India is fast losing its reputation as a tough emerging market and is now providing huge returns for global consumer goods companies, based on a new report by Bain & Company published Thursday.
The report emphasizes that affiliates of India's leading multinational companies (MNCs) are currently returning total shareholder returns two to six times higher than their foreign parents.
That is, among companies with over $100 million revenue from India, 60 percent of the revenue of Indian affiliates is doubling as fast as their parent company's overall revenue growth.
Ravi Swarup, leader of Bain's Consumer Products practice in India, said, "Companies already making commitments to India are enjoying turbocharged growth, greater shareholder returns, and the chance to influence products with worldwide relevance." He stressed that MNCs that have not entered the Indian market yet need to do so now or risk missing out on substantial growth and long-term strategic benefits.
India has emerged as the third-largest driver of growth in consumer goods in emerging economies over the decade. In the future, it is projected to experience the biggest surge in working-age population globally and the largest growth in per capita income of the top five emerging markets in consumer goods that also include Brazil, China, Mexico, and Russia.
Although India has long been a challenge for MNCs, it has made remarkable progress in bridging obstacles. The rapid digitalization of the country, coupled with mass adoption of smartphones and the internet, has enabled businesses to increasingly reach India's heterogeneous consumer base. E-commerce and fast commerce, especially, have expanded two to three times faster in value compared to traditional trade channels, decreasing the dependence on traditional trade networks to penetrate the market. Also, digital payments are gaining popularity, with 45% of Indians using the internet opting for them to make payments.
Nikhil Ojha, leader of Bain's Strategy practice for Asia-Pacific, clarified, "What we're witnessing is a market where legacy players and new entrants both can win, but only if they rewire their strategy to be genuinely India-centric."
This report shows that India's changing environment offers a huge opportunity for international consumer businesses, as long as they modify their strategy in line with the distinct dynamics of the market.
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