Economy

According to a global survey on business, India is among the top five economies for ease of launching a new business

According to a global survey on business, India is among the top five economies for ease of launching a new business


According to a global consortium of over 500 researchers, India is among the top five most accessible places to establish a new business. Their latest analysis ranks the country first among low-income economies on various entrepreneurial framework conditions. 

The Global Entrepreneurship Monitor (GEM) 2021/2022 study data was acquired by a survey of at least 2,000 respondents in each of 47 high, medium, and low-income economies, which was unveiled at the Dubai Expo.

According to the study of Indian respondents, who were asked about their entrepreneurial activity, attitudes toward business, and perceptions of their local entrepreneurial environment, 82 per cent believe it is simple to start a firm, putting India in fourth place globally.

Eighty-three per cent say there are strong possibilities to start a business in their area, which is ranked second globally, and eighty-six per cent believe they have the skills and knowledge to start a business, which is ranked fourth globally.

Furthermore, 54% of respondents cited fear of failure as a reason for not planning to start a new firm in the next three years, ranking India second out of 47 countries on the list.

 

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According to the GEM report, India ranked first among low-income economies (based on GDP per capita) in several Entrepreneurial Framework Conditions, including Entrepreneurial Finance, Government Policy: Support and Relevance, and Government Support: Taxes and Bureaucracy, with Government Entrepreneurial Programs coming in second.

However, the findings revealed low entrepreneur growth expectations, with more than 80% of Indian entrepreneurs expressing much lower growth forecasts than the previous year.

Dr Sreevas Sahasranamam, a Senior Lecturer in Entrepreneurship and Innovation at the Hunter Centre for Entrepreneurship at the University of Strathclyde in Glasgow and one of the report’s eight authors, said: “The fact that over 80% of respondents in India agreed that it is easy to start a business in the country, placing India among the top five economies globally, reflects an entrepreneurial ecosystem that has improved, due to government initiatives like the National Entrepreneurship Policy.”

Entrepreneurial inclinations among the general population and growth expectations among entrepreneurs, on the other hand, are still low, according to him.
“As a consequence, there is a need for a culture shift to reduce people’s fear of failure, as well as support for scaling up new initiatives.,” he said.

“Entrepreneurship has become a critical factor for sustainable economic growth and has enormous potential to offer employment opportunities,” stated Dr Sunil Shukla, Director-General of the Entrepreneurship Development Institute of India and GEM India National Team Leader.

“Developing a national entrepreneurial mindset has become a top priority for governments and society around the world. In the Indian context, a holistic approach to entrepreneurship development can bring transformational changes to the country’s socio-economic environment, given its socio-economic difficulties and its size and scope,” he stated.

Furthermore, according to study data, more than 77 per cent of entrepreneurs are looking for new chances due to the COVID-19 epidemic, which has India ranked #1 out of 47 countries.

This observation supports the findings of a paper released last year by researchers from the University of Strathclyde and King’s College London, which found that nearly 60% of Indian entrepreneurs expect COVID-19 to have a long-term positive influence on their enterprises.

“We saw a clear association between national income and the share of startups in business services, like professional services and communications,” Sreevas continued, “with this share typically being significantly larger in high-income nations than in low-income economies.” As a result, supporting new startups in differentiated, knowledge-based high-value business services rather than consumer services may improve the development trajectory of developing economies like India, paving the way for the country’s USD 5 trillion economic aspirations.

“While low-income economies have a high level of entrepreneurial activity, their job creation ambition is low, and so may not easily translate into job-intensive established businesses in the future.” In such economies, an emphasis on training and other forms of company development support to help venture scaling-up is required,” he noted.
According to the GEM survey, more than half of entrepreneurs in 15 of these 47 economies agreed that the epidemic had resulted in new business prospects.
Only nine of the 46 economies were in this situation in 2020.

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GEM is a global network of national country teams, most of which are affiliated with renowned academic institutions that conduct survey-based entrepreneurship research worldwide.

It is the only global research source that collects entrepreneurship statistics directly from business owners.

GEM’s Adult Population Survey examines the characteristics, motives, and goals of people who are establishing firms and societal attitudes regarding entrepreneurship.
The National Expert Survey examines the national environment in which people start enterprises.

India is today considered one of the world’s most strong economic forces. Despite its status as a developing country, India’s economy has a substantial impact on global trade. Most of the world’s developed countries want to establish or improve ties with India. Due to its vast market base and fast-rising purchasing habits of middle-class Indians, India is a favoured investment destination over other major countries, independent of geography. India values diversity and has a 5,000-year history of welcoming foreigners, making it easier for a foreigner to start a business in the country.

To streamline the process, some companies instead of register a company in India, they have a Global Employer of Record as partner. This company allows them to speed up HR processes such as payroll, recruiting or hiring overseas without the entity.

 

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India is a fantastic destination to do business because it is the world’s fastest-growing country and economy. Foreigners who start enterprises in India have various advantages, ranging from a large pool of skilled specialists to government support for business-friendly rules, enticing foreign policies, and a qualified workforce.

 

Let’s look at some of the benefits of starting a business in India as a foreigner:

 

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Large Population


Large Population Macroeconomically, one of the critical advantages of beginning a business in India is its broad population and a large market without borders with well-established logistics. India’s young population and expanding economic strength will be a magnet for global enterprises for decades to come.

 

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Comprehensive Tax System


India has a large number of tax treaties with other countries. Furthermore, the Direct Taxes Code and the Goods and Service Tax (GST) have recently been amended in India to make doing business easier.

 

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Business-friendly Laws


In recent years, several key bills that benefit most industrial sectors have been passed in the Indian Parliament. The Commodities and Services Tax Bill has improved the efficiency of goods transportation in India. The Direct Taxes Code Bill intends to simplify the tax law. The Land Acquisition Bill, on the other hand, will be the most essential (and divisive) bill. The Companies Bill was also passed, bringing India’s corporate law up to date for the twenty-first century. Such pro-business legislation makes it straightforward for foreign businesses to carry out their plans to enter India.

 

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Low Operational Cost


There is a noticeable distinction. Infrastructure, phones, internet, labour, salary, and anything else needed to start a business can all be done for a low operational cost. Furthermore, workers are willing to work for a low wage. Not only that, but India’s tax policies are very mild compared to those of other countries, lowering the cost of doing business.

 

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Financial System in India


India’s financial system is well-regulated, with access to developed markets throughout the world and the ability to raise funds from a variety of sources, all of which are subject to RBI laws and regulations.

 

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Vast Trade Network


India has a vast network of technical and management institutions that comply with international standards and are backed up by regional and bilateral free trade agreements. There are also a number of trading partners with whom to do business. High-quality human resources are produced by these institutions.

 

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There is a sizable English-speaking community in the area


India has a substantial English-speaking population for business purposes. Because of the historical ties between the UK and India, Indians have a high level of English. Even though Indian English has a little different accent and vocabulary than British or American English, international organisations would benefit immensely from graduates’ ability to speak English fluently and their knowledge of the numerous local Indian languages. Due to the low linguistic barriers, doing business in India appeals to multinational corporations.

 

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Work Ethics in India and the Working Class


Indians are famed for their work ethics all across the world. A combination of workaholic temperament, enthusiasm to learn, and a never-say-no mindset differentiates Indians from their South Asian peers. Furthermore, the huge share of the Indian population in the working-age category, i.e. 18 to 65, extends the time that services are available in the Indian market. The youth have come out of the closet and are looking for opportunities. Companies may take advantage of this opportunity by increasing production and creating jobs.

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Government’s initiatives


The Indian government has made a number of efforts to promote foreign investment in the country’s diverse industries. It has established a variety of attractive strategies and initiatives to entice investors on a regular basis. Individual ministries of multiple industries have made specific efforts to simplify foreign investment rules and procedures in their respective businesses.

 

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Startup India Movement


The government is implementing a number of changes as part of the ‘Startup India Movement,’ which aims to increase prospects for FDI and business partnership. To assist businesses in dealing with outdated laws and regulations, some efforts have already been taken. This reform also complies with the World Bank’s “Ease of Doing Business” criteria, which will help India enhance its rating.

Mineral and agricultural resources abound in India. It has experienced a significant surge in offshore outsourcing and manufacturing in the previous two decades, which has benefited India’s rapid economic expansion. It’s intriguing to see how doing business in India benefits foreign firms and investors.

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Three Reasons Why International Companies Should Continue to Invest in India

 

India’s economic prospects have sparked a heated discussion. On the one hand, Prime Minister Modi stated at the 2018 World Economic Forum that India’s GDP, which is presently the world’s fifth-largest, will double to $5 trillion by 2025. On the other hand, the media has highlighted the country’s shallow middle class, rising inequality, joblessness, and a trail of multinationals dissatisfied with India’s lack of China-like success.

While India remains a challenging market, there are at least three reasons why international companies cannot afford to ignore it.

 

Infrastructure spending in India has increased. Infrastructure spending, such as airports, cities, hotels, ports, highways, bridges, hospitals, and power plants, has been expanding. For example, in the last three years, the newly established state of Andhra Pradesh has made significant investments in infrastructure development. Since 2014, India has increased its solar generating capacity eightfold, achieving the aim of 20GW four years ahead of schedule. Over the next decade, India expects to catalyse $200–$300 billion in new investment in renewable energy infrastructure.

Industrial firms such as JCB, Cummins, AECOM, General Electric, and investors like Brookfield have profited from India’s infrastructure projects. In reality, India accounts for half of JCB’s global profits. India will require $5 trillion in infrastructure investment to maintain its economic growth, yet local Indian enterprises lack the necessary skills. This means that multinationals with core strengths in high-tech infrastructure solutions like jet engines, turbines, CT scanners, and satellite communications have a lot of room to grow.

 

India’s growing middle class is a force to be reckoned with. True, India’s business environment presents hurdles to all consumer-facing businesses. Nonetheless, certain global consumer brands, such as Unilever, Xiaomi, Suzuki, Hyundai, Honda, LG, Samsung, and Colgate, have excelled in the middle of the economic pyramid despite hurdles and limits.

Consider two consumer success stories in India: Amazon and Renault’s ultra-low-cost Kwid vehicle. Amazon entered India in 2013, after two native Indian companies, Flipkart and Snapdeal, had already established themselves as e-commerce market leaders — and went on to become the country’s largest online retailer. The country has added new consumers at the quickest rate in Amazon’s history of global operations, including the United States.

Similarly, when Renault launched the Kwid in India in 2015, Maruti and Hyundai controlled about 70% of the country’s enormous and rapidly rising subcompact car market. Kwid has captured 15% of the market in just two years. Renault has also introduced the Kwid to other areas, including South America.

Amazon and Renault can succeed in India’s consumer sector due to three factors. First and foremost, their CEOs are committed to the market strategically and long-term. Jeff Bezos, the CEO of Amazon, and Carlos Ghosn, the CEO of Renault, see India as a long-term hub for middle-of-the-pyramid technologies that can service all rising and even developed markets.

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Second, they establish strong local teams in India and reallocate resources and decision-making authority to the country. Amit Agarwal, the CEO of Amazon India, and Sumit Sawhney, the CEO of Renault India, have a lot of freedom to develop in India. Third, they refine their business strategies and create items that appeal to the emerging middle class while remaining affordable and accessible. Renault’s Kwid and Amazon’s e-commerce models are entirely tailored to the Indian middle class’s wants.


Apple is doing the exact opposite in the world’s second-largest smartphone market. Apple’s iPhone has a 2% market share, while Samsung and Xiaomi are tied for first place with 23% apiece. One explanation for this is that Apple appears to be waiting for Indians to get wealthier to match its business model. In contrast, competitors Samsung and Xiaomi have products and pricing tailored to Indian consumers.

As difficult as India is, most global corporations have greater difficulty learning to adapt their tactics to various markets rather than simply copying and pasting their existing market models worldwide. Companies that want to flourish in India must be willing to start with a blank sheet of paper and design their way to the top of the pyramid.

The country is experiencing a technological startup boom. The ability to participate in one of the world’s richest tech startup innovation ecosystems, rather than the size of the market, is the most compelling reason why India should continue to matter to global corporations. The startup environment, which is now the third-largest in the world, is fast developing and is no longer dominated by copycat e-commerce businesses. Nearly $20 billion has been invested in tech businesses in the last three years.

Three sources are fueling this surge. The first is India’s technological infrastructure investment. Government agencies and tech volunteers have collaborated to create “India Stack,” a set of APIs that provide a common digital foundation for governments, enterprises, startups, and developers to construct and offer presence-less, paperless, and cashless services.

The ability to participate in one of the world’s richest tech startup innovation ecosystems, rather than the size of the market, is the most compelling reason why India should continue to matter to global corporations. The startup environment, which is now the third-largest in the world, is fast developing and is no longer dominated by copycat e-commerce businesses. Nearly $20 billion has been invested in tech businesses in the last three years.

Three sources are fueling this surge. The first is India’s technological infrastructure investment. Government agencies and tech volunteers have collaborated to create “India Stack,” a set of APIs that provide a common digital foundation for governments, enterprises, startups, and developers to construct and offer presence-less, paperless, and cashless services.

The second aspect is India’s massive customer base and its large, well-educated, youthful talent pool. India is difficult to beat in terms of sheer numbers. India’s 10,000 engineering institutes generate more engineers than China and the United States combined, and the country’s workforce grows by 10–12 million every year.
The third point is that India’s problems are intractable without technology. In comparison to its 1.2 billion people, India, for example, has a severe deficit of hospital beds and medical experts.

Similarly, there are too few instructors and universities in the education sector. Clearing the backlog of pending legal cases could take up to 30 years in the judicial system. Only by successfully using technology can financial services, education, health care, justice, and various other services be supplied. This means that tech entrepreneurs in these sectors will have a lot of potentials, and we’re already seeing innovative tech companies enter the Indian market.

Finally, India is a paradox: it offers enormous prospects while also posing enormous challenges.

The main problems are:

  • Bureaucratic rules and regulations.
  • Strong labour unions.
  • Corruption.
  • Weak institutions.
  • Limited physical infrastructure.
  • Land acquisition difficulties.


However, if a corporation can overcome the obstacles, the reward is enormous. We’ve already mentioned a few corporations that have broken India’s code. More people should follow in their footsteps.

Edited and published by Ashlyn Joy

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