1. A Comprehensive Guide to Foreign Business in India
By:
David Fry
Eric Whitlock
Mariana Villegas
Marion Shirley
Spencer Hartwig
A Comprehensive Guide to Foreign Business in India
Our objective, with this presentation, is to share information needed to help make an informed decision regarding a business opportunity investment in India. It is necessary in any case when dealing with a foreign country to first consider their culture.

2. Hofstede Cultural Dimensions
Indulgence
Long Term Orientation
Individualism
Uncertainty Avoidance
Masculinity
Power Distance
The Hofstede Cultural Dimensions are used to assess cultural differences between countries. The Hofstede model has six different dimensions to help understand this assessment. The dimensions are Indulgence, Long Term Orientation, Individualism, Uncertainty Avoidance, Masculinity, and Power Distance.

3. A comparitive look at India and the US
This graph shows the difference India and the US have in the six Hofstede dimensions. This comparison is useful in determining the differences between cultures in these two countries. Uncertainty Avoidance and Masculinity score similarly in both countries, meaning their desire to control outcomes and gain standing are of similar importance. The important elements to look at are the ones that are considerably different.

4. Bridging the Gap Indulgence- Intent to control desire and impulse
Long Term Orientation- The idea that putting off today allows for increased gratification in the future
Individualism- The extent at which people are not interdependent or group oriented
Power Distance- The understanding individuals have that power is not shared equally.
With large scale differences there is more possibility to create tension. With this information we can better avoid possible misunderstandings. The lower score of indulgence in India shows a measure of greater control over impulse and desire than in the US; this is also personified by the drive to save now and enjoy later as outlined in Long Term Orientation. Individualism in this case shows that India is more group oriented and cares less about individual needs and focuses on collective growth. Finally, Power Distance shows the understanding that Indians have of the unequal distribution of power is greater than the understanding individuals have in the United States. This information shows the necessity to focus on the needs of the group and adhere to their paradigm for future prosperity and growth.

5. Political and Legal Starting a business in India takes 20 days
Resolving legal issues in court takes 4.3 years while enforcing contracts takes 1420 days/3.9 years.
Cost of claim is 39.6% which includes cost of court fees and attorney fees
Corruption continues to slow India’s
growth
Although starting a business and resolving legal issues in court takes much more time than in the United States, India has made great strides to improve the business environment. In 2003 it would take over 50 days to start a business. Today, that number is down to around 20 days. Although to resolve a legal issue, usually takes 4.3 years. Enforcing contracts takes approximately 1420 days or, 3.9 years. When it comes to legal issues it is clear India is not a place where issues will be resolved quickly. India also makes sure to charge a large amount of money during this process. A company is charged both court fees and attorney fees which add up to 39.6 percent in some cases. Corruption is a serious issue and India ranks 79th least corrupt country out of 175 countries.

6. Foreign Direct Investment (FDI)
Despite the support and promotion from the government of India there are still some restrictions among different industries and sectors which limit the level of investment by a foreign company. For instance, different sectors have maintained a limit in equity that a foreign company can acquire. In other cases, companies require that nationals fill leadership and administration positions
According to Makeinindia.com, the government created two ways of approval for FDI, the Automatic Route and the government route. First, the Automatic Route implies that companies do not need approval from the government to invest in certain sectors of the industry; however, there is a degree at which companies need to interact with the government to establish a business. Second, government has different levels of equity ownership, that indicate at what percentage of ownership a foreign company needs to apply for government approval

7. Economic GDP
The GDP growth rate is the change in GDP per year. The growth rate for India has been fairly constant and the average growth rate is 6.7%. This tells us that the production and services from India are increasing. This also means that people are spending more money in services and products. Increasing income in India means more opportunity for investments in the country. People have more money to buy services and products.
The Gross Domestic Product or GDP, is the total of all products and services produced annually in a country

8. Economic GNI
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
In the last five years, India’s Gross National Income or GNI per capita of PPP has had an average growth rate of 6.5%. This indicates that the purchasing power of their currency is increasing in comparison to the US dollar. A constant growth in the purchasing power per capita in India may occur paired with GNI PPP. An increase in demand will increase the opportunity for Foreign Investment in this country. In addition, the purchasing power of the Indian Rupee is increasing in comparison to the dollar.
PPP GNI is the comparison of purchasing power of a dollar in the US and a dollar in another country.

9. Currency Exchange Rate
On August 28, 2013 the rupee slumped to a record low near 69 to the dollar because of growing worries that foreign investors (would) continue to sell out of a country facing stiff economic challenges and volatile global markets. The markets failed and investors continued to pull money out of the country to invest in gold. As gold flowed in to India from outside the country, rupees had to be exchanged for dollars to replace them draining the economy and driving it further into a mountain of debt. Reforms and foreign investment began to stabilize the Rupee. Since then the value of the Rupee has stabilized and has not hit the low it faced in 2013.
Note: Spike in August of 2013 and devaluation of Rupee compared to $ USD

10. Other Economic Metrics
India’s unemployment rate has been declining from a high 9.4 percent until the last measurement of 4.9 percent. This bodes well for the populace as they are able to work and have a skilled labor force. Following the unemployment rate, the inflation rate also has been declining from a high in July of 2016, just over 6 percent down to a current low of 2.99 percent in April of this year, India’s prime lending rate has slowly declined but not as rapidly as the two previous metrics. There was a significant dip in the end of 2013 but this was a result of the flow of cash, particularly hard currency dollars, leaving the country to accommodate the large amounts of gold re-entering the country during this hard time when the economy was on the brink of disaster.

11. Regional Economic Integration and Trade Agreements
ASEAN-India Free Trade Zone
Asian Pacific Trade Agreement
The GSTP
MERCOSUR-India
India has a strategic position in Asia because of its location. India is surrounded by many countries and has made bilateral Trade Agreements with these countries. For this reason India can serve us as a platform to extend our business to other Asian countries because of these agreements.
India is a member of the Association of Southeast Asian Nations or ASEAN, and India-Free Trade Agreements, the Asian Pacific Trade Agreement, The Global System of Trade Preferences or GSTP, and Mercosur. India also has bilateral agreements with nations such as South Korea, Afghanistan, Malaysia, Bhutan, Chile, Nepal, Sri Lanka, and Thailand. India has also developed trade relations with the European Union. The relationship between India and the US is still an ongoing discussion. There are several topics that occupy the discussion agenda during trade conferences between India and the U.S. that still need improvement. However, the relation between India and the U. S. is improving constantly and has a promising and profitable future.

12. Regional Economic Integration
India is very friendly to trade. (Both in imports and exports)
India exports most of its goods to The US, United Arab Emirates, China, Hong Kong and The UK
Most of their imports come from China, Switzerland, The US, Saudi Arabia, and The United Arab Emirates
India is a friendly nation with which to trade. They export finished products from their consumption of crude oil and they are still a net importer of oil. Only 25% of crude oil is domestically produced in India, the other 75% they need for their economy growth must come from outside producers, and the majority of this imported crude comes from the Middle East region. The average dollar amount in exported products: 
Refined Petroleum products  ($29.2B), Diamonds ($23.2B), Packaged Medicaments ($13.4B), Jewelry ($9.2B) and Rice ($6.55B)

13. (cont.) India usually runs a trade deficit.
India is the 16th largest exporter worldwide
Top imports are crude petroleum, gold, diamonds, coal briquettes, and petroleum gas.
India usually runs a trade deficit. In 2015 India’s exports were 276 b and its imports were 368 b. (meaning there economy is growing but they are consuming more than they produce). Their deficit difference in 2016 between imports and exports was about 92 billion dollars in the negative.
India is the 16th largest export economy in the world. Their top exports are Refined Petroleum products, diamonds, packaged medicaments, jewelry, and rice. India, imports and exports diamonds to meet the needs of their Gems and Jewelry industry.
India’s main imports are crude petroleum, gold, diamonds, coal briquettes, petroleum gas, organic Chemicals, Aircraft, minerals, Medical equipment, electrical and machinery equipment, precious stones, etc.

14. Product 1: Tablets and Smartphones
Second biggest market in the world for mobile phones and tablets.
Major Competitors
Samsung
Micromax
Intex
Lenovo
The products that we considered viable for a business venture and that have an underserved market in India are: Tablets and Smartphones, ethanol, and Medical Equipment. India is the second biggest market in the world for electronics, including smartphones and tablets. It has an annual growth rate of 24.4% each year. It is expected that in 2019 the number of smartphones in India will reach 650 million units and a value of USD 13.1 bn. The principal competitors in India are Samsung, Micromax, Intex, and Lenovo. According to GrowthPraxis.com, quote: “Tablet PCs have emerged as a viable option to fulfill the communication, entertainment & connectivity requirements of consumers’ on-the-go.” Close quote. Foreign Direct Investment to produce these electronics in India would be the best option. India has low cost high skilled labor, and government is providing attractive packages to investors in this sector.
Production of these products in India would also serve as a platform to expand business to other Asian countries.

15. Product 2: Ethanol for Fuel Use
5% of ethanol required in petrol blending
When domestic suppliers are not able to cover demand, finals users buy from foreign suppliers.
Low cost
Indian government will increase this number to 10% in the coming years.
Demand is high and is continuously increasing.
Ethanol is used in finished gasoline blending and in beverage production. In India the demand for this product is increasing because of new environmental regulations. The government of India requires that finished gasoline contain 5% undenatured ethanol in order to reduce the pollution produced by combustion.
According to the 2016 Top Markets Report, the production of ethanol in India is limited. Only domestic agriculture is allowed to sell ethanol for the gasoline blending. However, domestic producers are not meeting the demand, which has caused final users to buy ethanol from abroad.
The U.S. has already taken advantage of this demand and is currently the largest foreign supplier of ethanol in India.

16. Product 3: Medical Instruments
Increasing Demand in Medical Services is leading the demand for Medical Equipment and Instruments.
USD$ 86 billion total investment required in health care sector.
Equipment for hospitals and clinics.
With an increasing population in India, the demand for medical services is increasing. The government is making an effort to increase investment in the Health Care sector.
“According to the World Health Organization (WHO), Indian per capita health spending stands at just $132 (on a PPP-adjusted basis), ranking 145th among World Health Organization nations and less than 2% of the $8,632 spent in the United States.” With a large increase expected in the next decade there will be a large call for medical instruments, devices and equipment. Private health insurance companies are investing in India due to the growing population and the rising income demand of health care services. The demand for more sophisticated services is opening the market for private hospitals, and Laboratories. 80% of the sector import medical equipment from other countries. By 2025, it is expected that private companies invest up to 80% to 85% of the 86 billion total investment required to cover the needs of this market in India. With the market for the medical sector increasing 180% in 5 years, there is a great opportunity to market such items.
We could sell medical equipment in India with high profits and low cost of production. The tariffs on imports of medical equipment are low, which facilitates the entry of foreign suppliers in the Indian market including products such as hospital beds, medical imaging, ultrasonic scans, and PCR technologies.
Rural areas in India currently have a shortage of hospitals, clinics, and medical care.

17. References:
Accessed 5/9/2017
Thank you.