Tractus in India

Undertaking consulting engagements in India since 1995 – Tractus India was established in Pondicherry, a satellite city of Chennai, in the southeastern state of Tamil Nadu in 2008

India has seen dramatic changes to its regulatory regime since the election of Mr. Narendra Modi as Prime Minister in May 2014 that are continuing through his second term that began in 2019. Mr. Modi has taken swift and decisive action by eliminating unnecessary laws and regulations, improving bureaucratic efficiency, and making government institutions more transparent, responsive and accountable. These efforts have seen India’s Ease of Doing Business rating improve dramatically since his first term rising from a rank of 131 in 2015 to 63 in 2019.

Alongside improving government, Mr. Modi has also launched the “Make in India” foreign investment attraction campaign that aims to facilitate investment in labor intensive and high-value add manufacturing by liberalizing new sectors of the economy for foreign investment, fostering innovation, enhancing skill development, protecting intellectual property, and building best in class manufacturing infrastructure across India. Multinationals seeking to diversify their global footprints away from China are recognizing that India has many of the factors that made China successful, such as low-cost and abundant labor, technical and engineering excellence, and a growing domestic consumption lead by an emerging middle class.).

Mr. Modi’s continued campaign during his second-term will maintain India’s position as a major destination for FDI for businesses in manufacturing and services across all sectors of the economy. The World’s 5th Largest Economy will continue to attract trade and investment as companies are drawn to India’s enormous population, second only to China in size, and demographically one of the youngest in the world, and with more of the population entering the emerging middle class looking for more goods and services which is expected to become the World’s 3rd largest consumer economy in the next decade.

Our office is staffed with a team of Indian and multinational staff supporting our clients’ needs as India’s investment environment improves along with its political, economic and social outlook.

Strategy & Execution

India is attracting greater attention from global companies because of its enormous market, high rates of growth and the English language facility of its workforce, but despite rising Ease of Doing Ranking and streamlined bureaucracy the country remains a challenging market in which to operate. These challenges, which range from infrastructure requirements for operations, connectivity to international sea and air ports, and the decentralized management government bureaucracy that varies across India’s 29 states require well considered investment strategies based on a clear understanding of client objectives and thorough analysis.

Tractus advises and assists our clients to make informed decisions to determine the best market entry decisions to trade and invest in India’s dynamic economy, and decide on how best to structure their investment from an operational, legal and tax perspective. Our experience advising companies on India strategy covers Tractus’ suite of services under the Strategy & Execution service line from bespoke market opportunity assessment on specific product classes to site-location strategy across the 3 million km2 country and its main population clusters.

As India’s IT, Knowledge Process Outsourcing (KPO), and Business Process Outsourcing (BPO) sectors has grown to become world class, concentrations of investment activity have created labor market hot spots where wages are rising faster than productivity is able to compensate and certain specialized skills and language capabilities are becoming harder to find. Determining the optimal location for shared service, software development and IT support centers requires a thorough understanding of the labor market situation and disciplined analysis. Tractus has worked with multinational firms to identify the optimal KPO and BPO location based on these niche labor market requirements.

India’s large growing middle class is attracting firms from all sectors of the global economy to its shores to trade their goods. Identifying the right partner for your product in India can be challenge and if unexperienced in the Asian markets, could often lead to selecting the first firm that aligns with a company’s vision but does not have the technical, financial, or resources to meet expectations. Tractus has engaged in detailed due diligence to vet criteria in a partner search be I financial, human resources, technical ability, or other factors relevant to the success of the partnership to ensure our clients have full transparency before entering into an agreement. Regardless of the investment strategy chosen, Tractus’ India team has the expertise and experience to support our clients with their investment strategy execution from registration of the legal entity, recruiting key management personnel, selection of professional service vendors to managing the design, engineering and construction project management of a new or existing facility.

Corporate Finance

Narendra Modi’s efforts to liberalize India’s investment environment has opened up new sectors to wholly foreign-owned investment making mergers and acquisitions (M&A) a viable option for market entry, and many well capitalized Indian Firms are seeking to identify professionally managed established companies and start-ups in North America, Europe and throughout Asia. The Tractus corporate finance team has years of experience negotiating joint ventures, acquisitions, dispositions and detailed due diligence on acquisitions in India.

Economic Development

India is an attractive market for Economic Development Organizations (EDOs) assessing trade and outbound foreign direct investment strategies from North America, European and Asian geographies. Tractus has worked with these EDOs in developing strategies that would promote trade into India and attract outbound investment from India.

Tractus’ past and current representation of EDOs has seen our team undertake service requests to identify agents and distributors, provide trade show representation, develop market surveys and industry sector analyses that support economic development and trade promotion activities. The India team has also conducted in-bound and out-bound trade and government missions that utilize our wide network of contacts with government officials, multilateral organizations and industry sector associations and realize increased trade opportunities.

India is the second largest source of Outbound Foreign Direct Investment (OFDI) to the US and EU, from Asia, and therefore a focus of many investment promotion agencies (IPAs) attracting OFDI. Composition of outbound investors are almost exclusively corporates who understand Western business practices and need significantly less handholding than their China counterparts who are largely state-owned enterprises (SoEs) with much less experience in international business. Tractus has advised EDOs and IPAs on developing an Indian focused OFDI strategy that aligns the geographies strengths with a targeted list of Indian companies.