India - Country Commercial Guide
Market Challenges

Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.

Last published date: 2021-10-22

High Tariffs and Protectionist Policies  

U.S. exporters and investors face non-transparent and often unpredictable regulatory and tariff regimes.  Some U.S. goods and services have limited access to the market.  India has the highest average applied tariff of any G20 country, and some of the highest bound tariff rates among World Trade Organization members.  

Price Sensitivity               

Even before the pandemic and ensuing economic slowdown, Indian companies and consumers were extremely price sensitive.  U.S. companies must evaluate whether they can sell at prices that Indians are willing to pay, and may need to adjust their sales models accordingly.  For example, some companies sell products in smaller sizes or with fewer features to reflect Indian consumer’s price sensitivities.  


India has significant infrastructure development needs, and improvements in this sector are vital to the country’s economic growth.  India’s congested road transportation infrastructure, inordinate delays in railway freight movement, inefficient and long turnaround time at ports, and fast-growing but highly concentrated airport sector all contribute to significant capacity constraints that, if not addressed, may stymie economic growth.  India has ambitious infrastructure development plans, notably in airports and inland waterways, as alternative means of transport to traditional road and rail.  Infrastructure projects in India often suffer from delays in completion, mainly due to an inadequate regulatory framework and inefficiency in the project approval process.  India has devoted significant portions of its recent annual budgets to infrastructure development, and plans to execute these initiatives largely through a Public-Private Partnership (PPP) model.  However, timely execution of projects within allocated budgets remains a challenge, even where funding is available.  

Data Localization Requirements and E-Commerce Restrictions  

The Indian government is pursuing data localization policies and legislation, such as the Personal Data Protection Bill (PDPB) and the Non-Personal Data Governance Framework, that would require local data to be processed and stored in India.  Such measures have cross-sectoral effects and could materially impact U.S. companies’ operations in India.  The draft PDPB is anticipated to be presented for discussion in the Indian Parliament by the end of 2021.  A proposed national E-Commerce policy drafted by the Department for Promotion of Industry and Internal Trade (DPIIT) limits to 25 percent purchases by sellers from E-Commerce entities providing marketplace services to those sellers.  Additionally, the Ministry of Consumer Affairs released its own draft E-Commerce rules that would ban deep discounts and flash sales.

Local Content Requirements  

The Government of India’s 2020 procurement regulations limit global tenders to purchases over roughly $26.6 million (unless specifically authorized); the regulations also include Indian value-add content preferences.  Similarly, state government organizations have put in place localization requirements for companies competing for tenders.  Given India’s movement toward self-reliance, we expect that local content requirements will become increasingly stringent at both the central and state government levels.  

Power of States  

As a federal system, much power and decision-making are decentralized in India, with differences at the state level in political leadership, quality of governance, regulations, taxation, and labor relations.  Indian states generally hold greater power than their U.S. counterparts.  U.S. companies also face varying business and economic conditions across India’s 28 states and 8 union territories, and should factor these variations into their national business strategies.  A regional strategy is key for success in India.  

The current government has promoted the idea of “cooperative, competitive federalism,” encouraging states to compete against each other to attract investment.  The Ministry of Commerce and Industry’s DPIIT maintains an “Ease of Doing Business” state-by-state ranking on its website.