India

Selling and buying in India

Reaching the consumers | Distributing a product | Market access procedures | Organizing goods transport | Identifying a supplier

Reaching the consumers

Marketing opportunities

Consumer behavior: Some Indian consumers are aware of quality differences and insist on world-class products, many customers can sacrifice quality concerns for price reductions. The quality of after-sales service by the seller plays an important role when making a purchasing decision.

Consumer profile and purchasing power: Indians are now far more brand conscious, and this is generating demand for some products that were previously unfamiliar.
Moreover, the dynamism in country’s economy has resulted into an increase in purchasing power and an expansion of the middle class having higher disposable income levels. But much of their money is spent on need-based consumption rather than on luxury goods.

Consumers associations: India Consumer Association

Main advertising agencies: JWT (Hindustan Thompson Associates)
Ogilvy & Mather
Saatchi & Saatchi Pvt Ltd
Mudra Communication

Distributing a product

Evolution of the sector: There has been a significant expansion in distribution channels in India. The total number of retail distribution outlets in the country is estimated at over 12 million.

Most Indian manufacturers use the traditional three-tier selling and distribution structure: redistribution stockists, wholesalers and retailers. However, with the advent of shopping malls in the retail sector, manufacturers are now ready to supply directly to large retail outlets at discounted prices.

India still does not allow foreign direct investment in retailing, so foreign companies need to partner with local companies to enter the market. For more information on FDI & Retail sector, visit the site: Ministry of Commerce.
Market shares: Indian retail market size is estimated at USD180 billion and organized retailing is likely to grow rapidly: 30-50% annually during the next five years. Currently, the volume of organized retailing is very small compared to the size of the market.
Organizations in the retail sector: Retailers Association of India

Market access procedures

International Conventions

Member of World Trade Organisation
Party to the Washington convention on International trade in endangered species of wild fauna and flora
Party to the Basel convention on the Control of Transboudary Movements of Hazardous Wastes and their disposal
Party to the Montreal protocol on Substances that deplete the Ozone Layer
Party of the International coffee agreement 2001

Main International economic cooperation

India does not belong to any Customs Union.

It is a member of the South Asian Association for Regional Cooperation (SAARC) and multilateral and bilateral trade agreements with many countries.

Non tariff barriers

- Import Licensing: Though India has eliminated its import licensing requirements for most consumer goods, certain products like motorcycles and vehicles still require import licenses.
- Anti-dumping and countervailing measures: Such measures are imposed from time-to-time to protect the domestic manufacturers from dumping.
- Export subsidies and domestic support: Several export subsidies and other domestic support is provided to several industries to make them competitive internationally.
- Procurement: The Indian government allows a price preference for local suppliers in government contracts and generally discriminates against foreign suppliers.
- Service barriers: There are still some restrictions for foreign companies to enter some service-oriented sectors like insurance, banking, securities, motion pictures, accounting, construction, architecture and engineering, retailing, legal services, express delivery services and telecommunication.
- Other barriers: Equity restrictions and other trade-related investment measures are in place to give an unfair advantage to domestic companies.

For the most current information on India’s Prohibited Import List, please see: www.exim.indiamart.com/freedlist/prohibited.html

Customs duties and taxes on imports

The average customs duty is around 15%.

Though this is relatively high, but as per the WTO commitments India is going to slowly reduce it.

The Central Board of Excise & Customs- CBEC is the apex body for customs matters.

Customs classification

India uses the harmonized system.

Import procedures

Incase of EDI (Electronic Data Interchange): No formal Bill of Entry is filed as it is generated in the computer system, but the importer is required to file a cargo declaration having prescribed particulars required for processing of the entry for customs clearance.
Incase of non-EDI more documents are also generally required.
Green Channel facility : Some major importers have been given the green channel clearance facility. They have to make a declaration in the declaration form at the time of filing of Bill of Entry. The appraisement is done as per normal procedure except that there would be no physical examination of the goods.
For details, visit the website: Central Board of Excise & Customs- CBEC.

Importing samples

Samples for non-commercial use are allowed incase the goods are supplied free of charge.

For duty free clearance the value of individual sample should not exceed Rs.5000/- and aggregate value should not exceed Rs.60 000/- per year or 15 units of samples in a year. However, the Prototypes of engineering goods can be imported even if the value is more than Rs.5000/-.

For further information