Mode d'entrée en Inde (document en anglais)

India is the 10th leading economy in the world with a GDP of $1, 842 trillions in 2012, the IMF stated that India will enjoy a growth rate of 3,8% in 2013, and of 5,1% in 2014. The annual disposable income in 2012 enjoyed a growth rate of 13% compared to the previous year across India and per capita expenditure increased by 12% in 2011-2012. As such, 2012 was a tremendous year for the retailing sector that has enjoyed a growth of 15%, and the demand was higher than the capacity of the suppliers. Studies also show that there is a strong appeal for foreign goods, consumers are eager to consume more and more foreign products. Those impressive figures encourage foreign single-brand retailer to get a share of this cake. But as India is a complex market, a careful analysis as to be made of the external environment to assess the opportunities and threats of the market and as such decide which is the best entry mode.

Added to these impressive figures, India presents many opportunities for single-brand retailer. The sales prospects are really high thanks to a rising middle-class combined with the fact that India has the second population and the youngest one in the world, which is really interesting as the youngest are greatly attracted by Western consumer goods. A single-brand retailer will also find low-cost labour, skilled workers with good experience of retailing, and a good network of shopping malls. The issues that it can encounter are also important. First of all, the Indian government strongly protects its national industries and as such it has settled a though FDI policy with a complex system of taxation. Other threats will come from the fact that infrastructures might be quite underdeveloped in some parts of the countries that can slow down the development of the business. But the country is lowering its commercial barriers so those issues are becoming less problematical.

In fact, until 2011, single-brand retailers were limited to a 51% ownership to settle a business in India but now, as the retail business is growing at a fast pace and as Indian companies cannot provide sufficient supplies to fulfil the demand, the Indian government has loosened the entry requirements for foreign single-brand retailer. India has approved a law in September 2012 that enables single-brand retailer to settle in the Indian retail market with 100% ownership, but with the requirement that “30% of the value of procurement of processed products shall be sourced from Indian micro, small and medium industries which have a total investment in plant and machinery not exceeding $2 millions” . It implies that companies adapt their offer to this requirement, which means strategic changes and delays added to the changes that already have to be made to adapt part of the products’ offer to local consumer tastes. It is really difficult for a company to cope with that as it has an impact over its production lines and business operations and can as such jeopardizes the whole structure of costs of the company.

Following the type of activity of the single-brand retailer it can be interesting. For a clothes retailer it is an option that has to be seriously assessed. For instance Zara or H&M, or other fast fashion retailers it can be the best options, moreover it is possible that they already sourced 30% of their products from Indian small/ medium sized retailers. This option can lead to competitive advantage, in fact, this 30%

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