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. 

India indeed not only offers attractions for export and investment, but also represents 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”I am at the center of this long-term vision, aiming to transform the nation into a global hub for manufacturing, thereby boosting 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 segment has registered 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 central to India's economic development focused on intensive manufacturing. The goal is to reduce the economy's historical reliance on services by strengthening manufacturing sector with the goal of increasing it by 10% annually. At the same time, the program aims to increase the number of factories and attract more foreign investment, particularly in the infrastructure sector, in order 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's now explore what other positive aspects are crucial for Italian exports and must be considered in 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 to the same period last year and 7.91% quarter-over-quarter, contributing positively to national GDP. In particular, new residential projects saw a 24.1% increase quarter-over-quarter. Initial estimates for the full year 2023 indicate real growth of 9.61% compared to 2022.

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

Projections indicate that the real estate sector's growth is expected to continue for the next three to four years, thus offering excellent export opportunities for the construction sector. The government is indeed intensifying efforts to increase the supply of affordable housing through incentives, further encouraging urban development in Indian cities.

Access india Initiatives, a gateway to the Indian market

Within the context of Make in India, the’Access India Initiative It is a strategic program aimed at facilitating businesses interested in exporting to India and investing in the country. 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 matters. The main objective is to promote sustainable economic growth and create business opportunities that can strengthen bilateral economic relations.

Among the specific benefits of the Access India Initiative, which can also positively impact the construction sector, we find:

• Customized supportthe initiative offers targeted support to each company, helping them understand the peculiarities of the Indian market and develop effective strategies for market entry.
• Targeted counseling: customized advice is provided by local experts in various areas, including legal aspects, tax regulations and operational practices.
• Facilitation of partnershipsThe 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)Businesses located in Special Economic Zones can benefit from a series of incentives, including total exemption from income tax for an initial period of five years, followed by a partial deduction for the subsequent 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 in their regions. These may include property tax exemptions, infrastructure development grants, and energy subsidies. Such incentives vary based on each state's specific economic development policy.
• Facilitated Access to Funds: Businesses can access a wide range of subsidized funds and 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.