- What is the climate for doing business in India? Is it supportive of foreign investment?
India is a very extraordinary country in all senses. When we talk about economic branch and investments partially, it is necessary to state that first of all it is a country with hyper potential. Business environment of India is very conducive and really attracts investors from all over the world.
Demographic data obviously must be taken into consideration, as here we face a huge diversity of possible meanings to use it effectively. Nowadays we may distinguish several main factors which make business climate in India favorable for foreign investors, such as plenty of labor resources; huge territory and low price for real property building (compared to other countries) and supportive financial climate (for example, salary expenses you will have here estimated to be 10-30% lower than elsewhere in high-developed economic spaces ). Three key factors — land, labor and capital usually play the main part in business developing process, especially in one that is financed from abroad. Moreover, India, in fact, is an agricultural country, as a major part of population is involved in the agriculture sector and related branches of economy. The level of population and its density lead to low level of earnings and real incomes of citizens all over the country. People are well motivated to get a well paid job and prosper in a company if they are given a chance.
Investors are supported on a high government level and statistics proves that is reasonable. Due to lots of successful investment projects which have been launched and realized in India the GDP of the whole country has showed a constant growth. This is really impressive, if we look at those results from a global point of view, as India is a country with more than a billion (!) people population.
It is also important to notice that India has become an independent country not so long time ago, only around 60 years have passed since the democratic principles have begun to be applied in all the spheres of country life, so business in not an exception here also, and it took a long time for the ruling elite to transform their views and beliefs into more loyal, opened and interested in cooperation with international community.
In conclusion, I would describe general business climate of India as excellent conditions for start-up. In addition, the investment policy of government lets you to open vast horizons and possibilities in almost every line of business activity. Business climate is supported of foreign investments as well because they are closely related and directly influence each other.
- How important is highly educated human resource pool for MNCs wanting to invest in India? Is it more important for some businesses than for others?
Human resources always play a preferable role in any kind of business. Talking about MNCs as special units, making business overseas and all around the world, we should pay attention to the following factors:
1) It is Information Age outside. Education takes first priority by default. If a person cannot afford an education and get the necessary knowledge and skills, even of a high school level, there are too little chances for him/her to grow up in moral and material meaning. Regarding India this aspect is more specific. Country is huge, and population is pretty diversified, first of all by language lines. India speaks 10 more other languages except Hindi, however, almost half of a population knows English, and the percentage of highly educated people is rather high. Such spheres as medicine, engineering and computer science are considered to be very perspective in economic sense, and they are fast growing and intensively developing in this country.
2) For MNCs presence of vast labor perspectives is a desirable factor. Just imagine, how many companies would like to hire educated microbiologists, who will invent dozens of new medicines that will be sold over the world and gain ultra profits? Or any other company who signs up an agreement with engineers who will be designing unique and prime project in all spheres of life. Same goes to computer giants. We all know how incredibly fast computer science is developing further and which perspectives it brings to all human civilization. Offering educated specialists on global labor market India has extremely high chances to become one of the leaders in this industry and gain profits from it during nearest upcoming future. Most important from the business point of view is level of expenses (salaries), of course. In India MNCs have very comfortable conditions for “head hunting”. Educated employees that work for a lower price than MNCs homeland citizens or employees from other countries, give plenty of new possibilities for a business owner and MNC in general, starting from cut of expenses up to opening new affiliates (branches, units) and global optimization and profits increase.
- Given the low per capita income of the country, why would you still argue for India to be an excellent place to do business in the next coming years?
When we analyze a country’s economic conditions, such as business climate and investment attractiveness, we should not be guided just by statistic reports or TV news. Any business is working because once an idea has become real. So we also have to be real while trying to evaluate factors that influence the general conclusion and lead to final resolution.
Obviously, we cannot deny the fact that India income per capita is too low, and this is not a good signal for investor. However, if we look into the deep, we should see that this index is low because it is counted out for a billion people populated country this automatically means it cannot be really objective and trustful. In other words, low level of people’s incomes proves that a population is mostly poor, and purchasing power is not that high.
For the next coming years, India will continue cooperation with international investors, first of all from North America, Europe, and Asia. It will bring more and more chances to reveal its great potential and make the next step for the future development.