India: The promise and possibilities for global companies

India is drawing attention as a global business hub. With a strong talent base, a large pool of consumers, and continuously improving infrastructure, the country offers many opportunities for multinational companies over the next decade. According to one estimate, India could gain up to $0.8 trillion to $1.2 trillion from trade-flow shifts by 2030 and boost the country’s GDP share for manufacturing from 16 percent in 2023 to 25 percent by 2030.¹Dipak Mondal, “Make in India fails to lift manufacturing share in GDP in 10 yrs,” New Indian Express, September 25, 2024.

As with any new venture, companies that expand into India may encounter unexpected challenges. While the country’s government has strong pro-business policies, companies may need to grapple with complex regulations, labor strikes, and red tape. India’s vast consumer base, with its huge variations in product preferences and spending power, could also present hurdles for marketing and sales. Some multinational companies have thrived in India despite these obstacles, but others have reduced, or even ceased, local operations.

What factors distinguish winning multinational companies from the rest of the pack? And with the landscape changing so quickly, what is the best time for companies to expand operations within India? To answer these questions, we first reviewed the Indian market’s unique characteristics and then identified five factors that are common to winning companies: taking a long-term view, empowering the right leaders, customizing products to suit local tastes, localizing operations, and moving fast.

The benefits of India—and the new rush to profit

Although some business leaders may simply think of India as a site for low-cost operations, the country has more to offer. Consider a few other advantages, many of which are recent developments:

• A growing wellspring of innovation and talent. India is home to about one-third of the world’s STEM graduates, and these employees are creating innovations that enhance electric vehicles (EVs), pharmaceuticals, and other products. The high number of STEM employees makes India a leading contender when multinationals are looking for programmers or considering sites for global IT capability centers. Overall, engineering, research, and development sourcing from India could increase in value from about $44 billion to $45 billion today to over $130 billion to $170 billion by 2030.²Sameer Ranjan Bakshi, “India’s share in global ER&D sourcing market to reach $130-170 billion by FY30,” Financial Express, October 13, 2023.
• Greater appeal as a manufacturing site. India has increased its share of global exports in multiple categories. In the electronics sector, for example, the value of Indian exports to the United States alone is now about $10 billion; analysts expect this to rise to $80 billion by 2030.³S Ronendra Singh, “US reciprocal tariffs may impact Indian electronics manufacturing,” Hindu Businessline, March 09, 2025. For global exports, the value could reach about $1 trillion by 2030.
• Historically low labor costs. India has traditionally offered competitive labor costs. Even if wages increase, Indian labor costs are likely to remain competitive because workforce participation and productivity are increasing.
• Large-scale infrastructure improvements. India is undertaking many infrastructure improvements and industrial projects, such as port upgrades, with target expenditures of $1.8 trillion by 2025.⁴“India to launch $1.8 trillion national infrastructure plan to help generate jobs: PM Modi,” Straits Times, August 15, 2021. These infrastructure improvements can enhance productivity and lower supply chain and utility costs.
• An increasingly pro-business environment. The Indian government has recently reviewed its business-related laws and is enacting pro-business policies.⁵Kirtika Suneja, “India picks 300 law points and sections to likely decriminalise for next manufacturing push,” Economic Times, September 25, 2024. For instance, the National Manufacturing Mission is designed to improve five critical areas: the ease and expense of doing business, workforce development, technology availability, production of quality products, and the environment for micro-, small, and medium-size enterprises.⁶Ministry of Finance, “‘National Manufacturing Mission’ to cover small, medium and large industries for furthering ‘Make in India’ announced in Union Budget 2025-26,” Press Information Bureau, February 1, 2025. Other government programs are aimed at specific industries, including one that subsidizes 50 percent of capital expenditures for semiconductor companies that build plants in India; individual states may provide additional subsidies on top of this.⁷Anishaa Kumar, “Budget 2024: Semiconductor industry upbeat on govt push for self-sufficience,” Money Control, July 18, 2024; Ministry of Electronics & IT, “Government of India taking steps to encourage domestic manufacturing of semiconductors & promote country’s digital transformation and self-reliance,” Press Information Bureau, July 31, 2024.
• A large consumer base. With approximately 1.4 billion residents, India has surpassed China to become the world’s most populous nation⁸“Countries in the world by population (2025),” Worldometers.info, accessed March 22, 2025. and its GDP is growing. Equally important, the vast pool of Indian consumers now has greater spending power, with average monthly household consumption rising from $271 in 2012 to $705 in 2023.
• A vibrant and growing digital economy. The number of smartphone users in India surpassed one billion in 2024,⁹Shangliao Sun, “Smartphone users in India 2010-2040,” Statista, September 18, 2023. and the number of internet users is expected to surpass 900 million in 2025.¹⁰Tech desk, “India’s internet users to surpass 900 million in 2025, regional content driving growth: IAMAI-Kantar report,” The Indian Express, January 17, 2025. The country’s digitally connected consumers now account for over 40 percent of global internet transactions.¹¹“India’s digital transactions revolution,” Google Arts & Culture, accessed March 22, 2025. Across sectors, the value of digital commerce through Open Network for Digital Commerce, a government-sponsored platform that connects online buyers with businesses, could rise from between $60 billion and $70 billion in 2022 to between $320 billion and $340 billion by 2030—about a fivefold increase (exhibit).

Success stories

Global interest in India is already growing. From 2021 to 2023, 984 international companies registered to operate in India, up from 320 between 2019 and 2021. There are now over 1,500 global capability centers in the country, about 60 percent of which focus on IT, business process management, or engineering, research, and development.¹²Annapurna Roy, “The rise of the GCC ecosystem in India,” Economic Times, June 19, 2024. Analysts predict that companies will create over 250 new global capability centers in India over the next three to five years.¹³Cision PR Newswire. “India's global capability center (GCC) sector: A strategic asset for global companies, study finds,” September 9, 2024. Many companies are also establishing data centers in India to gain access to skilled IT workers.

Although multinationals across industries are present in India, some sectors are more established than others. Consider the Indian pharmaceutical industry. Although this sector accounted for only about 6 percent of India’s global exports in 2022, the country is the main supplier of active ingredients and small-molecule drugs.¹⁴Prashant Prabhakar Deshpande, “A focus on progress of pharmaceutical industry of India,” Times of India, February 10, 2024. India is also the leading provider of generic drugs, representing about 20 percent of all global exports by volume.¹⁵Ankit Agrawal, “Pharmaceutical sector spotlight: Driving innovation in India,” Invest India, November 20, 2023. Recognizing the country’s value, one major pharmaceutical company recently decided to build a global capability center in India.

Companies in other industries, such as electronics and high tech, recently made some major investments in India to expand their presence. In 2021, for instance, a major smartphone manufacturer announced that it wanted to locate most of its overseas manufacturing in India and bring the share of smartphones manufactured there to about 30 percent. Similarly, a leading global semiconductor decided to diversify its geographic footprint by building its first packaging, assembly, and testing facility in India. In doing so, the company will benefit from a 70 percent capital subsidy from federal and state governments combined.

Navigating uncertainty

Although it may be tempting to focus on India’s benefits, companies cannot overlook India-specific challenges, including the following:

• A highly diverse customer base and complex macroeconomic fluctuations. The cultural, economic, and linguistic diversity within India surpasses that seen in many countries. Although spending power is growing in most segments, more than 95 percent of consumers have $2,000 or less in financial assets, putting many expensive products out of their reach. Consumer spending and demand can also take rapid and unexpected twists that could affect sales. For instance, the recent increase in consumer spending power is greatest among rural residents and has occurred because food prices dropped. Spending power has fallen for urban consumers, and disposable income is stagnating for the middle class.¹⁶Shritama Bose, “Cracks in India’s consumption story run deep,” Reuters, January 16, 2025.
• Global trade shifts and geopolitical uncertainties. Trade policies and tariffs are in flux. For instance, the US government recently announced that it would place reciprocal tariffs on many nations, including India.¹⁷Lazaro Gamio, “Trump tariffs: See which countries have the highest rates,” New York Times, April 2, 2025.
• Long lead times for payoffs. Companies are unlikely to see quick wins in India because it can take time to build their operations and overcome challenges. With semiconductors, for instance, the government has been providing government subsidies for about a decade, but positive effects are unlikely to occur before 2026 or 2027.
• Overdependence on government spending. Over the past five years, public capital expenditures have been the driving force behind most business growth. Interest from the private sector is rising, but companies must increase their investment and remain committed to stimulating greater manufacturing growth.
• Potential difficulties in scaling. To meet demand, companies may need to manufacture products on a much larger scale than they do today. But many suppliers in India are small to medium-size enterprises that are unable to deliver the quantity of components required for large-scale manufacturing. Companies may also find some gaps in the local supply chain. Such problems are particularly common in industries that have a limited presence in India.

Winning in India

Although the challenges may seem daunting, some multinationals across sectors have overcome the obstacles and are thriving in India. Our analysis of the winners reveals that they tend to share the following five approaches to business.

Taking a long-term view and building resilience

Companies that expand operations, manufacturing, sourcing, or other activities in India should focus on long-term gains, rather than quick wins, and anticipate India-specific challenges that might arise in coming years. For instance, companies should emphasize product quality, consumer satisfaction, and innovation from the outset to maximize sales and win market share. This approach could help keep them profitable even if the government decreases subsidies or discontinues certain pro-business policies.

Empowering leaders with local knowledge and experience

Having strong local leaders can make the difference between success and failure in India. These leaders—especially the office head—must have direct experience with the local market’s quirks and nuances, including regulations, cultural issues, and the economic landscape.

Global headquarters should vet local leaders during the hiring process, as it would with any key staff, and ensure that they share the company’s global vision. But local leaders must also have the autonomy to make many critical decisions quickly, without approval from central leadership. If a labor strike or another unexpected disruption occurs, companies that do not pivot quickly may fall behind more agile competitors.

To boost the local leadership pipeline, multinationals can create leadership programs to develop current employees; offering highly competitive salaries and benefits can also give them a strong reputation that helps attract the best employees within India.

Customizing products and pricing for India

There are multiple “Indias within India” because of the country’s diverse population and geographic spread. Companies that do not conduct an extremely detailed customer segmentation might fail to develop products with wide appeal, or they may miss some of the biggest growth opportunities.

Hindustan Unilever illustrates how companies can satisfy many different groups within India. Much of the company’s success hinges on a consumer model that examines the needs, characteristics, and spending capacity of 15 segments. During the COVID-19 pandemic, for instance, the company used the model to capture local data and insights about hand sanitizers, including the features that consumers value most. Hindustan Unilever then launched 17 different Lifebuoy hand sanitizer variants in 100 days.¹⁸“Winning in many Indias: Lessons in growth from Hindustan Unilever,” Unilever, August 31, 2021.

When formulating a product strategy for India, pricing deserves particular attention because buying power varies greatly by segment. Dynamic pricing is also critical because of the market’s frequent economic fluctuations.

What does the future hold for India?

Explore the article

Localizing operations in India

Companies can also benefit from localizing other operations in India. Three elements are particularly important:

• Investment in local manufacturing. Local plants can help businesses reduce costs and gain access to talented employees. Many companies have recently expanded their manufacturing presence in India, including one that is building a plant to produce batteries. In some cases, the new plants may become a hub for global exports.
• Development of a local supply chain ecosystem. Multinationals could seek Indian partners to source raw materials and components. In addition to shortening transport times and decreasing costs, these partnerships can streamline inventory management, allowing companies to restock parts more quickly if demand rises or unexpected shortages occur. Developing a supply chain ecosystem may take time because many suppliers are small to medium-size enterprises that may be unable to fulfill large orders in the desired time frame.
• Collaboration to promote innovation and training. Companies may benefit from partnerships with Indian research institutions, start-ups, and other organizations as they seek to develop innovative products for local and global markets. In some cases, they might co-invest in training programs to equip current and potential employees with critical skills.

Localizing operations within India will not simply help companies capture the domestic market; it could also strengthen their global share by increasing cost efficiencies that could translate into lower product prices.

Moving fast to capture opportunities and scale manufacturing

Moving quickly makes sense because early entrants or companies that have built a large presence in the market may gain an edge with consumers, have their choice of suppliers, or enjoy other advantages. That said, even the most ambitious companies should not proceed until they have developed clear goals and KPIs.

Companies must also ensure close communication between the Indian team and headquarters, possibly by establishing cross-functional teams that include staff from both locations. Together, team members can review metrics, including those related to cost and quality, and make quick adjustments as issues arise.

The most successful companies establish ambitious goals for scaling their Indian operations, with some planning to increase output by tenfold or more. Greater automation, sophisticated logistics, and stringent quality assurance management systems are just a few of the elements required for large-scale operations, and the best companies will investigate these solutions early on.

The road map to success in India may sometimes seem fraught with challenges, but companies that take a long-term view and persevere could simultaneously improve costs, reduce risks, and gain a greater share in one of the world’s most rapidly growing markets. In the best case, India will not simply be a new location for manufacturing but a source of innovation and new product development. Although much uncertainty lies ahead, companies that establish or expand their presence in India could create a new growth engine.