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www.ukbusiness-today.co.uk • Issue 10 • 2012 • Price £3.50

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ne of the advantages of the ongoingeconomic situation in the UK andmainland Europe is that companies

have brought forward their global expansionplans and are actively exploring new growthopportunities outside the domestic andmainland European markets.

The economies of the so-called BRICcountries are all growing and amongst theseIndia should be one of the first countriesthat UK businesses consider seriously.

Its population of 1.2 billion is still growingand 600m are under 25. This is equivalent to50 per cent of the entire world’s populationunder 25 and of course represents a hugenew emerging consumer market.

In recent times, there has been much focuson the emergence of the wealthy middleclass and white collar workers who run andstaff India’s highly successful outsourcingand IT industries. Of course both groupshave – and will continue to have - spendingpower. In today’s India, however, manycompanies are much more excited by theprogress of India’s rural population, whichrepresents 70 per cent of the population.The expansion of mobile phone networksinto rural areas combined with the wideravailability of electricity generated usuallyby solar power is increasing the wealth ofeven the poorest.

One only needs to visit one of the country’smany new shining malls to see that thedemand for products and services is here –and will continue to increase for decades tocome. Though the organisation of it all hasnot yet been quite perfected…for example,parking is an issue as are traffic flows at peakhours into the malls and understanding theneed for footfall alongside luxury outlets.

However, what is crystal clear is that there isa tremendous opportunity for companies ofall sizes from all sectors to set up stall in themarket.

Opportunities for allWhen asked “What are the opportunities” inIndia I resist the temptation to break it downinto sectors as so many commentators do. Ifyou have a product and service that sells in theWest that is not simply a “me too” product, ifyou can maintain quality control and figureout the challenge of distribution and cancompete with local equivalents (of the samequality) on price, there is tremendous scope.

And, in general, whether you are consideringestablishing a factory or outsourcing elementsof your existing business or importingproducts and services to sell in India,opportunities are plentiful.

However, India is not a market where you cansimply turn up and gain 1% of the market(which so many claim they will do!). It takesthorough planning, a cautious and pragmaticapproach and importantly giving yourselfenough time to get to understand the market,tweak your offering accordingly and then beready to scale up. A fully-fledged assault intothe market with all guns blazing is not a wiseapproach.

Just because the language of business isEnglish one should not assume that thebusiness practices and working culture bareany comparison to those found in Europe andthat you can run an Indian business like a UK

one. One of the commonest mistakes a UKcompany makes in India is to say “this is theway we like to do things”.

The challenges that exist in India are foundelsewhere in the world, some are however,more apparent in India than others.Bureaucracy, corruption, cultural differences,time zones, IP protection, the efficiency ofthe legal system and flip- floppinggovernment policy all pose serious challengesand take time to understand.

And the sheer size of the county can also bedaunting. India operates as a state-drivencountry with differing laws in each. UttarPradesh, a state in the north of India, has apopulation of almost 200 million. If it was acountry it would be the 5th largest in theworld!

I am not ashamed to admit that after twentyyears of doing business in India, I am stilllearning. However, I’m in good company aseven the country’s leading business advisorsneed to keep on their toes as economic reformcontinues and policy shifts.

Go nativeOf the various bits of advice I share with myclients, one is that you must ensure thathowever you operate in India (whetherdirect, through a distributor or in a JV) that

INDIA – A LAND OFHUGE OPPORTUNITIESIndia expertADRIAN MUTTONexamines the vast possibilitiesfor UK business in thisfast-expanding market

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you operate as any local business would. Thismeans employing locals (even if they areworking in a JV or overseeing a distributionchannel) to represent your interests and runthe business as if it has always been Indian.

Identify one or two key recruits to start with.Have them brought into your business andyour philosophy, train them in the UK beforethey begin and then listen to what they haveto say. You can expect to recruit someone withtremendous local and relevant sectorexperience in your business line; there areafter all 1.2 billion potential employees!

However, my advice to most companies is ifyou plan to establish a presence of some sort,take a look at the options before you jump inand commit.

Setting up a local legal entity for foreigncompanies is feasible for most sectors thesedays but compliance is a huge challenge inIndia. I often come across foreign companiesthat have already started operating in Indiabut are not yet incorporated (typicallyincorporation takes between 3 to 6 months),are employing locals and breaking numerouslaws. To use the infamous quote, in India itreally is true that you don’t know the thingsyou don’t know!

However, there are companies that do; Usinga third party to help with incubation and start-

up, enables you to cost-effectively and legallyput your toe into the water and get to knowthe lay of the land before you formerlyestablish a commercial entity.

The more support you have with theadministration ofstarting-up, the more timeyou will have to focus on businessdevelopment meetings, get to know yourtarget market and work through what you willactually need to provide and how you willprovide it.

Many companies are establishing a presence inIndia through these incubation structures,which enable them to recruit the right staff,begin actively doing business in the market,but without the legal and financial burden of alegal entity from day one. Once revenue startscoming, companies then move theseemployees into their own legal entities andcontinue seamlessly.

Opportunities are in abundance in India forforeign companies. They will take time todevelop, they will need a pragmatic andconsidered approach and any successfulgrowth in India will not be without itschallenges (which I think is the case in everymarket these days). But companies ignoringIndia which has decades of growth ahead of it,an aspiring consumer population, a commonlanguage and a desire to be in the world’seconomic elites do so at their own risk.

SETTING UP ININDIA: ITEMS TOCONSIDERCompany Incorporation – bureaucraticand time-consuming

Accounting, Payroll and ExpenseManagement – no transparency

Direct and Indirect Taxes – complicatedand obtuse

Compliance Management – multiplelayers

Legal Practice, Company Secretarial andcommercial matters – often confusing

Identification and due diligence ofpartners, distributors and strategicalliances – risky without insider helpand knowledge

Staff Recruitment and HR Advisory –risky in a new unknown market

Market Research and Validation:market entry strategy, local businessplan, local relationships – comes withlimited value unless delivered bypeople who have first hand experience

ABOUT THE AUTHOR

Adrian Mutton is CEO of Sannam S4, whichhelps international businesses enter andexpand in the Indian market. Adrian, whowas the founding India Country Director ofthe UK India Business Council, lives in NewDelhi and speaks Hindi. He is in the UK onceevery six weeks meeting and advisingpotential and existing clients.