innovative growth strategies

Board Agenda - The Riddle of “Incredible India”

“Does Your Company Have an India Strategy?” blared a recent headline for an article in the Harvard Business Review (HBR)[i]. It asked the right question but didn’t provide all of the right answers. And yet, this has to be one of the top issues on the agenda for boards at many multinational companies (MNCs).

The reasons are simple. The authors point out that India is one of the largest and fastest growing markets in the world. The population is 1.5 billion, half of which will be middle class by 2030, up from around 30% now. The GDP is growing at nearly 7% every year.

Add to that the fact that the US government is in a “no-good-can-come-out-of-this” standoff with China (See our article “What’s your China Exit Plan?[ii]”) and India is the only other country that can offer a similar combination of both a scalable production hub and large domestic market.

India has plenty of cheap labor, a highly competent local management cadre, a democratic state where English is an accepted business and legal language, and decently functional regulatory institutions.

More importantly, the authors point to some highly successful MNCs whose India operations are now a defining fraction of their global market cap. They cite the success of Unilever (operating in India as Hindustan Unilever or HUL), 3M, Nestle and BASF as clear proof of their thesis that every MNC must set shop in India and now if they haven’t already. As cost of capital is higher for investments in India, they rightly conclude that the story is all about the unfettered market size, growth, and profitability opportunity.

So far so good.

If this was all there was to the story, then you would don your super cool Capstone helmet, jump on your Harley-Davidson Road King and ride off into the Indian sunset. Except for one thing. In 2020, after more thana decade of trying, Harley pulled out of India on frustratingly weak sales, taking a $75 million restructuring charge along the way[iii].

They weren’t the only ones. Last December, the government revealed in a parliamentary report that about 2800 foreign companies had ceased operations in India the 8-year period 2014-21 and the number of active foreign companies had somewhat declined[iv]. Other notable exits included General Motors, Cairn Energy, Holcim, Daiichi Sankyo, Carrefour, Henkel, and Ford.

The authors of HBR article don’t mention any of this. Their theses suffers from what academics would describe as a “survivorship bias,” meaning that the companies they model are the ones left standing amongst a heap of other failed ventures.

So, what gives?

If you are a member of the board at an MNC, you should indeed be planning an India strategy, but with eyes wide open. Here’s a set of questions that are worth asking.

Which India will your company sell to?

If your company plans to capture the mass market in India, you must see a pathway to selling at Indian prices – which may be 30-50% of what you charge in the US and still make money. The average cost of living in India ($420) is 81% less than in the United States ($2213)[v]. Dinner at a fast-food restaurant like McDonald’s is under $4 in India versus $9 in USA, family utility bills are $41 vs. $173, and a doctor’s visit is $10versus $112.

Hence, understanding what drives your costs and figuring outa way to localize them advantageously will be critical. This could mean local manufacturing and sourcing but also product design and supply chain. You not only may need to price lower but also make a good margin. This will drive customer adoption and keep local copycats at bay.

But not all Indian prices are low. The enormous size of the population creates opportunities for companies to make a play for either market or the wealthy consumers. Luxury goods in India sell for similar prices as those in the US or higher. That’s another India.

Lamborghini, which sells its Huracan and Aventador cars priced in the range of $500-600,000 in India, posted record sales of 92 units in 2022, growing 33 per cent over the previous year.  The automaker is fully booked for the next 18months and sold out for 2023.

On a more earthly plane, Apple iPhone’s sell for a premium (compared to US prices) in Indian markets. This is possible because the top 10% of the population (150 million people) commands nearly two-thirds of the country’s wealth[vi]. That’s another India with India.

Which India is the right one for you?

How will your company get the infrastructure it needs?

The present prime minister, Mr. Modi, has made infrastructure development a priority. There are highways, rail line and airports cropping up all over the country. Yet, infrastructure development is uneven and it will be years, maybe decades, before India will be where China is today.

This means that you have to look closely at the infrastructure your business will need to be successful in its strategy and compete efficiently. If it isn’t there already, you may need to build it. HUL for example wanted to penetrate even the rural poor markets in India. It not only had to redesign its products (e.g. single use, low cost soap sachets and 2-in-1 soap bars for washing both body and hair), but also deploy its own fleet of small trucks, recruit a microfinance industry style army of 70,000 women selling peer-to-peer in villages, and stage 7,000 kabuki-like plays in villages to educate consumers on better hygiene and the need to use soaps more[vii].

Likewise, Adani, a major Indian industrial conglomerate, got the real wind behind its sails when it built a 57 km (now 117 km) private rail line connecting its Mundra port in Gujrat to the hinterland.

Not every company needs to build its own distribution network and rail lines. However, it is a good time to ask what infrastructure your company would need and how it will get it. Mining companies, like Rio Tinto, think like this all the time when they harness resources in remote underdeveloped geographies.

Think like a mining company even if you aren’t one!

Yet, in other instances the Indian infrastructure is paradoxically miles ahead of the West and can create unique opportunities for MNCs. Yes, I am referring to the “India Stack,” the world’s largest digital infrastructure platform, that connects virtually the entire middle class to a banking system, allowing them to make and receive payments digitally through their smartphones. This cashless system is government funded and allows businesses to sidestep the costs of expensive networks from Mastercard and Visa which otherwise take 3-4% cut of all credit card transactions.

What is your infrastructure blueprint and plan?

How will your company tailor without over-tailoring?

By now, you have probably been told about the incredible diversity of India and its people.  The HBR authors caution prospective investors that “… despite being a single country, India means a multitude of cultures and languages. There are more than 780 languages written in 66 different scripts, of which 22 languages are considered “official,” each with its own script.”

This may scare many and give the impression that extreme tailoring of their products and brands will be necessary. That notion is misplaced. There are virtually no brands in India that tailor their products and brands to each region. However, some core level tailoring to suit the Indian market may well be warranted.

To gain traction against local market leader Mahindra, John Deere had to adapt its world-renowned tractors and harvesters for local crops, smaller farms and lower price points. This did not happen overnight. Over the last 25 years, the company has invested well of $100 million and set up multiple factories, technology/engineering centers, a parts distribution center and a financing arm[viii].

In contrast, Harley Davidson ended up exiting India when it failed to produce a lower cost bike that could be suitable for Indian consumers and could compete with the local offerings, like those from Hero-Honda, Suzuki and Ryal Enfield.

Sometimes, it is the marketing approach that needs to adjust and not the product. Cadbury made its iconic milk chocolates a success in India with its famous “Kuch Mitha Ho Jai” (how about a little treat) television campaign. It helped to reposition its chocolates as something that could be used for gifting during the all-important Diwali festival (Indian new year) –which is marked by the tradition of people giving each other boxes of sweets. It did not need to localize its chocolates to any region – just plain ol’ milk chocolates.

So, tailor for the basics, but don’t over tailor. You don’t need to.

Does your company have the strength at home to go abroad?

An India strategy is not a recipe for relieving a company’s ills in its home markets. In fact, most companies that have succeeded in India, didn’t make a killing overnight. Nor were their ventures self-funding cash cows. Most did so over decades of sustained investments.

Ford pulled out of the Indian market after accumulating $2billion in operating losses over 10 years. GM also failed to adapt to the local markets, stopped selling cars in India and recast its local factory as a export hub for car for Mexico. Citibank sold its consumer bank in India to Axis Bank when continued low margins became a drag on its earnings.

The companies that can do well in India may well be those that are successful in their home markets and can sustain the needed investments to develop the market.

Does your company have the requisite deep pockets to go the distance?

Does your company understand the India risks?

You can’t do business without understanding the people in the country. And that’s complicated. Indians, particularly the intelligentsia, love everything American, but are deeply suspicious of the American State. But not without reason.

In the Indian peoples’ collective memory looms large the 200 years of enslavement and economic exploitation by the British which ended about 75 years back. Thus, foreign powers, now mainly the US, are viewed as possible wolves in sheep’s clothing.

It certainly does not help that up until recently, the US and Pakistan (India’s arch enemy) were best friends geopolitically. That changed overnight with the shocking discovery and dispatch of Osama bin Laden lounging in a countryside hacienda near a military encampment in Abbottabad, Pakistan.

The present India government has cultivated acute nationalist sentiments in its populace and the demons of the past are never too far from the minds of the Indian cognoscenti. Thus, there is always the risk that a future leader of India may veer further to the right and come down hardon foreign companies.

Even though the Modi government anxiously courts foreign investments, it has not hesitated to weaponize the bureaucracy and its income tax department to attack companies that don’t quite toe its party line.

In 2021, Indian government announced that it would force social media companies to take down messages it deems threatened the "unity, integrity, defense, security or sovereignty" of the country. In another case, GE Capital's Mauritius subsidiary was told it had to pay a 40% capital gains tax it owed on a 2017 sale even though India and Mauritius have a tax agreement that allows companies operating in the two countries to avoid double taxation from each jurisdiction[ix].

Companies may find themselves pressured by constituents in their home countries to take a stand on issues spanning human rights, gender equality, child labor and LGBTQ rights – where India has less than a stellar record. But foreign companies must tread softly and deliberately (See our article “The Next Frontier For Governance in Corporate Boards – The Corporate and Brand Values Committee[x]”).

Further, safeguarding intellectual capital may be challenging, leading to leakage of proprietary technologies and manufacturing processes to local firms that may then pop up as copycat competitors. Companies must steer carefully in a market that has high levels of corruption without falling afoul of the US government mandated Foreign Corrupt Practices Act (FCPA).

Navigating the waters can be easier in partnership with a well-connected Indian company. The Reliance and Adani companies are for example seen as joined at the hip with the present government and able to open doors and bend regulations to their great advantage. The Indian diaspora in the US, who often understand both worlds well, can be an essential source of talent for companies setting shop in India.

What is you risk-return map for India?


With the demise of China as a reliable business partner and the immense growth of the middle-class market in India, there is no question that the latter is acritical strategic option for many companies. It is the right combination of a low-cost supply base and a large consumer market.

Thus, the question really may not be whether India, but rather when and how. For board directors of MNCs, starting with the questions posed above is as good a place as any to start setting the chess pieces.

The pot of gold at the end of the rainbow is very real as are the potholes in the road along the way.

[i]Vijay Govindarajan, et. al., Does Your Company Have an India Strategy? HBR June27, 2023

[ii] Cerenti Senior Executive Briefing;

[iii] Karan Deep Singh, After a Long Ride, Harley-Davidson Is Leaving India, New York Times, November, 2020

[iv]Mimansa Verma, The number of foreign companies active in India is declining, Quartz, August, 2022

[v] India vs United States - Cost of Living Comparison,

[vi] Sana Ali, India very unequal; top 1% own 33% of the country's wealth: World Inequality Report, Business Today, December 2021;

[vii] Rekha Balu, Strategic Innovation: Hindustan Lever Ltd., Fast Company, May 2001

[viii]John Deere Launches 7 New Tractors and 3 Implements in India 2023, TractorGyan, January, 2023

[ix] Ike Brannon, India’s Hostility To Foreign Investment Threatens Long-Term Growth; Forbes, April 2021

[x] Cerenti Senior Executive Briefing;