCs. Domestic consumption is estimated to treble to USD 4 trillion by the year 2025. This becomes a significant metric when estimated in comparison to the stagnation of middle-class growth in leading European countries.
- Supportive Government Policies For MNCs– Slashing corporate taxes and allowing 100% FDI via an automatic route across various industrial sectors have also proved beneficial for the European companies investing in India. Also, the Indian Government is creating Special economic zones for MNCs. Such initiatives are increasing the ease of doing business in the country, backed by the help of business consultants in India.
India Provides Opportunities For Competitive Advantage
India’s place in the global market is identified based on the multifaceted competitive advantages. The massive human resource pool, interconnectedness, and low-cost production costs collectively make India an attractive investment market. Ideal market entry strategy consulting firms can play a massive role in this regard.
- Low-Cost Sourcing Of Products And Services– Availability of raw materials and comprehensive support from the Government with various incentive schemes like PLI (Product Linked Incentive), reduced logistics cost, GST, will boost domestic production and exports in India.
- Exceptional Quality Intellectual Skills– India has a large and rapidly growing workforce. Furthermore, the human resource pool in India is available at an extremely low cost. Also, India boasts a vast network of management and technical institutions that are of the highest international standards and can provide all-inclusive management support to ensure higher yields.
- Advantageous Location– India is well connected with transportation infrastructure and export hubs like seaports, airports, highways, etc. Also, the strategic location of the country in the context of the 3rd world market in the rapidly growing south-eastern Asian countries provides India a competitive advantage over other countries to attract foreign investments.
Many European Companies See India As Key To Their Long-Term Global Growth And Competitive Advantage
European companies investing in the Indian market receive higher yields. In fact, several European companies are already trying to capture the local market opportunities that are created by the growing domestic market, increasing purchasing power of the middle class and consumerism. Also, sourcing from India proves profitable due to the low cost and higher productivity.
To boost trade, both the Indian and EU leaders agreed to resume the negotiations for a “balanced, ambitious, comprehensive and mutually beneficial” trade agreement in 2021. The leaders of both countries are also planning to start negotiations on investment protection agreements and geographical indications. This will ensure long-term growth and provide unmatched competitive advantages for European companies.
Along with comprehensive Government support, European companies can also avail the assistance of reliable consultancy firms to capture new market opportunities. Top Ideal market entry strategy consulting firms and business consultant India like Tecnova offers all-inclusive support to new European investors like-
- Market Research
- Incubation Support
- Completing Regulatory Compliances
- Partner Search
- Manufacturing Plant Setup
- HR Support and more.
These consultancy firms will also customize India-specific market entry strategies with strategic business consultant India to ensure sustainability.
Reference
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