India is a country with an endless number of Gods and venerated deities, 26 states, 22 official languages and many different cultures and ethnical groups. It is a mosaic of tradition and modernity. India is the largest democracy worldwide and it is one of the fastest growing economies in the world. The expected GDP growth for 2010 is 7.1%. The population of 1.147 billion people represents one of the worlds largest consumer markets. After China, India is the country with the most citizens in the world. A rapidly growing middle class, urbanization and the expansion of the organized retail sector, are the driving forces behind the strongly accelerating consumer expenses.

As a result of a progressive tax system, an increasingly flexible law concerning FDIs, the Indian economy is opening up more and more to foreign investments.

Multinationals like Philips, ING, ABN AMRO, Apple, Samsung, Levi’ s etc. have been in business in India for a long time. However, more recently, international SME's are exploring and entering the Indian market. Some of the underlying reasons for this development are the fact that traditional home markets are getting saturated and entry barriers to India are rapidly being lowered.

Pest Analysis

Polictical

India is a democratic republic and is in a political sense, quite stable. The country has a president, who's responsibilities are mostly ceremonial. The executive power rests with the ministers, who are lead by a Prime Minister. Additionally, each separate state has its own state government with its own chief minister at it's head.

Many different political parties exist in India. Some parties focus purely on one, or a couple of states. But some of these regional parties participate in the national elections as well. Furthermore, a few national parties exist as well (Congress, BJP), which are only popular in a limited amount of states. Most of the parties cooperate in political alliances.

Economical

India is the 12th largest economy in the world in terms of GDP and 4th largest economy in term of Purchasing Power Parity (PPP).

The Indian GDP can be split up as follows:

• Service sector: 54%.
• Industry: 29%.
• Agriculture: 17%.

Between March and November 2008, foreign direct investments (FDI) grew by 137% to $17.21 billion. Over 60% of the population is actively engaged in agriculture. The service sector represents 28% of the employment, where the industry sector represents the remaining 12%. The service sector is growing substantially, as a result of the high level of education in India. The IT sector is especially large and strongly developed. The Rupee-Euro exchange rate has been fluctuating in recent years between 65 and 70 Rupee against one Euro.

Due to the economical boom, real estate prices have increased significantly in the countries' major metropolitan areas. Some areas in Mumbai have higher per square feet prices than, for example Manhattan (NY) or Tokyo. Real estate owners are powerful players and sub sequentially charge hefty rent and rent deposits; these deposits can be as high as 10 months rent in some cities.

Social

Nowhere else in the world is the caste-system so complicated and integrated as in India. The Indian term for cast is ‘jati’. The size of a cast can vary between just a few people to millions. There are a countless number of 'jati’s', with each haviong its own specific rules. The traditional, fourfold subdivision of the Hinduistic society is as follows:

Brahmin's: the priests and intellectuals.  
Kshatriya’s: the warriors and lords.
Vaishya’s: the farmers and traders.
Shudra’s: the citizens and laborers

The (extended) family forms the cornerstone of society. Many marriages are still arranged by families. The position of the man and woman within families is still very traditional, but in the urbanized areas, amongst the younger and upcoming middle class, this is starting to fade away.

Technological

The openness for foreign direct investments is most noticable in the IT sector. Many multinational IT companies have a large part of their activities based in India. This is also the case for other technological firms like General Electric, Honeywell, Philips, Bosch, BASF and Shell. These firms often have an important R&D department in India, which is a result of the high level of education in the country. Every year, many highly educated engineers graduate from Indian universities like IIT's; Indian Institute's of Technology, which are known to be among the best in the world.

Foreign Direct Investments are obviously the major force behind the influx of international knowledge and technology in India. Apart from the IT sector, this also holds true for the following sectors:

Medical technology, Food- and Beverage technology (for example the beer-brewing-technology), Security technology and Supply Chain technology (stock management, cool technology, cold-chain management, etc).