Country Analysis (India)

Executive summary India is the world’s largest democracy and seventh largest country geographically, it stands tall in the global eyes to be a place for international businesses and investments. Along with comparisons with China and the United States, this paper aims to provide an insight into India’s business landscape to assist managers who may be considering an entry strategy into this country. A descriptive analysis of various sources of data has been consulted to provide. India’s country analysis in regards to its general business and economic factor, cultures, legal and demography. This analysis includes the PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) SOWT analysis of India, Hofstede model analysis and trade and investment analysis subsequently, and to gain a better appreciation for specific business issues and future developments. Also we have made some recommendation for a RMG company who want to run or set up a business in India. About INDIA India officially the Republic of India is a country in South Asia. It is the seventh-largest country by area, the second-most populous country with over 1.3 billion people, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the south-west, and the Bay of Bengal on the south-east, it shares land borders with Pakistan to the west China, Nepal, and Bhutan to the north-east; and Myanmar and Bangladesh to the east. India got independence from British rule on August 15; 1947. India has 29 states and 7 union territories .The capital city of India is New Delhi. Mumbai in Maharashtra is famous as the financial capital of India. Currently, the Indian economy is the world's seventh-largest by nominal GDP and third-largest by purchasing power parity (PPP). Following market-based economic reforms in 1991, India became one of the fastest-growing major economies; it is considered a newly industrialized country. However, it continues to face the challenges of poverty, corruption, malnutrition, inadequate public healthcare, and terrorism. A nuclear weapons state and a regional power, it has the third-largest standing army in the world and ranks sixth in military expenditure among nations. India is a federal republic governed under a parliamentary system consisting of 29 states and 7 union territories. India is a pluralistic, multilingual, and a multi-ethnic society. It is also home to a diversity of wildlife in a variety of protected habitats.India has rich cultural heritage of more than 3000 years. The National Anthem of India is “Jana Gana Mana” and the National song is “Vande Mataram”. The mojor festivals in India are Holi, Diwali, Durga Puja, Saraswati Puja, Mahavir Jayanti, Eid, Muharram, Christmas, The major religions practiced in India are Hinduism, Islam, Sikhism, Christianity, Jainism, etc. India is a secular country and no religion is considered superior over the other .The most spoken language in India is Hindi. https://en.wikipedia.org/wiki/India  Indian Culture and values India is a country of rich culture where people of more than one religious cultures lives together. It is the country of oldest civilizations in the world. India is a big country with high population where people of various religions with unique culture live together. Some of the major religions of country are Hinduism, Christianity, Islam, Buddhism, Jainism, Shikhism, and Zoroastrianism. India is a country where various languages are spoken in different parts of the country. People here are generally used of varieties in costume, social beliefs, and customs and food-habits .People beliefs and follow various customs and traditions according to their own religions. People of India celebrate festivals according to their own rituals, keep fast, take bath in holy water of Gange, worship and pray to God, sing ritual songs, dance, eat delicious dinner, wear colorful dresses and other lots of activities. They also celebrate some National festivals by getting together such as Republic Day, Independence Day, Gandhi Jayanti, including various social events. People of different religions celebrate their festivals in various parts of the country with great zeal and enthusiasm without interfering each other. Some events like birthday of Gautama Buddha (Buddha Purnima), Lord Mahavir birthday (Mahavir Jayanti), Guru Nanak Jayanti (Guruparv), etc is celebrated conjointly by people of many religions. India is a famous country for its various cultural dances like classical (Bharat Natyam, Kathak, Kathakli, Kuchipudi) and folk according to the regions. Punjabis enjoy dancing Bhangra, Gugaratis enjoy doing Garba, Rajasthanis enjoy Ghumar, and Assamese enjoy Bihu whereas Maharashtrian enjoy Lavon. The vital components of the Indian culture are good manners, etiquette, civilized communication, rituals, beliefs, values, etc. Even after the life styles of everyone has been modernized, Indian people have not changed their traditions and values. The property of togetherness among people of various cultures and traditions has made India, a unique country. People here live peacefully in India by following their own culture and traditions. https://en.wikipedia.org/wiki/Culture_of_India , http://www.indianmirror.com/culture/cul1.html Hofstede analysis for India The Geert Hofstede analysis for India shows a large power distance society and all other measures are relatively moderate. This would be indicative of the fact that India is in the midst of change. The traditional caste systems has been outlawed, however the large power distance score indicates that the attitudes still remain. Power Distance India has Power Distance (PDI) as the highest Hofstede Dimension for the culture, with a ranking of 77 compared to a world average of 56.5. This Power Distance score for India indicates a high level of inequality of power and wealth within the society. This condition is not necessarily subverted upon the population, but rather accepted by the population as a cultural norm Long Term Orientation. India's Long Term Orientation (LTO) Dimension rank is 61, with the world average at 48. A higher LTO score can be indicative of a culture that is perseverant and parsimonious Masculinity India has Masculinity as the third highest ranking Hofstede Dimension at 56, with the world average just slightly lower at 51. The higher the country ranks in this Dimension, the greater the gap between values of men and women. It may also generate a more competitive and assertive female population, although still less than the male population. Uncertainty Avoidance India's lowest ranking Dimension is Uncertainty Avoidance (UAI) at 40, compared to the world average of 65. On the lower end of this ranking, the culture may be more open to unstructured ideas and situations. The population may have fewer rules and regulations with which to attempt control of every unknown and unexpected event or situation, as is the case in high Uncertainty Avoidance countries. India is predominantly Hindu, with 81% of the population practicing that religion. Next is Muslim at 12%, Christian at 2%, and all others within the last 5% of the society. It has been found that in most cultures, there is a correlation between a country's religion and the Hofstede Dimension rankings it has. There is only one country with over 50% of its population practicing the Hindu religion – India. The Hofstede Dimension that correlates most with the Hindu religion is Power Distance (PDI), the same as Atheists in China and Muslims. All three have a high level of Power Distance as the highest correlating cultural Dimension with their religions https://geert-hofstede.com/india.html Graph: Hofstede analysis PESTLE Analysis Political Factors Being one of the largest democracies in the world, India runs on a federal form of government. The political environment is greatly influenced by factors such as government’s policies, politician’s interests, and the ideologies of several political parties. As a result, the business environment in India is affected by multivariate political factors. The taxation system is well-developed and several taxes, such as income tax, services tax and sales tax are imposed by the Union Government. Other taxes, such as control and utilities, are taken care of by local bodies. Privatization is also influenced and the government encourages free business through a variety of programs. Economic Factors The economy of India has been significantly stable, since the introduction of the industrial reform policies in 1991. As per the policy, reductions in industrial licensing, liberalization of foreign capital, formation of FIBP and so on, has resulted in a constant improvement of India’s economic environment. The country registered a GDP of $5.07 trillion in 2013 following a further improved GDP growth rate of 5% in 2014 as compared to 4.35% in 2013. Social Factors The social factors refer to any changes in trends which would impact a business environment. For instance, the rise in India’s ageing population is resulting in a considerable rise in pension costs and increase in the employment of older workers. India has a population of more than 1.2 billion people with about 70% between the ages of 15 and 65. Therefore, there are structures with percentages according to age. These structures contain varying flexibility, in education, work attitudes, income distribution, and so on. Technological Factors Technology significantly influences product development and also introduces fresh cost-cutting processes. India is served with both 3G and 4G technology which has facilitated several of their technological projects. Furthermore, the country also possesses one of the strongest IT sectors in the world, promoting constant IT development, software upgrades and other technological advancements. Recently, India has also attempted to launch their satellites into space. Environmental Factor: India’s current environmental protection policies are wide-ranging and adequate to meet the intended goals. However, there has been little improvement, and arguably a decline in some areas, due to slow implementation and lack of enforcement. The primary challenge centers on trying to balance sustained economic growth and environmental impact. Depleting water resources as the population continues to grow continues to be a primary concern. Also, India’s dependence on coal for thermal energy is causing widespread problems to include air pollution and the corrosive effects of acid rain. Many of India’s major cities contain particulate levels considered unsafe by the World Health Organization (WHO). It is crucial for India to skillfully manage the tradeoffs between expansion and the environment as they move forward. SWOT Analysis: SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a particular country this analysis help to specifying and identifying the internal and external factors that could be both favorable and unfavorable. A SWOT analysis helps evaluate strategic advantages. India has a number of positives to operate successfully in the RMG sector. India being one of the world's most populous countries naturally has a large pool of human resources. Government's continued investment in higher education since independence in terms of establishment of educational institutes as well as subsidization of education have produced a pool of knowledge-workers capable of performing skilled and specialized tasks. In addition, due to the rupee dollar exchange rate, Indian labor turned out to be considerably less expensive for the US business enterprises. Traditionally, English language skill is also high amongst the Indian population compared to other Asian countries. Given India's value proposition, multinational organizations came up to establish captive units in India or outsource processes to third party service providers. Here is and SWOT (Strength, Weakness, Opportunities, Threats) Analysis of India Economy not to become a Super power but at least to become a Developed Country. Strengths of India. Large Industrial exists in both Public and Private Sectors. Cost of Skilled Human Resources is low. Increasing investment in real assets (Capacity Expanding), Inflow of FDI (Foreign Direct Investment) across Industrial sector. Adequate and good quality infrastructure cost. Weaknesses of India Existence of large Industrial sickness. Outdated labor laws, and presence of too many political labor and trade union. Nascent Regulatory systems to check misuse of market power by firms. Dependency of Subsidies(SSI – Small scale industries) Huge demand for Domestic Industrial goods. Opportunities in India. Growing Competition of Indian industry due to focus on efficient and quality. Vast export marked to explore. Growing recognition of “Made in India” brand in global market Major growth through outscoring opportunities Presence of Deming award winning firms (Focus on quality) Growing number of overseas investment and acquisition by Indian Firms. Threats to India Heavy competition in manufacturing field from china. Power crises and the virtuous growth cycling manufacturing sector. Large informal sector, Poor working condition and low wages. Inclusion of social (Labor) issues in trade dialogues could happens exports (e.g., Child labor) High corruption and inadequate environmental safety norms could affect sustainability. Trade and investment Analysis of India: It’s a vast country, occupying a major portion of the south Asian sub-continent and made up of 29 different states. The market varies widely across its many different regions and states. Now in India it rising personal incomes creating a new middle class consumer market. The Strengths of the Indian market including fast growing economy with one of the world’s largest youth populations also expanding emerging cities with more than 50 cities now over a million people availability of skilled, low cost workforce good network of banks, financial institutions and an organized capital market gateway to south east Asian markets When an RMG company want to do business in India the company might be faced some difficulties and challenges also. India is a price competitive market. Government contracts are awarded to the lowest bidder who meets the technical specifications. Consumers often prefer lower prices to quality or durability. Some Challenges doing business in India including: barriers to trade and investment in some sectors resulting from regulatory constraints, local sourcing requirements and import tariffs protecting your Intellectual Property (IP) risk of bureaucratic delays land acquisition can be difficult risk of bribery and corruption access to the right skills in the local workforce Weather extremes with extremely hot weather in summer and wet weather in the monsoon season can affect business. India has carried out slow but steady programs of economic openness since the early 1990s. According to International Monetary Fund (IMF) estimates that in 2014 after a growth of 7.3% that India’s Gross Domestic Product (GDP) grew by about 7.3% in 2015. It forecasts growth of about 7.5% for 2016. India has removed the majority of its trade barriers to improve the business environment. This includes: reducing tariffs to an average of 13% in 2014/5 from an average of 71% in 1993 removal of quantitative restrictions on imports in 2001, opening up the economy to foreign businesses and allowing overseas investment in multiple sectors https://www.gov.uk/government/publications/exporting-to-india/exporting-to-india Recommendation: If a Bangladeshi RMG company wants to export in India we have some recommendation for the company with the basis of country analysis including PESTLE, SOWT, and Indian trade and Investment risk analysis and labor market analysis. Enhancing workforce: workers of the RMG Company must be trained in order to get better result. Economic and political stability : India is an economically and politically stable country, now a day India is granted a boost economic growing country all over the world and also the political situation is friendly that might be brought success for RGM industry. Infrastructure and communication: Developed Infrastructure and communication are very essential for RMG business. Indian Infrastructure and communication is improving day by day so now India is very lucrative place for RMG sector. Low cost strategy: If an RMG company to business in India they should follow the low cost strategy as much as possible because there are so many competitor exist in the market like Orient Fashions Limited and the most important RMG giant Wal-Mart also doing business in India. Improve the product quality: high product quality is very important for RGM sector also it can be affordable that must be produced in order to rule overseas market. Focus on various segmentation: In India each state resembles a separate country, often with its own language, cultural practices and preferences. So according to those culture, languages and preference we should be focus on different or various types of market segmentation Conclusion: Recently A number of western retailers has opened stores in India, which came as a boon for Bangladeshi garment exporters, as the retailers are buying clothing items directly from Bangladesh to sell in the Indian market. Bangladesh also enjoys a duty-free privilege in the Indian market, which is a good sign for the company that helpful to enter into the Indian market. As a result of which the demand for Bangladeshi garments is soaring in India, especially among its middle-income consumers, due to competitive prices. Page | 9