How do desi and pardesi companies stack up against each other in India?

With the current Union Budget clearly waving the green signal for foreign companies to invest in India, more and more large global companies will enter the market – some of which might even cause a sort of threat to existing Indian players.

Are we ready to handle this situation, do we have a good hand, or should we buckle up a little more?

Experts say that the move on FDI (Foreign Direct Investments) is a positive move and that Indians are equipped to take on competition, whether it is internal or from outside.

Image credit "ShutterStock"

“It is not that these companies are here to threaten Indian companies, the challenge is fair. The choice still remains with entrepreneurs to ensure they build their businesses on models that won’t put them in a David-Goliath situation ever. Also, I am sure our budding entrepreneurs are a smart lot,” says Ganesh Krishnan, serial entrepreneur and Founder, Growthstory.in, an investment platform for early stage startups.

What advantages do Indian companies have over foreign companies?

There are some things that our entrepreneurs have an upper hand in -- a knack for doing thing as we call it.

• Unique solutions to small problems: Some of the best practices that work abroad may not work in India, while the reverse is also true. Who ever thought that companies could manufacture small, handy sachets of shampoo or oil, or even introduce an entirely new mode of payment called Cash On Delivery?
• India, the land where jugaad works: We Indians are so in love with the term jugaad that we even forget that there is an equivalent for it in English – hustle. After all , this is the land where washing machines churn yoghurt for lassi.

This method of finding low cost, highly efficient means to complete any given task works in India because there aren’t too many systems still clearly in place for a more orderly and disciplined execution of business.

• Knowledge of local markets: India is a place of chaos; it is not as homogenous as China or America. There are around 122 different languages and a 1,000 other dialects; who can understand this market better than an Indian herself?

“The macro behaviors of customers don’t change much. For example, Facebook and Whatsapp will still be the most popular social media apps, but ability to understand consumer behavior is a very local thing,” says Mukund Mohan, who heads Microsoft Ventures.

• Better understanding of laws: In theory, it is easy to read law books and understand the laws that govern a certain state in India. How we wish, it all went by the book, right? Although, Indian companies that have already set up shop have been through the whole grind and usually know where to go and who to talk to.
• Be Indian. Buy Indian: We don’t know how this phrase came about, but we do know it stuck. Most Indians (still) prefer to buy simple Indian products as opposed to luxury foreign products.

“I know a lot of people who will choose Hamam soap or Mysore Sandal soap over Dove or any other international brand. We are still a little traditional in that way,” states Shivakumar Ganesan, Co-founder and CEO, Exotel, a cloud telephony startup. Just as Finance Minister Arun Jaitley put it, we will promote ‘Make in India’ products.

What are the areas where Indian companies are at a disadvantage?

There are some things we can change, while some we must just embrace and work around.

• Brands are already established: Most foreign companies have already established their brands before deciding to set foot into India. This gives them an edge over marketing and effective sales. And if the worst comes, they always have the option to retract from India, and they will still flourish.
• Big market, easy understanding: India might be a huge market, but understanding it does not take much time, says Mukund Mohan, adding that it is not as complex as the United States or Europe.

This leads experts to believe that Indians take longer to build technology products for a global market, than foreign companies take to customize their products for India.

• Capital is more easily available: These large companies like Amazon, Uber and the likes, are willing to invest large sums of capital to gain their market share here, as opposed to Indian companies that have to be prudent at all times.

Experts are certain that the above scenario will remain true only for a limited period of time as more and more investors have started looking at India as an innovation hub.

All this said and done, we have proved ourselves quite successful in the past, and we are a country that does not like losing on home grounds.

“If we start looking at how much money Indian companies have made abroad, it is immense, almost 70-100 billion in the IT services industry. The same figures for foreign companies in India are negligible when compared to this. The product companies’ era is just beginning, and a lot will change in the future,” says Mukund Mohan confidently.