What is it about India that attracts both local and international players to try to endear themselves to its markets?
India, with its ancient roots in trade and commerce, is one of the fastest-growing economies in the world today. As the nation continues its rapid development, it’s emerging as a global hub for businesses of all kinds.
In this article, we explore the unique attributes of India that nurture the seeds of budding ventures to evolve into thriving ecosystems.
Massive heterogenous population and global reach
With approximately 1.43 billion people calling it home, India is the most populous country in the world. In addition to its vast domestic market, India also boasts the largest global diaspora. This global reach suggests that products striking a chord with the Indian populace have potential appeal worldwide. Case in point: Indian expatriates worldwide yearn for familiar staples like Maggi noodles and Parachute coconut oil, even when they’re not mainstream in their new homelands.
Such a diverse and expansive population, encompassing individuals from every age group, socio-economic status and cultural background, virtually guarantees a market for myriad products and services. Given this immense population, you’d be hard-pressed to find a product that doesn’t resonate with someone!
Diverse climate and geographical conditions
India is called a subcontinent for a very good reason. In its great expanse, the country has deserts (both hot and cold), mountains, valleys, glaciers, plateaus, riverine plains, coastlines, islands, rainforests…India has it all. Almost any geographical or weather condition that one can think of can be found.
This geographical diversity creates a viable market for a variety of products and services. Whether it’s sporting goods from skis to scuba equipment; foods and beverages from cookies to wines; events and experiences from workshops, adventure trails to music festivals or anything in between—there’s almost certainly an environment conducive to your endeavor somewhere in India.
A nation online
As of 2022, 48.7% of Indians were connected to the internet, placing India second in global internet user rankings. This digital growth is backed by some of the cheapest mobile data plans in the world and rapidly digitizing infrastructure in the nation. Such advancements signal a ripe market for web-based features and content like media, online education, e-commerce, digital payments and digital advertising, to name a few.
Reflecting its youthful demographics, the majority (35%) of India’s internet users are between the ages of 20 and 29. As internet coverage expands, we anticipate a swell in the number of users from older age brackets.
The Internet in India Report 2022 highlighted a noteworthy trend: over half of the country’s active internet users hailed from rural regions, marking a 14% increase in rural digital penetration from the preceding year. The surge in rural digital penetration bodes well for businesses aiming to tap into the Indian market. Considering that roughly 65% of India’s population lives in its villages, the steady increase of internet users from rural regions of the country is an extremely encouraging sign for organizations targeting the Indian market.
Moreover, while cash is still king in India, the 2016 launch of India’s Unified Payments Interface (UPI) marked a pivotal shift in the nation’s digital payment landscape. This state-backed platform, designed to propagate ease of doing business online, allows real-time money transfers to bank accounts using smartphones, underscoring India’s growing digital prowess.
With its efficiency, the system is now widely used across the country and various economic strata. Now, it has garnered roughly 260 million users, recording about eight billion transactions worth nearly US$200 billion in January 2023. As talks of global adoption of the UPI system progress, international trade could soon be more accessible to the average Indian consumer.
The increasing tech-savviness has also given a stratospheric rise in the service sector, with platforms like Swiggy, Zomato, Blinkit and Urban Company offering a range of services, from food delivery and grocery to home maintenance.
A young, global, educated workforce
Indians strongly value education. With a median age of 28, there’s a national emphasis on ensuring that young people receive well-rounded formal education and vocational training.
The number of students receiving higher education has also been steadily increasing. In 2022, about 750,000 Indian students were pursuing education abroad. Australia, the U.S. and Canada host the highest number of Indian students.
About 26% of the country’s school children attend English medium schools, and one in five Indian adults can converse in English. This proficiency positions India as the second-largest English-speaking nation in the world, surpassed only by the U.S..
Put all these aspects together, and you get a workforce that can keep up with the times. This young, well-educated workforce, boasting widespread working proficiency and fluency in a global language like English, is an attractive proposition for multinational corporations (MNCs) and global economic players.
Attractive foreign investment policies
On August 12, 2017, in Mumbai, Shri Piyush Goyal, the Minister of State for Power and Energy, addressed the GST and energy topics at the MSME Convention hosted by Laghu Udyog Bharti.
Image courtesy of Wikimedia Commons
The Indian government has adopted a series of policies to encourage foreign investment. These include relaxing restrictions on Foreign Direct Investment (FDI), allowing full ownership by foreign entities in several sectors, simplifying the tax framework and establishing a dedicated organization to facilitate foreign investments. Reforms such as the Goods and Services Tax (GST), the bankruptcy code overhaul and the liberalization of foreign investment have significantly bolstered investor confidence and streamlined business operations for companies operating within the nation.
Love a good bargain
Bargaining is often humorously referred to as India’s favorite pastime.
The average Indian consumer has a keen eye for value and an innate tendency to seek out the best deals. They are generally well-informed consumers and will do extensive research to compare various products and find ones that suit their specific needs.
Indian consumer culture is shaped by frugality and family-centric values, making the Indian consumer appreciate some variety in similar products and options in price ranges. So, the market’s seeming saturation can be deceptive, as the consumer’s quest for “more for less” often opens up new niches.
Despite current inflationary challenges, India has witnessed steady economic growth in recent years. Personal disposable incomes are on the rise, which may result in higher spending budgets for many Indian consumers.
India’s penchant for innovation is evident in its thriving startup ecosystem and its enthusiasm for embracing the new and the trendy. Brands like Maggi and Bata illustrate the Indian knack for blending the foreign with the familiar, creating success stories that resonate deeply with the populace.
Nestle, a Swiss multinational food and drink conglomerate, launched the instant noodle brand Maggi in India in 1982. This coincided with the rise of women joining the workforce in larger numbers than before. Maggi targeted predominantly working mothers by giving them a quick and easy-to-prepare meal option that could be whipped up in the promised two minutes to provide a hearty and wholesome meal for the whole family.
With its pocket-friendly prices and widespread availability, Maggi became a go-to snack for people across all economic backgrounds, making it a household name in India. The brand also paid great attention to the variety of flavor profiles to cater to the South Asian taste palate, which was very different from those found in East Asian instant noodle brands.
Maggi also relied heavily on word of mouth and targeted a feeling of nostalgia from a favorite childhood meal, further solidifying its emotional appeal and the loyalty of consumers. Harnessing family-centric values, local flavors and the Indian tendency toward brand loyalty, Maggi instant noodles deeply enmeshed themselves in the Indian market and has become a beloved part of public consciousness.
Bata, a brand founded in erstwhile Czechoslovakia, was an early entry into the Indian market in 1931. The company came to India to provide Indians, many of whom used to walk long distances barefoot, with good quality shoes at affordable prices. The brand gained a strong foothold and established itself as a reliable and trusted footwear brand over the years. The brand did this so successfully that to this day, many Indians believe that Bata is a local brand.
Catering to the sentiment of frugality and family-centric values by offering sturdy, comfortable and long-lasting shoes for individuals of all age groups, Bata has become a household name in India as a one-stop shop for all the footwear needs of the average middle-income Indian family.
The company strategically expanded its retail network to be easily accessible in both urban and rural locations, adapting designs to local needs and preferences and customer service to a myriad of local languages. The brand also continuously updates the designs it carries to keep up with trends and innovations, remaining relevant and mainstream, maintaining its strong foothold in the Indian market.
For businesses aiming to tap into India’s pulsating market, adaptability is the key. Staying attuned to India’s unique cultural tapestry and swiftly responding to its ebbs and flows can unlock unparalleled opportunities. With its unique blend of tradition and progress, India continues to present immense opportunities for businesses to flourish. As the country continues to evolve as a global hub for entrepreneurship and commerce, understanding the Indian consumer’s values and preferences will undoubtedly play a pivotal role in achieving sustainable success in this dynamic market.
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