India tough market to crack for global companies

​Morgan Stanley report finds leisure, shopping and entertainment facilities still in starting stage

Despite vast populace and obvious potential, India has been a tough market to crack for many international companies. A latest report by Morgan Stanley indicates that leisure, shopping and entertainment facilities are still in the starting blocks in the country,

which has a population of 1.2 billion and is the fastest-growing large economy in the world. The report studied amenities in 200 big cities. The Wall Street Journal published a gist of the report capturing the ground reality.

66 of cities without a supermarket. India is contemplating making it easier for companies like Wal-Mart Stores Inc. to run its own stores, but companies say the rules remain too tough to do business. Local rules prevent foreign firms from setting up consumer-facing grocery stores unless they have an Indian partner and mandate that roughly a third of their products be sourced from small or medium-sized Indian businesses.

The country also lacks cold storage facilities and the infrastructure to supply large stores selling perishable goods. As a result, most Indians buy their groceries at local bazaars or neighborhood mom-and-pop stores, millions of which are scattered across the country.

75 of the cities analysed by the report do not have a five-star hotel. Morgan Stanley says long gestation periods and lack of quality real estate are the biggest hurdles to fancier overnight lodgings.

27 of Indian cities have luxury car dealerships. Perhaps not surprising given that many in India survive on less than $2 a day, according to World Bank estimates. Crippling infrastructure, such as narrow, crowded and chaotic roadways, concerns about after-sales service, a general lack of road safety and taxes up to 140% on imported vehicles also make it tough to own a luxury car in India, even for the superrich.

60 Of cities have a restaurant that is part of a chain but doesn’t have a gym.

3 The number of cities in Morgan Stanley’s “Vibrancy Index” top 10 that ranked highly for financial infrastructure, such as ATMs and banks. The index uses three major indicators of urbanisation across India’s 200 most-populous cities–job opportunities, consumption data and financial infrastructure.

The ranking is updated every six months and shows the pace at which Indian cities are modernising or urbanising. Bangalore came top for the second time in a row, followed by Pune and Chandigarh.
Most of India’s biggest cities are rapidly moving to create jobs and spur consumption, but unable to provide adequate financial services for them to deposit their salaries.

Nearly half of Indian adults did not have a bank account in 2014, according to the most recent data from the World Bank, although India’s government has launched a massive financial-inclusion push since then. The government says it has helped open more than 200 million accounts under the campaign.