uncoveringthebusinessvalueinindia-june12

7/27/2019 UncoveringTheBusinessValueInIndia-June12

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Uncovering thebusiness value in IndiaBalancing opportunity withcomplexity

A perspective on India

June 2012


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India had the foundation of aremarkable eight per cent GDP

growth rate in 2009-10 in the

wake of the global nancial crisis.

In 2010-11, it emphasized its

position with an even stronger

GDP growth rate of 8.6 per cent.


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Uncovering the business value in India 3

With a population of 1.2 billion, India is second onlyto China in terms of size. Indeed, according to CFOInnovation Asia, demographers believe that thecountry will overtake China (population: 1.3 billion)in the next 20 years, as 181 million new citizens areborn in a youthful India every decade as compared

to 73.9 million in an ageing China. With the medianage of 25 (versus 35.5 years in China), India has alabour pool unmatched by its Asian competitors. TheUnited Nations predicts that the countrys workingage population (15 to 64 years) will increase by 135million by 2020, thanks to its high birth rate whichdemographers estimate will run until 2050. Europe,China, Australia and the US on the other hand, will

witness a reduction in their workforce.

India had a GDP growth rate of a remarkable 8% in2009-10 in the wake of the global nancial crisis.In 2010-11, it went on to emphasise its position

with an even stronger growth rate of 8.6%. Thecountry attracted US$ 19.43 billion of foreign directinvestment (FDI) in 2010-11. Alongside, growth inthe manufacturing sector was running at 8.1%.

Even though the Indian economy has slowed downrecently in light of the uncertainty in Europe,opportunities for signicant growth are stillpresent. The biggest problem in India has beenination which was averaging at 9.4% in 2011. Withmonetary tightening and slowing growth, inationis expected to plateau to 8% this year and 7.3% in2013. The Indian economy has grown by 6.5% this

year and economists expect it to expand by 7.3% in2013. Even though reduced, this is still the kind ofgrowth that leaders of developed economies can onlyaspire to at present.

While the recent political deadlock had limitedthe efforts to increase access to FDI, the Indiangovernment is expected to pursue this with renewed

vigour over the next two years. The promising FDIdata towards the closure of the nancial year 2011-12 indicates a slight uptrend.

A perspective on India

Economy expected to

increase by

7.3%in 2013

India is second only toChina in terms of size

Population

1.2billion

India represents an enormous opportunityfor global businesses. International trade,across various sectors, is buoyant andhaving achieved US$ 520 billion of exportsand imports in 2007, it is expected to reach

US$1,300 billion in the next two years.


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An appetite for investment

FDI of up to 100% is allowed in the following sectors in India:

Automatic route Approval route Automatic route with conditions

Food processing

Brewing and distillation of alcohol

IT and IT enabled services

Manufacture of consumer and

industrial products (except the ones thatare reserved for small scale sectors, requireindustrial license or are prohibited)

Transportation services

Hotels and tourism

Power

Advertising and lms

Data processing and softwaredevelopment

Business and management consultancyservices

Market research services

Construction of infrastructure Construction of ports and harbours

Accounting and book-keeping services

Health and medical services

Storage and warehouse services

Greeneld pharmaceutical projects

Greeneld airport projects

Broadcasting of non-newschannels

Publishing/Printing ofspeciality magazines

Courier services

Test marketing activities

Single brand retail trading

Tea plantation

Titanium mining

Browneld pharmaceuticalcompanies

18 Non-banking nancial services

- Merchant banking

- Underwriting

- Investment advisory

- Financial consultancy- Portfolio management services

- Stock broking

- Asset management

- Venture capital

- Custodial services

- Factoring

- Credit rating agencies

- Leasing and nance

- Housing nance

- Forex broking

- Credit cards

- Money changing

- Micro credit and rural credit

- Wholesale trading

Construction and development oftownships

Agriculture and animal rearing

Airports

Helicopter and seaplane services

Maintenance and repair services

Flying and technical training

institutes

Industrial parks

Although FDI inows declined in 2009-10 and2010-11, there has been a recent increase inforeign inows. In 2011-12, FDI inows recordeda strong growth of 34% (US$ 12 billion). In

particular, FDI inows into equity capital rose by88% to US$ 36.5 billion.

According to the United Nations Conference onTrade and Development, India still ranks secondin global FDI growth, behind Brazil, and is seen

as one of the top ve attractive destinations forinternational investors. In 2011-12, sectors

which attracted large FDI inows were chemicals(US$ 7.2 billion), services (US$ 5.2 billion),

pharmaceuticals (US$ 3.2 billion), telecom (US$2 billion), construction (US$ 2.8 billion), power

(US$ 1.65 billion) and metallurgical industries(US$ 1.8 billion).


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70% of the CEOsnamed changes in consumer

behaviour and spending asthe major business threat

The growth of the Indian economy is based uponrapid urbanisation, poverty alleviation and buildingmuch-needed infrastructure. This creates signicantopportunities for foreign investment.

In addition to this, India is now Asias biggest buying

economy, and has the worlds largest growing mid-dle class. The 2011 PwC report, Protable growthstrategies for the Global Emerging Middle (GEM)estimated that by 2021, India will have about 600million people constituting its emerging middle-classsegment (See gure below).

This fact has certainly not been lost on Indian CEOs.According to the 15th Annual PwC Global CEOsurvey, 38% of the CEOs interviewed in India statedincreased share in existing markets as the mainopportunity for business growth over the next 12months. However, 70% named changes in consumer

behaviour and spending as the chief business threat.

For global businesses seeking to enter India for therst time, understanding new consumer segmentsdriving Indian growth is important.

Indian businesses have certainly begun to learnthese lessons and now, spurred on by the successesof companies such as the Tata Group, have theirsights rmly set on establishing themselves as truemultinationals.

In many cases, this means nding suitable for-

eign partners. Therefore, the provision of foreigncapital to fund domestic growth becomes critical.Potentially, its this foot in the door that gives themaccess to the rest of the world.

Sources: PwC analysis, NCAER (National Centre for Applied Economic Research), CMI.* The emerging-middle income bracket, PPP adjusted is US$5 - US$15 per capita per day. Alternatively, US$1,850 - US$5,550 per capita per year.

All fgures are reported at 2010 constant prices.


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Characteristics of Indian consumersThe upper crust: This constitutes the afuent upper middle class. Theemphasis here is more on status, luxury and high-value exclusive products.Price does not act as a differentiator. Status is the driving force. Traditionallysmall, this segment has been growing at over 20% in the last few years.

The emerging middle class: Conservative in nature, this demographic hasemerged as a strong segment for CEOs to target. The focus is more on valuefor money than low cost. About 600 million of the emerging middle class

will reside in India by 2021.

The working women: The annual report of the Ministry of Labour andEmployment (2010) puts the number of employed women (in urban areas)at 5.41% of the total workforce, an increase of 1.63% as compared to the lastdecade. Independent, with a yen for taking their own decisions, this segmentholds untapped potential for CEOs to explore.

Gen Y or the millennials: Currently, India is passing through exceptionaldemographic changes. The country has around 500 million people under theage of 25. The Annual Report to the People on Employment by the Ministryof Labour and Employment (2010) projects the proportion of population inthe working age group (15 to 59 years) from approximately 58% (2001) tomore than 64% (2021) of the total population.

Source: Winning in Indias retail sector: Factors for success


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Opportunities amidst complexity

The Indian economy is constantly evolvingand growth opportunities are present acrossmultiple sectors. The 1.2 billion-strong

population is underserved with products andservices, creating a signicant, sustained

investment potential spread across sectorsranging from infrastructure and energyto consumer goods and nancial services.

Despite the obvious attractiveness for foreigninvestors, the question of cost arbitrage

remains. On the plus side, the country has anextensive and growing low-cost workforce.

However, interest rates and energy pricesare high and infrastructure is poor makinglogistics a problem and contributing togrowing ination.

Nevertheless, certain sectors represent bigopportunities for foreign investors. One is coal. Withmore Indians enjoying the trappings of middle-classlife and the country industrialising and urbanising,demand for coal-red electricity is rising almost inline with economic growth. India has the worlds

fth-largest coal reserves and has successfully foundanother carbon-based raw material to generateelectricitya combustible product gas created fromunderground gasication of coal that cannot bemined. It has raised US$ 130 billion over the pastve years, out of which approximately US$ 60 billionhas come from the private sector. This makes it thelargest-ever private-sector investment the countryhas seen. It is expected to grow further.

Despite the discovery of another raw material, thefact remains that India is still unable to extractsufcient coal to meet domestic demand. Another

issue is the Indian governments refusal to privatisethe coal industry and bring in foreign buyers. As aresult, the country is heavily investing in foreign coalassets, particularly across Australia, Africa and theUS, to meet the exponential demand.

As a result of the shortage of coal, electricity needsare not adequately met. The system delivers 10%less electricity than customers want during peakperiods. Additionally, the grid does not reach some300 million people or a quarter of the population.This represents an opportunity for foreign companiesskilled in mining and coal generation technology.

Heavy investments in the coal sector, particularly inunderground mining, will be needed to increase thepace of domestic coal production in India.

Another big opportunity for foreign investors comesfrom the country embracing a system of biometrics.Indias Unique Identication project, also known as

Aadhaar, which means the foundation in severallocal languages, has one goal--to issue identicationnumbers linked to ngerprint and iris scans of everyperson in the country. This will create a database ofmore than 1.2 billion people. This includes everyonefrom Himalayan mountain villagers to Rajasthani

desert nomads, from call-centre employees inBangalore to the street-beggars of Mumbai. It is asystem that will take in more than 300 languages

The biometric initiative

is going to create thebiggest database in the

world. It will have anenormous impact on thebanking model and those

further down at the bottomof the pyramid. It will bea driving force for mobile

banking


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Delhi and Mumbai are fastreaching saturation levels.

In the coming decade, TierII and Tier III cities willcommand the attention ofCEOs around the world.

and dialects, creating a portable national ID thatcannot be faked. It is by far the biggest and mosttechnologically complicated biometrics programmeever attempted anywhere in the world and services

will ow from it.

At the moment, less than half of the householdsin India have a bank account. The rest keep theirsavings in the house. This unbanked money isntgaining interest, either for its owner or for the bank.If these millions of people are able to put the moneyin the banking system, individuals will gain fromthe interest they earn and the nancial system willhave more capital to invest. E.g., if each one puts justUS$ 5 into a bank account, it will add billions in newcapital to the nancial system.

The Indian government has made Aadhaar sufcientproof for opening a bank account and getting amobile phone connection. This will bring a largesection of the population into the nancial sectorand the mobile phone market, creating enormousopportunities for new growth. The government hasalso set in place processes including an ecosystemof registrars enrolling people, enrolment agencies,training agencies that train operators keying in thedata and ngerprint reading and iris scanning devicemanufacturers, for 2012. The new biometrics systemis an enormous opportunity for investors in Indianbanks and mobile phone systems.

PwC Indias Associate Director, David Wijeratnesays, The biometric initiative is going to createthe biggest database in the world. It will have anenormous impact on the banking model and thosefurther down at the bottom of the pyramid. It will bea real driving force for mobile banking.

There are other investment opportunities garneringthe attention of developed economies. There is astrong growth opportunity in power generationled by the exponential growth in the economy, theincreasing propensity for electricity consumptionand expanding urbanisation. Over the next ve

years, India has planned to add close to 75 GW toits power generation capacity. This also offers anopportunity for developing evacuation capacities andsupply-related original equipment manufacturers(OEMs) such as conductor manufacturing,


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insulator manufacturing and tower fabrication. Thecountry is also looking to build a strong renewableenergy portfolio in the coming years. The Indiangovernment is offering a number of incentives suchas preferential tariff and generation-based incentivesto renewable energy developers to accelerate

investments in that space.

The Indian oil and gas sector is replete withopportunities across its value chain and sub-sectors.While securing supplies is a clear priority, the pastexploration activity has been conned to on-land andshallow basins in the country. It is widely believedthat deepwater and ultra-deepwater oil and gasresources hold the key to substantially increasingdomestic production. Indian companies have limitedtechnical and monetary bandwidth or experience toundertake exploration and development activities in

these areas. This creates a plethora of opportunitiesfor strategic investors with relevant technicalexpertise and nancial muscle such as BP (whichhas acquired a 30% participating interest in the oiland gas acreages of Reliance Industries for US$ 7.2billion) to invest in the country through partnerships

with local public and private sector companies.

Infrastructure and road-building is anotheropportunity for foreign investors. Cash-strappedinfrastructure developers are in the market lookingfor equity investment in as many as 40 road projectsin India. Projects are now up for sale because oflower-than-expected toll collection, rising cost ofcredit and bottlenecks in land acquisition. Inuentialdevelopers are also looking for investors to nanceother projects.

GDP by sector in US$ billion

*Projections based on past growth ratesSource: PwC analysis, World Bank, IMF, OECD, World Economic Outlook, The Reserve Bank of India.


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Unfortunately, some Indian towns and villagesstill lack good road connections. Wijeratnesays, This has a big impact on consumer goodscompanies trying to expand out of the main citiesinto the rural market.

There is also a large opportunity in refrigeratedlogistics. The price of food is increasing asagricultural produce comes from rural India.By the time it reaches the cities, it cant be soldbecause it has deteriorated either in transitor through inadequate storage. Therefore,refrigerated logistics is a signicant investmentopportunity and a huge need.

Based on the Indian governments identicationof tourism as a growth area with an aim topromote the country culturally as well aseconomically, Wijeratne comments that thissector also represents an opportunity for foreigninvestment through tour companies and hoteland leisure groups.

Despite these obvious opportunities, Indiasunique market is littered with contradictions.

Indias retail sector is one of the largesteconomic growth drivers and contributes over13% of GDP but only 4% of the 12 millionretail outlets are 500 sq ft or more in size

The soft drinks market exceeds US$ 2 billionand is dominated by Coca-Cola and Pepsi, yetThums up (a domestic brand now owned by

Coke) still dominates this market with a 17%market share

Even though the Indian government is highlyactive in shaping and responding to such issues,it still has a long way to go.

A staggering 92% of CEOs

interviewed in India wereextremely concerned or

somewhat concernedabout bribery andcorruption.


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Building relationships is key

The Indian government is highly active in shapingthe market and all entry plans need to account forthis. Government regulations make India relativelyrestrictive when compared to other developingeconomies, such as Brazil, China and Russia. Thecountry is ranked 132 out of 183 in the annual World

Bank Ease of doing business ranking.

One of the big issues is the war for talent. The 15thAnnual PwC Global CEO Survey reveals that 47% ofCEOs were focussed on creating a vibrant and skilled

workforce. Further, around 66% said they werevery condent about having access to the talentneeded to execute their companys strategy over thenext three years. Neither, the Chinese (38%) norglobal (30%) peers responded with the same sort ofcondence.

The problem, however, is the high degree of churnin the Indian workforce. Studies show that there isa 20 to 30% attrition rate across industries. Laurierecommends companies to invest heavily in trainingas a retention tool. Some might even set up campusesto hold on to their employees in the same way thatIndian rms such as Bharat Forge Ltd have done, sosuccessfully.

Another big issue is graft and corruption. Accordingto the same PwC survey, a staggering 92% of CEOsinterviewed in India were extremely concerned orsomewhat concerned about bribery and corruption.They considered it a major threat to the growth oftheir businesses. The Indian government is awareof this and anti-corruption debates dominatedpolitics last year. The anti-corruption legislation wasbrought into Parliament. It is now in the process ofbeing enacted. The endeavour, if successful, willstrengthen anti-corruption laws by making the act ofoffering a bribe a punishable offence.

Laurie says that companies investing in India need tond local partners for joint ventures. The country,he states, is not one market but many. It is complexand requires working with locals who understandthe scene.

Companies investing in India or setting upoperations will have to work with minority

governments. The Congress party has lostits dominant status. The number of political

parties that contest elections, win seats in

Parliament and gain cabinet portfolioshas increased. Minority governments andcabinet instability are now regular featuresof Indian parliamentary politics. However,the country is not unique in that respect.

According to PwC Partner, Mark Laurie,Its not too dissimilar to what we have seenin Australia. Companies would know how todeal with that.

You cant capitaliseon that unless you

have someone there whounderstands the nuancesand complexities


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E.g., Tier I cities, such as Delhi and Mumbai are fastreaching saturation levels. In the coming decade,Tier II and Tier III cities will command the attentionof CEOs around the world. Out of the 700 mallsplanned in the country, almost 40% are expectedto come up in Tier II and Tier III cities. Jaipur,

Coimbatore, Ludhiana and Chandigarh will beamong the top markets over the next few years.

Several Tier II cities are also witnessing large mixed-use projects in housing, retail, entertainment andhotels. These are attracting big investments andcreating job opportunities.

You cant capitalise on that unless you havesomeone there who understands the nuances andcomplexities, says Laurie.

Strategic partnerships, especially in distribution,are critical in India due to the lack of infrastructure

and appropriate channels. The number of channelsfor several markets is limited and some of them areunique to the country. Thus, creating an effectivestrategy to establish the right relationships acrosschannels should be a critical consideration formarket entry.

These links are particularly critical for working withlarge family-owned companies that dominate theintensely competitive Indian economic landscape.

Organised markets in India are typically dominatedby a few players, Laurie says. Deeply entrenchedplayers are aggressive about protecting their turf

and will resist new entrants in organised sectors.Race to the bottom scenarios are common inservice-focussed industries such as retail andtelecommunications. Entrenched players tend toignore newcomers in markets growing at double-digit rates and with considerable size.

To win in the Indian market, one needs to deploy ashift in mindset to achieve new value propositionsdelivered through innovative business models,starting with the question--What is the need in themarket that I can meet?

Wijeratne says that companies need to invest inthese relationships before they even start.

Any foreign company looking to do business inIndia does need local representation and the best

way to do that is through someone who is there.

These connections provide the foreign companywith access to policy decisions in areas such asbanking and telecommunication. It helps createan understanding of how business is done in Indiaby being a part of the policy discussions, even ifthere is not much room to actively shape them.With signicant presence of large family-owned

companies, the involvement in policy discussionsbecomes even more important.

You have to put aside the time to build almost aone-on-one relationship with that senior familymember, Wijeratne says. Its about understandingmore about the ethos, about what theyre tryingto do with their business and build a personal andprofessional relationship. Do not try to push theprocess too much in the initial stages but at thesame time, show them what they can get out of arelationship with yourself.

But building that relationship can take time. PwC

Indias Strategy Leader, Shashank Tripathi, says thatit has taken him as long as 18 months to do it.


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Sourc

e:PwCanalysis,

WorldBank,IMF,OECD,

World

EconomicOutlook,ReserveBankofIndia,

CIA

WorldFactBook.


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Preparing for a successfulmarket entry

While the growth potential in various Indianindustry sectors is immense, concerns aroundthe economic scenario and political and policyenvironment can make companies looking to enterIndia a little apprehensive.

Attracting FDI and foreign entrants dependson multiple factors such as macroeconomic

Taxation and regulatoryissues can introduce

delays or lower returnsbut shouldnt overturninvestment decisions

environment, business cycle, investment gestationperiod, return on investment (RoI) and businessrisk. The current global environment has seen theEurozone crisis intensify, causing investors to playsafer and focus on lower risk assets and more stablecurrencies.

The effect isnt demonstrated in the depreciation ofthe Indian rupee alone. Amidst the global slowdown,the FDI inows in China fell for the fth straightmonth in March to US$ 11.76 billion as companiescurbed their investment. China received US$ 29.48billion of FDI in the rst three months of 2012, whichis down 2.8% from the previous year. Conversely,India has seen a healthy number of FDI transactionsin the last year.

Besides, FDI has opened up considerably since the1990s and Fortune 1000 companies are present in


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Taking a long-term view

to put the company on asustainable growth path

in India is important

one form or another. The FDI policies are liberal andguidelines are fairly simple. However, the regulatoryframework hasnt complemented the FDI guidelines

well enough since the commitments on policy havenot been met and transfer pricing regulations havebeen tight.

The regulatory framework will benet through quickerdecisions on reforms and their implementation.Further, a tug-of-war between the parliamentaryparties, tax authorities and taxpayers has led to issuesaround the General Anti-Avoidance Rules (GAAR),retrospective taxation and delays in the Goods andServices Tax and the Direct Taxes Code. This is likely tomake rms hesitant to invest in India.

Akash Gupt, Leader, Regulatory Services, PwCIndia, says, Taxation and regulatory issues act asirritants but should not act as critical inuencers forinvestment decisions. These issues can introducedelays or lower returns but shouldnt overturninvestment decisions.

According to Saurav Bhattacharya, AssociateDirector, Direct Tax, PwC India, The GAAR andretrospective taxation have been implemented inother countries. These have been under discussionin India for some time. For companies looking toenter the country, there is greater clarity on what canhappen. They can go ahead to build the uncertaintyaround these issues into their return expectations.Similar issues are not likely to come up again.

However, it needs to be acknowledged that thecentral government is taking steps to correct thecourse. According to Suchint Majmudar, AssociateDirector, Transfer Pricing, PwC India, The AdvancePricing Agreement that the Indian governmentis trying to implement for products and servicesshould boost foreign investment, reduce litigationand add certainty and an unanimity of approachtowards transfer pricing. Additionally, the NationalManufacturing Policy is on the anvil and is likely topromote FDI across the Delhi-Mumbai corridor, inparticular. Implementation will be the key to success.

The recent depreciation of the Indian rupee mayhave lowered the returns from investments made

by global rms in India. However, according toMoodys, the depreciation will help correct themacroeconomic imbalances in the scal and currentaccounts. Gupt says, The currency depreciationis a temporary phenomenon. The RBI is takingaggressive measures to control the slide. It is alsotrying to bring back the money that came as FIIor FDI through different measures. The Indiangovernment is also looking to expedite the capping

of subsidies on liqueed petroleum gas to ensurethat the subsidy burden is reduced, correcting theaccount decits.

According to Majmudar, Even though any newinvestments being made from this point on are likelyto be a lot cheaper for global companies looking toenter India, business plans need to be structured

with a long-term view without resting too heavilyon the currency situation. The population of India islarge and underserved. The growth opportunity thiscreates is here to stay.

Addressing the softer but equally risky issue of graft

and corruption is another area. The enormous socialcost of corruption on the poorest countries of the

world is widely acknowledged, as is its corrosiveimpact on democracy and good governance for therich and poor alike. Less understood is the pricepaid by business. The search for new opportunitiesis increasingly taking companies into emergingmarkets, including the fast-growing economies ofBrazil, Russia, India and China, where they confrontunfamiliar business practices. Being able to managerisk in new environments is a necessity as businessescompete globally. Companies must be able to

condently seek new opportunities without exposingthemselves to undue risk.


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16 PwC

Vidya Rajarao, Leader, Forensic Services, PwCIndia says, In the West, there are clear linkagesbetween actions and their legal implications.However, in most emerging markets, includingIndia, these linkages are not as clear. This makesgood governance extremely important. It is

essential for foreign rms looking to enter Indiato place governance before returns projected fromemerging markets.

Companies need to understand that administrativeand regulatory procedures in India take time ifthey have to be done properly. This can delay thereturns but prevent potential future litigations.

According to Rajarao, Boards need to have thepatience to examine how the high rates of return

will get generated in emerging markets. They need

to ensure that the strong governance standards theyset across the globe or in their home country areinstituted in India even if it comes at an expense ofthe extra 2% year-on-year growth. Taking a long-term view to put the company on a sustainablegrowth path in India is important.

Kunal R Gupta, Fraud Investigation Services, PwCIndia comments, Comply before you invest. Itis important to set up a local compliance ofce

with standards of trust and ethics as strong asglobal ofces. Companies need to set up localhotline numbers for reporting misdeeds by anyoneassociated with them. Finally, it is important to

judiciously differentiate the individual and corporatein assessing indulgence in malpractices.


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How to get started?

PwC has a long and well-established history in Indiain building strong relationships with clients andhelping them grow successfully. PwC Indias Strategypractice has extensive experience in assisting foreigncompanies enter the Indian market. The practiceuses its knowledge of local market developments

and consumer trends to help companies assess thepotential of the market and set realistic growthexpectations. Where opportunities have beenidentied, we help companies devise the marketentry strategy, identifying the value proposition andpositioning required to target relevant consumers,and develop effective business models to executethe entry strategy. We work across a number ofindustry verticals such as industrial products,engineering services, retail, consumer goods,pharmaceuticals, healthcare, aerospace and defenceand telecommunication.

PwC India is able to bring experience from acrossits tax, assurance and advisory businesses to assistcompanies in mitigating the risks associated withentering the Indian market and operating successfully

without succumbing to challenges. The rm utilisesits knowledge of local laws, procedures and marketsto provide companies with policy clarications andguidance to navigate relevant regulations associated

with entering a specic Indian sector.

Building upon the opportunity identication andclarication of regulatory requirements, we at PwCIndia are well-placed to advise and assist companies

in establishing operations through identifyingpotential joint venture (JV) partners, conductingnecessary due diligence and setting up localcompliance ofces.

The immense growth potential of the Indian sectorshas been harnessed well by companies that put inadequate time to understand the nuances of themarket and its practices. Making investments in aphased manner, these companies have graduallybuilt an operating base that helps them sustain high

growth rates.

Leading global companies across various sectorssuch as Foods & Beverages, Engineering Servicesand Healthcare have spent the extra time requiredto abide by regulations in setting up their operatingbases. Now, the Indian operations of thesecompanies have grown into protable businessesthat continue to expand at rates which are thehighest among the global markets that they operatein. These companies continue to invest in Indiaaggressively and some of these are looking to doubletheir investments in India over the next ve years.

Tripathis main piece of advice to foreign companiesis to keep it simple.

You take what your strengths are in your homemarket and try to apply them to the Indian market,taking the time to navigate the countrys nuancescarefully, says Tripathi. It may not be the perfect

way, but its the best way to start.

You take what your

strengths are in yourhome market and try toapply them to the Indianmarket, taking the timeto navigate the countrysnuances carefully


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18 PwC

About PwC

PricewaterhouseCoopers Pvt Ltd is a leadingprofessional services organisation in India. Weoffer a comprehensive portfolio of Advisory andTax & Regulatory services; each, in turn, presentsa basket of nely dened deliverables, helpingorganisations and individuals create the value

theyre looking for. Were a member of the globalPwC Network.

Providing organisations with the advice theyneed, wherever they may be located, PwC Indiashighly qualied and experienced professionals,

who have sound knowledge of the Indian businessenvironment, listen to different points of viewto help organisations solve their business issuesand identify and maximise the opportunities theyseek. Their industry specialisation allows them tohelp create customised solutions for their clients.

We are located in Ahmedabad, Bangalore,Bhubaneshwar, Chennai, Delhi NCR, Hyderabad,Kolkata, Mumbai and Pune.

Tell us what matters to you and nd out more byvisiting us at www.pwc.com/in.

ContactsShashank TripathiExecutive Director+91 98196 [email protected]

David WijeratneAssociate Director+91 981896 [email protected]

Lokesh KhannaSenior Consultant+91 9711 031 [email protected]


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pwc.com/india 2012 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability

company in India), which is a member rm of PricewaterhouseCoopers International Limited (PwCIL), each member rm of which is a separate legal entity.

MS 327 - June 2012 U the BV in India .indd

uncoveringthebusinessvalueinindia-june12

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