Guide to Doing Business in India

India is a story of growth and opportunity. India’s sustained growth of around 8.0% in 2009-10 and growing dynamism in several of its regional markets have created wide and diverse business prospects for U.S. exporters and investors. With 2011 growth estimates hovering at around 8.6%, India remains one of the fastest growing, dynamic economies in the world.

The current economic downturn has not affected India to the same extent as the United States, though most Indian companies remain apprehensive and are extremely cautious with large expenditures. Worldwide economic difficulties notwithstanding, U.S. multinationals are sold on India and are expanding and deepening their market penetration. U.S. firms with advanced and niche-market products and services are entering the market for the first time, or are replacing legacy distributors appointed in the slow-growth past with more capable and aggressive representatives.

Many smaller American firms have begun to view India as a top anchor market for their products and services as well. The marked rise of U.S. exports to India, the daily business press announcements, the rapidly expanding demand for Commercial Service India matchmaking programs and due diligence services, and the many business development trade missions visiting India all point to India being open for business.

Economic growth in India today is being rewritten by India’s highly entrepreneurial and rapidly globalizing private sector. Indian firms are investing in infrastructure projects, growing their advanced manufacturing capabilities, and investing in new volume-based business models that tap into rising incomes and consumption in towns and rural economies across the country. Whether it is consumer goods and services, high technology and industrial goods, healthcare, or infrastructure development, Indian firms are bullish about their economy and are eager for U.S. commercial and joint venture partnerships, technologies, brands, services, and know-how.

In fact, the pace of the America’s trade and investment relationship with India is accelerating. In 2010, U.S. exports to India amounted to $19.2 billion. Advanced technologies, including aerospace, specialized materials, information and communications technologies, electronics and flexible manufacturing systems underpinned this growth.

India is playing a large role in the Obama Administration’s National Export Initiative (NEI), which aims to double U.S. exports over a five year period. CS India is implementing NEI on the ground and will assist U.S. firms across a range of sectors including, but not limited to, medical equipment, renewable energy, civil nuclear energy, clean coal, energy efficiency, civil aviation, homeland security, education, retail, and franchising.

India was the United States' 17th largest goods export market in 2010.
India was the United States' 14th largest supplier of goods imports in 2010.
U.S. foreign direct investment (FDI) in India was $18.6 billion in 2009 (a 12.3% increase from 2008).
In 2008, Indian FDI in the U.S. totaled $4.5 billion (a 60.4% increase from 2007).

*According to Office of the United States Trade Representative

In terms of long-range economic forecasts, some major consultancies project that more than 400 million people, a full 40% of the population, will enter India’s middle class over the next 15 to 20 years. One noted firm expects India to have and sustain the fastest growth rate in the world by 2011. Another well-known consultancy believes that India will become the 3rd largest economy in the world in 2032. India’s “demographic dividend” (71% of the population is under the age of 35, and the median age is 25) will ensurethat India retains strong production and knowledge-based competitiveness for many years to come.

Though these numbers are impressive, barriers to trade and investment remain in India. Thanks to economic reforms introduced in the early 1990’s, Indian tariffs have been progressively reduced. However, additional reform is widely recognized as necessary for continued economic growth at recent levels in India. While poor infrastructure and high tariffs present the biggest obstacles to foreign investment and growth, India’s infrastructure requirements also present trade and investment opportunities for American companies.

Strategic planning, due diligence, consistent follow-up, and perhaps most importantly, patience and commitment are all prerequisites to successful business. The Indian sub-continent necessitates multiple marketing efforts that address differing regional opportunities, standards, languages, cultural differences, and levels of economic development. Gaining access to India's markets requires careful analysis of consumer preferences, existing sales channels, and changes in distribution and marketing practices, all of which are continually evolving.

Resources

Commercial Service Office

Embassy of the United States in New Delhi, India

Embassy of India in the United States

Export.gov Doing Business in India

Export-Import Bank Support for U.S. Exports to India
The U.S. Export Import Bank (Ex-Im) provides both export insurance and working capital for U.S. exporters and guaranteed loans for Indian importers.

Office of the U.S. Trade Representative - India
Office of the U.S. Trade Representative (USTR) is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries.

U.S. Department of Agriculture (USDA) - Foreign Agricultural Service
Represent the interests of U.S. agriculture and assist exporters of American agricultural products in assessing and developing markets in the South Asian nations in India, Sri Lanka and Bangladesh.

U.S. State Department Background Notes
Background Notes include facts about the land, people, history, government, political conditions, economy, and foreign relations of independent states, some dependencies, and areas of special sovereignty.

U.S. Trade and Development Agency - South and Southeast Asia
The U.S. Trade and Development Agency (USTDA) advances economic development and U.S. commercial interests in developing and middle-income countries. The agency funds technical assistance, early investment analysis, training, reverse trade missions, and business workshops that support the development of a modern infrastructure and a fair and open trading environment.