Preparing to export
Consultation and bespoke research
There is a range of online information for exporters, including advice and guidance on how to thoroughly research overseas markets. Visit: https://www.great.gov.uk/ for more information.
Researching the Indian market
Each state in India resembles a separate country, many with their own language and cultural practices. Therefore, the country is not a singular national market as each state has its own industry clusters. Make sure you research the regions as separate entities.
You should make regular visits to India, as well as making contact with others in your industry/sector. This will enable you to access the most up-to-date advice and information, and may lead to new insights, or at the very least, form the foundation for further research.
Visit: https://www.great.gov.uk for information and guidance on how to develop your marketing strategy, competitor and SWOT analyses and customer/market segmentation. The IOE&IT can also offer help with this. Visit: https://www.export.org.uk/.
You will need to determine whether there is a market for your product or service, if your pricing is competitive, whether you might need to change your product packaging or marketing, and whether to adapt your business model.
The questions listed here should help to focus your thoughts. Your answers to them will highlight areas for further research and also suggest a way forward that is right for your company. You may then want to use this as a basis for developing a formal strategy, although this may not be necessary or appropriate for all companies:
It is unlikely that you will have the answers to all these questions at the outset and these ‘knowledge gaps’ could form the basis for further research and investigation. Some of these questions will require quantitative research in your sector, while others involve more contextual and cultural considerations.
Talking to other people in your industry and regularly visiting India will give you access to the most current advice and such experience can often lead to new insights and form the basis for further research.
Following your initial research, you will need to create an export plan, identifying your best route to market. Guidance on developing an export plan, including marketing strategy, customer segmentation, competitor and SWOT analyses, etc. is available on the: https://www.great.gov.uk/advice/create-an-export-plan/how-to-create-an-export-plan/ site, and also on the Institute of Export’s Open to Export site at: https://opentoexport.com/info/export-action-plan/.
One option to test how viable your product or service could be in the Indian market would be to attend trade shows held in India each year. The Department for International Trade (DIT) provides funding for eligible businesses in the form of grants to enable them to attend trade shows overseas via the Tradeshow Access Programme.
The funding helps your business to gather market knowledge, gain experience in attending and getting the most from overseas trade shows, and to receive advice and support from trade experts. Visit: https://www.gov.uk/guidance/tradeshow-access-programme for more information.
To discover future events and trade missions in India, visit the DIT events portal at: https://www.events.great.gov.uk/ehome/index.php?eventid=200183029&.
For company launches and events held at British High Commission locations, contact the Department for International Trade (DIT) in India at: https://www.gov.uk/world/organisations/department-for-international-trade-india#contact-us.
[Source – DIT, gov.uk]
Direct sales in India using local representation
When choosing an agent or distributor, make sure you carry out due diligence regarding their:
local business reputation
India has several regions, therefore it may be helpful to appoint a series of agents and distributors.
Setting up a corporate or non-corporate entity in India
In India, a liaison or branch office will need permission from the Reserve Bank of India under the Foreign Exchange Management Act (FEMA) 1999.
A project office, however, does not need permission as it is treated as an extension of a UK company. There are reporting requirements and a tax that is rated applicably to the foreign company.
A wholly owned private company can be set up by a UK company, which must be subject to the foreign direct investment (FDI) guidelines.
Laws governing domestic companies also apply to joint ventures between UK and Indian companies.
See the Indian Ministry of Corporate Affairs site: https://www.mca.gov.in/content/mca/global/en/home.html, for more information about incorporating a company in India.
Go to the UK India Business Council page: https://www.ukibc.com/india-guide/how-india/market-entry-structures/ for information on market entry options.
Institutional investors in the UK can invest in India’s financial markets.
The UKIBC can help you to set up your business in India through their ‘Launchpad’ service: https://www.ukibc.com/what-we-offer/market-entry/launchpad/.
It may be easier to work with an Indian partner or advisor rather than export directly. This partner/advisor will be more familiar with the Indian business environment and will be able to help you:
keep in contact with customers
seek new business
get information on the latest market trends
Make sure you research several potential agents or distributors. It will help if you visit the Indian market on a number of occasions before you choose an agent or distributor to make sure that you are positive you are choosing the one most helpful to your company. Always look at their reputation, marketing ability and resources before making a decision. Be wary of agents who are promoting products or services that are similar or the same as yours.
The Department for International Trade (DIT) team in India at: https://www.gov.uk/world/organisations/department-for-international-trade-india#contact-us can assist you in locating and meeting potential agents and distributors for your products in India.
[Source – DIT Trade and Export guide: India, gov.uk]
Direct exports and sales
You must take care of the logistics of marketing, selling and sending your products/services overseas as well as getting paid when you directly export. This may be a viable option if you plan to sell your goods/services online to potential purchasers in India, or if you are responding to enquiries.
Further information on selling directly overseas can be found at: https://www.great.gov.uk/selling-online-overseas/.
Localise your website or use an online marketplace if you plan to sell online in India.
DIT can help to find suitable online marketplaces for your product/service. They can also help to access preferential government deals.
The Department for International Trade (DIT) can help you export your goods to India through their E-Exporting Programme. Find out more at: https://www.gov.uk/guidance/selling-online-overseas-with-the-digital-exporting-programme.
DIT has also negotiated listings at better-than-commercial rates. See online marketplaces in India at: https://www.great.gov.uk/selling-online-overseas/.
Joint ventures with a local partner are how most franchises are carried out in India.
The majority of the franchises in India are due to foreign franchisors selling licences to franchisees. This means that these franchisees can operate under a franchise’s brand name.
For more information on franchising, visit the international section of the British Franchise Association at: http://www.thebfa.org/international.
[Source – British Franchise Association]
Merger or acquisition in India
To succeed in India when merging or taking over an Indian company, you must have local expertise and have established a customer and supplier base. Make sure you also carry out due diligence on any prospective targets.
India’s Consumer Protection Act, updated in 2019, provides protection for consumers, as well as establishing an authority that can deal with disputes quickly and effectively.
[Source – Indian Department of Consumer Affairs]
Professional indemnity insurance
You may require professional indemnity insurance if you provide a service and need to protect yourself against negligence claims from clients or third parties in India.
See the Association of British Insurers (ABI) website at: https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/business-insurance/liability-insurance/professional-indemnity-insurance/ for further information, or alternatively, contact the DIT team in India at: https://www.gov.uk/world/organisations/department-for-international-trade-india#contact-us for further advice, and for contacts of local insurers or specialist brokers if appropriate.
[Source – DIT Trade and Export guide: India, gov.uk]
Getting finance to fulfil an export contract
Globally, India ranks 25th out of 190 economies for ease of ‘Getting Credit’, in the World Bank’s Doing Business report 2020. See: https://www.doingbusiness.org/en/data/exploreeconomies/india.
There are schemes available for UK companies that wish to sell their products/services to India. These schemes are to help simplify the growth of your business and can also help you to fulfil an export contract. For up-to-date information regarding current schemes, contact your bank or financial adviser.
UKEF can help UK companies to get paid for the products and services they export by insuring against buyer default.
Before exporting, make sure you are confident you will be paid as you may face difficulty when accessing foreign exchange. Contact one of UKEF’s export finance advisers at: https://www.gov.uk/government/publications/find-an-export-finance-manager for free and impartial advice on your insurance options, or contact one of UKEF’s approved export insurance brokers at: https://www.gov.uk/government/publications/uk-export-finance-insurance-list-of-approved-brokers/export-insurance-approved-brokers.
Currency risks when exporting to India
In order to fix your price, it is essential to fix your exchange rate. Before signing any contract, you need to consider whether the best option for you is to agree terms in Pounds Sterling (GBP), US Dollars (USD) or Indian Rupees (INR). It may also be advisable to seek expert financial advice on exchange rates (FX).
Transferring money from India
Under the Foreign Exchange Management Act (FEMA), there are exchange controls in India. Therefore, foreign-currency money transfers will be subject to restrictions in India.
[Source – DIT Trade and Export guide: India, gov.uk, UKEF]
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