Political Risk Profile: India

According to the United States Census Bureau, India is the second-most populous nation in the world, with more than 1.2 billion residents. It is currently the seventh-largest country on Earth (World Atlas). Therefore, it makes perfect sense that multinational corporations want to enter the Indian economy to compete in the global market. But there are risks involved in doing business in India, just like in any other nation. India is among the numerous nations thought to have more political volatility and, as a result, greater risk when considering economic entry (Rapoza). But to comprehend India’s risky political profile, one must also comprehend the country’s business and economic climate, into which MNCs will be stepping. The economic market frequently produces shifts and changes within the business environment due to shifting customer wants across the nation, distinguishing India’s business environment from Western nations like the United States or Canada (Edsel). Indian client demand differs from region to region rather than being uniform across the country, as is frequently the case in the United States (Gartner). India is home to people of various religions, cultures, and languages (as are many other countries, but none in such a conglomerate state); weather patterns and infrastructure also fluctuate across India’s many areas due to the country’s varied terrain (World Atlas).

Indian companies, and subsequently MNCs, are challenged with the problem of tailoring their products to regional client tastes to counteract the varied levels of customer demand across the nation. Unfortunately, MNCs cannot fully benefit from more extensive, nationwide product promotion (BBC). Additionally, and perhaps even worse for MNCs, despite having one of the world’s largest populations, most Indians work in low-level, “blue-collar” jobs and reside outside of the country’s more urban and metropolitan areas. This creates an employment gap and increases the need for MNCs to fill positions at the corporate level with a relatively small workforce pool. The unpredictability of Indian economic activity is also influenced by other factors, including fluctuating interest, inflation, and currency rates, as well as risky foreign investment and tax-related difficulties (IndiaStat).

Understanding India’s political climate is simpler once one knows its economic situation. Despite its internal economic shortcomings (IBEF), India has developed into a sizable presence on the global market over the past few years. While these flaws could hurt India’s internal economy, its political risks pose a similar threat to its foreign policy. In a short period, India has experienced the overthrow and installation of three different governments, calculated increases in political party unrest, a rise in interest in nuclear weapons, rapid social change, and numerous instances of military engagement with neighbours like Pakistan (CNBC). These elements have heightened worldwide concern for the nation, particularly from MNCs. Because of uncertainty or anxiety regarding the political climate, many have been discouraged from investing in the Indian economy.

India (as an entity) must set itself toward a path of political stability and economic certainty, marked not only by economic growth and development but also by strong, firmly-footed government control and policy (Overdorf) if foreign companies wish to increase their investments in India or even to increase India’s involvement within the MNC’s home country.

References

 BBC. “Business Studies: Economies of Scale; The Benefits of Large-Scale Business.” 2014. BBC.

CNBC. “India, China Soldiers Involved in Border Altercation: Indian Sources.” 16 August 2017. CNBC: Asia-Pacific News.

Edsel, G. “Country vs Country: India and United States Compared: Economy Stats.” 3 April 2014. Nation Master.

Gartner. “Demand Pattern Analysis.” 2017. Gartner.

IBEF. “About Indian Economy Growth Rate & Statistics.” October 2017. IBEF: India Brand Equity Foundation.

IndiaStat. “Socio-Economic Statistical Information About India: Labour and Workforce.” 2017. IndiaStat. Overdorf, Jason. “How to Fix India: 5 Solutions to India’s Biggest Problems.” 28 August 2012. PRI. Rapoza, Kenneth. “The World’s Riskiest Nations.” 2013 19 March. Forbes.

United States Census Bureau. U.S. Census Bureau Current Population. 9 December 2017.

<https://www.census.gov/popclock/print.php?component=counter>.

World Atlas. India Geography. 2017. <http://www.worldatlas.com/webimage/countrys/asia/india/inland.htm>.

—. The Largest Countries in the World. 2017. <http://www.worldatlas.com/articles/the-largest- countries-in-the-world-the-biggest-nations-as-determined-by-total-land-area.html>.

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The purpose of this assignment is to understand how the political environment of a foreign country affects the decisions of an MNC, such as entry, operations, etc. At some point, almost every MNC will encounter some type of political unrest in a foreign country. It’s important to be proactive as much as possible with decision-making. Select a foreign country that has experienced recent political unrest (select up to the previous 10 years). Using the readings, lecture, and your own scholarly research, complete a political risk analysis of the country. Address the following in your paper:

• What is the current political environment for the country?
• How did the political unrest affect business for an MNC? Select an MNC to provide context as an example.
• What recommendations do you have for an MNC wanting to enter this country to expand its operations?

Use critical thinking to apply depth and breadth. Be concise and address the country and its political environment. Go beyond description and restate the facts. This writing assignment is required to be completed in the standard APA format. Minimum 2 pages (not including title and reference pages). Abstract not required.

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