India is the tenth and the third largest economy in the world as ranked in terms of nominal GDP and purchasing power parity respectively. The country is also the 10th largest importer and the 19th largest exporter according to the IMF ranking (CIA, 2014).
Political and Legal Conditions
The government has reduced the excise duty on all products in the category of Value Added food products to a maximum of 8%. It is much encouraging taking into account that previously businesses in the manufacturing category were being charged a VAT of 16% (Lucintel, 2014; Research and Markets, 2014). On legal issues, analysts note that both state sales tax and central excise duty have been deterrent to the growth of many industries. However, the country has placed a zero import duty on raw materials and capital goods for those goods that are destined to be 100 percent export oriented. Moreover, packaging materials for most commodities are exempted from excise duty (Lucintel, 2014; Research and Markets, 2014).
Economic Situation
Economically, the country’s GDP is growing at a very outstanding average; at 8% and it is expected that consumers will have surplus incomes to spend on more convenient and portable products (CIA, 2014). Accompanied with the increase in GDP will obviously be per capita income increase, and as already noted the consumers will spend more on products. However, lack of inadequate financial credit, inherent corruption and the government’s poor support, especially for small and medium business units can hamper growth in some industries (Lucintel, 2014; Research and Markets, 2014).
Social Cultural Factors
Socially, analysts have noted that the country’s consumption has increased in all segments due to the increasing incomes. High birth rates in previous decades make the country be composed of a largely young population, between 16-25 years (CIA, 2014). Changes in lifestyle are also going to affect consumption patterns of many products. Women are increasingly entering salaried employment, especially in urban areas where more and more families are becoming predominantly nuclear. It will boost consumption of certain products especially those that ensure convenience and comfort (Lucintel, 2014; Research and Markets, 2014).
References
CIA. (2014). The World Book: India. Retrieved on 17 November 2014 from
https://www.cia.gov/library/publications/the-world-
factbook/geos/in.html
Lucintel. (2014). PESTLE Analysis of India 2014. Retrieved on 17 November 2014 from
http://www.lucintel.com/reports/economic_analysis/pestle_analysis_of_india_2014_june_2014.aspx
Research and Markets. (2014). PESTLE Analysis of India 2014. Retrieved on 17 November
2014 from http://www.researchandmarkets.com/research/kl5nqk/pestle_analysis
