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Market Entry to India

Venturing Renewable Energy

By: Muhammad Fahim Bin Haja Hamid

5 Current Situation 2. Introduction 2. Country Profile 2.1 Demographic. Conclusion 6.6 Business Culture 3. SWOT Analysis 5.4 Doing Business in India 2.2 Language & Religion 2.3 Government 2.Contents 1. Geographic. Climate 2. The Energy Market in India 4. Reference .

INTRODUCTION In recent days. India had taken various initiative to reduce CO2 emission. The world is going through desperation for renewable.1. .d). More than 300 million of its population are lacking of electricity due to reducing source of traditional energy and increasing cost of production (India Newsletter n.1 Demographic.3 million km2 making India 7th largest landmass(IEA 2011) in the world and the largest peninsula in the world. as India lacks of technology to produce the renewable energy equipment’s on its own. India is in great need for renewable energy by 2030 to tackle their energy issue. 2012). eco-friendly. consisting 28 states and 7 union territories (FOA n. and cost efficient energy source since the CO2 emission index had gone beyond its limit. there had many planning for energy sector to transform to renewable energy since Prime Minister Nerendara Modi was elected (Jyoti Parikh 2009). It is an excellent opportunity for foreign green tech companies to venture in India.d). This paper closely studies the market entry to India from international business perspective for venturing renewable energy business in India. Geographic. COUNTRY PROFILE 2. India is one of the biggest country in terms natural resources (CIA World Factbook n. Climate India has the second largest population of 1. and the total Landmass covers more than 3.d). the word climate change and global warming are arising almost everywhere. 2. India is located in southern part of Asia. It’s clear that there is a huge demand for renewable energy business in India. making India is an excellent place to do business with because of its vast amount of minerals and land space. According to India’s Prime Minister Nerendra Modi during his last trip to US.24 billion people in 2011 (WDI.

). Below just to show where India Is Located: Figure 1 (Geology n. Buddhism and Jainism. and Jainism (0.9%). India is the birthplace of some major religion in the world namely Hinduism. monsoon during June to September.88%). Buddhism (0.35%). and winter during December to February. Furthermore.d. However it can rain heavily sometimes. Sikhism. India has approximately 415 active language which have been spoken in many parts of India and practices 6 different religions namely Hinduism (78.4%) (trekkingagencynepal n.d). Christianity (2. Sikhism (1. Islam (14.8%). . English and Hindi are the two most widely spoken and official language of India which the whole nation able to converse and compulsory to be thought in all school in India (voyagesphotosmanu n.d) Climate in India can be described as a tropical monsoon country.2 Language & Religion India if one the most diverse nation in terms of its cultural and religious aspect. (FOA nd) 2.5%). The country has 4 seasons namely summer during March to June. post-monsoon during October to November. causing floods in many parts of India due to lack of urban planning.

and flexibility from debasement balance by decreases in labor flexibility and exchange opportunity. transportation and general living expenses do vary from province to provinces. whereby the president is the commander of the army.4 Doing Business in India India is one of the best and exciting places to do business with. the policy making is carried out by the prime minister.) 2. (Why invest in India 2011. where all the decision made from there. making its economy the 128th flexible in the 2015 Index. India is positioned 26th out of 41 nations in the Asia Pacific region.6. There are quite a lot of benefits of doing business in India for example labor costs extremely lower than other emerging markets. The president is the head of country and the prime minister is the head of the government.d. The head government offices and central government is located in New Delhi.1 focuses from a year ago. cost of labor. and upper house (Rajya Sabha). Furthermore. human resources. property rights.5 Current Situation India's economy flexibility ranked at 54. India practices bicameral parliament system where it was adapted from British since they ruled India once. the parliament consist lower house (Lok sabha).). . land. With the right business it is easy to turn a profit as it not an easy place to make an honest living or buck (Rissik 1994. Meanwhile.2. The president hold the major power in India. India rank 130 out 194 accordingly to the survey that was done in 2016 for ease of doing business. (VSALR n. and its general score keeps on being below the regional and world averages. full power on judicial and Legislative system of India.3 Government India is the largest democratic country in the world. Its score is around 1.) 2. Other costs such as rent. it is being one of the developed countries in Asia makes it a very good place for business. with humble upgrades in business opportunity. It is also quite favorable when it comes to corporate tax rate compared to other emerging markets.

India was ranked as 7th in terms of the Gross Domestic Product (GDP) at the current value and is set to grow by 7. During the fiscal year between 2015 and 2016 India has set their expectation on growth of India’s Gross Domestic Product (GDP) by 7. Over the past years India has seen multiple changes on the economic growth in financial year 2015 at 7. In recent article published by the World Bank. The state’s presence in the economy remains extensive through state-owned enterprises and failure subsidy programs that cause frequently high budget shortfalls. improving managing public finance. (IMF2015) There was significant changes in the dimension of India’s economy is valued to be at Rs129.3 per cent compared to financial year of 2014 valued at 6. Under the reform minded Prime Minister Modi administration has carried out some essential organizational alterations with a focus on reforming the ineffective and bloated government sector.9 percent. India has promised to become as the world’s super growing economy by the year 2015.23 trillion (1. (IMF 2015) Investments & developments in India India has emerged one of the strongest performers with relevance deals across the globe in terms of mergers and acquisitions (M&A). In the absence of a well-functioning legal and regulatory framework.84 trillion USD) in 2013.1 .India’s state of economic freedom were unmodified more than five years. and improving the business and investment environments. M&A activity raised in 2014 with contracts value US$ 38. India remains a “mostly unfree” economy.57 trillion (2.01 trillion USD) for the year 2014 as compared to Rs 118. (World Bank 2015) Since Prime Minister Narendra Modi elected in 2014 India has witnessed robust reformation in the government systems that greatly enhanced the economic fundamental of India. a weak rule of law exacerbated by corruption in many areas of economic activity undermines the emergence of a more vibrant private sector. (RBI 2015) Market Overview In the recent report by International Monetary Fund (IMF) Outlook April 2015.5 per cent as reported by the World Bank. The Reserve Bank of India have been ordered to strongly monitor the inflation of global commodity material prices so that prices of raw mater doesn’t hike up fast.5 % by the year 2016.

Besides. Narendra Modi.4 billion in 2012. amounting to 38 per cent of the full dealings price. This initiative is predicted to extend the buying power of a mean Indian consumer.6 per cent in 2015 and at 7. Energy and natural resources was the dominant sector. Within the M&A area. Also. lower food costs and higher policy reforms.billion being all over. Mr. is gazing variety of reforms and backbone of unfinished tax disputes to draw in investments. the govt. personal equity (PE) investments enhanced 16 per cent y-o-y to US$ 2.5 per cent in 2016. thanks to improved investment confidence.7 billion involving a complete of 156 contacts. delivering services digitally and to extend the digital skill.2 billion.2 billion in 2013 and US$ 35. marking the very best activity in 2015. Besides. and therefore spur development. has additionally come back up with Digital India initiative that focuses on 3 core components: creation of digital infrastructure. under the made in India initiative. Prime Minister of India. of India. additionally for benefiting investors. . Minister of finance mister Arun Jaitley expressed that the govt. has launched the made in India initiative with Associate in Attention aim to boost up the producing sector of Indian economy. compared to US$ 28. which might boost the demand. that were higher in terms of volume (47 per cent) and price (17 per cent) compared with constant amount last year. (Grant Thornton Group India 2015) India’s Current Projects Numerous foreign firms were putting in their facilities in India’s goal of various government initiatives like made in India and Digital India. the govt. in step with mid-year update of UN World Economic scenario and Prospects. Currently. (Press Information Bureau 2015) Future of India The International fund (IMF) and also the Moody’s Investors Service have forecasted that India can witness a GDP rate of growth of 7. The overall contacts price for the month of July 2015 was US$ 6. India is predicted to grow at 7. is attempting to convey boost to the contribution created by the producing sector and aims to lift it up to twenty five per cent of the value.7 per cent in 2016. the producing sector in India contributes over fifteen per cent of the gross domestic product.

5 per cent. Minister of State for Finance. India now has an economy with a vibrant private sector and a mushrooming middle class. various initiatives like made in India and Digital India can play an important role within the driving the Indian economy. It is vital to get a consultant before making any action that will lead to expansive process. Furthermore. faces increasing challenges to maintain its economic growth. 2015 (Reserve Bank of India 2015) Challenges India have experienced extraordinary economic development since its reforms in 1991. India is leading the countries Bank’s growth chart for major economies.015 as on Dec 1st. a well-functioning and financially-sound energy sector is critical to allow India to sustain further economic growth and reduce negative impacts on its public finance. In the first quarter of 2012. 2012). Exchange rate: INR 1 = US$ 0. growing at seven. To revive the vibrancy of its economy. the Indian economy raised by 5. Since that time.As per the newest world Economic Prospects (GEP) report by World Bank. widespread concern exists over whether India could see the return of a “1991-like crisis” (FT. Indian economy would still grow at 7 to 9 per cent and would double in size to US$ 4–5 trillion in an exceedingly decade. the country has seen a significant reduction in poverty and huge improvements in the standard of living. All business must first get approval from the reserve bank of India to check whether the business proposal is allowed or not. The Bank believes India to become the quickest growing major economy by 2015. This will require an accelerated transition to an energy sector based on market economy. and a depreciating currency. With rushing trade and budget deficits. The PLC model allows the investor to choose various forms ownerships such as joint venture . According to mister Jayant Sinha. In India most of the foreign investors prefers Private Limited Companies (PLC) business model. Setting up business in India Setting up a Company in India requires long admin process that will lead to communicate various authorities. however. the lowest in almost a decade. turning into the third largest economy in absolute terms.3%.

It takes roughly 6 to 8 weeks to establish a PLC in India. Furthermore. and further registration. (Indian Brand Equity Foundation 2015) India´s Wages India wages have increased in the second quarter of 2015 from what it was in the first quarter of 2015.partnership with an Indian partner or with public offering. Table Below shows the minimum standard wages which set by the government. This unique number will enable the government of India communicate the company. the sector backed about 5. Over the days. with highway transportation contributing the biggest share. it provides to the needs of 1. there were numerous conflicts and misunderstanding within the government regarding the rates implementation of VAT and GST which is expected to be implement by somewhere around end of 2017. (Dezan Shira & Associates 2015) Transport and Logistic Infrastructure India’s transport sector is huge and diverse. In India there are three forms of tax that impacts the foreign investors.5 percent to the nation’s GDP. Value-added tax (12. the company must also get approval from state government concerning the land. ports. energy.%) since September 2012. all companies must be applied for a Permanent Account Number (PAN) for taxation process. namely corporate income tax (30% . In 2007. investment value and location approval. Additionally. However. roads. Standard tax on dividend (15%). The infrastructure consists railways. (Database of Indian Economy 2015) .1 billion individuals. Once done setting up the company. water. This makes India ideal place for business due its efficient transportation infrastructure. the company must get approval from the government for license registration regarding pollution control.40%). or fully own the company by 100 % with foreign ownership model. and aviation. there was many tax reform planning to decrease burden for companies and individual income tax.

language and caste is main factors that require to be taken into consideration once doing business in India. Before setting up business in India one must explore some cultural facts and their influence on business culture and rule.6 Business Culture Business Customs of India In such a richly diverse and multifaceted country as India it's tough to convey general conclusions which will be employed by those doing business there. Hierarchy Hierarchy plays the major roles in the business culture of India.20) 2. The peon is responsible from serving drinks to attending visitors in the office.55) High Skilled Wage 43000 INR (USD 647. Regionalism.43) Low Skilled Wage 9000 INR (USD 135. However. English language can help one to communicate to the local because English language is majorly in many parts of India. etc. Mumbai. this system usually cost lots of time wastage for the company because all depend on one person. religion.61) Living Wage 7470 INR (USD 112. the society strictly follows the framework of status and social order. cast. most of them venturing business in India can do as in major cities like Delhi. rule and approach are all differentiated depends on whom you're directing to and the context within which they're being addressed. with various different culture. For instance all the reputation effecting tasks are done by one person who called a `Peon’. Language In India people use different language in different states. If one cannot converse in Hindi. The government of India only recognizes the Hindi language as the official language of India. Chennai and Hyderabad and with a selected class. religion.46) Medium Skilled Wage 20500 INR (USD 308. Meetings & Greetings . Behavior. Statutory Minimum Wage 4160 INR (USD 62.

In India greetings plays a major role in the business culture. the state and central government are the main bodies that responsible for the energy sector with the primary motive of providing energy available to everyone. and hydropower. (Kwintessential 2014) 3. (Financial Times 2015) Coal. since the cost of using coal increased the government finally decided to find other renewable energy source. this is quite a lot of coal been used to generate electricity while another comes from fuel. and so on. wind energy. However. gas. in all meetings protocol required to give a handshake or Namaste. Since the energy demand increased the government alone is incapable to meet its demand. At least 70% of energy must be generated from renewable energy project. the government expects and supports to come up with national level plan. (PricewaterhouseCoopers 2015) The energy sector in India have been traditionally using coal as the major source of energy. India controlled the power sector ever since the day of independence of India. . urbanization and industrialization. Most of the Indian prefers to use to Namaste as sigh of understanding. as demand increases annually. The government of India is currently in need of private companies to come up with new ideas. nuclear. it’s recommended by placing your hand on the chest and slightly bow the head. 28% of coal is exported (Financial Times 2013). biomass. other renewables 44% of India`s energy need comes though coal. There have been numerous projects of renewable energy that have been offered by the government namely the solar energy. biomass. It’s not just performed by saying. fuel. hydroelectric. THE ENERGY MARKET IN INDIA In India energy sector traditionally have been operated by the government owned monopolies due its full capability to operate and provide decent service to its sector. This resulted the government of India to open license to private companies to venture in the renewable energy sector. oil. Since the economy boom in 1990s the demand for energy has been rapidly increased due to its large scale of liberalization.

these are the Indian source of energy.Figure 2 Above figure 2 shows the total primary energy supply in India 2012. (Eia-gov 2012) ENERGY CONSUMPTION SECTORS Figure 3 (Ministry of Environment. Forest and Climate Change of India 2013) As show above in figure 3 their energy consumption in different areas .

The initial aim is to cut the demand by 15% by end of 2015. with introduced limit ascending from 23 GW to 142 GW in 2030. to some extent because of the narrowing hole in the expense of sunlight based contrasted and wind (and its full coverage by the late 2020s). Madhya Pradesh. and so on.Energy consumed by Residents The more rising residence the more energy consumption. which look into just land regarded suitable for wind turbine installations. however their viewpoint is hosted by higher speculation prerequisites and costs. measure and land use. with around 90% of the potential in the conditions of Tamil Nadu. Maharashtra and Gujarat. to make agreements on a suitable structure for force buys by dispersion utilities. put add up to coastal wind power potential with a center point stature of 100 meters at 302 GW. introduced wind limit develops at not as much as a large portion of the pace of solar PV. Costal wind ranches bypass land obtaining issues. Karnataka. Another approach to overcome issues connected with area buys is to construct wind towers on . but rather by various difficulties. and the far reaching nature of solar powered assets that makes it workable for expansive utility-scale solar based activities to be assembled closer to request focuses. The latest authority gauges by the National Institute of Wind Energy. the country came up with various plans to reduce the demand. turbine statures. Its main target of energy efficiency plans are the industry. contingent upon diverse desires of proficiency. (MOEF 2015) Wind Energy in India The capability of wind energy in India are exceptionally tremendous. transportation. Rival with solar power is another element constraining further development in wind power: notwithstanding multiplying unequivocally. Most of the energy to residences are coming from Coal due to its consistent supply. energy consumed by residence is forecasted at 10%. Further advancement is not compelled by absence of wind assets. (MOEF 2015) Industries Energy Efficiency Since the government of India accepted the reality of growing energy demand. Andhra Pradesh. The most encouraging locations are in the west and south. running from area procurement and endorsement procedures. Wind power era is anticipated to increment unequivocally. especially in remote areas.

Strengths  Efficient workflow • Enormous Engineering skills • Good quality • Ordered workflow • Highly Experienced • Good customer relationship • Reliable people . 2015) 4.existing farmland. without prejudicing their capacity to cultivate the area. (National Institute for Wind Energy. permitting agriculturists to raise extra salary from charges to the administrators. SWOT Analysis This SWOT analysis is for the renewable energy companies that are interested in Entering the South India Market.

Weaknesses • Lack of in depth knowledge of Indian market • Less culture knowledge • Less acquaintances • Different places with totally different culture • Language differences • Funding risks Opportunities • Government stability • Strong legislative framework • Solid financial network • Availability labor force • Up-to-date and broad infrastructure • Satisfactory tax rates • low labor costs • Suitable climate • Cheap rental cost .

making the foundation for increased investments. Due to this a lot of opportunities has been given for real increase in expenditure. It being one of the well developed nations in Asia which makes it a decent place for business. India´s infrastructure is one of the best in the whole of Asia. there are a considerable amount of advantages of venturing in India contrasted with other developing countries. Moreover. these things cannot be avoided instead we should use it in our process of increasing our opportunity. Threat • High crime rate • Traffic jams and pollution in some major cities • High corruption level • Lack of knowledged workers • Laws of employment • Government policy • Unstable currency rate In conclusion based on the SWOT analysis there are many opportunity there are all can be applied in the target market. 5. India's Economic dependability level that has been accomplished has not been found in the country for a long time. social services and reduce of costs and risks for investors. Even there are some challenges and threats in the analysis. . I hope by using this market entry strategy research any foreign renewable company can penetrate the market effectively into India. Conclusion In conclusion India is one of the best and beneficial place to do business.

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