Exporting to India: Construction Sector

Export to India represents a significant opportunity for Italian businesses, thanks to their large population and rapidly expanding domestic markets. 

India not only offers attractions for exports and investments, but also represents a strategic hub for re-exports 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 investments. 

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

What specific opportunities are opening up for exports to the country, especially in the construction sector, where the building envelope sector has recorded a global growth of 28,33% in the last five years?

Glthe key incentives for the internationalization strategies of Italian companies in the construction sector in India

The “Make in India” program is the cornerstone of India's economic development focused on intensive manufacturing. The aim is to reduce the economy's historical dependence on services, enhancing the manufacturing sector with the aim 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 streamlining red tape to make the country more attractive to foreign investment, introducing deregulation measures to ease the entry of foreign capital.

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

Export to India, focus on current benefits and incentives in the construction sector

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

This long-awaited boom, which has created millions of new jobs, came after nearly 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. 

Real estate growth is projected to continue for the next three to four years, providing excellent opportunities for construction exports. The government is stepping up efforts to increase the supply of affordable housing through incentives, further encouraging development in Indian cities.

Access India Initiatives, a gateway to the Indian market

In the context of Make in India, theAccess India Initiative is a strategic program aimed at facilitating companies 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.

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

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

What further incentives are there for exports to India and the construction sector?

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 specific benefits for various sectors and regions. Below is an overview of some of the main incentives available to companies intending to export to India.

• Special Economic Zones (SEZ): Businesses located in Special Economic Zones are eligible for a range of benefits, including full exemption from income tax for an initial five-year period, followed by a partial deduction for the following five years. These zones were created to encourage industrial and commercial development.
• Incentives for Startups: India has launched several initiatives to support those who want open a company in India, including a tax exemption on profits for a period of three consecutive years during the first seven years of operation. Startups can also benefit from easier access to venture capital funding and mentoring programs.
• Regional Incentives: Some Indian states offer additional incentives to attract investment to their regions. These may include property tax exemptions, infrastructure grants, and energy subsidies. These incentives vary based on each state's specific economic development policy.
• Easy Access to Funds: Businesses can access a wide range of funding and concessional 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 valid support to companies that want to expand their business in India, offering a internationalization consultancy for companies specialized and targeted. To explore all the opportunities, also in the construction sector, we invite you to contact us.