This is something to wonder about , at a time when India is trying to position itself as an alternative to China, & where many MNCs are looking to diversify their supply chain.
While the reasons could be company-specific . In some cases such as restructuring to curb losses, failure to crack the price-sensitive Indian market, replicating western business model blindly rather than adopting to a local model. Several have also given up on India due to regulatory flip-flops, high tariff barriers, red tape, perplexing land policies, infrastructure issues and others tied to the ease of doing business.
Ease of doing business in India has definitely improved over the last five years. However, to bring about this improvement, the government is constantly making regulatory changes which have taken some time to get used to.
To make things worse, there are 26,134 imprisonment clauses in India’s business laws, according to an Observer Research Foundation report that highlights the risks faced by entrepreneurs and corporations in doing business in India.
To be sure, many western MNCs, especially carmakers, had to
leave India because of their own inability to crack the world’s fourth-largest
auto market, resulting in poor sales. There is definitely a lack of planning or
understanding of the Indian markets among MNCs that have failed. The
competition is also very high and most foreign companies struggle to meet
customer expectations. Cultivating brand loyalty in the Indian market is also
very difficult, especially when companies succumb to product modifications
i.e., making cheaper substitutes.
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