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Luxury Boating Industry in India

January 27th, 2016 8:49 am

In ancient times, India was well known for its prosperity, education and science. The Portuguese arrived in India in 1498 to trade spices. In the 1600s, the Dutch, the French and the English followed and set up their own trading centers in the country. The British East India Company was very aggressive in expanding their trade, and soon started trading in many commodities, such as cotton, silk, salt, opium, and tea. The Company had its own private army to protect their trading posts. This resulted in conflicts between the local rulers in India and the British East India Company. The British government sent a larger force to India and provided funding to expand the Indian British army. Soon the British were not just traders, but became the rulers of India, and were creating more revenue by taxing the locals. By 1819, the British were in control of almost all of India.

As trade grew, the British had to build India’s infrastructure to move their armies and goods efficiently. After a long struggle for freedom, India finally regained her independence in 1947, when the British left India. India used her freedom to opt for democracy, but was soon suffering under heavy corruption and national power struggles. One of the biggest challenges that India was faced with, was the many languages and different religious castes that divides society. Politicians had to put all their energy and power to use just to keep the country united. Many states wanted their own freedom based on their religion, language and their geographical location. During this time the development of industry and infrastructure in India was very poor. Even today, although India is one of the largest economies in the world, poverty is still a huge problem. But considering this from a different point of view, this also presents a great economic opportunity for India.

India has been growing steadily since the year 2000. Unfortunately, for many years the government was infamous for corruption, scams and misuse of public funds. In 2014, the people of India voted the corrupt government out of office. The new government, elected in 2014, is more focused on development of infrastructure, tax reforms to attract foreign investments and create industries, and shortening long bureaucratic procedures to make it easier for people to set up businesses. The government is also intent on making India the biggest manufacturing hub in the world. There are also plans to transform 100 existing cities to high-tech smart cities by rebuilding their infrastructure, using renewable energy to create power, and making use of the internet to provide services. India’s luxury market has also been growing significantly since the year 2000. There are all sorts of expensive luxury cars on the roads, the automobile industry is growing, and shopping malls bearing big brands are cropping up in all major cities. The cost of living is not cheap anymore. Real estate prices in Mumbai for example, which is known as the financial hub of India, are amongst the most expensive in the world.

According to Forbes in 2015 India ranks fifth in the world for having the largest number of billionaires, 90. The number of millionaires in India was around 182,000 in 2014 and is expected to grow up to 50% by 2019. India’s major economic sector in 2014 was the service sector, which mainly comprises of the I.T. industry and outsourced call centers for banks and airlines around the world. India’s manufacturing sector is also one of its main contributors to the economy, for example manufacturing of pharmaceuticals, textiles, automobiles and machinery. Other significant sectors are mining, of raw materials such as iron and copper, and agriculture. India has made a conscious effort to move the focus of the economy from agricultural to industrial. India’s service sector is comparatively new and employs mainly the young and educated. This sector has greatly increased the rate of growth of the educated middle class in India. The country is experiencing consistent growth in the high-tech industry and the wealth of the middle class is increasing due to more technological innovation. What this means for the boating industry, is that India has a potentially large market for speed boats and inexpensive yachts for the adventurous youth of India. The country is also surrounded by beautiful waters along its more than 7500 km coastline, with a huge ocean for the locals to enjoy.

What has held India back is not just the slow development of infrastructure, but also corruption within the government, leading to the development of the wrong type of infrastructure, which does not benefit the public. India’s bureaucracy also makes it difficult for entrepreneurs to set up businesses. Other problems such as crime and constant religious conflict have also resulted in a brain drain. Many of India’s educated workers such as doctors, scientists and engineers have left the country to settle in the USA, Europe and other developed countries. Many have achieved huge successes overseas, which they would not have been able to achieve in India’s system.

As for boating industry, there is enough visible wealth in India for the industry to flourish, but the previous government never really paid any attention to it. It was as if they didn’t care about or understand this industry at all. Tax on private yachts is in India is currently 48.7%, and to make matters worse, there is not a single decent marina club to be found in the whole country. Over the past few years a few companies have struggled to achieve success in the pleasure yacht industry, but they have not been given any kind of support from the authorities, or provided with assistance in setting up infrastructure. Some companies have built a small private marina club facility in the southern part of India, but it is nowhere near the international standard. The pleasure boating industry also suffers because there are not enough private yachts in the country to provide enough profit for companies to survive.

Having said that, the underdeveloped boating infrastructure of the country also provides potential for larger growth. If the government starts taking the industry seriously, encourages the private sector to develop marina clubs, and provides space and assistance for small enterprises to set up their facilities, the boating industry in India can achieve rapid growth. India’s authorities also need to understand that the country needs a new industry such as boating to create employment, generate revenue and to diversify the economy.

Some of India’s car manufacturers have dabbled with boat manufacturing but on a very small scale. The good news is that the government that was elected in 2014 is very interested in creating a better economy and has proved to be more active than the previous government. They are also interested in adjusting its taxation system to create a business-friendly environment, and like Indonesia, they are trying to set up automated, transparent online systems to grant licenses to individuals to set up businesses. This could be a very positive development for the future of the country, and if the boating industry constantly strives to work with the government, India could potentially become a significant consumer and manufacturer of luxury yachts over the next 10 years.

Eight Steps to Investing in India

December 29th, 2015 9:37 am

Driven by a growth rate of over 8% in 2010 and a 350 million strong middle-class with growing purchasing power and appetite to spend, the Indian market is reshaping the world’s economy. Investment in almost every sector (Education, Food, Energy, Health care and Retail) of the Indian economy has a promise of high returns that has caught the attention of investors and businesses across the world.

Indian economy is, however in transition and so are its tax and investment laws. New guidelines, policies, programs, and incentives for investment are being introduced into the system regularly and frequently.

Indian government is offering various incentives for the foreign companies and investors who want to

– Lower labor costs

– Explore new market/s (in and around India)

– Develop and Commercialize/Industrialize new products and services

– Open up export oriented units in India

Government incentives include:

– Duty free import of capital goods and raw materials

– Reimbursements of Central Sales Tax

– Tax holiday for specified period

– 100 per cent repatriation of profits for subcontracting facilities- and more

However, there is a considerable risk for players who are not fully prepated to do business in India and may not fully understand how local markets operate in India. Hence the challenge of the investor is to assess what opportunity to tap and how to minimize the associated risk.

I outline below an eight step plan with action, resources and contacts to help you benefit from the booming Indian Economy while minimizing your risk.

1. Know WHAT you want..

Have clear objectives for your company and ensure that your India strategy is aligned with your objectives.

Buyusa.gov provides excellent information on assessing your objectives and provides what you need to know for doing business in India.

2. Understand the Economy you are investing in

India is a diverse country with many languages, different business norms and a complex regulatory structure. In addition, foreigners must know how to deal with corruption, bureaucracy and labor market rigidities at the state and the central level.

World Bank’s ‘Doing Business’ site provides excellent information on these topics. Read through the following papers and presentations:

1) Doing Business 2010 ‘India’ by the World Bank Group

2) ‘Doing Business in India’ by Ernst & Young

3. Identify and Assess Opportunities in India

You need to do a thorough market research to qualify the opportunity for selling your products/services or for making other investments in India. Get the research tailored to your needs from the following resources:

– Market Research Reports are available on buyusa.gov
– The country commercial guide for India from US Department of Commerce- Indian Brand Equity Foundation group from India

4. Are you ready?

Assess if your company is prepared to do business or invest in India. Is your company committed to succeeding in India? Is there a market for your product? Is your product/service unique enough? Are the regulatory requirements straightforward to implement?

5. Attend Trade Events

Trade events are probably the best way to identify opportunities, meet subject matter experts, showcase your products and services, connect with potential partners, suppliers and buyers and check out your competition.

Business Events by Entry India is an excellent source for upcoming business events in US and India.

6. Find one or more local partners in India

It is essential to have a local partner who understands the language and culture of the country. This will make it easy to negotiate, develop sales and distribution channels, price the product and services appropriate for the target market segment, and to protect intellectual property of your company. Due diligence and sound contractual agreement with the partner are a must for success.

7. Market Entry Options

Options include creating a wholly owned subsidiary, a joint venture with a local company or opening a branch or liaison office in India.

Department of Industrial Policy and Promotion under government of India provides excellent information for foreign companies pursuing entry into India.

8. Know Industry and Professional Associations in India

Through membership with key Industry associations, businesses gain access to local business resources, make valuable contacts, keep track of changing laws governing their business etc.

– Depending on the industry/sector of interest Confederation of Indian Industry, FICCI, AMCHAM, ASSOCAM, and NASSCOM are a few industry associations that a foreign business must look into. India One Stop provides a comprehensive list of professional organizations in India that foreign companies must know.- Export Assistance from US: The U.S. Commercial Service helps U.S. companies to expand their business to worldwide markets and has the largest presence, outside US, with 7 offices in India. U.S. Commercial Service offices are located in 107 U.S. cities and 145 U.S. Embassies and Consulates worldwide to take advantage of.

Summary:

A thorough planning before expanding your business to India or making your investments in India will go a long way for a profitable and worry operation in India.