Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
Selling in the Indian market can be complicated and difficult for new entrants for many reasons including:
- Market fragmentation due to the country’s vast size and diversity in terms of language, culture, and infrastructure;
- Low per capita income ($6,390 in 2020, according to the World Bank);
- High cost of creating and maintaining independent sales infrastructure;
- High retail outlet density (12-15 million outlets) spread over many urban and rural centers, and often small and unorganized; and
- Strong local competition.
Trade Promotion and Advertising
Over time the Indian economy has moved from being a controlled seller’s market to a buyer’s market. India’s economic liberalization policies reached a crescendo in 1991, reducing import tariffs and taxes and deregulating markets. These changes brought foreign investment, increased competition, and a need for increased advertising. According to a 2021 dentsu Digital Report, at 41 percent television captures the largest share of advertising expenditures. TV is followed by digital media at 29 percent. Print media comprises 22 percent of advertising expenditures. Radio, outdoor, and internet advertising command smaller shares, and digital media is expected to grow the fastest. The advertising sector, which slowed in 2020 due to the pandemic, is expected to touch $70 billion by 2022.
More than 65 percent of India’s population is rural. The key to gaining rural market share is increased brand awareness and affordability, complemented by a wide distribution network to ensure availability. Rural markets are best covered by mass media (e.g., television, newspapers, and radio), as India’s vast size and poor infrastructure pose challenges for effective use of other media. With improvements in basic telecom services and increasing penetration of smartphones in rural areas, online purchases by rural consumers are increasing.
India has a diverse and growing number of daily newspapers. Print media reaches 70 percent of urban adults. Further, the number of readers in rural India is now roughly equal to that in urban India. The print media, almost completely controlled by the private sector, is well developed and advertising and promotional opportunities are available in many newspapers including daily, weekly, or monthly business publications, news magazines, and industry-specific magazines. A decade ago, television was one of the most popular advertising channels, but social media and platforms such as YouTube, video advertising, video blogging, and direct message tools are seeing increased use.
U.S. companies interested in advertising in the Indian media can choose from many advertising agencies. Many large and reputable international and U.S. advertising agencies are present in the market, and they work with local advertising agencies. In addition to advertising, U.S. companies can also work with established public relations firms.
Trade shows are also an effective means of promotion for U.S. products and services. U.S. companies can select from several quality international trade fairs, both industry-specific and horizontal, to display and promote their products and services. The U.S. Commercial Service partners with a number of Indian trade show and U.S. pavilion organizers to promote U.S. participation and U.S. company interests in a number of select trade shows in India every year. See our list of trade events here.
The U.S. Department of Commerce’s U.S. Export Assistance Centers, U.S. industry associations, and individual U.S. states organize trade delegations and missions to India to explore business prospects with local firms in the private and public sectors. The U.S. Commercial Service supports participation in many of these trade missions. Visit here for a list of trade events and trade missions supported or organized by the U.S. Commercial Service in India.
The U.S. Commercial Service in India also offers several easy and inexpensive services to explore and begin promotion in the Indian market; these are particularly helpful to small and medium new-to-market companies. Once such service is the Single Company Promotion, a customized event for U.S. exporters to promote their goods and services to a targeted audience.
In July 2017, India implemented the Goods and Services Tax (GST) to unify Indian states and union territories into a single market to improve the ease of doing business. The GST is designed to improve tax compliance, increase price transparency, and simplify the movement of goods within India. There are four GST rates: 5 percent, 12 percent, 18 percent, and 28 percent; the highest rates apply to luxury items.
Petroleum products such as petrol, diesel, natural gas, aviation turbine fuel, electricity, and liquor remain outside the scope of the GST, with individual states retaining the power of taxation. While the entertainment industry is part of the GST regime, municipalities and regional governing councils have the authority to impose additional taxes.
To avoid product import duties and other costs, some foreign companies, notably in the consumer goods sector, have established manufacturing facilities in India.
Pricing may also affect product packaging decisions. Many consumer product suppliers have found it helpful to package smaller portions at reduced prices. Although some Indian consumers are aware of quality differences and insist on world class products, many customers sacrifice quality concerns for price considerations.
Bargaining is routine for the buyer and seller in India. For consumer goods, especially for durables such as refrigerators, TVs, and washing machines, sellers often offer discounts during holiday seasons to attract more customers. Trade-ins of old products for new ones are also increasingly popular among consumers. A successful pricing strategy must consider these factors.
Sales Service/Customer Support
While U.S.-made products enjoy a reputation in India for premium quality, durability, and low maintenance costs, Indian buyers are price sensitive and often choose products with low initial acquisition costs. U.S. companies, especially those new to market, often need to persuade Indian consumers to make purchases based on lifecycle costs.
The Indian customer appreciates quality after-sales support and associates it with good value. To ensure efficient distribution of products and timely after-sales service, it is usually more efficient to establish regional service centers with trained technicians and sufficient inventory than to partner with third party service companies or ship items back to the United States for servicing or product repairs. These considerations are very important, especially when seeking long-term success in the value conscious and growing Indian market.
To compete with local and other foreign suppliers, U.S. companies should consider:
- Using online channels to help customers in need of service information and/or to provide them with fast and convenient after sales service.
- Establishing a call center staffed with knowledgeable technical personnel.
- Having personnel on call with spare parts when customer replacements are needed.
- Establishing an efficient system for after-sales support including hiring and training technical maintenance teams.
Local Professional Services
The Business Service Providers (BSP) Directory is a list of experienced Indian and U.S. business service providers offering services to U.S. exporters and investors. You may also be able to identify professional service providers through any of the following business associations:
Principal Business Associations
- American Chamber of Commerce (AmCham) India
- Confederation of Indian Industry (CII)
- Federation of Indian Chambers of Commerce & Industry (FICCI)
- Indo-American Chamber of Commerce (IACC)
- The Associated Chambers of Commerce & Industry of India (ASSOCHAM)
- U.S.-India Business Council (USIBC)
- U.S.-India Importers’ Council (USIIC)
- U.S.-India Investors Forum (USIIF)
- U.S.-India Strategic Partnership Forum (USISPF)
Please contact the U.S. Commercial Service India for details of other business associations in India, including regional bodies.