Equity investment in India
The equity investment market in India is unique and is on a look out to invest more in manufacturing, construction, real estate, health care and financial services. A firm understanding of an equity market and behavioral adjustments are required from the potential investors, who are novel to the equity investment in India and are looking forward to maximizing their profits.
Skills to achieve success in the investment market in India
In order to attain success and generate profits from the market of equity investment in India, it is necessary for an investor to be well versed with certain skills. Subsequent to the capital required, proper research of the challenging market, healthy dosage of patience and subtle managerial skills are also necessary to be invested in order to obtain success in the investment market.
Trends in equity investment in India
In a research carried out by Evalueserve, an analytics and global research firms state that in 2007, with the growing trends in the Private Equity, India received US $13.5 billion, ranking it amongst the top 7 countries across the world.
The forecasts show that this bursary could easily rise to more than $20 billion until 2010. The firm also claims that there are more than 366 equity investments firms at present operating within India, among these 69 firms have raised the process of funding and are on a verge to commence their maneuvers soon.
BY MINISTRY OF FINANCE – GOVERNMENT OF INDIA
Investment in Indian market
India, among the European investors, is believed to be a good for investment purpose despite political uncertainty, bureaucratic hassles, shortages of power and infrastructural deficiencies. India presents a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the market. No company, of any size, aspiring to be a global player can, ignore this country for long which is expected to become one of the top three emerging economies.
Success in India
Success in India will depend on the correct estimation of the country’s potential, underestimation of its complexity or overestimation of its possibilities can lead to failure. While calculating, due consideration should be given to the factor of the inherent difficulties and uncertainties of functioning in the Indian system. Entering India’s marketplace requires a well-designed plan backed by serious thought and careful research. For those who take the time and look to India as an opportunity for long-term growth, not short-term profit- the trip will be well worth the effort.
Market potential
India is the fifth largest economy in the world (ranking above France, Italy, the United Kingdom, and Russia) and has the third largest GDP in the entire continent of Asia. It is also the second largest among emerging nations. (These indicators are based on purchasing power parity.) India is also one of the few markets in the world which offers high prospects for growth and earning potential in practically all areas of business. Yet, despite the practically unlimited possibilities in India for overseas businesses, the world’s most populous democracy has, until fairly recently, failed to get the kind of enthusiastic attention generated by other emerging economies such as China.
Lack of enthusiasm among investors
The reason being, after independence from Britain 50 years ago, India developed a highly protected, semi-socialist autarkic economy. Structural and bureaucratic impediments were vigorously fostered, along with a distrust of foreign business. Even as today the climate in India has seen a change, smashing barriers and actively seeking foreign investment, many companies still see it as a difficult market. India is rightfully quoted to be an incomparable country and is both frustrating and challenging at the same time. Foreign investors should be prepared to take India as it is with all of its difficulties, contradictions and challenges.
When actually entering the market following are the three basic steps to make a successful entry into India:
- Developing a basic understanding or potential of the Indian market
- Envisaging and developing a Market Entry Strategy
- Implementing these strategies
Developing a basic understanding or potential of the Indian market
The Indian middle class is large and growing; wages are low; many workers are well educated and speak English; investors are optimistic and local stocks are up; despite political turmoil, the country presses on with economic reforms. But there is still cause for worries.
Infrastructural hassles
The rapid economic growth of the last few years has put heavy stress on India’s infrastructural facilities. The projections of further expansion in key areas could snap the already strained lines of transportation unless massive programs of expansion and modernization are put in place. Problems include power demand shortfall, port traffic capacity mismatch, poor road conditions (only half of the country’s roads are surfaced), low telephone penetration (1.4% of population).
Indian Bureaucracy
Although the Indian government is well aware of the need for reform and is pushing ahead in this area, business still has to deal with an inefficient and sometimes still slow-moving bureaucracy.
Diverse Market
The Indian market is widely diverse. The country has 17 official languages, 6 major religions, and ethnic diversity as wide as all of Europe. Thus, tastes and preferences differ greatly among sections of consumers.
Therefore, it is advisable to develop a good understanding of the Indian market and overall economy before taking the plunge. Research firms in India can provide the information to determine how, when and where to enter the market. There are also companies which can guide the foreign firm through the entry process from beginning to end –performing the requisite research, assisting with configuration of the project, helping develop Indian partners and financing, finding the land or ready premises, and pushing through the paperwork required.
Developing up-front takes:
Market Study
Is there a need for the products/services/technology? What is the probable market for the product/service? Where is the market located? Which mix of products and services will find the most acceptability and be the most likely to generate sales? What distribution and sales channels are available? What costs will be involved? Who are the competitors? etc.
Check on Economic Policies
The general economic direction in India is toward liberalization and globalization. But the process is slow. Before jumping into the market, it is necessary to discover whether government policies exist relating to the particular area of business and if there are political concerns which should be taken into account.