Country Analysis And Assessment Of An Emergent Market – India

Overview of the country (India)

The report brings about the discussion on the topic of the assignment ‘International business across borders’ and the related aspects. The assignment will perform the country analysis and assessment of the emerging market which represents an increase in the GDP growth rate, leading to attractive investment opportunities in the market. The country will be assessed in terms of potential and the opportunity for the foreign direct investment. For the assessment, and analysis India has been taken as the country in this report. In addition to the assessment, the readers will gain an understanding of the benefits received by the country and the currency rates prevailing in the country. Trade systems, policies, and barriers, pestle forces influencing the business environment of the country with other markets or countries. In the later part of report, the factors or aspects of the country will provide an understanding of the factors contributing to the country’s competitive position in the world economy. Recommendations will be provided in the last section of the report as how the country can make further improvement or advancements in terms of investment opportunities which will enhance the stability of the country’s economy.

India is a country located in South-Asia, is found to occupy seventh position amongst other nations in terms of geographical area, and has been the most populous country with over 1.2 billion people. The population in the country states that the country is found to constitute the world’s one-sixth population. The country is surrounded by Indian Ocean to the south, the Arabian Sea to the southeast, and Bay of Bengal to the southwest. India has been divided into 29 states and 7 union territories, with New Delhi as the capital. Hindi and English are established as the official languages of India, which are broadly spoken amongst the population of the country (Chittoor, Aulakh, and Ray, 2015). 

Discussing the other general aspects of the country’s economy it can be stated that over the seven decades in the past, India has achieved self-sufficiency in terms of food and grains; thus it has now become an exporter of food.  In addition, there has been certain major improvements in the country such as increase in the life expectancy rates, literacy rates and the health conditions has been also improved. India is now a larger market for a number of companies which has been involved in the operations of pharmaceuticals, automobiles, steel, and information, and space technologies. In context to the politics and the aspects related to government, India is considered as the world’s most populous democracy. India has the mixed economic system, and continues to be an emerging market in the economy (Cavusgil et al., 2014).

The pestle analysis of India aims to define and analyse the political, economic, socio-cultural, and technological influences and the benefits concerned with the country.

Factors Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Influence/benefits
Political	India has been one of the most powerful nations in the world, and forms as the base of largest democracy, with a relatively stable political environment. New Delhi is the India’s country, and it has two other powerful nations as neighbours, China and Pakistan. The citizens in the country show their democratic will in the local and national elections held in the country, and the due respect is given to them. Thus, the political culture of tolerance in the country has been contributing towards maintaining a stable political climate to a major extent. This in turn leads to an initiative towards attracting the investments in the FDI (Tripathi et al., 2016). Negative influence such as corruption in India is a major issue which badly affects the political and economic stability, and increases cost of the foreign direct investment. However, over the recent years it has been analysed that India has reduced the political interference in the management of the businesses, which has led to the improvement in the productivity and efficiency of the businesses. Thus, the above benefits described that the political situation of the country can be defined as stable (Rastogi and Trivedi, 2016).
Economic	The economic factors consist of the changes in taxation system, interest rates, economic growth, and prevailing exchange rates in the country. According to the data obtained from IMF 2017 economic forecast, the GDP of the country is equal to $2.4 trillion which describes it as the  7th largest economy in the world with the nominal GDP. Current corporate tax rate in the country is 30%, and attributes as one of the top country in several industries; as 7th largest coffee producer in the World. India has several key export products which leads to the strong economic system of the country facilitating in the trade. Thus, these are the benefits of the economic factors and the stability in the environment.
Socio-cultural	India has extensive consumer market, with 1.2 as the total population, and such a huge market leads to the opportunity for the multinationals to invest. India has abundant cheap labour, and they are easy to access and afford leading multinationals to make investments and outsource their business to the country. Looking into the cultural aspects, India is the country with multiple languages, and follows different cultures and religion, maintains communal harmony which is one of the greatest strength. Standard of living of the people living in the country  is improving and leading to a growth in the disposable income of the people (Saeidi et al., 2015).
Technological	India has been recognised as the most technological advanced countries in the World; as it ranks third in terms of technology. As there has been investments from the high-tech giants or companies such as Facebook, apple, and Microsoft. Thus, there are major benefits in the technological environment of the country and India features a developed IT system (Raina, 2015).

The biotic natural resources include fossil fuels, coal, petroleum, and the nation’s coal reserves are found to be fourth largest in the world. There are some other natural resources which lead to a comparative advantage of the country, such as availability of water, rainwater, water quality, surface water. These are the resources which create a competitive sustainable advantage for the country, leading to further growth of economy (Prakash and Anand, 2014).

PESTLE analysis of India

Although India is rich in multiple natural resources, but the knowledge-based services act as the major competitive advantage of the country. The increasing level of contributions to the country’s GDP is often the positive outcome of growing service sector in the economy (Bhaumik, Driffield and Zhou, 2016).

A significant rise in the BPO/KPO, and the healthcare tourism sectors in India are assumed to India’s fundamental strength of the country. A country’s factor endowment is generally referred to the amount of land, labour, capital, and entrepreneurship that is possessed by any country, and used in manufacturing products. Talking about the India’s factor endowments and aspects related it has been considered that Indian labour market determines the major advantage of the country over other markets such as China, and the labour costs at the top management in India are low (Bhaumik, Driffield and Zhou, 2016).

Investing in the international market differs from the investments made in the home market in numerous ways, but one of the major differences has been the currency or impact of the currency fluctuations. It has been a general aspect that reduction in the currency of one country leads to an increase the flow of FDI into that country. Foreign Direct Investment (FDI) refers to the international flow of capital where the individual or the country invests in another country. Exchange rate means the price of one currency in terms of another currency (Seid, 2018).

Currently one US dollar is exchanged for 62 rupees, thus it is the foreign exchange rate of rupee in terms of US dollars. Changes in the foreign exchange rates influence the import and exports within the country thereby determine the balance of payments (Pradhan, 2017).

Discussing about the foreign currency and exchange rates in the country, it has been analysed that India has experienced depreciation in the recent years. The low value of the currency of India has been affecting both, the higher and lower sectors of economy. Exchange rate has the significant role in context to the Indian economy, as it affects other factors such as return on investments, investor’s portfolio, and the profitability of the firm (Malhotra, 2014).

The foreign trade policy of India is also referred to as EXIM policy (Export-import), and the policy in general can be defined as developing export potential, improving the performance of country’s exports and encouraging foreign trade. The policy also aims at creating or enhancing the situation of favourable balance of payment (Farooqui, 2016).

DGFT (Directorate General of foreign trade) is the main body which governs the matters related to the exports and imports within the country. The main objective of this policy is to accelerate the growth of the economy and support high level of economic activities. The other objectives are generation of employment opportunities for the citizens of country (Matsushita et al., 2015).

The foreign trade policy in the country facilitates by providing incentives to the exporters to help them succeed over the impacts of the decreasing demand of Indian products in the major markets, such as US and Europe. Government has made amendments in the FDI policy of India to increase the flow of FDI (Joshi and KUKREJA, 2016). 

National resource and factor endowments

Discussing about the barriers, anything restricting or putting barriers to the flow of trade between nations is referred to as trade barrier. The trade barriers can be both, tariff barriers or non-tariff barriers, including import licensing, standards testing labelling and certification, export subsidies and support, service barriers. A negative list has been also made for certain imported products included in non-tariff regulation, such as tallow, fat, and oil of animal origin. The items which are restricted require an import license include livestock products and certain chemicals. India has the trade system which puts restrictions on a number of services. These are Insurance, banking, securities, motion pictures, accounting, construction, architecture and engineering, retailing, legal services, and telecommunication and others (Mukherjee, 2015).

Discussing about the current levels of Foreign Direct Investment in the country, it has been found that Indian government has made investments around $1 trillion on the infrastructure on the infrastructure facilities from the year 2012-2017. From this 40% is found to be funded by the private sector in the country. Now, 100% FDI under the automatic route has been permitted in the country in context to the construction sectors for the cities and township. Annual FDI inflows are expected to increase in the country at the rate of US$ 75 billion, and private investments are expected to increase by 8.8% in the FY18-19. Currently for a single retail brand in India, up to 49% FDI is allowed under the automatic route, and it applies to the foreign airlines investments in India. Thus, it all describes about the existing levels of FDI in the country (Zheng, 2016).

From the perspectives of different sectors, FDI is allowed in India in many sectors, such as service sector, manufacturing sector, however there has been issues still in the global operations of the Indian economy. As FDI is the strategic component of the investments in the country therefore, it is required by India to sustain the economic growth and development.  Thus, there are suggestions for the government and their policies as they must focus on the increasing the speed of improvement in the infrastructure sector and their requirements as they are crucial towards the diversification of business operations. In addition, government of India must allow and open doors for the foreign companies in the export-oriented services which could facilitate in increasing the demand of the unskilled workers  and services which are low-skilled, thus leading to increased wage rates for workers in these services. Increase in the FDI from the other sectors and removal of restrictions from other businesses will help in increasing the per capita income and GDP of the country.

Conclusion: 

To conclude the above discussion it has been analysed that India has been well established country and has become the most attractive market for the global partner’s investments in various sectors. The stability of the country’s economic, and political environment has led to an invitation to the major investments across the border. The report discussed several aspects of the country, and FDI related discussions which stated about the economic growth of the country. Thus, India is expected to grow at the rate of 8.2% in the year 2018-19.Hence, India has been considered as one of the fastest growing economy with the dynamic and young manpower and rich in natural resources and has high potential to create sustainable competitive advantage amongst economies of the world.  

References:

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Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L. (2014) International business. Australia: Pearson.

Chittoor, R., Aulakh, P.S. and Ray, S. (2015) Accumulative and assimilative learning, institutional infrastructure, and innovation orientation of developing economy firms. Global strategy journal, 5(2), pp. 133-153.

Farooqui, S.U. (2016) Analysis of Foreign Direct Investment (FDI) in India and China: A Comparative Study. International Journal of Advanced Research in Management and Social Sciences, 5(1), pp. 463-483.

Joshi, M. and KUKREJA, M. (2016) Emerging profile of Indian outward foreign direct investment. Journal of Applied Economic Sciences, 11(3), p. 41.

Malhotra, B. (2014) Foreign Direct Investment: Impact on Indian Economy. Global Journal of Business Management and Information Technology, 4(1), pp.17-23.

Matsushita, M., Schoenbaum, T.J., Mavroidis, P.C. and Hahn, M. (2015) The World Trade Organization: law, practice, and policy. United Kingdom: Oxford University Press.

Mukherjee, A. (2015) Services sector in India: trends, issues, and the way forward. Eurasian Geography and Economics, 56(6), pp. 635-655.

Pradhan, J.P. (2017) Emerging multinationals: A comparison of Chinese and Indian outward foreign direct investment. Institutions and Economies, pp. 113-148.

Prakash, S. and Anand, S. (2014) Impact of growth on factor endowment and structure of India’s trade. IOSR Journal of Economics and Finance, 5(5), pp. 53-66.

Raina, R.S. (2015) Technological and Institutional Change: India’s Development Trajectory in an Innovation Systems Framework. In Emerging Economies (pp. 329-351). New Delhi: Springer.

Rastogi, N.I.T.A.N.K. and Trivedi, M.K. (2016) PESTLE technique–a tool to identify external risks in construction projects. International Research Journal of Engineering and Technology (IRJET), 3(1), pp. 384-388.

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Tripathi, L., Mishra, A.K., Dubey, A.K., Tripathi, C.B. and Baredar, P. (2016) Renewable energy: An overview on its contribution in current energy scenario of India. Renewable and Sustainable Energy Reviews, 60, pp. 226-233.

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