In July of this year, foreigners invested 4 billion dollars in shares of Indian companies
Blackstone Inc, KKR, Carlyle Group Inc, and EQT AB do not regret billions of dollars in the Indian economy, believing in the miracle of its growth. Parimatch and other companies have high hopes for the Indian economy, but there are obstacles for business in India, which are desirable to remove.
What companies invest in India’s economy?
Bloomberg writes that private firms are adding staff in Mumbai, financing sectors of the entire Indian economy. For example, the KKR fund has invested in eyewear maker Lenskart and school operator Lighthouse Learning Group, and has invested about $3 billion in roads, renewable energy sources and traditional power generation. Carlyle Group Inc. has a stake in VLCC, which develops solutions for weight loss. Sweden’s EQT AB works with Indira IVF, a network of fertility clinics. Blackstone owns stakes in more than 80 companies and has become the country’s largest commercial landlord. Parimatch sees the Indian market as attractive for millions of investments, but is still wary of entering this market.
And the other day, Japanese corporation Toyota announced investments in car manufacturing in India. Toyota Kirloskar Motor (TKM), a representative of the company operating in the Indian market, reported that it will set up a new manufacturing facility in Maharashtra with investments of about Rs 20,000 crore. TKM is headquartered in Karnataka, and already has two manufacturing units in Bidadi near Bengaluru. In Karnataka, the automaker has already invested over Rs 16,000 crore and created about 86,000 jobs across the value chain. Toyota’s total export contribution to India is about Rs 32,000 crore.
“The signing of the Memorandum of Understanding marks a key moment as we move into the next phase of growth in the country, allowing us to contribute to enriching lives through quality mobility solutions, both locally and globally,” said Masakazu Yoshimura, Managing Director and Chief Executive Officer of TKM.
What drives business to invest in India
India is steadily moving towards increasing its own GDP in 2024 to 8%. It is so far the only economy in the world that shows such rapid growth. It attracts investments from international companies and funds. However, the bookmaker Parimatch is unable to invest in the country.
“India is on the cusp of major structural changes in its growth trajectory,” said Head of the Reserve Bank of India Shaktikanta Das. “We are moving towards an annual growth of 8%. The economy has grown an average of 8.3% over the last three years and contributed 18.5% to global growth in 2023-24”, the official added.
Such predictions led foreigners to pour more than $4 billion into Indian equities in July this year, their biggest monthly buying since December, while local funds added $2.4 billion, helping the benchmark NSE Nifty 50 index increase its annual gain to nearly 15%.
“India is a perfect emerging market, thanks to its population and economic growth,” said Kevin T. Carter, founder and chief investment officer of EMQQQ Global, an investment management and research firm in San Francisco. Investors worried about valuations should know that “India is better than it looks,” he said.
Barriers to business
Despite the over-optimism that radiates from the companies – “big wallets” in the Indian market, businesses with smaller capital have to overcome many difficulties to establish themselves in this promising market.
Kanakupillai, as a business consultant in India, warns companies that are going to start a business here yo take into account the local peculiarities of this market. Therefore, we list the challenges that have to be considered by newcomers, which are pointed out by business consultants.
Lack of access to capital
Access to capital is one of the biggest challenges facing entrepreneurs in India. Traditional sources of funding such as banks and venture capitalists are often reluctant to invest in startups due to the high risk. This leaves many entrepreneurs with limited opportunities to fund their businesses.
Comprehensive regulatory environment
India has a complex regulatory environment with several laws and regulations that control various aspects of business. This can be extremely difficult for entrepreneurs, especially for those who are new to the Indian market.
Poor infrastructure
Infrastructure of India is often cited as one of the biggest obstacles to doing business in the country. The country’s roads, airports and ports are often congested and poorly maintained, making it difficult for businesses to transport goods and services.
Lack of skilled labor force
India has a large labor force, but is experiencing a shortage of skilled labor. Many entrepreneurs find it difficult to find skilled workers who can meet the needs of their business.
Cultural differences and language barrier
India is a country of diverse cultures and languages, and it can be quite difficult for foreign entrepreneurs to overcome cultural differences and language barriers. Indian culture is unique and it can be difficult to understand without proper guidance. Communication barriers can also arise if an entrepreneur does not speak the local language or if he or she is not familiar with Indian business culture.
Bureaucracy and corruption
Starting a business in India involves working with a lot of bureaucracy, and the process can take quite a long time. The government has introduced several reforms to simplify the registration process, such as introducing a single-window registration system and eliminating the need for multiple licenses. However, corruption is still rife in some government institutions, which can lead to delays and increased costs.
These challenges also create problems for international companies like Parimatch, who believe in the prospects of the Indian economy. Therefore, Parimatch continues to look for ways to overcome these difficulties, seeking to contribute to the development of the local market.
Parimatch’s problems in India
Parimatch, a well-known bookmaker, is ready to invest millions of dollars in the Indian economy. However, even before it started operating on the market, Parimatch encountered serious problems related to deterioration of the business climate in India. In particular, Parimatch faced the counterfeiting of its brand. The company that counterfeits the brand is still operating illegally in the Indian market, creating image problems for Parimatch’s international brand.
This has complicated Parimatch’s plans for business expansion. Parimatch is an international holding company that is engaged in betting activities and organizes gambling in different countries of the world. Parimatch believes that business conditions in India do not yet allow foreign companies to develop. This, according to Parimatch, seriously complicates business operations in this country and deters foreign investment.
Conclusions
The attractive Indian economy hides a number of difficulties that newcomers to this market have to overcome – from regulatory problems to cultural differences and infrastructure issues. Entrepreneurs should be prepared to navigate the complex business environment of India, which Parimatch faced even before entering the market. However, Parimatch believes that despite the challenges, India remains a land of opportunity for entrepreneurs with a large and growing market.
