Entering
the Indian market finally
After studying the potential of the Indian market and determining
an entry strategy, the final stages of actually setting up a base in
India will include:
Partner Search
If setting up a joint venture or developing an agency/franchise
relationship, it will be necessary to:
- Find a partner who meets your
objectives
- Find a partner with the
requisite skills
- Perform a credit check of the
proposed partner
- Negotiate the details of the
contract
- Arrive at a Memorandum of
Understanding (MOU)
- Finalize the joint
venture/agency/franchise agreement
Government Sanctions
Before actually setting up operations, various central and state
governmental approvals must be obtained. The approval granting
authorities in the Central Government are:
The Reserve Bank of India (RBI).
Foreign Investment Promotion Board (FIPB).
Registration Once the project has been approved,
it has to be registered with the Registrar of Companies (ROC). If
forming a joint venture or subsidiary, the company must be
incorporated and obtain a certificate to commence business. If
setting up an office, registration is required with the appropriate
regional ROC.
Other Approvals
Once the entry plan has been cleared by the Central Government and
registered appropriately, actually setting up will require various
State clearances, viz. building planning, land use, environmental
clearance, power clearance, etc.
Conclusion
Many overseas companies -- large and small -- have made successful
entries into the market since India began its liberalization process
in 1991. Yet, some have also attempted and failed. There is no doubt
that the potential is vast. India's total market is 950 million and
the middle class is huge and growing. Both the central and state
governments are aggressively seeking foreign investment -- adding
incentive on incentive to encourage overseas companies to set up
shop. On the surface in fact, India looks like an investment dream
come true. But, in reality, the challenges are equally vast. Those
that will succeed in tapping this great nation's potential will do
so through careful research and a well-designed plan.
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