You are on page 1of 6


General overview:
India is the vast country situated in southern Asia. India has shared its border with china and Pakistan,
Nepal, Bhutan and North. There still exists the small disputed with Pakistan which share border with
Afghanistan. India is surrounded by the Bay of Bengal, the Indian ocean to the south and the Arabian sea
to the west. To the north side of India there is Himalayan range. India is the second most populous country
with the population 1.21 billion people and 29 percent of the population living in urban areas. India has
more than 2,000 ethnic groups. India has the 29 states and seven union territories with new Delhi as the
capital. Languages in India is Hindi and is spoken in the major cities of India. English is also spoken in the
major cities of India and 21 other languages also spoken in India. The main religion of India is Hinduism,
Islam is 13.4 %, Christianity is 2.3. literacy of the country is 61 % and having life expectancy is 67. 14 years.
currency of India is rupee. India has the world 11 largest GDP in the world. The GDP crosses $1.843 trillion
in 2011. Trade partner of India are china, US, EU and the UEA. Sprawling over a land of 3,287,263 sq. Km,
India has a vast and varied geography. The four geographical regions are north, plains of the ganga and
the Indus, the desert region. 5.78 million foreign tourists visited the country in 2010.

Economic factor of India:

The economy of India is better than other emerging countries due to low oil price. The india economy
increased by the 7.1 % in 2017, driven by a rebound in industrial activity, especially manufacturing and
construction, and an expansion in agriculture. The forecast for the fiscal year of 2018 is 6.6%. india fiscal
deficit for the year of 2017 is $5.25 trillion. Overtook by the budget estimate of 96.1 % for 2017-18, due
to rise in expenditure with the depth of GDP ratio remaining high 67%. After election the government has
imposed tax on many goods and imports to strengthen the country economy. Major decision taken by the
government in 2017 was to declare that india highest-denomination banknotes-accounting for 86% of
cash. India government has done major operation to take black money out, thus have positive impact on
the is expected that india would become the number one populous country by 2024. India has
the world largest youth population. India continues to suffer from a low GDP per capita, almost 25% of
the population still lives below the poverty line. The richest 1 % population own 53% of the india and the
country inequalities are very strong, and the unemployment rate will stand at 3.5 % in 2018.
Main sector of industry:
Agriculture contributes 16.8% of the GDP and employs around 47% of the active population. This is
strengthening the economy and the GDP increase occur. The agriculture production of india are wheat,
millet, rice, corn, sugar cane, tea, potatoes and cotton. Economical advantage of india also due to second
largest production of cattle, and fourth largest fishing product in the world.

The industry sector employs less than one-fifth of the workforce and accounts for 28.9% of GDP. Coal is
the country main energy source. Textile is another bigger industry and the chemical industry is the second
largest industrial sector. Rapidly growing software side and IT market has been boosting the export of
services and modernizing the Indian economy. McKinsey & Company report, more than half of the 3.9
million people employed in the Indian IT sector.

Socio-culture of india:
India culture is about 4500 years ago. Sa Prathama Sanskrati Vishvavara the first and the supreme culture
in the world. India culture having one of the best architects of Taj mahal, having mathematician and
medicine. Today, India is a very diverse country, with more than 1.2 billion people. The family values are
very high throughout india and are fundamental in daily life. According to india culture in which the
structure of the family is patriarchal; a woman must obey her father, her husband, her son. Arrange
marriages are the common places. Urban middle class people are running away from the arranges
marriages. Families are often live with the three or four generation in the same household. Tradition are
of dowry and the child care should be provided by the female. India has one of the oldest cast systems in
which people are divided into Brahmins, Kshatriyas, Vaishyas and Shudras, brahmins are the teacher and
the intellectual people, Kshatriyas, the warriors and rulers, there can be thirty cast in one village living
together. Patriarchal families are the norm, women are considered as the secondary position within the
home, 82.14% of males and 65.46% of females are literate.

Political factor:
Being the biggest democratic country in the world india is running on a federal form of government. The
whole political environment is greatly influenced by the political parties, politicians’ interest and
ideologies of the several political parties. Due to which the business of the country is greatly affected by
the political parties that are governing the state. The reforms made by them often suit the business terms
and compel foreign investors to invest in the India to get the international business inside the country to
increase the GDP. The taxations system of the country is well-developed and several taxes, such as income
tax, services tax and sales tax are imposed by the Union Government. Privatization is also influenced and
the government encourage free business through variety of programs.

Technological factor:
Technology can change the buying pattern of the business. India is very rich in technological term having
own mobile manufacturing companies. Due to strong IT market it can change the customer behavior could
be changed due to online shopping and home delivery of the goods. Organization produce to sell, but if
the spending power of the customers decreases or they become average to particular type of product or
service, the organization will be affected immensely. Due to technologies modernization is indicated by
the change in people food habits dress and speaking style to ease of availability of everything. The industry
is characterized by heavy, fixed capital investment due to modern technologies. Social changes also occur
due to technologies. Mechanistic approach viewing the universe as a collection of parts, that can
individually analyze and understood. Opportunities the contribution of the internet economy to the
country gross domestic product is expected to increase from 4% in 2010 to 5.6 % in 2016. Also, the number
of billion-dollar Indian companies from 141 fiscal year 2010 to more than 700 by 2020.

Natural resources of endowment factors:

Endowment factors are those which give country economic advantage over other countries by effecting
the opportunity cost of specialization in producing goods relative to others. India as an agricultural country
having waste scale production of wheat, rice and cotton. Natural resources of india are coal, gas, gypsum,
textile, tea and gold. India is producing a lot of quality tea and Rice and export it to the other countries.
India is divided into five regions on the climate changes and weather changing phenomenon. Climate is
another natural resource that provides an export advantage, sea and other diverse weather make it ideal
for different crops production in different weather. Another factor is the technology and the labor
availability for manufacturing the goods in the industry. Due to great population the unemployment rate
is very high which tends to produce the labor at very cheap rate assisted by the latest technology to fulfill
the common need of people and producing goods at industries. The cost of the labor is very low in india
to produce and manufacture textile, civil work and in the medicine industry.

Foreign currency and exchange influences:

The exchange influence of the rupee on the international market depend upon the following factors.
The Relative Price Levels:
If the restriction upon the exchange of currency does not imposed by the country than the exchange can
be adjusted freely. If the price of the BPL TV set is lower in Britain than it will pay the buyer to buy the set
in Britain and sell that in india. So that the price level is set and the difference in prices is eliminated. And
the exchange rate is determined by the relative price level in two countries.

Rate of inflation and exchange rate:

Suppose the india has the higher rate of inflation than America. Higher rate of inflation causes the rises in
the prices of goods, in india compared to USA. It will make US goods cheaper than Indian goods. This will
increase the imports by the Indian citizens. This will increase the demand of the $ compared to rupees.

India trade policy:

The trade policy of india is described as follow.

 In the midterm foreign trade policy of 2015-20 the minister of commerce and industry has
enhanced the scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from
India. For ready made garments the tax has been increased up to 2 percent by SEIS. And also
increased the validity of the duty credit script from 18 to 24 months.
 In September the duty of the 28 milk items export also increased.
 All the import and export are monitored by the foreign trade policy.
 FTP enhances the trade policy of the country by increasing the exports as a trade expansion as an
effective instrument of economic growth.
 The department of commerce increased the tax and also include some additional items under the
Merchandise Exports from India Scheme (MEIS) to support exporters.
 CBEC has developed the integrated declaration.
 Under FTP india has signed the Comprehensive Economic Partnership Agreement with South
Korea to increase the exports and imports.

Barrier and incentive in business:

Any opposition to the trade is called trade barrier. Trade barriers can either be tariff barriers and non-
tariff barrier. Some of the following policies are under.
Import license:

The india has removed its licensing requirement for customer goods. For example, the Indian government
imposed the extra duty tax on the motorcycles and vehicles that is very restrictive. India maintains a
"negative list" of imported products subject to various forms of nontariff regulation. India treats boric acid
imports to stringent restriction. The united states urged india to eliminate its imports licensing
requirement on boric acid and other material.

Standards, testing, labeling & certification:

The Indian government has identified 109 commodities that must be certified the national standard body.
Food safety and the standard authority of india act 2006 is to ensure the quality of the foods seeking into
the market.

Anti-dumping and countervailing measures:

India imposes these from time-to-time to protect domestic manufacturers from dumping, it increase the
raised in the transparency and due process.

FDI of india:
he total FDI investments in India April-June 2018 stood at US$ 12.75 billion, In 2018 the highest FDI of
$2.43 billion of USD. Followed by the $1.43 billion by trading, telecommunication $1.59 billion and
computer and hardware and the 1.41 billion. During April-June 2018, India received the maximum FDI
equity inflows from Singapore (US$ 6.52 billion). And other foreign investment in different sectors.

India is the second largest country by population, having one of the largest areas. Cultural values are very
diverse and above 100 languages are spoken in india. Hindi is the capital language and Hinduism is the
national religion. India shared border with china and also have trade with china but india need to revamp
their foreign policy regarding china and Pakistan. Political, cultural, economic and the technological term
of the india have been discussed. Rupees has great influence on international trade but what needed to
be done is to allow the foreign investor to invest in india. They have to make their relation better with
Pakistan and china to strengthen their economy. Trade policy is very strict for some countries while lenient
for the other. the imbalance in the market is due to over population and due to less self-manufacturing
increase the unemployment.

India: Economic and political outline. (n.d.). Retrieved from

Home. (n.d.). Retrieved from


Technological Environment Affecting Indian Business - Research Paper Example. (2018, April 13).
Retrieved from

4 Factors that Affect the Foreign Exchange Rate in India. (2015, August 26). Retrieved from

India - Trade Barriers India - Trade Barriers. (n.d.). Retrieved from