India & Franchising: What I Learned in My Business Trip and Beyond

“It is the actions that count. Our thoughts, no matter how good they may be, are false pearls until they are turned into actions. Be the change you want to see in the world,” a quote by Gandhi that has always inspired my work and my life.

Thanks to Gandhi, my love for India has grown over the years, and finally, I had the opportunity to visit it by seizing the invitation of Gaurav Marya, founder of Franchise India Group, industry investor, and author in managerial literature, who invited me to participate in one of the world’s most important franchising fairs: the Franchising India Expo, with over 500 brands present and an average of 50,000 visitors every year.

What struck me immediately, as soon as I set foot in the fair, was the overwhelming energy of Indian entrepreneurs, the desire to undertake and find new international business partners. An energy and a feeling of great hope for the future that also explains the extraordinary numbers that the Indian economy has been able to achieve in recent years.

In this article, I want to tell you what I learned about India and the franchising sector in great ferment and expansion.

An Economy with Incredible Numbers?

“Thank you India,” sang Alanis Morissette in a famous song from 1998. Today, many entrepreneurs can say “thank you” to the South Asian country precisely for the great opportunities it offers, especially in the franchising sector.

After all, the country’s numbers are extraordinary: the expected GDP growth is above 7%, exports have reached 650 billion. Good news also comes on unemployment, which is well below 10% with per capita income doubling in 10 years.

From chatting with Indian entrepreneurs at the fair, it emerges that these results have also been achieved due to the foresight of Indian politics. The BRAP Plan, launched in 2014 by the current Prime Minister Narendra Damodardas Modi, has contributed to the surge in the Indian economy through the simplification of procedures and bilateral agreements to stimulate, above all, foreign investments. It’s no coincidence that Apple is trying to move away from China, tripling iPhone production in India.

Fundamental have also been the incentives offered by the State, such as the PLI: acronym for Production Linked Incentive Scheme, a maneuver worth 25 billion dollars that has allowed to internalize many productions, such as that of cell phones.

+ 100 Billion Opportunities

I heard from Gaurav Marya, founder of Franchise India Group, some data and details about the Indian franchising sector. This will reach $150 billion, with a growth from 30 to 35% per year. Another figure: over 300 companies on average launch a franchising business every year.

The restaurant sector represents the largest segment of the market with a weight of 35% of the total, while retail, beauty and personal care services, training, and education are growing.

In addition to international franchising chains dominating the Indian market (we’re talking about McDonald’s, KFC, Domino’s Pizza, and Subway), there are other chains, developed locally, that are worth keeping an eye on for those wishing to invest in the country. Reliance Fresh, for example, is a leader in the fruit and vegetable sales market, with over 2,700 stores and the sale of over 200,000 kilograms of fruit and 300,000 kilograms of vegetables every day. In the fashion and franchising sector in India, Pantaloons dominates, selling men’s and women’s fashion and accessories from over 200 brands, with 344 stores in 170 cities in India. Among the largest players in the Indian hypermarket sector is Big Bazaar (now Smart Bazaar), which aims to reach a thousand stores after being acquired in 2020 by Reliance Retail (the same as Reliance Fresh) for $360 million. In the healthcare sector, three of the most successful brands in the Indian market are Apollo Hospitals (managing approximately 71 hospitals and revenue of $2 billion) and Max Healthcare, which manages 17 hospitals in India, Dubai, and Africa, with revenue of $740 million. Among other brands that have managed to establish themselves in the Indian market are Patanjali, in Ayurvedic medicine, Lenksart, in sunglasses production, and Lakme Industry, in cosmetics, an international brand present in over 65 countries worldwide.

Which Cities to Invest in?

There are five cities in which an entrepreneur investing in India can have more opportunities, both for policies aimed at foreign investors and for the transport system. Among these is certainly Mumbai, the country’s leading financial center (Maharashtra contributes 15% to the national GDP, of which 87% is thanks to Mumbai). The city is also the main destination for foreign investments (more than 25% of the total) and boasts records in the automotive industry and in the biotechnology, pharmaceutical, and textile sectors. In addition to hosting the Reserve Bank and the Country’s Stock Exchange. New Delhi is the capital of the nation and is the city with the highest concentration of foreign companies investing, also due to the good transportation system. Leading the city’s economy is the manufacturing industry along with construction, but dominant are also telecommunications and healthcare. Bangalore, one of India’s most populous cities (with its 5 million inhabitants), is considered the Indian Silicon Valley because it produces about 1/3 of the software exported by the nation, and it is also the headquarters of ISRO, the Indian Space Research Organisation. Finally, we mention Ahmedabad, both for its highly skilled workforce and for the solidity of its financial system.

Pros and Cons of Investing in India

On the one hand, this article clearly highlights the pros of investing in a franchise in India, with an enlightened policy with development plans to attract foreign capital, approximately 70 million millionaires representing a great opportunity to find investors and master franchises for their formats, and still the ferment of the diverse and growing franchising market.

Indian and foreign entrepreneurs present at the fair have complained about some obstacles to overcome, such as rules and regulations not always transparent and the significant obstacle of corruption: a problem that places India in 85th place out of 175 countries analysed in the Transparency International’s Corruption Perception Index. Not to mention the inequality between the rich and the poorest. In India, the richest 1% of the Indian population holds over 40.5% of the country’s wealth, while the 50% in the lowest income bracket holds just 3% of the total wealth (World Economic Forum data).

Have you ever thought about developing your franchise network in India? Write to me if you need more information at davide@sviluppofranchising.com.