Written by: Jagriti Shahi, Business Analyst @Global Launch Base
India can present a big opportunity for European startups. With a population of over 1.4 Billion markets and an economy that is scorching at nearly 9%, it is worth taking to see what the vibrant Indian economy might hold for international startups.
Expanding a startup in India is however not an easy task. The Indian market has many unique characteristics that are significantly different, especially when compared to the European and American markets. One of the major challenges in establishing a startup in a market that one may know little to nothing about. One good way to bridge this divide could be through strategic partnerships. Companies looking to expand in India could look for Indian partners to make the expansion easier. In this article, we explain what makes for great Indian partners and how to find them.
What Makes a Great Indian Partner
When we take our business to the Indian market, we’re taking our business into possibly unchartered territories. A great local partner will know the market and how to navigate it successfully and help in minimizing the costs and risks that can occur while expanding into the Indian market. Sourcing a partner who has had experience in other Indian business expansions is also beneficial, as we do our due diligence on this future partner through their previous collaborators.
Discovering common interest ground is an enormous edge when it comes to forming a partnership for a company. Look for the partner whose cultures and experience are matching with the desire for the market.
Example: Hello Network, the social media platform launched by Orkut, by a Turkish engineer, the social media platform enjoyed unprecedented popularity in Brazil and India, Orkut Buyukkokten, joining hands with digital innovation company JetSynthesys is an example of this common trend ruling the Indian business.
JetSynthesys as a local partner in India for Hello Network manages the larger business strategy and operations, marketing and monetization to strengthen its reach in the Indian market.
Entrepreneur India spoke to a few industry experts to understand why a partnership with an Indian company is the ideal way for global companies to enter the Indian market.
A Win-Win Situation for Both: Partnering with an Indian Company is a win-win situation for both, as they exchange more than business and profits, the alliance goes to a great extent when the amalgamation of technologies, ideas, and business relations, secure business grows faster. Spent more on marketing and consumer and brand awareness of the product rather than on setting up infrastructures and systems.
Why Prefer India for International Expansion
According to the World Bank Report 2020, India ranked 63rd out of 190 countries, which shows that India joined the list of 10 most improved economies. The country shows a remarkable reform effort in the country's economy.
Global investors typically focus on India mainly because of its demographics and its stable barometers, whether it be labour, inflation, fiscal deficit, or growth. With India’s growing demographics, and huge e-commerce and technological markets, activity in both areas is expected to grow in the following years. Among the biggest investments that occurred in recent years is the merger of Sony Pictures Networks India, a subsidiary of Sony Pictures Entertainment Inc., and Zee Entertainment Enterprises for USD 1.575 billion.
According to a survey of the Ministry of Commerce and Industry, Mauritius ranks highest in terms of investment in India, due to its low 3% capital gains tax, quality regulations, structure, skill labour, geographical contiguity, and cultural empathy, and historical connection with India. Countries like Singapore, the USA, Netherlands, Japan, The United Kingdom, Germany and UAE are the main investing countries in India.
Figure: 2 According to the reports, investments were mainly oriented towards services, computer software and hardware, telecommunications, trade, the automobile industry, construction, and chemicals. How to Find the Right Partners to Successfully Set up Business in India Best way to find Indian partners is through connections we’ve formed, either in our home market or through research into a new market We take help from government websites. In India visit the Ministry of Commerce & Industry for details regarding international expansion. Government departments have a plethora of knowledge and opportunity to offer their assistance and services to companies looking for Indian partners. Other support can be found through the foreign embassies and trade commissions. Along with the government website, attend the trade shows, where companies can come face to face with potential partners and gain knowledge about the Indian market. What To do Once Found Indian Partnerships After establishing a partnership, negotiate a clear contract of what is expected, including the length of the agreement – some companies only hire local partners for the first few years to get the expansion up. It is important to hand over control to the partner in order to let them do their job effectively – remember, they know local business practices, rules and regulations. Finding great local partners could make or break an Indian expansion, it is crucial we put time and energy into the right strategy to develop the right partnership. While the startup's goal can remain in doing what they do best, the right partner can indeed multiply a startup's revenue with little effort in the diverse and yet booming Indian economy. Global Launch Base helps international startups expand in India. Our services include market research, validation through surveys, developing a network, building partnerships, fundraising and strategy revenue growth. Get in touch to learn more about us.