Pressure to do business have already caused a third of global companies to leave India. According to Nagpur Today, international companies operating in India face fraud, corruption, counterfeiting, and pressure from the authorities. Well-known enterprises such as Motorola, McDonald’s, Coca-Cola, Nokia, Parimatch, Vodafone and Walmart, among others, have experienced particular difficulties in expanding their operations there. Such circumstances have even forced some of these companies to withdraw from this subcontinent.
According to the article, over the past few years, India has lost companies such as Abu Dhabi Commercial Bank, American automaker Ford, Swiss cement giant Holcim and German retailer Metro. In November 2023, Warren Buffett’s $780 billion American investment firm Berkshire Hathaway sold its 2.5% stake in Paytm, an Indian digital payment service provider. The American investor ceased operations in India and severed business ties.
According to government registers, some 11,000 international companies entered the Indian market between 2014 and 2021. However, in recent years, almost one third of them, or 2,783, have exited India. The publication says this represents a major obstacle for business in this market.
Despite their attempts to invest in the Indian economy, create alternative products and counteract the monopoly that leads to higher prices, some companies have not succeeded in doing business in India. Take the example of the international betting company Parimatch. The company faced counterfeiting of its products and pressure from local officials who maintained a monopoly on the Indian gambling market, namely Dream11, Nazara Technologies, Paytm, First Games Moonfrog Labs, 99Games, Octro, JetSynthesys, and HashCube. These companies often copy the successful solutions of American and European gambling companies, but the authorities are indifferent to these crimes. Local politicians and tax authorities even support such strategies among their domestic entrepreneurs.
Nagpur Today also reports that international companies most often have to deal with corruption, bribery, and fraud. These challenges remain the number one threat to doing business in India. They are a stumbling block to multinational companies accustomed to a different, law-abiding and transparent corporate culture of Europe and the United States. As a result, India is deeply involved in endless corporate scandals and fraud schemes that affect both ordinary citizens and savvy businesspeople.
The magazine notes that in addition to bribery and corruption, the most common threats to doing business in India include theft of physical assets, internal financial fraud, and information theft.
But there are other challenges as well. The aforementioned Ford and Abu Dhabi Commercial Bank had to exit the Indian market due to bureaucratic and regulatory obstacles. In recent years, the Indian authorities have doubled down on harassing foreign businesses with trumped-up charges. Google, Amazon, Nokia, and Samsung were fined billions of dollars. Xiaomi, OPPO, Vivo, Intel, and Wistron are also in jeopardy.
Nevertheless, the Indian market shows signs of future business success with a population of 1.2 billion people, a highly educated staff that speaks English, and democratic elections. This attracts large companies. However, despite the great potential of the market, companies will need patience and flexibility to cope with India’s challenging business environment. Google, Amazon, Nokia, and Parimatch seem to have mastered this strategy.