5 Steps to a Successful Business Entry into the Indian Market

In recent years, India has been making significant efforts to secure its place as the world’s third-largest economy. The government has undertaken reforms and created more favorable conditions for foreign entrepreneurs, aiming to present an attractive image to investors and business partners. The development of trade and economic relations between India and the Western world is actively supported by both sides. Therefore, entering the rapidly growing Indian consumer market holds great promise, albeit with its own challenges. After studying the common dilemmas faced by entrepreneurs entering the Indian market, we have developed five specific recommendations to enhance the chances of success.

1. Carefully select your entry point

Just as a play starts with a stage, entering a foreign market begins with thorough analysis. Actively participate in business events and exhibitions, engage with competitors, seek expert advice, and leverage market analytics from reputable authorities and statistical data platforms. Choosing the right location will greatly facilitate your entry, saving both time and money. For instance, if you operate in the technology sector, Bangalore would be worth considering due to its well-developed infrastructure, which includes exhibitions, seminars, and agencies dedicated to this industry. Mumbai is renowned for its support of the media industry, while Delhi is a hub for the political sector. Explore our comprehensive material for further details on different regions and their specific characteristics.

2. Hypothesis Testing, Pricing, and Initial Transactions

During the Customer Development stage, when testing an idea or a prototype for product demand, you may encounter various challenges specific to the Indian market. However, these challenges can be overcome with the right approach.

Product Language: If your company offers a product that targets a specific niche audience, it may not be necessary to immediately translate all information into Hindi or another local language. Instead, consider creating a discount coupon code to assess the demand for your offer and accurately evaluate your prospects in India.

Reviews: Real reviews hold significant importance. Indians tend to search for information about a company on the Internet. Even when working with a warm contact base, it’s essential to be prepared for scrutiny, which may prompt the need to change the contact numbers used for customer calls.

Transactions: One common barrier occurs at the final stage of the sales funnel when a potential customer needs to make a payment. Customers often hesitate to change their accustomed payment methods. Indians are accustomed to using the local UPI (Unified Payments Interface) fast payment system for transfers. Making payments to a foreign bank may appear lengthy and risky to consumers. Moreover, there is a high likelihood of transaction rejection by Indian banks. For smaller amounts, you can consider using payment systems such as RazorPay, Xsolla, or PayYou.

Pricing: When setting prices in both the B2C and B2B segments, be prepared for discounts and concessions. Experts suggest adding an average of 25-30% to the final price. This way, the Indian side will feel satisfied that they have negotiated a significant reduction in price, while you will ensure you do not lose money. Discounts are deeply ingrained in Indian culture, and without offering them, it’s unlikely that people will make purchases from you.

3. Representation and Reputation

Establishing a presence in the Indian market as a foreign company can be done through classic business models. Opening a legal entity is a typical approach, although it is a time-consuming process that can take several months on average, even with the involvement of an intermediary agency. Legalizing your company not only expands your business opportunities but also enhances your reputation.

Another important aspect of registration is the necessity to utilize local services. This includes CRM systems, telephony services, and acquiring services that may not be accessible to foreign companies. Due to the prevalent level of fraud, Indian businesses and consumers tend to carefully verify the info. Therefore, it is crucial that your company name aligns with the product or service you offer, along with a verifiable physical address.

4. Organizing Work Processes

Irrespective of the type of entity you plan to establish, registration with the Ministry of Corporate Affairs and obtaining a license are mandatory requirements. While the process of registering a company in India can be cumbersome, it is achievable with the right guidance. Additionally, you will need a local office to establish a physical presence in the market.

5. Hiring Employees

As mentioned earlier, India has a relatively high level of scams, so it is crucial to carefully verify potential employees. It is not uncommon for candidates to completely rewrite their LinkedIn profiles after being rejected for a job and then approach the same company with a completely updated resume to interview with another HR specialist. To mitigate this, you can request proof of income from their previous job as a means of verification. Alternatively, you can entrust the employee verification process to specialized organizations such as recruiting agencies or detective bureaus.

The hiring sector in India is characterized by certain prejudices. Despite the official abolition of the caste system, certain biases still exist in the mindset of the local population. It is advisable not to insist on hiring individuals who may have reservations based on religious, ethnic, regional, or other factors.

Launching your product and shifting your development focus to the Indian market is a challenging but achievable task. Preparation and perseverance are key factors to make this transition as smooth as possible. Both countries have a vested interest in fostering business partnerships, leading to the establishment of special government departments (such as IEC and REC) that provide support, including financial assistance, to commercial enterprises. In times of crisis, new opportunities emerge, so it is important to promptly test your products and hypotheses, enter new markets, immerse yourself in the culture, and seek guidance by asking questions.

Currently, India benefits from a stable government, which increases the attractiveness of the Indian market for businesses. Political stability aids in making economic decisions and reduces the risk of economic imbalances.

Government initiatives such as Skill India, Make in India, and Digital India have also influenced investors’ choices. Projects like the Smart Cities initiative and increased infrastructure spending are among the recent administrative reforms that have positively impacted India’s appeal as an investment destination.