This is extracted from our Market Expansion ebook, which gives tips on expanding into many Asian countries. Scroll to the bottom to download it.
There’s a storm brewing in India, fueled by cheap smartphones, widespread internet, and increasing spending. According to a report by McKinsey, these factors will help make the country of nearly 1.3 billion the world’s fifth largest consumer market by 2025.
Thinking about expanding your company in India? Here are a few things to keep in mind.
With 22 official languages across 29 states and seven union territories, India is diverse. Add to that innumerable religions and major class differences, and you have a melting pot of customers that is impossible to tackle at once. Start small by focusing on a single region and moving outward.
India’s major urban cities include governance hub Delhi, financial capital Mumbai, and technology hub Bangalore. Consumer tech startups like food delivery company Swiggy and ecommerce site Flipkart have had considerable success in these regions.
It gets more difficult once you get out of urban areas and the upper class, though.
In 2011, the World Bank estimated that nearly 24 percent of the country’s population lived on less than US$1.25 a day.
Most startups tackling non-urban and rural India are social enterprises, which sell their goods and services with an important fact in mind: while there may be over a billion people in the country, most of them can’t afford to spend money on things that aren’t the absolute basics. Other products like cheap smartphones have slowly started infiltrating these corridors.
India has a grand total of 4,200 technology startups, says a recent study conducted by the Associated Chambers of Commerce of India (ASSOCHAM), officially making it the third biggest startup hub in the world. Chances are, your startup will have a fair amount of competition.
Of course, with the novelty of India’s startup ecosystem will come many failures – 997 Indian startups have shut shop since June 2014, states research company Xeler8.
Some sectors like fintech are heavily regulated and nearly impossible for foreign startups to crack. Others, like ride-hailing and ecommerce, are only now helping shape regulations.
Other popular sectors include healthtech and edtech.
Setting up shop
Setting up shop in India can take a while. Startups have conventionally gotten around this by headquartering in Singapore or Mauritius, and servicing India.
The government has taken action to change this, however. There’s a “Startup India” portal where you can register your startup online.
For foreign nationals, the best route is to start a private limited company. Public limited companies have mazes of rules to comply with.
All private limited companies must have at least two shareholders and two directors. While a non-Indian can act as a director, at least one director must be an Indian citizen and resident.
One method is for a non-Indian company to create an Indian subsidiary and make a foreign direct investment (FDI) into it. The subsidiary will have to include participation by at least one Indian national. FDIs don’t require government approval unless you’re investing in particular sectors like natural gas, defense and strategy, atomic minerals, and print media.
Launching other types of businesses is much more complicated. Foreign investment in proprietorships or partnerships requires prior approval from the Reserve Bank of India (RBI). Limited liability partnerships were introduced a few years ago and require government approval.
As a non-Indian, it’s also not an option to open an office branch in the country alone, so the private limited company presents the best option.
Creating a team
An important part about entering a new country is launching your global team. India is set to have the highest number of developers in the world by 2018. They’re generally more affordable than their Western counterparts.
The biggest job site in India is Naukri. For startup hiring, LinkedIn, AngelList, and HasJob are also popular.
Freelancing is also gaining popularity. Don’t be afraid of the informality – sites like HackerEarth let employers test developers for their skills before hiring.
Like most startup ecosystems, good talent is hard to come by and important to value when you come across. Compensation can be competitive in places like Bangalore and Mumbai, where the cost of living is comparable to other major cities around the world.
If you want to find out more, fill in the form below and we’ll send you our Market Expansion Ebook. It’s designed to give you basic information on each tech and startup ecosystem. It can serve as a guide on how best to get started with your company’s expansion. We share with you what you need to know about the region’s cultures, government regulations, hiring practices, business relationships, and so much more.
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