Consulting firms see surge in MNCs eyeing India entry

Top management consulting firms and Big Four companies are witnessing a surge in India entry strategy mandates as a fresh wave of multinational corporations are looking to establish a presence in the country.

In the face of global uncertainty marked by geopolitical volatility, high inflation and supply chain disruptions, India has emerged as a beacon of growth with 5.9% plus GDP growth as per IMF estimates.

Fuelled by strong domestic consumption, favourable demographics, a thriving tech ecosystem and rapid digitisation, the Indian market is now again attracting international businesses in search of fresh opportunities.


Industry watchers say that companies like PF Chang's, Tim Hortons, Byd, Foot Locker, Rimowa, Messika, Shein and Flix have entered India recently or in the process of setting up their offices.

According to Rahul Jain, managing partner of BCG India, there is a significant increase in interest from global companies to consider investments in India.

"Clients are reaching out to understand the business landscape, and global supply chain studies are being conducted to reconfigure manufacturing footprints, with India playing a central role. This surge in interest indicates that this is a pivotal moment for India. More people are visiting India, exploring investment opportunities, and there is already a noticeable intent and commitment to deploy capital," he said.

Sanjeev Krishan, chairman, PwC India, said, "We are also seeing enthusiasm from global clients seeking specific inputs on investment opportunities in the country, and we have been working with various industry bodies in India and abroad to channel this interest further."

He added that India's positioning on the global stage continues to grow stronger - as a talent machine, a manufacturing hub, and an attractive market. In fiscal year 2023, India attracted significant foreign direct investments amounting to nearly $71 billion, driven by initiatives like Make in India, the PLI schemes, and companies taking a strategic China+1 approach of diversifying supply chains, solidifying India's potential as an attractive investment destination. Despite the challenges faced by the private equity (PE) industry on a global scale, India stood out with robust PE-VC (private equity-venture capital) investments totalling $61.6 billion in 2022.

Deloitte India CEO Romal Shetty recently told ET, the firm has observed a surge in enquiries from global clients of Deloitte expressing their interest in ramping up investments in India. As part of entry strategy exercise, tax planning work of the Big Four firms have witnessed significant activity. For any MNC, besides a host of other important factors like market opportunities, economic and political stability and rule of law, tax implications and certainty thereof are also very crucial determinants. "In this regard, an MNC would actually holistically consider direct and indirect tax implications including central and state-level incentives to determine the projected post tax and post incentive business cash flows and arrive at ROI," said Sudhir Kapadia, senior tax partner, EY India.

VS Mani, partner, tax, Deloitte, said, "It is also essential to consider the impact of customs duties on imports and GST on domestic transactions as these have a significant impact on the profitability of the entity. Preferential trade arrangements/FTAs - both in existence and at formulation stage - sector-wise tax incentives, locational benefits etc. would also need to be considered as part of the entry strategy," said Mani.

According to a global survey conducted by Invesco, India is a favoured destination for debt instruments among emerging markets, particularly for sovereign wealth funds and central banks.

Additionally, Goldman Sachs Research has projected that India will become the world's second-largest economy by 2075. Despite the low number of foreign companies entering India in 2022, experts suggest that the new brands arriving in the country are those that have patiently observed the market and now deem it suitable for entry.

Experts say a large part of the move to India can be attributed to the steps being taken by the Narendra Modi government to create and enhance the enabling ecosystem in the country.

Increasingly, policy makers have been working with industries to understand the nuances and roadblocks impacting their progress.

"We have seen several initiatives focused on inclusive growth by promoting MSMEs and the burgeoning startup ecosystem, last-mile infra including digital capabilities, capacity creation for larger projects and skill development," said Krishan.