India – A Land of Many Contrasts And Lots of Promise

Today, we will talk about India. India to say the least is a very amazing country. Filled with much history, rich cultural diversity, and a rich history. It is also an interesting land of contrasts. Cities like Hyderabad are at the leading edge of technology, while many parts of India are without roads, running water, or even electricity. One of the worlds largest private homes in the world is in Mumbai, a billion-dollar house, 27 stories tall, and yet not too far away are shanties. India has many newly rich, and yet has among the highest rates of destitute poverty. India of course is a BRICS nation, indeed it along with China are the original members, of the leading emerging market grouping. It has over the past few years experienced respectable, and even enviable growth rates. With a 2013 GDP of $1.877 dollars, India ranks number 10 in the world, and moves to number  three when purchasing power parity is calculated. Without question, India has a lot of potential, and in fact some even feel that it’s potential could exceed that of China. Known for producing first class IT professionals as well as scientists and engineers, all whom are in demand worldwide, the outlook in the near and long term for India is very bright. While the actual rate GDP per capita income seems low, don’t pass up India automatically. First, India as among the highest rates of people with $5000 or more annual household incomes currently estimated around 267 million. That is nearly three quarters the size of the US population. Further, we GBA want to share the story of the success of Unilever NV in India. Unilever an Anglo-Dutch company, has more than 400 brands mostly cosmetics and personal hygiene products with 2013 sales of €49.7 billion ($66.54 billion). Unilever was determined to break into the Indian marketplace, in spite that most consumers were very poor, earning on average only $2 per day. To pull this off, Unilever completely redid it’s strategy tailored to the situation of India at the time, it formed a subsidiary, Hindustan Lever (HLL). They came up with single-use products that could be afforded by even those making just $2 a day, they implemented an Avon-style network marketing and sales structure, not only helping their products reach all over India, but helping millions of Indian women supplement their household incomes. Today HLL dominates the personal care products market in India, and this despite the low incomes of most Indian consumers. An entire blog post could be written about everything Unilever NV and HLL did right, but the point here being don’t let the low incomes of India discourage your business from at least evaluating the Indian markets for exporting to.

India of course faces serious challenges to it’s potential. The Indian government is well-known for being very bloated and inefficient. This tends to lead to corruption and bureaucratic slowdowns for even simple tasks requiring government approvals or permits. And indeed India ranks 94 out of 177 on the transparency index but scores 36/100 which indicates prevalent corruption. India is also well-known to have both high tariff and high non-tariff trade barriers. This will be a very critical factor to research before committing to export to India. Many businesses have sought to tap the Indian market only to run into these barriers, often experience significant financial losses. India is severely behind on its infrastructure. It may not appear so when one visits the major cities, but one does not need to go too far from the cities to see this clearly. Many states in India have just single lane poorly-maintained roads, running water is scarce outside the urban centers, even electricity is scarce. The lagging sanitation infrastructure outside the urban centers can present significant health risks to travelers. India has enacted their equivalents of the US’s Rural Electrification Act and National Act, to catch up with the developed world India needs to commit to them full force. Aside from the jobs created, having a nationwide infrastructure will allow all areas of India to partake in the economy. Time will tell if India overcomes these challenges, but should it, it is quite possible to see India being the leading country in the future.

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