The Indian government is working towards implementing the Goods & Service Tax which will especially escalate the ease of doing business across the states, and attract foreign direct investment across the sectors as it will increase tax compliance through all the 29 states from global brands into the country.
This is an evidence of how much the government is open to the idea of inviting manufacturing companies and develop technological hubs in India. According to a survey conducted by Feedback Business Consulting Services, which covered 67 companies from various sectors, around 72 per cent respondents felt investments will rise across sectors and a significant portion of this will come in the form of FDI especially in heavy engineering and automotive sectors.
After being successful in their own countries and various other developed countries a large number of international brands are keen to set their base in India and China, as these two countries have large populated market and are the most favored destinations as they are largely untapped.
This year Xiaomi, the Chinese electronic giant has announced exactly a year after it began making smart-phones in India that it is looking to expand manufacturing operations in the country. The company and its manufacturing partner Foxconn are in talks with a few state governments to build two more plants to manufacture Xiaomi mobile phones. The move comes even as Xiaomi has reported staggering sales numbers of its Redmi Note 3, and has said its brand-new Redmi-3s will be manufactured completely in India.
The beauty of the news is that such agreements will not only generate employment in India, also it will give a boost to the Make in India initiative of the government.
On the same lines, Apple India, the local arm of Cupertino-based Apple Inc., is also set to start initial manufacturing operations in Bangalore. Apple’s decision on initial manufacturing in Bengaluru will validate the state government policies aimed at fostering manufacturing, innovation and investments in the state.
In December, Apple had shared a list of demands with the Indian government seeking tax concessions, including lower import and manufacturing duties, and certain policy exemptions as prerequisites for setting up manufacturing operations in the country, however there is a good chances that the government may not make any exceptions. Apple wants to open its own stores in India, but it has been asked by the government to locally source at least some of the components, as Prime Minister Narendra Modi looks to boost manufacturing in the country. Tim Cook had met Prime Minister Narendra Modi to discuss the same in May 2016.
If we delve deeper we will understand how many food and beverage specialist companies like McDonald’s, KFC, Starbucks, Dominoes, Burger King, Pizza Hut, Café Coffee Day, Subway had all entered India through a franchise model and even though hundreds of international franchisors are already operating in India, there is scope for many more to step in. As a result, a sudden spurt in the number of international franchisors setting foot in India has been noticed.
As per industry sources, ten per cent of the current franchise operations in India are owned by international companies. With the growth rate of 35 per cent of franchising industry in India there is a massive potential for international franchisors to tap.
Popular messaging platform WhatsApp which has 200 million active users in India, is also eyeing the largest market for e-commerce and digital payments (with WhatsApp pay) segments in India. WhatsApp’s founder Brian Acton is now pushing the company to hit a billion users in India, which he thinks is very achievable and he doesn’t want to limit factors that are smartphone adoption and affordable data plans. He said, “Without these, I don’t think we will hit a billion in two years,” he said. “Also, when you look at growth you look at the economic S curve, where at a certain point you hit a saturation point. We have not hit saturation point; we are still at the sweet spot of the curve.”
Ironically another company from the Silicon Valley, Snapchat which was in news lately for the alleged remarks from their CEO Evan Spiegel , “app for rich people” and that India, being a poor nation, was not a lucrative market for Snapchat to expand to.
It doesn’t make sense that such a big company could ignore a giant Asian market like India which has so much potential to be internet ready and has huge smartphone market too, when it is such a market for the many global giants since China is such a restrictive market.
BW Reporters
Soumya is a young writer and journalist, with bachelors in Multimedia and Mass Communication. She is an alumini of the Asian College of Journalism, and finds politics and sustainability intriguing beats to work with.
