The Challenges of Setting up a Business in India

India, a developing nation, with a population of over 1.3 billion people, and an embarrassment of natural resources, presents an alluring proposition for many businesses, but only a few global brands have been able to successfully penetrate and furthermore consolidate their business in the subcontinent.

Earlier many experts pointed to the stringent investment policies of the country as barriers-to-entry but those arguments too waned after the 1991 economic reforms, which liberalised laws to an extent. Currently the NDA government too has taken several steps in order to undermine India’s unfortunate reputation of being one of the most difficult nations to conduct business in. But the Indian population is still in the throes of rudimentary issues like illiteracy, poverty and of course, corruption. Throw into this India’s variety in terms of culture, language, economic and social statuses and you may have all the components of an entrepreneur’s nightmare.

Thus it’s difficult to gauge and analyse India on a macro level so much so that even experts struggle to define the Indian market in general terms. Also, the kinds and number of hurdles an organisation faces are largely dependent on the scale of its operations. If an organisation is looking to hire local manpower, it’s imperative to understand what and most importantly where to find the best talent.

India’s governance model has multiple layers, which is a necessity considering the sheer size of the country. It would be impossible to properly govern such a vast and diverse country, with a centralised governance structure, without inadvertent suffocation of its diversity. Therefore, there are many local and regional parties dotting India’s political landscape. Hence, apart from just Centre and State level elections, there are various lower level elections as well, which means various parties with various agendas come into power, which may or may not hamper your organisation’s prospects. If perchance there’s a conflict in your ideologies, you may need to grease a few palms. This brings us to perhaps the biggest issue in the country, an issue which makes investors wrinkle their noses in disgust; corruption.

It’s a well-documented fact that corruption has permeated through many levels of Indian society, and it’s appalling how it has become a norm. Procuring required permissions is an arduous process and it can take up to a whole year to get in place all the necessary permits for your business! This is the result of a self-inflicted two-pronged attack of the multi-layered governance system and the dilatory behaviour of the officials. Therefore it is a necessity to ‘incentivise’ the correct people.

Also, if yours is a global brand, it’s important to understand that your global marketing blueprint may go out of the window when it comes to India. Many global brands have failed to make the transition to the Indian landscape from ‘global’ to ‘glocal’. This is because India provides the gamut of social and cultural buying patterns, throughout the country. For instance, a product which is a success in North India may not do just as well in South India due to the cultural dichotomy. Therefore it’s imperative to conduct and continue comprehensive market research throughout the life of your product, especially in India, where people would switch brands at the blink of an eye if they find a more trustworthy/cheaper alternative. An example of a global brand failing to make a seamless transition into the Indian market would be Levi Strauss and Co.; which is now a popular brand, but initially, it was a failure. This was down to the fact that Levi’s presented itself as a ‘premium clothing’ brand and priced its products upwards of 1,100 INR. But the lion’s share of denim clothing is worn by people belonging to the age group of 16-25; who simply couldn’t fork out that kind of money for just jeans, especially when brands from the unorganized sector were selling similar products at a much pocket-friendly rate. Thus it is crucial for a global brand to take the assistance of local experts before foraying into the Indian landscape.

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Shivansh Sareen, from ISANO’s blogger team