Entrepreneurs in India

India’s Economic Growth Enticing Global Entrepreneurs

January 22, 2015
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When we speak of wealth creation, it is not just applicable to the affluent, but also to those stuck in poverty traps and others in between the two extremes. Wealth is merely the availability of resources above current demand.

India has identified, correctly, that it needs to expand its overall wealth so that its burgeoning poor can be converted to a sizeable middle income group. Basically, instead of cutting the cake into smaller pieces and redistributing the current domestic wealth, which is a part of Obama’s platform, India’s premiere economic focus is on increasing the size of the entire cake.

 

India: Leveraging its Greatest Asset

So, how does a nation go about increasing the size of its economic cake?

Well, if you are India, you leverage your greatest strength – which is your population. By mobilizing a large portion of the masses that live below the poverty line, India is attempting to create a new segment of the economy. And so far, they’ve done a pretty good job.

Over the last 22 years, the segment of India’s population that lived below the poverty line decreased from 44.5% in 1983 to approximately 30% in 2013. For some context, India and China have nearly identical annual figures for what the poverty line is: roughly 12,000 rupees or 2,300 yuan. While China’s rate drop of those who have risen out of poverty is marginally better, India is a democracy while China is not. As such, the business climate in India for entrepreneurs is considered much more stable.

No surprise, the market for low-end goods in India has blossomed in recent years. Mobilizing approximately 150 million people out of poverty will do that for a nation’s economy.

Adding to India’s economic momentum is its recent change in leadership. The new administration, led by Prime Minister Narendra Modi, seems energized and determined to foster the growth of India on the international stage, even to the point of attracting Indian diaspora, four generations deep.

If you are Indian by heritage, but were born in a different country, the government is now willing to give you an unlimited visa for stay in the burgeoning nation. Why?

Because India is courting top talent to help continue its growth plan.

 

India’s Economic Growth

India’s growth has been fueled by an increasing population and its aggressive effort to convert those below the poverty line into middle income folks with some spending power. There has been tremendous economic benefit from this, obviously.

So, what’s still missing?

What’s missing is the cerebral part of the equation: the skill, the teaching, the technology and knowledge. That’s why there is a big push by the Indian government to bring in expats, Indian nationals and diaspora back from wherever they are now – especially from the US and Europe. This is done in the hopes that experience in more sophisticated markets can be leveraged. And history shows that it’s a great strategy.

What does that mean for the hungry entrepreneur willing to venture into India?

 

Entrepreneurs Moving to India

Setting up shop in India gives you direct access to an already huge, but still growing, consumer base for what we consider to be low-end goods, while giving you a large and relatively inexpensive workforce. Ernst & Young has repeatedly published surveys that document major corporations exhibiting intention to penetrate the Indian market from within the borders. It makes more sense to provide for the market by taking advantage of its workforce, rather than just exporting to it. Currently, US corporations have more than $60 billion of investments and projects reported in India.

Even the Middle East recognizes the opportunity in India, and prioritizes its investments in the country. The Middle East investment growth in India is over 100% year on year, and is led by old oil money from the UAE. In the five years between 2007 and 2012 UAE invested over 16 billion dollars in India.

Astutely, the Indian government has foreign investment as a major driver of its future growth; and to maximize its benefit, they correctly prioritized improving education and increasing literacy rates over two decades ago. Click here to read Part I on India and you’ll see just how rapidly the country’s literacy rates have improved.

The Economic Perfect Storm

Growth in literacy rates and foreign investment, coupled with its government aggressively trying to decrease poverty rates, have created the perfect storm in India for large companies and entrepreneurs alike.

Between getting cost-efficient local hands to work on your project, the growing middle-class and the business-friendly government, India provides opportunity that can’t be found in most developing nations. The country has all the necessary elements to make for an enticing and rewarding environment for any adventurous entrepreneur willing to step outside their own borders.

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AJ is a naturalist and economic realist. His articles are based on his study of world events and common sense, not conventional wisdom. He believes technology allows humanity to get past the deficiencies inherent in civilization's inadequate political methods and deficient economic tools. His observations are sometimes radical, sometimes provocative and sometimes misunderstood. But they are effective in evoking a discourse. Ultimately, that is his intention and desire - to stir the pot in search of solutions to today's political and economical challenges.

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