As one of the emerging economies of Brazil, Russia, India, China, and South Africa (BRICS), India is a prominent developing economy startups should consider tapping into. Projected to be the 3rd largest economy in 10 years, and already the 3rd largest startup ecosystem in the world, India is the place to be for business owners and potential startup owners alike.
What’s driving the India opportunity?
There are three themes driving the Indian economy, says Mr Ashiss Wadhwani, Co-founder and Managing Partner at IvyCap Ventures.
Firstly, with a population of 1.3 billion growing at 7% per annum, consumer demand is set to rise continually. However, with segmentation of the market, digitisation and shifting consumer behaviour, some sectors are more promising than others. Mr Wadhwani advises business owners to observe current trends lest they be misled by historical data.
Segmentation, where different sectors of the market experience different rates of growth, also presents great opportunities for Singapore companies. According to Mr Wadhwani, “while demand for automobiles quadrupled, there is still a lack of women’s apparel in India.” Singapore companies should pay attention to how the market is segmented in order to identify the best areas of opportunities for entry. For example, rising incomes are providing the room for the luxury market to grow, creating opportunities for Singapore brands to gain early mover advantage.
Advancements in technology are also spurring generational advancements in established markets. For example, traditional rickshaws are being replaced by battery operated ones, and e-commerce is also taking root.
India is also rising today as a technology hub. While India has been known for its service economy, such as real estate and finance, there is now a shift from services and products to platforms. In fact, India has many advantages for building platforms – including good resources, and an abundance of experts who understand the market well, and can build solutions around their domains.
This is seen in how sectors such as agriculture and retail have been adopting new technologies through platforms to leapfrog their businesses forward. For example, agritech startup Crofarm uses a digitised agri-supply chain, and has greatly increased efficiency during distribution and selling of farm produce.1
Lastly, India is known for government-led transformation. Besides just subsidising businesses, the government is spearheading digital transformation in what is known as the JAM trinity. The project aims to provide every citizen with a biometric identity number that is paired with a bank account and mobile number. This move to electronic services opens a window for Singapore companies to help develop the infrastructure to support it.
More opportunities abound
Healthcare is also a huge opportunity waiting to be disrupted. Not much is done in that space currently, but that is partially because doctors are the barriers to change, and it takes a long time to build infrastructure in India.
F&B is also growing as consumer behaviour changes and people are eating out more. With high retail costs, companies might want to consider a centralised kitchen and delivery model.
There is also the government led Make in India project, where 100% FDI in 25 sectors are allowed to encourage companies to manufacture in India. While there are plans to build the supporting infrastructure like manufacturing hubs and high-speed trains, it is still a work in progress.
Many benefits for startups by the Indian government
The government of India recognises that startups are critical to helping India achieve its goal of a US$8 trillion economy by 2030, which is why they are proactively supporting new companies with the Stand-Up India campaign.
Some benefits include:
- Qualifying startups can self-certify with regards to environmental and labour regulations.
- Fast tracking and subsidies up to 80% for filling patents to promote innovation.
- Relaxing of prior experience/ turnover requirements for startups under public procurement.
- In event of winding up of company, startups can now do it in 90 days instead of 180.
- A US$2B fund to benefit startups indirectly such as incubators.
- Income tax exemption for 3 years.
Business owners, find out more about Stand-Up India here.