As you embark on your next business venture, why not explore the advantages of doing business in India before investing? India is among the world’s fastest-growing economies, with a strong 6.8% GDP growth[1], sectoral advancements and impactful government measures boosting investment and tech progress.
Picture entering a vibrant market of over 1.4 billion people hungry for innovative solutions, backed by supportive government policies, a growing digital infrastructure and a thriving ecosystem for startups. India’s unique blend of a vast consumer base, progressive reforms and technological advancements makes it an ideal playground for ambitious business ideas and ventures.
The advantages of starting a business in India extend far beyond its vast market potential. The government’s approach toward fostering entrepreneurship through initiatives like “Make in India” and “Startup India” has also facilitated a supportive ecosystem for starting a business in India.
Benefits of Doing Business in India
India offers several advantages to startups and business ventures, positioning itself as a compelling destination for global investors and entrepreneurs. With its economy predicted to grow at 6.5% in 2024-25 and hit 7% in 2026[2], India offers immense opportunities for entrepreneurs seeking growth and innovation. Following are a few advantages of starting a business in India.
1. Large and Diverse Market
With over a billion people from various cultural, linguistic and economic backgrounds, the Indian market translates to a wide variety of consumer needs and preferences. For instance, consumer behaviour in urban areas may differ significantly from that in rural regions.
Additionally, India has multiple income tiers, from highly affluent segments to large, price-sensitive populations. Businesses can find niches in various sectors like technology, consumer goods, healthcare and education.
2. Cost-Effective Manufacturing
India’s reputation for cost-effective manufacturing is largely due to its abundant and skilled labour force available at lower costs compared to developed countries.
This advantage extends across various sectors like automotive, pharmaceuticals, textiles, and information technology services. Businesses can benefit from lower operational costs, which enhance margins and competitiveness.
3. Growing Economy
India’s vast population is an advantage for businesses seeking to establish or expand their operations within the country. The youthful demographic profile—with a large portion of the population in the working-age group—drives consumption and labour supply. Increasing urbanization and rising income levels are boosting consumer spending across multiple sectors.
Foreign companies and investors get attracted to India’s market dynamics, recognizing the long-term potential for growth and profitability afforded by its vast and young population.
4. Government Policies
Government policies encourage and offer a business climate to attract foreign investment and stimulate domestic entrepreneurship and ease of doing business in India. Measures include streamlining bureaucratic processes, simplifying tax structures, and enhancing infrastructural facilities.
Initiatives like ‘Make in India’ and ‘Digital India’ are aimed at boosting manufacturing and tech industries, respectively. Schemes like “Startup India Seed Fund Scheme” and “Startup India Initiative” provide support to startups.
5. Location and Connectivity
India’s geographical position at the crossroads of the Middle East, Asia and the Pacific region makes it a hub for trade and commerce. Its extensive coastline dotted with major ports and combined with a vast network of railways and airports, facilitates international trade and logistics.
This connectivity enables businesses in India to easily access and serve markets in the Middle East, Africa, Southeast Asia, and beyond, making it an ideal location for companies looking to expand their global footprint.
6. Technological Advancements
India’s rapid technological advancements, particularly in sectors such as information technology, biotechnology and telecommunications present benefits for entrepreneurs looking to establish businesses in the country.
Initiatives such as “Digital India” have accelerated the adoption of digital technologies across various sectors, creating opportunities for businesses to grow efficiently. As a result, entrepreneurs in India are well-positioned to tackle the power of technological innovation and use it to their advantage.
7. Business-Friendly Laws
In recent years, several important bills that are beneficial for most industrial sectors have been passed in the Indian Parliament.
The Goods and Services Tax Bill has increased efficiency in the movement of products across India. Such business-friendly laws make it easy for international players to actualize their plans to enter the Indian market.
8. Indian Financial System
The Indian financial system is underpinned by a strong regulatory framework led by the Reserve Bank of India (RBI), overseeing a diverse and growing sector that includes commercial banks and non-banking financial companies (NBFCs).
The system offers a wide array of financing options to individuals and businesses, facilitating access to both domestic and international markets. India’s banking sector, characterized by a mix of public, private, and foreign banks, provides comprehensive financial services, contributing significantly to the country’s economic growth.
India’s capital markets are among the most vibrant in emerging economies, with well-established equity and debt segments. The regulatory environment, guided by policies from the RBI, SEBI (Securities and Exchange Board of India), and other regulatory bodies, ensures stability, transparency and protection for investors and stakeholders within the financial ecosystem.
Frequently Asked Questions
1. What are the primary benefits of starting a business in India?
The primary benefits of starting a business in India include access to an ever-growing market with over a billion potential consumers, a workforce renowned for its skill and adaptability and a landscape rich with varied investment avenues.
The government’s proactive approach, highlighted by initiatives like ‘Make in India’, further heightens the business ecosystem, making it ripe for innovation and growth.
2. How does the Indian market’s size and diversity benefit new businesses?
The Indian market is characterized by its vast size and cultural diversity. It’s an environment where businesses can test, iterate and scale solutions across a spectrum of economic settings and consumer preferences, providing a real-world laboratory for growth and market penetration.
3. What government initiatives support startups and new businesses in India?
The Indian government’s initiatives, such as Startup India, Atal Innovation Mission, Make in India and Digital India, have significantly uplifted the startup ecosystem, establishing India as the third-largest startup hub globally. These programs offer startups a plethora of benefits including tax breaks, funding opportunities, simplified compliance, and support in manufacturing and digital transformation.
The impact of these initiatives extends beyond just startup formation; they have been instrumental in shaping a new entrepreneurial culture across the country. By fostering innovation at grassroots levels, enhancing digital infrastructure, and promoting manufacturing within the nation, the Indian government has not only spurred economic growth but also positioned India as a significant player on the global stage.
4. What are the benefits of India’s skilled and diverse workforce for new businesses?
India’s skilled and diverse workforce is a cornerstone for new businesses, providing a competitive edge in the global marketplace. The blend of technical expertise, linguistic diversity and adaptive problem-solving skills among Indian professionals facilitates innovative business strategies and operational excellence in a range of sectors.
5. How does the ease of doing business in India compare to other countries?
India ranked 63rd in Doing Business in the World Bank Report year 2020. India has made significant strides in improving its ease of doing business, marked by a notable jump in the World Bank’s rankings due to reforms in construction permits and trading across borders. However, challenges remain, especially in areas like starting a business and enforcing contracts, where India lags behind countries like China, which has implemented reforms reducing the complexity of business processes. India, however, is continuously introducing regulatory reforms that are enhancing its global business standing and attracting more foreign investment.
6. How does the Indian startup ecosystem support collaboration and networking?
The Indian startup ecosystem thrives on collaboration and networking, thanks to the government’s “Startup India” plan that helps startups grow and innovate. This friendly environment is supported by various funding options, and programs like incubators and accelerators that guide new companies. Technology growth and digital changes are creating new opportunities. Meetings, events and places where startups can work together help them meet and make deals.
7. What are the benefits of India’s strategic location for business operations?
India’s strategic location offers multiple benefits for business operations. Situated at the crossroads of Asia, it provides easy access to major markets in the Middle East, Southeast Asia and beyond which serves as a gateway to profitable business opportunities across the region and beyond. Businesses benefit from India’s skilled workers, cost-effective labor and English proficiency, making operations smoother. The country is also a tech powerhouse, with digital growth creating new business channels. Plus, its location by the Indian Ocean aids in global trade, especially in energy.
Conclusion
The advantages of starting a business in India are manifold and enticing for aspiring entrepreneurs and established enterprises alike. India’s rapid economic growth, supported by progressive government initiatives creates a nurturing environment for businesses. The vast and diverse Indian market offers unparalleled consumer reach, while the skilled workforce and cost-effective manufacturing enhance operational efficiency and innovation. The country’s strategic location acts as a gateway to Asian and global markets, further amplified by significant technological advancements and a robust financial system.
As you consider the advantages of starting or expanding your business in India, remember that navigating the legal landscape is crucial for success. At Burgeon Law, we specialize in helping businesses set up and establish their presence in India seamlessly. Our team of experienced attorneys understands the intricacies of Indian laws and regulations, offering tailored solutions to meet your specific needs.
