Exporting to India: construction sector

Exporting to India represents a significant opportunity for Italian companies due to their large population and rapidly expanding domestic markets. 

In fact, India not only offers export and investment attractions, but is also a strategic hub for re-export to neighboring countries. Since 2014, under the leadership of Prime Minister Narendra Modi, recently re-elected, the Indian government has initiated reforms aimed at making the country self-sufficient and increasing foreign investment. 

Key programs such as “Make in India” are at the heart of this long-term vision, aiming to transform the nation into a global hub for manufacturing, thereby strengthening the industrial sector and improving national competitiveness.

What specific opportunities are opening up for exports to the nation, especially in the construction sector, where the building envelope sector has recorded a overall growth of 28.33% In the last five years?

Gli key incentives for the internationalization strategies of Italian enterprises In the construction sector in India

The “Make in India” program is the centerpiece of India's economic development focused on intensive manufacturing. The goal is to reduce the economy's historical dependence on services by enhancing the manufacturing sector with the goal of increasing it annually by 10%. In parallel, the program aims to increase the number of factories and attract more foreign investment, especially in the infrastructure sector, to modernize facilities and support long-term economic growth.

The Indian government is also simplifying bureaucracy to make the country more attractive to foreign investment, with the introduction of deregulation measures aimed at facilitating the entry of foreign capital.

Let us now explore what other positive aspects are crucial for Italian exports and need to be considered in the internationalization strategies toward this country, with a special focus on the construction sector.

Exporting to India, focus on current benefits and concessions in the construction industry

In contrast to Western economies plagued by high interest rates and rising energy costs, India is experiencing a remarkable boom in the real estate sector. In the July-September quarter of 2023, the construction sector recorded a growth of 13.3% compared with the same period of the previous year and 7.9% compared with the previous quarter, contributing positively to national GDP. In particular, new residential projects marked an increase of 24%. Early estimates for the full year 2023 indicate real growth of 9.6% compared to 2022.

This long-awaited boom, which created millions of new jobs, came after about six years of economic hardship caused by the pandemic. It was driven by rising per capita income, severe housing shortages in major cities, and population growth. 

Growth in the real estate sector is projected to continue for the next three to four years, thus providing excellent export opportunities for the construction industry. Indeed, the government is stepping up efforts to increase the supply of affordable housing through incentives, further encouraging housing development in Indian cities.

Access india Initiatives, a gateway to the Indian market

In the context of Make in India, the’Access India Initiative is a strategic program aimed at facilitating companies interested in exporting to and investing in India. This program provides a structured platform to support companies in navigating the complexities of the Indian market, offering assistance in various areas, from business operations to legal and regulatory issues. The main objective is to promote sustainable economic growth and create business opportunities that can strengthen bilateral economic relations.

Specific benefits of the Access India Initiative, which can also positively impact the construction sector, include:

• Customized support: initiative offers targeted support to each company, helping them understand the peculiarities of the Indian market and develop effective strategies to enter the market.
• Targeted counseling: customized advice is provided by local experts in various areas, including legal aspects, tax regulations and operational practices.
• Facilitation of partnerships: The Access India Initiative facilitates the identification of potential local partners, promoting the formation of joint ventures and other forms of business collaboration.

What additional facilities for export to India and the construction industry?

L’India, to encourage foreign investment and stimulate economic growth, has implemented a series of tax incentives and benefits aimed at making the country an attractive business destination. These incentives include. tax breaks, subsidies and benefits specific to various sectors and regions. Below is an overview of some of the main benefits available to companies that intend to export to India.

• Special Economic Zones (SEZs): Enterprises located in Special Economic Zones are eligible for a number of benefits, including full income tax exemption for an initial period of five years, followed by a partial deduction for the next five years. These areas were created to encourage industrial and commercial development.
• Incentives for Startups: India has launched several initiatives to support those who want to open a company in India, including tax exemption on profits for a period of three consecutive years during the first seven years of operation. Startups can also benefit from facilitated access to venture capital funds and mentoring programs.
• Regional Incentives: some Indian states offer additional incentives to attract investment to their regions. These may include property tax exemption, subsidies for infrastructure creation, and energy subsidies. These incentives vary according to each state's specific economic development policy.
• Facilitated Access to Funds: businesses can access a wide range of funds and subsidized financing through government programs that support specific sectors such as agriculture, manufacturing and infrastructure. These funds are designed to reduce the cost of capital and promote long-term economic development.

Octagona provides valuable support to companies looking to expand their business in India, offering a internationalization consulting for enterprises specialized and targeted. To explore all opportunities, including in the construction sector, we invite you to contact us.