Becoming an entrepreneur in India

Doing business in India: the guide to success

Launching an entrepreneurial venture in India can seem complex when faced with the cultural differences and special administrative procedures of this dynamic market. 🚀 India, with its population of over 1.4 billion and its rapidly growing economy, nevertheless offers interesting opportunities for entrepreneurs wishing to set up an international business. In this article, we’ll explore the key steps to making a success of your business in India, from the formalities involved in setting up a company to the specifics of the Indian market.

Contents

1. Defining a business idea
2. Drawing up a business plan
3. Financing
4. Registering your company
5. Creating a network
6. Marketing and sales
7. Managing operations
8. Complying with regulations
9. Comparison

Defining a business idea

Becoming an entrepreneur in India starts with identifying a need in this fast-growing market. 🔍 Analysing the local context will enable you to develop an innovative solution that meets the expectations of Indian consumers. Companies such as Reliance Industries, India’s largest private company, founded by Dhirubhai Ambani, demonstrate the country’s entrepreneurial potential Investopedia. Before you take the plunge, it’s a good idea to understand the important steps involved in becoming an entrepreneur.

Using SWOT analysis is an effective approach to assess the viability of your idea in the Indian context. 📊 This method helps you identify the strengths, weaknesses, opportunities and threats associated with your business project. The specificities of the Indian market, such as its cultural diversity and regional variations, must be taken into account to adapt your Western idea to the local context.

Growth sectors for entrepreneurship in India in 2024

Here’s a look at the most promising business areas for entrepreneurs in India today. 🌟

Legend: Overview of sectors with high growth and investment potential in India.

Drawing up a business plan

Creating a thorough business plan is a fundamental step for any entrepreneur wishing to set up in India. 📝 This document should include your business objectives, development strategies and a detailed analysis of the Indian market. Before you get started, it’s important to understand the key steps to becoming an entrepreneur. Reliance Industries, founded by Dhirubhai Ambani, is a perfect example of how a solid business plan can transform a small textile company into an industrial conglomerate, according to Investopedia.

Financial projections must be realistic and adapted to the Indian economic context. 💰 The Goods and Services Tax (GST), similar to the Europeen VAT, is an important element to include in your calculations. The government’s efforts in the area of digitalisation offer interesting prospects for entrepreneurs in India. Economic research institutes are forecasting an increase of more than 7% in India’s GDP in 2024, a factor to consider in your projections.

Essential elements to include in a business plan for the Indian market

Here are the essential elements to include in a business plan to succeed in the Indian market.

• In-depth analysis of the Indian market, taking into account its diversity.
• A strategy for adapting to India’s specific cultural and regional characteristics.
• Human relations management plan, essential in the Indian context.
• Realistic financial projections, incorporating India’s tax reforms.

A solid business plan is the key to convincing investors and guiding your company in India.

The example of McDonald’s in India shows the importance ofadapting your strategy to the local market. 🍔 The company had to modify its menu to respect religious sensitivities, offering beef alternatives and vegetarian options. This adaptation has enabled McDonald’s to successfully establish itself on the Indian market, despite the significant cultural differences. Similarly, Oyo Rooms, founded by Ritesh Agarwal at the age of just 19, succeeded in revolutionising the Indian hotel industry with an innovative business plan that met the specific needs of the local market.

Financing

Finding capital is a key step for any entrepreneur wishing to develop their business in India. 💰 The Indian market offers various financing options adapted to the different development phases of your business. Between 2019 and 2023, the cumulative financing of Indian startups exceeded $70 billion, which testifies to the country’s dynamism and attractiveness to investors.

India’s technology sector is experiencing spectacular growth, attracting large amounts of domestic and foreign capital. In 2022, this industry generated revenues of 227 billion dollars, an increase of 30 billion over the previous year. Technology exports reached 178 billion dollars, representing more than 51% of the country’s service exports. These figures show India’s considerable potential for entrepreneurs in this sector.

Exploring the financing options available to entrepreneurs in India

The Indian entrepreneurial ecosystem offers different sources of funding depending on your needs and the maturity of your project. 🌱 The year 2023 saw the creation of over 950 new tech startups, bringing the total number to over 31,000 in a decade. This dynamism is attracting investors despite a 40% drop in seed-stage deals observed in 2024.

India offers fertile ground for entrepreneurs thanks to its vast market of more than 1.3 billion people and its pool of engineering and IT talent. Operating costs are generally lower here than in other technology hubs, allowing capital utilisation to be maximised. Around 25% of startups founded in 2023 will incorporate DeepTech solutions, while 70% plan to use generative AI in their products.

Focus on venture capitalists and government programmes specific to India

The “Startup India” programme is a major initiative by the Indian government to support entrepreneurs. 🏛️ This policy aims to facilitate access to finance, simplify administrative procedures and encourage innovation. Tax incentives and dedicated funds are also available to stimulate business start-ups throughout the country.

Around 40% of Indian start-ups are now located in emerging hubs, a sign that the entrepreneurial spirit is spreading beyond the major metropolises such as Bangalore and Mumbai. This decentralisation is opening up new opportunities for entrepreneurs wishing to set up in different regions of the country. Companies such as OYO Rooms, founded by Ritesh Agarwal at just 19 years of age, illustrate the potential for success for young innovative entrepreneurs in India.

Comparison of sources of finance available in India

Here’s an overview of the main sources of finance you can explore for your entrepreneurial project in India:

Legend: Comparison of the advantages and disadvantages of different sources of finance for entrepreneurs in India.

Company registration

To officially set up your business in India, you need to follow several well-defined legal procedures. 🧩 Registering with the Indian authorities involves obtaining an electronic signature for each director, registering directors to obtain a DIN (Director Identification Number) and defining the legal address. The whole process, including name approval andobtaining the certificate of registration, usually takes between 4 and 12 weeks depending on the complexity of your case.

The choice of legal structure is a key strategic decision for your business in India. 🏢 The “Private Limited Company” is particularly popular with foreign entrepreneurs thanks to its limited number of shareholders (between 2 and 50) and its accessible start-up capital of 100,000 rupees (around 1,400 euros). For larger projects, the Public Limited Company requires a minimum of 7 shareholders and share capital of 500,000 rupees (around 7,100 euros), with management provided by a board of directors.

Documents and licences required to register a company in India

Here are the documents and licences you need to register your business in India.

• Electronic signature for each director of the company.
• DIN (Director Identification Number) for all directors.
• Legal address of your company’sregistered office in India.
• PAN (Permanent Account Number) and TAN (Tax Account Number).

Make sure you have all these elements for a hassle-free registration of your company in India.

Creating a network

Building relationships with other entrepreneurs and industry experts in India is a major asset to success. 🤝 Business in India relies heavily on personal relationships. Developing a professional network is therefore essential for any entrepreneur, especially in India. To find out more about the importance of networking for entrepreneurs, read our dedicated article. Events such as the “Bengaluru Networking Meet up” or the “TiE Global Summit” are ideal opportunities to meet potential partners and investors.

The TiE (The Indus Entrepreneurs) organisation plays a key role in the Indian entrepreneurial ecosystem. 🚀 This global organisation has over 500,000 members and offers different categories of membership depending on your stage of development. TiE events offer networking, mentoring and presentation platforms for startups. For example, Byju Raveendran, founder of online education platform Byju’s, has benefited from this type of network to develop his company now valued at over $22 billion.

Marketing and sales

Developing a marketing strategy tailored to the Indian market requires an understanding of the cultural particularities of this multi-faceted country. 🌏 Linguistic diversity and regional preferences play a determining role in the way you communicate with your potential customers. Personal relationships are paramount in India, as trust is built over the long term and directly influences purchasing decisions.

McDonald’s perfectly illustrates this adaptation with its Indian menu, which excludes beef and offers numerous vegetarian options, thus respecting local religious sensitivities. 🍔 The Indian economy, ranked fifth in the world in terms of nominal GDP with a population in excess of 1.4 billion, offers a huge market for entrepreneurs who know how to adapt. Digital marketing is gaining ground, but traditional media still play an important role, depending on the region and the target audience.

Indian consumers are looking for quality products at competitive prices. ✨ They are influenced by family and community values in their purchasing decisions. Brand trust is important, as is customer service. Companies like Flipkart have succeeded by offering services tailored to the specific needs of Indian consumers, with, for example, the option of payment on delivery.

The sales pitch in India needs to emphasise personal relationships and trust. 🤝 It’s important to be patient and respectful, taking the time to understand the customer’s real needs. Negotiation is an integral part of Indian business culture, so you need to be flexible. Rather than focusing solely on technical features, highlight the benefits for the customer and their family.

According to EY, the Indian media and entertainment sector exceeds INR 2.5 trillion in 2024, with advertising revenues growing by 8.1%. 📊 The pricing approaches that work best are those that take into account consumers’ price sensitivity. Transparency is key, and offering smaller versions or economical packaging can make a product more accessible to the Indian market.

Managing operations

Having efficient processes in place is important for the day-to-day running of your business in India. 🔄 Successful companies adopt systems tailored to the particularities of the Indian market. For example, Zomato, the meal delivery platform, has developed bespoke logistics to navigate the congested streets of Indian cities.

The use of digital tools such as artificial intelligence and automation can greatly improve your operations in India. New technologies are spreading throughout the country thanks to the digitisation of business formalities. Some companies are using the Customs Management System (AGMS) to simplify the inspection and tracking of goods.

It is important to develop resilience to overcome obstacles. Faced with the unique challenges of the Indian market, this quality becomes essential for any entrepreneur. As Byju Raveendran, founder of Byju’s, India’s largest edtech company, has shown, perseverance in the face of difficulties is a key factor in success.

Human resources are an important aspect of management in India. 👥 Indian society is highly hierarchical, so respect for authority is paramount in professional relations. Successful companies, such as Infosys, invest heavily in employee training to reduce staff turnover, which averages 13.4% according to KPMG.

The legal working hours in India are 9 hours a day and 48 hours a week. Companies offer various types of leave, from privileged leave to maternity leave. Overtime is paid at double the normal rate, so it ‘s worth factoring this into your financial planning.

The logistical challenges in India can seem daunting for foreign entrepreneurs. 🚚 Overland transport remains the main means of moving goods, with more than 60% of freight transported by road. The Indian government has launched several initiatives to improve the road network and reduce transport costs.

The National Logistics Policy aims to reduce logistics costs from 14% to 9% of GDP. This ambitious project includes the construction of multimodal logistics parks such as Obalapura, designed to relieve road traffic around Bengaluru.

To cope with power cuts that can disrupt your activities, plan for back-up solutions. Many Indian companies like Flipkart have invested in generators and alternative energy systems. These initial investments ensure continuity of operations even in areas where the infrastructure is less developed.

Complying with regulations

Understanding Indian regulations is an important step for any entrepreneur wishing to set up in this country. 📚 Indian labour law aims to ensure fair treatment of employees and requires written employment contracts specifying the position, pay and benefits. Companies need to familiarise themselves with the rules on legal working hours, which are 9 hours a day and 48 hours a week in India.

For import-export activities, you need to obtain an Import Export Code from the Directorate General of Foreign Trade. 🔍 This document takes about 72 hours to obtain if your file is complete. Companies subject to GST (Goods and Services Tax) also receive a unique 15-digit identification number called GSTIN, which is compulsory for all registered importers and exporters.

Understanding and complying with the laws and regulations applicable in India

By complying with local laws, you can avoid penalties that could affect your business in India. 🛡️ The Bureau of Indian Standards is the national body responsible for standardisation and quality certification for certain products. Companies operating in the food sector must obtain authorisation from the Food Safety and Standards Authority of India.

Importance of tax compliance and compliance with Indian sector standards

Tax compliance is an important aspect for any company operating in India. 💰 The Central Board of Indirect Taxes and Customs oversees the collection and administration of customs duties and goods and services tax. Large multinational companies are required to prepare a country-by-country report containing data on the worldwide distribution of income and profits if their consolidated turnover is at least €750 million.

Depending on your sector of activity, different certifications may be required. 📋 For example, the Central Organisation for the Control of Pharmaceutical Standards requires approval for all pharmaceutical products and bulk medicines. Similarly, wireless equipment must be approved by the Wireless Planning Commission, which reports to the Ministry of Communications.

Compare

To succeed in your entrepreneurial venture in India, it is important to test the market before you launch. 🔍 The Indian market is unique and unlike any other, which makes this testing phase a must. A full audit of your business will enable you to assess your chances of success, taking into account constraints specific to India such as manufacturing, exporting and legal aspects.

Adapting to local customs is a key factor in your success in India. 🌏 Apple experienced this bitterly in 2018 with a 40% drop in iPhone sales compared to the previous year, mainly due to prices that were too high and a lack of consideration for the needs of Indian consumers. Initial plans are rarely followed to the letter in this dynamic market, hence the importance of being flexible in this market.

Legend: Comparison of the key elements for setting up successfully in India.

The target audience for doing business in India is extremely diverse. 🧑‍💼 India’s population of 1.3 billion represents a customer base with growing purchasing power, while the Indian government is actively encouraging foreign companies to set up in the country. You can target different segments of your business, from luxury goods to FMCG, depending on your business strategy.

The prices of the elements for doing business in India vary considerably depending on your sector of activity. 💰 It’s important toadapt your prices to the local purchasing power, which is particularly price-sensitive. Detailed market research will help you determine the appropriate prices for your products or services. You should also bear in mind that the cost of setting up a business will vary depending on the location and the infrastructure required for your activity.

Embarking on entrepreneurship in India requires careful preparation, but the opportunities are immense in this dynamic market. 🚀 Thanks to programmes like “Startup India” and a fast-growing economy, foreign entrepreneurs can succeed by adapting their projects to local specificities. Success in this multi-faceted country relies on your ability to respect its business culture while providing innovative solutions.

FAQ

What type of entrepreneur is best suited to India?

An entrepreneur suited to India needs to have an understanding of the local market, an ability to adapt to Indian business culture and an aptitude for seizing the opportunities offered by a growing economy. Perseverance is essential for overcoming challenges, and cultural diversity requires great adaptability.

Innovation is another key success factor. It is important to propose innovative solutions to meet the needs of the Indian market. A major asset is knowledge of promising sectors such as manufacturing, the technology sector and luxury goods. ✨

What business can you set up with €100,000 in India?

With €100,000, several business options can be considered in India, taking into account market dynamics. Buoyant sectors include services, software and hardware, trade and distribution, and renewable energies. ⚡️

The Private Limited Company (Pvt Ltd) is the most popular legal form for foreign investors, with a minimum start-up capital of around €1,400. It can be financed by a personal contribution or via local banks. It can take between 4 and 12 weeks to set up a company. ⏳

Which companies are in high demand in India?

Several sectors and types of business are in high demand in India. E-commerce is growing rapidly, with a forecast of $350 billion by 2030. Personal care, beauty and wellness are also showing strong demand. 💄

TheIndian pharmaceutical industry, particularly in the area of generic medicines, is in high demand. The technology sector in India is growing exponentially. 🚀

How do you adapt your business plan to the specific features of India?

Adapting your business plan to the specifics of India involves understanding the local business culture and market dynamics. It is important to understand Indian business culture, which is centred on the collective and hierarchy. 🤝

It is crucial toanalyse the Indian market, taking into account the young population, growing GDP and expanding middle class. Indian consumers are price-sensitive and look for value for money. 💰

How do you manage cultural differences within your business in India?

To effectively manage cultural differences within a company in India, it is crucial to understand and adapt to local specificities. Indian culture values the collective, where group harmony, solidarity and collective success are paramount. It is therefore important to foster an environment where everyone’s opinion is listened to in order to reach a consensus. 👂

Hierarchy is an essential component of Indian business. Human relations are at the heart of the professional world, guided by the principle “Atithi Devo Bhava” (the guest is God). 🙏

What are the pitfalls to avoid when setting up a business in India?

Setting up a business in India is a complex and lengthy process. Trying to navigate the bureaucracy and tax system alone can quickly become a mistake. Choosing the wrong legal form is also a pitfall to avoid. 🏢

Lack of cultural understanding can play a crucial role. It’s important to understand local cultural expectations and buying patterns. Failing to adapt products to local needs is a major mistake. 🌏