Introduction
Why would a business miss the opportunity to excel and expand rapidly? Why would a business miss the opportunity to expand beyond the borders without any risk? Why would a business miss the opportunity to work with loyal partners? Don’t know about others, but US companies should definitely not miss these opportunities to expand business in India.
If life gives you lemons, make lemonade. But, if life gives you India – a land of growing business opportunity- bring your business to new heights.
Now you must be ready with so many questions like why the US Businesses should expand in India. How is it possible? What are the opportunities in India? How do we tackle laws and regulations?
Do not let your short attention span keep you away from the most important information. Read this blog till the end to know all the answers to these questions.
Why Is India the Best For the US to Expand Business?
According to CNN Business, the US is already India’s largest trade partner, accounting for almost $120 billion. This directly suggests how the US trusts India for business. Additionally, expanding business in India would definitely be cost-effective. Also, the huge youth population brings a vast talent pool. But there are more important reasons why the US should expand business in India. Let’s understand those reasons.
Legislative Reforms and Proposed Regulations
Before expanding to a new country, laws and regulations are the most important concerns a company goes through. However, India has acts that support and make foreign businesses feel secure from the risks. These policies make India a desirable location for US-based businesses.
The Digital Personal Data Protection Act of 2023 (DPDP Act) was put into effect by the Indian government in 2023. By ensuring security and privacy by its terms, this act protects the company’s personal data. Due to this, American companies can now enter the Indian market without fear of data privacy issues.
Numerous laws, or The Jan Vishwas Act, amends several existing laws, such as:
- The Information Technology Act, 2000
- The Payment and Settlement Systems Act, 2007
- The Copyright Act, 1957
- The Legal Metrology Act, 2009
- The Environment Protection Act, 1986
- The Trademarks Act, 1999,
protects foreign companies.
Want to know payroll acts in India?
Here are 4 essential payroll acts you should know about
Favorable Government Policies
To create a better business environment, the Indian government has implemented several policies that are in favor of foreign businesses.
These policies would be beneficial for US businesses in India to nurture and protect the innovations. Also, these initiatives generate a large number of employment opportunities. The US businesses in India can leverage all those schemes and expect sustainable business growth.
Policies like easing Foreign Direct Investment (FDI) regulations, simplifying tax structures, and launching initiatives such as “Startup India” to support startups and new innovative ideas, and “Digital India” to create digitally empowered businesses. The aim was to improve online infrastructure and internet connectivity.
Market Potential
India is widely known as a major economy. Given its market potential, the nation attracts companies from all around the globe. The Pradhan Mantri Gram Sadak Yojana was launched by the Indian government in consideration of the development of rural areas. This project has enhanced connections and infrastructure, which helps foreign companies grow in India.
Considering the large population, India also makes it an attractive consumer market for manufactured goods and services. India has an ever-changing consumer market, and the shifts in consumer behaviour bring better chances for international businesses.
India is transforming digitally and presenting rapid growth in opportunities for foreign businesses. Digital payments or cashless exchanges have given a boost to entrepreneurs. For example, brands like Amazon, Uber, Apple, and Netflix have experienced rapid growth.
India offers access to huge markets in South Asia, Central Asia, and the Middle East. Who would miss access to such big market chains? The US businesses can access the opportunity to expand beyond the border of India.
Due to the free trade agreements with some major global economies, it becomes a win-win situation for US companies in India. Now that you have understood the reasons why US companies should expand business in India, let’s understand the opportunities for US companies in India.
What Are The Opportunities for the US Companies in India?
India presents a good number of opportunities across multiple industries. India is an absolutely lucrative market for US Businesses looking to expand.
Growing Consumer Market
India is famously known for its vast consumer base. The country has become habitual to the disposable income and the increasing adoption of digital payment methods.
This is the reason for consumer spending and establishing opportunities for US companies in India. They can find a great retail, e-commerce, and consumer goods market and expect good growth.
IT and Tech Industry Expansion
India has built a great reputation in the IT and technology sector. Indians provide a strong workforce that is skilled in software development, cybersecurity, and artificial intelligence. Well, about AI, even a school-going kid in India has become a pro in it. In fact, in 2024, Forbes’ list of AI 50 featured 6 companies led by Indian Americans. This shows the high capability of Indians to adapt to new technologies.
US companies setting up business in India can take advantage through outsourcing operations. Also, with the help of an Employer of Record, US companies can hire a remote team in India.
Manufacturing and Industrial Growth
India is also known as a global manufacturing hub with its schemes such as Production-Linked Incentive (PLI) or “Make in India”. The US companies establishing business in India should consider the electronics, automobile, and pharmaceutical industries. US companies can gain the advantage of lower costs and government incentives.
Healthcare and Pharmaceutical Industry
India’s healthcare sector is rapidly growing, which has created opportunities for US companies in the pharmaceutical and medical devices industries. India produces generic medicines on a large scale and is also one of the largest producers in the world. The US companies in India can experience the advantages of research collaborations, contract manufacturing, and expanding access to inexpensive healthcare solutions.
Renewable Energy and Sustainability
India has set ambitious targets for hydroelectric, wind, and solar energy. India has made a substantial financial investment in renewable energy because of its significance. American companies in India that are successful with renewable energy technologies can work with local companies.
Here’s a list of US companies involved in renewable energy in India:
- General Electric (GE Vernova)
- Husk Power Systems
- SunPower Corporation
- Blue Oak Energy
- US Development Finance Corporation (DFC)
- Augment Infrastructure
Now that we are aware of every opportunity, let’s examine how American companies enter or grow in India.
How do US Companies do Business in India?
US companies can opt for various ways to enter the Indian market. The ways are owning a subsidiary, partnering with a local, or offering a franchise model. Reforms and policies of the country have simplified for the US companies in India to invest and operate. Let’s understand two important and beneficial ways of how US companies do business in India.
Owning a Subsidiary
The US companies that are big prefer to follow Indian laws and own subsidiaries in India. Having one’s subsidiary offers complete control over the operations. However, this does not mean that the owner gets relief from the local tax and labor laws.
Employer of Record (EOR)
This is the best option for companies that want to understand the Indian market but cannot immediately form a subsidiary. The employer of record (EOR) helps businesses form a team of experts in India on behalf of US companies.
The Indian laws and regulations are also applied here but the US companies do not have to worry about handling compliance, and makes it easier to enter the Indian Market.
Want to know How to use EOR in India?
Conclusion
India provides a balance of scale, skill, and speed for US businesses with global aspirations. It is not just a desirable location but also a crucial component of any global expansion strategy due to its young population, thriving market, and digital transformation journey.
American businesses are already reaping the rewards of doing business in India, whether it is through outsourcing operations, the establishment of a consumer brand, or R&D center creation. Strong diplomatic links, a common legal system, and a shared interest in innovation make the US-Indian corporate partnership ready for even bigger things.
In today’s rapidly changing global economy, expanding to India isn’t just an opportunity—it’s a smart, strategic move for long-term success.
