The Indian market

Modern India is one of the fastest growing major economies in the world since the radical economic reforms in 1991. These reforms and the various Foreign Direct Investment (FDI) liberalisation policies have had a significant impact in creating steady growth and unleashing India's full economic potential. India is a highly attractive destination for business, trade and investment opportunities across a broad range of industries and sectors.

The following range of factors fuels the growth of the economy:

• an expanding middle class
• availability of skilled workforce
• domestic demand for quality goods and services
• rapid urbanisation and development of physical infrastructure

Prime Minister Narendra Modi's progressive economic reforms have positively transformed the business climate, building momentum and expanding foreign investments.

India has made huge strides in improving its ease of doing business, regulatory environment and competitiveness in recent years. It currently ranks 63 out of 190 countries in the 2014 World Bank's Ease of Doing Business. The Government of India aspires to rapidly break into the top 50 nations, to become an even more attractive global business destination.

The Reserve Bank of India (India's central bank and banking system's regulator) has made a forecast that the economy will grow at 7.8% for the 2022 to 2023 fiscal year.  Despite the ongoing challenges of the pandemic, India's economy is poised to grow and expand based on a range of positive measures, including sustained fiscal and monetary support.

Several economic institutions and global agencies predict that India is to become the world's third largest economy by 2030, providing extensive opportunities for Canadian businesses to participate, expand and invest in the burgeoning market. 

India is a vast, diverse and complex nation that requires:

• careful business planning
• cultural understanding
• market research
• support from professional service providers

Geographic profile

As an integral part of the South Asian subcontinent, India includes 28 States and 8 Union Territories. The country is therefore not just a single national business market. It varies across its many regions and states, each with their own:

• languages
• geographies
• outlook
• cultural practices consumer preferences 

Being a large and complex nation, it is often said that there are many India's within India performing at varying degrees in terms of economic growth and social development.

It is important to recognise that different regions have different industry clusters, sectors and economic activities that cannot simply adopt a one size fits all approach.  New market entrants should focus on developing regional engagement plans with local market research so that you may customise your products, services and/or technology to penetrate local target audiences.

The state and central governments have adopted proactive and business friendly reforms as well as competitive policy frameworks that make India an attractive global business destination. The state level governments are influential in their regions and determine the business policies, priorities and industrial incentives for domestic and foreign investors. The package of incentives can vary in nature and are generally provided through a combination of capital-linked, expenditure-linked and sales-linked benefits.

Alongside the major metropolitan areas like Mumbai, Delhi, Bengaluru, Kolkata and Chennai, there has been an unprecedented expansion of tier two and tier three cities across the nation. Astute state governments are providing robust infrastructure and incentives to encourage innovation and entrepreneurship opportunities in these smaller cities, which have immense untapped business potential.

Why is India an attractive market?

• Estimated population of 1.38 billion people and English is the language of business 
• Largest democracy in the world which offers political stability to foreign investors
• Second most populous nation in the world with one of the largest global youth populations
• Fastest growing economies in the world with a growing middle class consumer base
• Government of India reforms have created a pro-business attitude and environment
• 28 different states and 8 union territories with regional, cultural and linguistic differences
• Rapid urbanization with over 30% of the population live in some 200 major towns and cities

Government of India's Make in India programme

The Government of India's 'Make in India' initiative was launched in 2014, as part of a refreshed focus on energizing the country's manufacturing sector and expanding its export base. The primary objectives of this major national programme are to:

• attract overseas investment
• foster innovation
• promote entrepreneurship
• enhance skill development
• create employment
• protect intellectual property rights
• strengthen India's world class manufacturing infrastructure

Led by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India, the programme is crucial for the economic growth of India. It seeks to utilise the important Indian talent base, creating additional employment opportunities and empowering secondary and tertiary sectors. It also aims at improving India's Ease of Doing Business ranking by:

• removing the outdated and unnecessary regulations,
• making bureaucratic processes easier
• making the government more accountable and transparent

The ambitious and dynamic programme focuses on 25 key sectors identified by the Government of India, as follows:

• Automobiles
• Automobile components
• Aviation
• Biotechnology
• Chemicals
• Construction
• Defence
• Electrical machinery
• Electronic systems
• Food processing
• Information technology (IT) and Business process management (BPM)
• Leather
• Media and entertainment
• Mining
• Oil and gas
• Pharmaceuticals
• Ports and shipping
• Railways
• Renewable energy
• Roads and highways
• Space
• Textile and garments
• Thermal power
• Tourism and hospitality
• Wellness

For more information about the opportunities and policies for this initiative, consult the Make in India website.

Key sectors and industries

India represents a key growth market for Canadian SME businesses with broad-ranging opportunities for investors and exporters across various industries and sectors. While India is globally recognized as having one of the world's leading information technology industries supporting global businesses with back-office operations and outsourcing services, it is now a diverse economy which offers exciting business opportunities across their full spectrum. 

Some of India's largest industries include:

• pharmaceuticals
• information technology
• financial services
• automobiles
• chemicals and engineering

 India's major IT hubs found in Bangalore, Hyderabad, Chennai, Mumbai and Pune. Mumbai is the financial capital of India and is home to some of India's largest and most established business families.

Agriculture remains one of the most important sectors for income generation and provides livelihood across the nation. Some of the top farming states across India include:

• West Bengal
• Uttar Pradesh
•  Punjab
• Haryana
• Gujarat

Growing sectors across Indian states include:

• advanced engineering
• telecommunications
• construction
• renewable energy
• food processing

India is scaling up its road, rail, ports and airport infrastructure to support the growing volumes of domestic and international trade and investment. Alongside plans to develop industrial corridors to improve connectivity between states and cities, India's smart cities initiative aims to create 100 new smart cities across different states and union territories of India. The ambitious initiative aims to drive economic growth and improve infrastructure and the quality of life of people within those regions by enabling local area development and harnessing technology to achieve inclusive and sustainable growth.

The rising income levels, online spending and consumer demand for luxury goods, services and experiences is increasing dynamic business opportunities in retail, entertainment and media. On the other hand, defense and aerospace are rapidly expanding sectors, with India being among the top five countries that have the highest military spending, opening up a myriad of supply chain opportunities for SMEs.

The COVID-19 pandemic, has significantly increased growth in the life sciences and healthcare sectors. Canadian businesses and investors will find multifaceted opportunities when seeking to enter the Indian healthcare market including:

• hospital industry, medical electronics and devices
• medial manufacturing supply chain
• home healthcare
• training programmes and development
• tele-health systems
• healthcare focused software solutions
• recruitment of staff for overseas markets

Alongside, health and wellbeing, the sports industry is rapidly expanding, as evidenced by the number of successful India professional sports leagues that have emerged in recent years, (in addition to cricket, the market leader), including:

• wrestling,
• football
• kabaddi
• field hockey
• boxing
• badminton etc.

These have accelerated the sports economy in the country and have created new opportunities for:

• sports equipment and goods
• sports management
• training
• international collaborations

The technology sector provides enormous opportunities for collaboration, research and development and commercialization. The pandemic has increased the scale and pace of digitalization of public and private sector services boosting India's IT enabled services, forcing greater volumes of consumers to adopt digital technologies. Coupled with the rapid growth of smartphone users in India and increased high-speed internet connectivity, this has opened up new and innovative opportunities for trade in services. 

Post-pandemic, the shifting global dynamics and supply chain diversification sought by Western businesses, provides tremendous opportunities for India to emerge as an alternative global manufacturing destination for raw materials and products, especially for those businesses seeking to de-risk over reliance on other important markets such as China.

India is a rapidly expanding innovation-led economy and is the third largest start-up ecosystem globally (after the USA and China), driving significant economic and social growth.  Many of these start-ups are new-age technology companies providing innovative solutions across the country in areas such as:

• e-commerce
• fintec
• edtech
• medtech
• and others

Indian unicorns are also flourishing and as of February 2022, according to Invest India (India's national investment and promotion agency) the country is home to 88 unicorns (privately held start-up companies with a value of over $1 billion).

Start-ups have been an important factor in improving India's rise in the Global Innovation Index (GII) produced by the World Intellectual Property Organisation (WIPO).  The country has made immense strides from 76 in 2014 to 46 in 2021 breaking in to the top 50 (among 132 economies). After creating a successful base and brand in India, many of these start-ups are going global and expanding their international footprint.

At the same time, India's new National Education Policy introduced in July 2020 is a game changer for India's higher education sector. The Policy sets out an ambitious roadmap for liberalising India's higher education sector, with the aim of making India a "global study destination" and "global knowledge superpower". This will provide many new opportunities for Canadian and Indian higher education, including:

• institutional partnerships
• student mobility
• dual degree programmes
• cutting edge research
• development and industry collaborations