Business Workshop: Investing in India a challenge

April 9, 2012 12:00 am

By Dennis Unkovic?/?

It makes sense that the many Western Pennsylvania companies looking for investment opportunities in Asia consider India, the world's largest democracy and a place where English is widely spoken. Moreover, Pittsburgh's research universities and high tech community already have created a number of successful ventures throughout the sub-continent.

Any company wanting to invest in India will inevitably face a number of challenges that may impede the best laid business plans. First and foremost, India suffers from a very poor nationwide infrastructure of roads, bridges, railways, ports and electrical generating capacity. While upgrading India's infrastructure offers business prospects to engineers, equipment makers and other suppliers, for other companies it could serve as an impediment to doing business.

Other drawbacks India must overcome include:

? An overly bureaucratic and frequently corrupt system of business regulation.

? A historically high and seemingly uncontrollable birthrate that threatens to tax the economic system despite India's current growth rate of 6 to percent annually.

? Historical political, religious and ethnic conflicts.

India also has an uneven distribution of wealth and resources, making some locations more desirable than others for foreign investors. Among the hottest Indian metropolitan areas for foreign investment is India's "Silicon Valley" of Bangalore, as well as the high tech communities of Hyderabad and Chennai.

The Indian government historically discouraged foreign investment, and even went through a period when it tried to make India completely self sufficient. Those days are gone. Today, the Indian government seems serious about opening up opportunities to foreign investors.

Given the current situation, India could represent a great investment opportunity for a company that will need a highly educated local workforce and for which an efficient distribution system is not essential.

-- Dennis UnkovicMeyer, Unkovic & Scott, du@muslaw.com

Business Workshop is a weekly feature from local experts offering tidbits on matters affecting business. To contribute, contact Business Editor Brian Hyslop at bhyslop@post-gazette.com.
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