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PESTEL Analysis of India (Analysis of the Macro Environment)

India is a country in South Asia whose capital is New Delhi. Also called the Republic of India, in 2022, it was the second most populous country in the world, with 1.26 billion inhabitants. In addition, India is also the second largest tea-producing country in the world, renowned globally for its virtues.

PESTEL Analysis of India

Credit Photo : Oboolo

India is a country that attracts more than 1.2 million tourists every year. It alone contains 17.5% of the world's population. India is a country that also has 29 states with 7 different territories. The population is relatively young since 45% are under 20 years old. The country has 7,000 kilometres of coastline and a 63,974 km railway network, which carries more than 14 million passengers across the country every day. There are 24 official languages, ​​but in total, more than 1000 languages ​​and dialects are spoken throughout the country, which makes it a very rich territory in terms of language and culture. The country has an area of ​​3287263 km².

In this analysis, we will study the PESTEL analysis of the country. This matrix makes it possible to better understand the environment of the country through various characteristics, such as politics, economy, sociology, technology, ecology but also everything related to the legal field. This strategic analysis is put in place to identify the strengths and weaknesses of a territory and also the opportunities available to it for the years to come. It also makes it possible to highlight the growth of the country and its various sectors of activity, in order to know how it is possible to attract investors over the long term and allow better development for the whole country.

Political

Political stability is one of the essential characteristics for the country to establish lasting contacts with other countries from a commercial point of view. India has political stability, which is an advantage for existing companies but also for those wishing to position themselves in the country in the years to come. The political domain is important for the capital market because, despite this newfound stability, India has gone through some turbulence in the past due in particular problems with neighbouring countries. The political world is influenced by individual interests as well as by religion. Note also that India is a country with democracy, but beware because corruption is very high in some areas. This can affect economic growth over the long term. Gradually, companies are becoming more independent, so their development is more established, and every year many companies want to diversify by also being based in this country in order to generate additional market share.

Economic

From an economic point of view, it is a question of determining whether the companies present in the country, as well as those wishing to enter it, can achieve their quantified objectives, and this, in a sustainable manner. It is a question of not only growth because this growth is linked to employment, inflation, and also the current unemployment rate. All this encourages or discourages companies from establishing themselves in the country. It is in India's interest for companies to be able to relocate part of their production within the territory in order to generate more employment and thus contribute to economic growth. India has seen a substantial increase in its GDP, which has led to the development of some rather attractive opportunities for foreign companies. In addition, the number of investments has also increased, which makes it possible to stimulate the whole activity of the country. The infrastructures are better distributed and more modern in order to encourage foreigners to come and settle in the country.

Socio-cultural

This section is about everything that concerns consumers, their buying habits, and the way they perceive consumption. When a company decides to set up in another country, it must know the buying habits as well as the behaviour of consumers because this largely determines what marketing strategy it will have to put forward in order to be able to develop. Cultural habits are also very important, as are beliefs, values, and major health concerns. In addition, it is also necessary to know how the employees of the country in question position themselves in relation to the professional world, as this may be radically different to other countries.

India is considered a territory that is diverse in all areas. We have also seen in the introduction that several hundred different languages ​​are spoken. The population in India is very active, which is an opportunity for companies wishing to recruit workers. India is now one of the emerging countries, with a marked improvement in the standard of living over the past several years. Residents are increasingly interested in luxury and are active consumers of it. Finally, it should be noted that family and family ties are very important, and the vast majority of businesses in the country are owned by families.

Technological

In India, advancements in technology are playing a huge role in changing consumer habits, as well as changing the way businesses operate. This is a country that has experienced very important innovations over time, and these innovations influence both production methods and communication with consumers. Since internet has arrived in homes and its use has become widespread, awareness of India has become more important. Indeed, consumers from all countries can now communicate with each other, and companies are better able to understand and analyse consumer behaviour and expectations, particularly via social networks. India has a very innovative and mature IT sector with frequent software upgrades.

Environment

Environmental awareness is paramount for every country around the world, and India is no exception. Being sensitive to this type of questioning opens up real growth opportunities for the whole country but also promotes the tourism sector, which is necessary for economic development. Indeed, today, consumers are increasingly sensitive to ecological issues, hence the need to implement concrete actions in favour of the environment. Supply and demand have changed, and companies must adapt to these changes, depending on the country in which they are located. The Indian climate is also known to be unpredictable, and companies must, therefore, adapt their infrastructures according to these climate-related variations. However, establishing more businesses has also increased pollution in the country. India has implemented recycling actions as well as an active fight for more efficient waste management.

Legal

Legally the regulations and laws are different, and companies must, therefore, adapt as best they can when they wish to set up in India. Nevertheless, we find more or less the same priorities, which are respect for competition, consumer protection, and equal opportunities. Of course, companies must respect the rules, and at the legal level, certain new regulations can impact costs for companies. In India, the most flexible laws mainly concern international trade. However, in certain areas of activity, it is also important to know the products or services that may be prohibited by the country.

 

India has, like all other countries, certain commercial specificities which are linked to its environment, and this is what has been highlighted via this PESTEL analysis. India is a territory that attracts a greater number of companies each year in a large number of fields because many markets are saturated in other countries, and companies are looking for a way to diversify in order to generate additional market share and, at the same time, be more competitive. As in other countries, the choice of business partners is of paramount importance for the success of companies. India is one of the countries that are increasingly developing, which also allows it to highlight tourism, which is one of the most important areas of the economy.

 

Sources: L'éléphant, Le Monde diplomatique