What Makes India a Favourable Business Environment for Foreign Companies?

India holds a vital position in the global economic market in fact, it serves as one of the major forces for businesses. Despite being a developing country, India has managed to create an impression on global trading through its dense population and diversity among every individual. The country’s diversity indeed raises the demand for a varied choice of products. Thus, the Indian market demand attracts other countries to magnify their ties with the country. Over the period, India has evolved to be the second-largest market in Asia, thus, attracts foreign countries to do business in India. According to an Indian Economic survey, India’s GDP growth has been moderate with around 6.8 percent in 2018- 19 from 7.2 percent in 2017-18. However, the country’s GDP is forecasted to grow by 7.3 percent in 2019-20.

 Favorable Business Environment Features

Apart from the massive population, India has a lot of facilitation that create favorable business environments such as Business-friendly laws and low operational cost. The country has considerable low operation charges starting from infrastructures to phones, internet, labors to set up a business. India’s cheap workforce makes it a welcoming market for foreign clients to set up a business. Alongside, India has a well-regulated financial system that opens the gateway for developed markets across the globe that encourages multiple investments. Its work ethics and working class that has a blend of hardworking nature with the curiosity to learn and never say any attitude has set the country apart from other countries in the global market.

Lately, India has introduced the ‘Startup India Movement’ that has been strengthening the ‘Foreign Direct Investment’ to foster business partnerships. According to UK India Business Council’s ‘Doing Business in India Report 2020’ states that 66 percent of the surveyed businesses have stated that they prefer an easier form of doing business and India is one such destiny that offers progressive reforms and improvement in India’s business environment. As it provides assistance, skilled labor, service provider, and efficient supply chain.

Jayant Krishna, CEO, UKIBC Group says, “Alongside the progressive trend in the rating of India’s business environment and the phased removal of barriers to business since the inception of UKIBC’s report in 2015, the findings of our 2020 report are not only very positive but hugely encouraging. In spite of new challenges to businesses such as Brexit, COVID-19, and the global economic slowdown, UK companies not only remain deeply committed to India, but many are optimistic of expanding their business footprint in India.” (Source: PTI)

Recently, following the global rift with China, India chooses to become self-reliant and launched Atmanirbhar Bharat this initiative has in turn brought in global integration for the Indian economy. Furthermore, the Atmanirbhar Bharat mission is ushering in a unique potential for co-development and co-creation among UK and Indian firms, leveraging the UK’s innovation for manufacturing in India.

Richard Heald, OBE, UKIBC Chair, said, “The positively-balanced findings of this report are tremendously encouraging. There is much still to do to remove the persistent barriers to doing business in India, particularly improvement to bureaucratic procedures and the application of the tax regime, which is a persistent concern for businesses in India. Yet, the optimism and commitment amongst UK businesses are telling of the strength of the UK-India relationship and scope for growth.”

Hindrance for Foreign Businesses

These facilitations have made it certain that Indian has progressed significantly in easing the business doing. Yet, a few challenges hinder foreign businesses to enter India that is legal and regulatory barriers. According to the survey, about 51 percent of respondents find the legal and regulatory barriers as an obstacle to venture India to set up their business. The prominent regulatory irritants include Goods and Services Tax (GST) process issues, lack of alignment with international standards, lack of alignment are the other major regulatory issue that hinders the foreign businesses.

However, the foreign businesses suggest that India could work on enhancing the bureaucratic processes and bring in greater accountability, increase regulatory certainty. Also, easing the GST processes, improving the quality of infrastructure could bring in a lot more foreign businesses to India, and aid in increasing the country’s economy by creating more job opportunities.  

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