India’s growing middle class is a strong market for consumer electronics and other goods.
GDP:$1 trillion
Population:1.12 billion
GDP growth rate:9.4 percent
Why it’s hot:
Driven by a rising middle class, India is on track to become the world’s fifth-largest consumer economy by the year 2025. With a median age of 25, the country’s population is young. These consumers speak English, and they have an appetite for consumer goods and the money to buy them.
Sectors in demand:
The target here is India’s middle class. This is especially true for wireless companies — India’s cell phone market grew 91 percent from 2000 to 2005 — and any company in fashion, retail, cable, computers, cars, and tourism. Samsung has opened an R&D facility here; Google started testing cell phone ads in the country; and Dell soon will sell PCs in Indian retail outlets. India also is witnessing growth in the aviation, energy, biotech, hospitality, and retail sectors. In Delhi alone, 22 million square feet of shopping malls will be built in the next two years, and thousands of hotel rooms are under construction.
Cost of doing business:
Low. Though wages are climbing fast, India boasts an educated, low-cost, and skilled workforce. (A senior software manager in India with over ten years of experience makes around $40,000 a year, compared to $120,000 in the United States, according to payscale.com.) The country also offers transparent, investment-friendly economic policies. But because Indians may live with extended families even into their 30s and defer to their elders when it comes to career choices, be prepared to woo not only young workers but also their parents, and to extend employee perks, loans, or health benefits to some or all of them. India also is creating special enterprise zones, including biotechnology zones in Tamil Nadu in southeast India, in which foreign investors and operations receive tax exemption status for the first five years.
Risk assessment:
About 70 percent of the population lives in far-flung villages, not in the country’s major cities. That’s a significant barrier-to-entry issue because rural India remains woefully behind many developing markets in basic infrastructure, including road works and electrification. Also expect trouble with the country’s cumbersome bureaucracy and some local control over businesses. Recruitment costs can be higher than those in North America, because attrition is high and the labor market is tight. On the plus side: Changes are under way to make business ownership easier. The country now allows foreign firms to own retail stores; historically, it required an Indian joint venture in the retail sector.
