Successfully investing in India

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published on May 16, 2018

 

​​​How do you assess the current economic situation in India?

India continues on a steady growth path. The general VAT reform of 2017 is beginning to produce the desired positive effects. So, in practice, the previously time-consuming controls of deliveries at federal state borders have been dropped. The federal states are now gradually introducing electronic freight documents (“e-way bills”) which will further facilitate the procedures. The chances of winning re-election by the existing business-friendly government are estimated as good. It has always been obvious that it will not be possible to master the challenges during only one term of office.


How would you describe the investment climate in India? Which sectors offer the largest potential?

“Make in India” is a political goal that continues to receive support from the government. The attempt to encourage businesses to site their manufacturing companies in India naturally fits very well into the strategy of German enterprises. “Make in India Mittelstand!”, an incentive programme in Germany, offers funding opportunities tailored to German companies.

 

Numerous infrastructure projects offer enormous opportunities for German companies and have already been used many times. Also the renewable energy environment is still dynamically developing. Machinery and plant construction continues to show a positive trend and market demand.

 

What challenges do German companies face during their business ventures into India?

India is a country as big and heterogeneous as a continent. The language, cultural and economic differences as well as the distances between some parts of the country are enormous and should always be considered when entering a market/selecting a location for your business. The infrastructure/energy supply system with its potential for expansion and an often still cumbersome bureaucracy pose challenges to German companies in India. Recruiting and, in particular, winning loyal qualified employees can prove to be challenging in the individual case. Much attention should be given particularly to winning loyal employees and the level of education does not always meet the required standards. Here, only measures initiated by the companies themselves will ensure very good results.  
 

What opportunities do the special programmes offered by the Indian government create for German companies?

The “Make in India Mittelstand!” programme continues to be heavily promoted by the Indian government. In September 2018, the programme will celebrate its 4th anniversary and has proved very successful in facilitating German companies access to networks and providing assistance in specific issues. In particular, numerous smaller-scale investment projects have been incentivised. Apart from the embassy of India in Berlin and the Indian Department of Economic Affairs, also the Indian federal states strategic for foreign investment are involved in the programme.
 

In your opinion, how will India develop?

Experience has already shown that India has been developing steadily and positively in the long term. We expect the trend to continue and intensify. Ample opportunities are opening up in individual areas and industries, such as e.g. infrastructure. The political determination to introduce reforms is unbowed. The domestic market continues to expand, driven by a growing middle class. The challenges in the areas of bureaucracy and infrastructure are being tackled with tenacity and long-term successes are becoming visible. The reforming government is backed by a broadening parliamentary majority, a fact that will lead to positive trends in the years ahead. 

 

Companies that break into the market in an informed manner and based on accurate targets will achieve very good results.     


Contact

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Martin Wörlein

Partner, Head of India practice

+49 911 9193 3010
+49 911 9193 9003

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