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Consumption and investment in India

With more than a billion inhabitants and a strong purchasing power, India offers some very interesting business opportunities even though 44% of the population does not have access to electricity (compared with 1% in China and 1.5% in Egypt) and the savings rate remains high (almost 28%); around 200 million people have access to consumer durables such as a television.

Indian consumers are interested in the value of a product and whether it is good value for money.
They appreciate having neighbourhood services and additional services and experiencing a show of solidarity from the business people (offering credit, home delivery services etc). Needs change and consumers expect to have a choice. They wish to be offered a diverse range of products and brands. The franchise networks that have a more Western structure profit from these changing needs when they launch their systems on the market.

It is very difficult to make one’s mark on the retail market. It is very fragmented and is for the most part made up of small structures supplied by wholesalers: this is due to the size of the country and its lack of logistics systems. However, this is changing rapidly with a move towards creating a more structured retail market. The large retailers are gradually increasing their share of the market year on year.

The large Indian industrial groups, notably from the textile, automobile and food sectors, are investing huge sums of money to set up shopping centres and distribution networks on a national basis (especially via franchising).

Since 1991, the country has been looking to attract foreign investment. The most attractive sectors are energy, telecommunications and consumer goods.

Investors, as any other foreigner, must take the culture of the country into account and how it affects business – for example Hinduism and the caste system. It is important to recognize the standing of families and its members within an Indian business because business management is often centralized and concentrates around one family.

Franchising in India :
There is not a single law in the country that regulates the business relationship between a franchisor and his franchisees. Certain standards do, however, exist:
- Contract Act
- Competition Laws
- Intellectual Property Laws.

Foreign franchisors who are looking to launch their concept in India should, however, carefully examine the laws that exist on exchanging goods abroad, taxes, work permits and the right to own properties.
Franchisekey’s correspondents in India are able to support franchisors in their move to develop their network there.

Some additional information:
The franchise sector is increasing by between 30 and 35% each year
In 2006, the franchise economy employed 300,000 people
The most attractive sectors experiencing growth are: teaching & training, services for disabled people and companies offering B2B services.

To learn more about the developments on the Indian franchise market, why not read the Indian magazine “Franchise plus”.
Figures : Source ledevoir.com, septimanie-export

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