Due to pressure on business, a third of the world’s companies have already left this country
Nagpur Today reports that international companies operating in India face fraud, corruption, counterfeiting, and pressure from the authorities. Among the well-known enterprises, Motorola, McDonald’s, Coca-Cola, Nokia, Parimatch, Vodafone and Walmart, in particular, have experienced difficulties in working in the local market. Some of them were even forced to leave this subcontinent.
According to the article, over the past few years, India has lost companies such as Abu Dhabi Commercial Bank, the American automaker Ford, the Swiss cement giant Holcim and the German retailer Metro. In November 2023, Warren Buffett’s $780 billion American investment firm Berkshire Hathaway sold its 2.5% stake in Paytm, an Indian digital payment service provider. Thus, the American investor stopped his work in India and cut off business ties.
According to government registers, nearly 11,000 international companies entered the Indian market between 2014 and 2021. However, in recent years, almost a third of them – 2,783 companies – have left India. The publication says this indicates significant obstacles for business in this market.
There are companies that, despite trying to invest in the Indian economy, create alternative products and counteract the monopoly that leads to higher prices, have not been able to do successful business in India. For example, the international betting company Parimatch. The company faced counterfeiting of its products in India and pressure from local officials who maintained a monopoly on the Indian gambling market, namely, companies such as Dream11, Nazara Technologies, Paytm, First Games Moonfrog Labs, 99Games, Octro, JetSynthesys, HashCube. These companies often copy the successful solutions of American and European gambling companies, but the authorities show indifference to these crimes. Local politicians and tax authorities even support such strategies among their domestic entrepreneurs.
Nagpur Today also reports that international companies most often have to deal with corruption, bribery and fraud. These challenges remain the No. 1 threat to doing business in India. They hold back multinational companies that are used to a different, law-abiding and transparent corporate culture in the West. Because of this, India is embroiled in endless corporate scandals and fraudulent schemes that affect both ordinary people and experienced businessmen.
“In addition to bribery and corruption, the most common threats to doing business in India are theft of physical assets, internal financial fraud, and information theft,” the publication notes.
However, there are other challenges as well. The aforementioned Ford and Abu Dhabi Commercial Bank were forced to leave the Indian market due to bureaucratic and regulatory obstacles. In recent years, the Indian authorities have doubled down on harassing foreign businesses with trumped-up charges. Google, Amazon, Nokia, and Samsung were fined billions of dollars. Xiaomi, OPPO, Vivo, Intel, and Wistron are also at risk.
Nevertheless, the Indian market seems very promising for doing business. It has a population of 1.2 billion people, a highly educated staff that speaks English, and democratic elections are held. This attracts big business. However, despite the huge potential of the market, companies will need patience and flexibility to cope with the challenging operating environment in India. Google, Amazon, Nokia, and Parimatch have learned this lesson.
