CHAPTER 1.

INDIA ENVIROMENT ANALYSIS

1.1 Political/Legal Environment:
India is a sovereign secular socialist democratic republic country with a parliamentary
system of government. GOI authorizes the union of 29 states and 7 union territories.
Foreign exchange controls: Rupee is mostly freely convertible for non-residents.
Still, in few cases, specific approvals are required.
Ownership restrictions: Foreign investors cannot have full ownership of private
property and they are not allowed to acquire en-bloc freehold land and/or property.
Import tariffs: Import duties of black pepper in Indian is currently 0% under the
ASEAN-India FTA takes effect achievements 1/1/2010 (13)
At the request of Vietnam, India agreed to reduce tariffs on coffee and black tea to
45%, and pepper to 50% by 2018.
Intellectual property: India is a signatory to the Berne Convention on copyright.
Registration is made with the Copyright Office. Though, in most cases, registration is
not necessary to maintain a copyright infringement claim in India. The patent law
operates under the first to file principle. Designs Laws includes the Designs Act
2000 and the Designs Rules 2001. Trade-names is a form of trademarks in India.
Because cybersquatting are widespread, it is advisable for right owners to register
their domain names in India as trademarks as soon as possible.
Promoting global business: The GOI has amended the FDI policy regarding to ease
the norms of area restriction, reduce minimum capitalization and make easy-exit on
projects. It has also recently relaxed the FDI policy norms for NRIs. The GOI plans to
further simplify rules for FDI, such as to increase FDI limits in current sectors and
include more sectors in the automatic approval route, to attract more investments in
the country. (9)

 Nhn xt 1 cu chung cho nguyn on.

According to the WTO, Indias average tariff rate is 34.9%, higher than the average
tax rate of 16.4%. The tariff rates of India on imported products from WTO members
are among the highest in the world. This could be considered as one of the significant
impediments to make an entry into Indian market.
Although Indian Intellectual Property law is thorough and generally comparable with
many developed countries Intellectual Property laws, there are still significant
concerns over IP enforcement. A major cause for concern in enforcement is
bureaucratic delay, which means that cases can run for five years or more. There is
also a lack of transparency, particularly at a local level.
Apart from the existing shortcomings, the Indian government has used their best
endeavours to loosen up the FDI policy to attract more foreign investment to a wide
range of economic sectors : civil aviation, banking, defence, retail and news
broadcasting

1.2 Economic Environment:

Agricultural products: rice, wheat, oilseed, cotton, jute, tea, sugarcane, lentils,
onions, potatoes; dairy products, sheep, goats, poultry; fish
Major industries - Major imports - Major exports: Lin quan g n h tiu nh
hng nh th no?
Major industries (Top 5) : Iron and steel industry ; Jute industry ; Cotton and textile
industry ; Sugar industry ; Information and Technology industry ; Pharmaceutical
industry ; Petroleum and natural gas industry ; Silk industry.
Major imports (Top 5): Mineral ; Natural Or Cultured Pearls,Precious Or
Semiprecious Stones ; Nuclear Reactors, Boilers, Machinery And Mechanical
Appliances ; Electrical Machinery And Equipment And Parts ; Organic Chemicals.
Major exports (Top 5) : Mineral ; Natural Or Cultured Pearls ; Vehicles Other Than
Railway Or Tramway Rolling Stock, And Parts And Accessories ; Nuclear Reactors,
Boilers, Machinery And Mechanical Appliances ; Organic Chemicals.
There is no clear indication that the pepper industry has taken any impact from
the factors concerning major industries, major imports, major exports, since it
is not viable to establish the relationship between the 3 mentioned factors and
the pepper industry.
Current economic conditions. (10) (11) (12) t bng ny ghi ra tnh hnh pht trin
chung ca kinh t n (GDP, Inflation, Currency, GDP per capita)
Currency : Rupee
GDP : 114,165.776 (2015) ; 122,676.545 (2016)
Inflation : 5.378% (2015) ; 5.520 (2016)
GDP Per Capita : 88,315.310 (2015) ; 93,666.725 (2016)

Subject

Units

Scale

2013

2014

Descriptor
GDP,

Nation

Billio

99,211.10 106,439.8

2015

2016

2017

2018

114,165.7

122,676.5

131,927.4

142,015.2

constant

al

ns

00

76

45

28

36

prices

currenc

GDP,

y
%

6.899

7.286

7.259

7.455

7.541

7.646

constant

change

prices
Inflation,

Index

233.028

246.840

260.114

274.473

289.360

304.015

prices
Inflation,

9.991

5.927

5.378

5.520

5.424

5.064

average

change

2.8

3.8

7.0

53.44

58.60

61.03

78,779.4

83,421.95

88,315.31

93,666.72

99,422.03

105,634.6

36

03

average
consumer

consumer
prices
Real

Interest
rates
Currency
value
GDP per

Nation

capita,

al

constant

currenc

prices
Employme

Units

nt
1.3 Competitive Environment: (8) (9) Phn ny cn lm li, sp thay th?
i th cnh tranh? Ngi sn xut n ? Ngi xut tiu sang n ?
- Substitute products :
- Competitors :
+ Domestic manufacturers :
+ Exporters :

India has emerged as the number one FDI destination in the world during the first half
of 2015. With FDI capital inflows of US$30.8b, India has outpaced all other
economies, moving up to the premier position from being in the fifth spot during the
corresponding period of the previous year.
Business leaders find Indias macroeconomic and political stability, FDI policy and
ease of doing business more attractive in 2015, compared with EYs 2014 India
attractiveness survey.
India in 2020: a promising outlook: Investors see India speeding up pace toward
becoming one of the worlds top destinations for manufacturing, as well as a regional
hub for operations.
Reforms expected to drive growth: A number of recent government reforms are well
received by investors, who expect them to increase Indias FDI attractiveness
significantly.
Index
Global Competitiveness Index
Health and Primary Education
Energy and transport infrastructure
Financial system
Banking system
Market size
Market efficiency

Rank of India
49
101
76
16
25
4
48

1.4 Level of technology: (5) (6)

India is the 4th country in the world by number of internet users. Therefore, it has
heavy infrastructure for bandwidth. It is served with both 3G and 4G technology
which has facilitated several of their technological projects. Furthermore, the country
also possesses one of the strongest IT sectors in the world, promoting constant IT
development, software upgrades and other technological advancements. Recently,
India has also attempted to launch their satellites into space.
Nhn xt, lin h n phn marketing trong marketing mix

The trend of shifting from traditional selling methodsto e-commerce has

been taking shape in India. The plausible explanation that might come up for
this movement is that the acknowledgement of how beneficial e-commerce
means to entrepreneurers - they can reduce costs on labour, international
phone calls and travel as the information you need to build your customer
base can be handled right from your desktop.

1.5 Structure of distribution: (7)

The distribution channel structure in India is largely traditional and quite unique. The
major channel components are the retail network, wholesale network, and the logistics
infrastructure.
The retail network in India consists of over nine million outlets, which include
traditional outlets such as paan shops, grocers or kirana stores; and newer formats
such as supermarkets, hypermarkets, and online stores. Traditional outlets are spread
across urban and rural India but the newer formats are mostly located in urban areas.
The penetration of organized retail in India is less than 8%. Traditional retail in India
offers consumers a number of advantages like convenience, home delivery, credit, and
personalized service. Modern retail offers periodic promotional offers, lower prices,
wider assortment, a better ambience, and higher quality brands. Only a few of retail
outlets in India are registered with a national authority. Hence, data on the size and
measurable characteristics of the distribution channel in India is very difficult to
obtain.
Wholesalers: Most wholesalers in India are small in relation to their counterparts in
developed countries and they operate in a limited geographical territory. Wholesalers
may specialize in a narrow product range across a few brands and deal with a small
number of retailers. FMCG companies in India have developed a category of
exclusive wholesalers called stockiest or redistributors. The number of stockiest used
by a single FMCG manufacturer for all India distribution may run up to a few
thousand and these stockiest may cover over a million retailers using systematic
physical distribution. Controlled distribution through stickiest is usually supplemented
by using non-exclusive traditional wholesalers. Traditional wholesalers can help in

expanding brand presence by several million more outlets. Traditional wholesalers are
an important element of distribution but there is hardly any published research about
their business models and operating strategy.
Logistics: The design of the warehouse network in India has hitherto been influenced
more by the taxation structure. Due to the presence of the inter-state Central Sales Tax,
companies have tried to avoid inter-state sales by setting up warehouses in almost
every state. For cost reasons, these state level warehouses are usually outsourced to
specialist entities called carrying and forwarding agents (CFAs).
Nhn xt, ni ra l do ti sao ch chn xut khu m khng phn phi.
As a newcomer in a vast foreign market like India, it is imperative to weigh the pros
and cons between direct exporting and distributing. According to the information of
logistics above, a conclusion can be drawn that direct exporting is more preferable
mainly due to the costs arising from the financial capability to put up many
warehouses across the country and from hiring CFAs.
1.6 Geography and infrastructure Environment:
Geography: India occupies most of the subcontinent in southern Asia with 2,973,193
sq. km of land and 314,070 sq. km of water. Its also the 7 th largest country in the
world. It borders on China in the northeast. Other neighbors are Nepal and Bhutan on
the north, Burma and Bangladesh on the east, and Pakistan on the west. The country
can be divided into three geographic regions: the Himalayan region in the north,
which contains some of the highest mountains in the world, the Gangetic Plain, and
the plateau region in the south and central part. Its three great river systems - the
Ganges, the Indus, and the Brahmaputra - have extensive deltas and all rise in the
Himalayas. (1)
Climate: Indias climate is varies from tropical monsoon in south to temperate in
north. Especially, 75% of the total annual rainfall of India is from the summer
monsoons. Moreover, it was found that monsoon rainfall in India is likely to increase
in the future. (2)
Natural and environment problems: It has many natural hazards (such as droughts,
flooding from monsoonal rains, thunderstorms and so on) as well as current

environment issues (such as deforestation, soil erosion, overgrazing, and so on). (1)
Thm thin tai gn y ca n .
Nhn xt xem kh hu c thch hp trng tiu khng? Din tch trng tiu
thc t bao nhiu? ny phc v cho chap 2 bn di)
Infrastructure: India has 63,300 miles of railway track making it the 4th largest rail
network in the world. However, India has many problems with roads, railroads, ports,
airports, power grid, and telecommunication. Its on-going urbanization and rising
incomes have heightened needs for improving infrastructure, both to deliver public
services and sustain economic growth. The 12th Five Year Plan (2012-2017) shows
that the government will invest $1 trillion in the infrastructure. It is also looking for
private sector participation to fund half of this massive expansion through the PPP
model. (Module 2) (6)
Nhn xt, ni ra l do ti sao ch chn xut khu m khng phn phi.
In the early stage of the plan of penetration into Indian market, it would be more
advisable if choosing to export directly instead of jumping right into the distributing
option. Despite that the infrastructure in India is undergoing a drastical transformation,
but this process might take a longer time than expected and still underlie many
potential disadvantages due to its incompleteness such as the direct monetary
outlays on communication, business travel, freight, insurance and legal advice ; or as
with transport costs, delivery time is partly determined by distance between the
trading partners. However, geography and the quality of infrastructure probably
matter even more for timeliness than for freight rates.

1.7 Cultural forces Environment:

Population: India is the second populous country in the world, with over 1.271
billion people (2015), more than one sixth of the world's population. Specifically in
age structure, 0 14 years group accounted for 31.2% of the total population. The 15
64 years group doubled it with nearly 64%. The 65 and above ages took the rest,
5.3%. [3]
India Age structure (12)

India is a country with a young population and the percentage of men/women relative
balance. It makes India has abundant labor resources. D on nhu cu tiu en
trong tng lai, ngun ca cu trn?
Indian black pepper yield had been down to 37,000 tonnes in 2014 before recovering
at 65,000 tonnes in 2015. Based on the data from The International Pepper
Community, they has projected the Indian black pepper output to touch 53,000 tonnes,
down by 12,000 tonnes from previous year.

Languages: India has 15 official languages and 844 unofficial ones. Hindi is the
official language used by the government and English is widely used for educational,
social and commercial communication. (3) Nhn xt kh nng to mi quan h
lu di
Based on the fact that English is regarded as the most commonly-used language in
India, there could be a positive expectation that to maintain a long-term partnership or
relationship may be not a matter of concern as the language barrier is somewhat faded
away.
Religions: Hinduism is the major religion of India, with 79.8% of the population, and
Muslims is also important religion which accounts for 14.23%. Nhn xt mi quan
h ca n vi nhu cu tiu
Pepper has been used as a spice in India since prehistoric times. Pepper is native to
India and has been known to Indian cooking since at least 2000 BCE. In other words,
pepper is an essential part of India culture and religion, thus an inevitable spice in the
Indians daily life.

Cultural Values: (4)

Status and Hierarchy: Traditional Indian society has been highly structured,
determining ones position throughout life. Indian culture has determined status from
caste, class and job role, and many other factors. Indian businesses still keep many of
these factors in mind in the work environment.
Reputation: Indians will be very conscious of how they are treated by other people.
There is an expectation that one should be treated with the level of respect they
deserve due to their status or position, both in the business environment and in society
as a whole.
Relationship Building: Establishing a good working relationship is the need before
turning to quantifiable business matters.

Yes Culture Challenges: Indians may say yes but the real meanings may be totally
different. To minimize misunderstanding, the traders should ask for clear clarification.