Starter Guide to India

Namaste, Salaam, Swagatam — Welcome to India

Are you considering setting up a business in India? Is expansion to India on the cards? Are you thinking about tapping the India market? Or are you another curious reader, interested in the India opportunity?

At Plum, we’ve been working with founders looking to build out of India and with aspiring global giants considering setting up shop in the country. It’s a market like no other — with immense untapped talent, a self-sustaining symbiotic ecosystem, and regulations that support innovation.

While it is a country on the cusp of exponential growth, how do you understand it? And more importantly, how do you realize its potential?

Read on.

Table of contents

• Namaste, Salaam, Swagatam — Welcome to India
• Table of contents
• Made with love, by Plum
• The elephant in the room
• The drivers of India’s growth story
• India’s got talent
• Companies that get India win — and they win big
• An optimistic economic outlook — India is poised to replicate USA’s 80s growth
• Matters of state — how the Indian government invests in growth
• The India tech stack
• Of giants and their shoulders — meet India’s formidable startup ecosystem
• tl,dr: Watch the Indus Valley Report Breakdown
• The India opportunity
• Meet India’s consumer class
• Built in India, built for… everyone
• The Make in India directory
• Starting up 101
• Global hiring and payroll platforms
• Health benefits offered in India
• Top Indian company law firms
• Covering risk with business insurance
• India’s trade associations
• India’s Special Economic Zones
• Top VCs in India
• Top startup communities in India
• Fantastic talent and where to hire them — India’s colleges
• India’s startup hubs
• Starter guide to India’s top cities
• Readings, reports, musings, and meditations on India
• Conclusion
• About Plum

Made with love, by Plum

Whether it's working with founders to create the right business and health insurance policies or building a resource kit to help you communicate with empathy — we help you put your needs first. If you'd like to learn more about Plum and what we're up to, visit our website. P.S. If you already find this useful, give us a shoutout on Twitter.

The elephant in the room

“India ‘is a slow trundling elephant’ that still has many hurdles, but is now a viable alternative to China. I think India stands to benefit from the decline in terms of the attractiveness of foreign direct investment and portfolio flows of China.” Veteran investor David Roche

David Roche’s quote describes how the world has traditionally viewed India. For the longest time, India has long held the promise of a young, aspirational population, backed by robust democratic and business frameworks. But historically, it has only been a promise.

Today, the narrative is changing.

From whispers in summit corridors to outlook reports by analysts, the tone has gone from indifference to optimism. Over the last few years, not only have NASDAQ-listed firms expanded to India, but local companies have made their debuts on NASDAQ.

Today, India is considered the fastest-growing economy. The world’s biggest untapped consumer and talent market. An active participant in the modern space race. A hub of tech innovation and cultural soft power. India has emerged as the world’s favourite destination for growth and business – a sentiment supported by its world-leading IPO market, burgeoning talent pool, and increasing numbers of global companies looking to expand there.

And according to Bloomberg, poised to become the world’s number one contributor to GDP growth.

The elephant is ready, and it's raring to go.

The drivers of India’s growth story

India’s growth story, like the country, is complex, diverse, and beautiful.

Success isn’t derived from a singular factor — regulation, entrepreneurial spirit, or access to capital and opportunity. It is a function of multiple jigsaw pieces, orchestrated by grit, hustle, jugaad, and luck, coming together to form the bigger picture.

We analyze six individual jigsaw pieces in this section — spanning from talent to the government to the ecosystem.

India’s got talent

“I’m just like my country, I’m young, scrappy, and hungry — I’m not throwing away my shot” Hamilton, the Broadway Musical, 2020

In the 2000s, India was the West’s service centre — back offices, BPOs, and training centres. With the 2010s came the tech calling, characterised by skilled diaspora in the Valley and a mushrooming of software developers at home. Today, India is in its roaring 20s — with a booming startup ecosystem, MNCs setting up innovation hubs, and a strong GTM muscle.

The common thread? Talent.

Some factors influencing India’s unique position:

• The demographic dividend: India hosts around 600mn aged 18 to 35. The country’s demographic dividend is expected to persist for the next twenty-odd years, making it home to the world’s youngest labour force.
• The diaspora dividend: 25 of S&P 500 company CEOs are Indian-born. Beyond this, senior management ranks of numerous companies are populated by Indians. It’s the leading country of origin for immigrant founders of U.S. unicorns. These connections help build global connectivity to Indian business and facilitate India’s integration into global value chains.
• A market of skilled workers: Approximately 30% of the labour force is employed in the service sector. India is third when it comes to GitHub users by nation, and produces around 70,000 high-quality engineering graduates every year.
• India’s English-speaking populace: India hosts 25–30m fluent English speakers – they’re not only fluent in English, but also have Western mindsets, are well-versed in global socioeconomics, and would hold their ground against their Silicon Valley counterparts.
• They’re open to work at a fraction of global salary benchmarks: A high supply of skilled workers, complemented by a lower cost of living, has ensured India is a great talent market from a unit economics standpoint.

This video by Nirmalya Kumar might be a decade old, but it’s still just as relevant.

Companies that get India win — and they win big

“We will invest for as long as we need to in order to succeed in India. I’m just super excited about the region.” Spotify founder Daniel Ek, in an interview to Mint

At the end of the financial year 2022, the price-to-book (P/B) ratio for the European consumer products giant Unilever PLC stood at six. The same number for its subsidiary in India, Hindustan Unilever, was twice that, at twelve. This difference was not because the latter was young or small — on the contrary, the Indian subsidiary is a 90-year-old company with a market cap of $76 billion.

This is not an isolated instance.

Nestle India earned a profit margin of 14.2% against that of its parent of 9.8% while generating sales-to-assets ratio of 196% against just 69% for its parent. Siemens India had a profit margin of 10.6% against 4.8% for its parent, and a sales-to-assets ratio of 91% against 51% for its parent.

Brands that get India make exponential returns on their investment.

Two more examples, from Mckinsey’s paper on the subject:

According to NASSCOM and Zinnov, India has firmly established itself as the go-to destination for Global Capability Centres (GCCs), attracting an increasing number of global companies seeking to leverage the country’s unparalleled advantages.

The stats back it up — India currently hosts over 1600 GCCs, with an installed talent base of around 1.6 million!

An optimistic economic outlook — India is poised to replicate USA’s 80s growth

“The economic returns to living in a city that’s living in the future are increasing.” Naval Ravikant

Despite India’s 8% GDP growth over the last few quarters, experts believe that the best is yet to come.

Ray Dalio’s optimism is not isolated.

Morgan Stanley research expects GDP per capita to increase from USD 2,400 in 2022 to above USD 3,600 in 10 years. According to them, India is not the next China, it is closer to the 80s USA – considering its size, underlying metrics, and drivers of growth.

This could be India’s decade, given the right investments in growth and ease of doing business. Which brings us to the next driver – the government and their reforms.

Matters of state — how the Indian government invests in growth

“To the people of India, whose representatives we are, we make an appeal to join us with faith and confidence in this great adventure. We have to build the noble mansion of free India where all her children may dwell.” Jawaharlal Nehru, Tryst With Destiny, 1947

Since the government moved away from socialism in the 90s to build a culture of innovation, entrepreneurship, and foreign investment – government reform and growth have gone hand in hand.

Key policy reforms over the last decade:

• The Unified Goods and Services Tax (GST) across India, which standardised taxes. In addition, The marginal corporate tax rate was cut to 25%, from 35%, in 2019.
• In 2016, the monetary policy target was moved to inflation targeting with a 4% target (+/- 2% band). Ever since, rates/currency have become less sensitive to moves by the U.S.Federal Reserve.
• In 2019, India opened its doors further to FDIs by loosening its grip on sourcing requirements for various sectors. The government also allowed 100% FDI in sectors like commercial coal mining and contract manufacturing.
• The implementation of insolvency to the bankruptcy code, coupled with proper recapitalization of state-owned banks, has enabled the system to recognize bad loans.
• India established a new law to ensure property developers met their contractual responsibilities. With inventory levels at historic lows and developers having strong balance sheets, real estate will likely contribute towards economic acceleration.

It’s just not good laws. India has 270+ SEZ zones, favourable tax laws, and a robust federal system – the State Governments are just as invested in attracting business as the Central Government.

Have they been effective? Given that India’s position on the FDI index has moved 40 places, from 81 in 2015 to 40 in 2023 — we will let you decide. :)

The India tech stack

“All roads lead to UPI.” Kunal Shah, Founder, CRED

Over the last decade, India has undergone a digital transformation of sorts, and crucial to that has been The India Stack.

To say that the country underwent a digital transformation is an understatement:

• 1.2 billion Indians have a unique digital identity
• 560 million have internet subscriptions
• 354 million have smartphone devices
• 400 million UPI transactions occur every day
• The average Indian consumes 8.3Gb of data per month
• 1Gb of data costs less than 0.1% of the average per capita monthly income

The India stack has become one of the country’s biggest exports, as well as a key driver to innovation in India.

• The ONDC framework has allowed disrupters like Namma Yatri, Magicpin etc to challenge incumbents in the space.
• UPI, the digital payment protocol, is used by countries like Singapore, Malaysia, UAE, France, Nepal, The United Kingdom, Mauritius, and Sri Lanka.
• Access to inexpensive internet has created easy access to education for India’s masses, which has been instrumental in the growth of edtech businesses like Physicswallah, Khan Academy, Scaler, and more.

Of giants and their shoulders — meet India’s formidable startup ecosystem

“If I have seen further it is by standing on the shoulders of giants.” Isaac Newton in a letter to Robert Hooke, 1675

India is no longer just a destination for companies looking to expand their operations for higher returns to low investments. The country is also home to a disproportionate number of high-quality companies, with >15% 3 year revenue growth CAGR and >15% ROIC. And operators are only too happy to share the seeds of their success.

Today, the world is looking at a formidable startup Indian ecosystem.

• India is the second largest destination for VC and growth funding in the Asia-Pacific region.
• India is home to 107 Unicorns, the third highest in the world.
• India witnessed the highest number of IPOs in the world in 2023, raising close to INR 500 million
• Over 1.2 million jobs created by startups in India

The country’s startup ecosystem has evolved into an enviable network with multiple epicentres transcending cities and industries.

India’s startup space isn’t an ecosystem as much as it is a community of operators who learn from each other’s playbooks and a force of founders setting up on their own.

Across Bangalore, Mumbai, Chennai, Delhi, Hyderabad, and Pune, the current environment is frequented by veritable giants — and disruptors standing on their shoulders.

tl,dr: Watch the Indus Valley Report Breakdown

The good folks at Blume Ventures publish The Indus Valley Report every year, documenting and detailing trends they witness from their unique position in the Indian startup ecosystem. This video is a great explainer for folks looking for a macro and micro view into the current climate in the country.

The India opportunity

If you want to build out of India, there could never be a better time. You have means, opportunity, capital, and ambitious talent. From space-tech to real estate, AGI to agriculture, B2B SaaS to kirana-tech — the country is your oyster.

Meet India’s consumer class

“We’re consumers. We are byproducts of a lifestyle obsession.” Tyler Durden, Fight Club

Most commentators discuss India’s talent and labour force. Nowadays, more commentators discuss the market and the factors that favour it. However, there is a new influence today – The Indian consumer.

With 1.4 billion people and myriad unmet needs, India’s growth is driven mainly by domestic consumption and investments. Real wages are expected to grow at 4.6%, whereas disposable income will continue to grow over 15%. This, coupled with the mushrooming of India’s middle and upper-middle class gives the average Indian consumer considerable purchasing power.

To understand India’s consumer market better, we recommend Episode Three of Nikhil Kamath’s WTF podcast. In this episode, he talks to Kishore Biyani, Vidit Aatrey, and Sujeet Kumar about how they built D2C empires in India.

Kae Capital’s Natasha Malpani captures the current market and opportunity in the following breakdown — from Elevation Capital’s indepth reportage on the subject. You can read the original tweet here.

This brings us to the second section — it’s no longer just ‘build in India, built for the world’. The affluent Indian’s purchasing power, coupled with inexpensive internet, global sensibilities, and general ambition, has resulted in the emergence of three other categories.

Built in India, built for… everyone

“It’s not just about Make in India. It also needs to be about research and design in India” Sridhar Vembu, founder of Zoho

There are four types of companies in India today.

• Built from India, built for the world: These are companies that emerged from the shadow of India’s service industry. Armed with an understanding of Western requirements and technical know-how, entrepreneurs have built million-dollar product companies taking on global giants like Salesforce, Hubspot, and SAP. With SaaS firms like Zoho, Freshworks, and Chargebee leading the mantle — these are companies doing over $100 million ARR, and a majority of their revenue comes from the US and European markets — the country is witnessing a breed of companies who are not only holding their own against their Silicon Valley counterparts but stealing their lunch too.
• Built from India, built for India: Thanks to the rise of India One and the previous category of companies, there is an active market in India. For instance, Zoho made 100+ crores from the Indian market in 2023. These are B2B and consumer companies alike, building specifically for the Indian — some of the biggest companies in this sector include Razorpay, CRED, Zerodha, CoinDCX, and more.
• Built from India, built for Bharat: Internet and smartphone penetration into Tier II and III India brought with it a new consumer class. Considered India II and India III, this section comprises heavy consumers and reluctant payers. Companies like Meesho, MXPlayer, Chingari, and Sharechat are finding PMF here, albeit with smaller ticket sizes — powered by the internet and UPI.
• Built abroad, rebuilt for India: The world is waking up to India. Consumer giants like Netflix, Spotify, and Bumble are growing rapidly in this segment, and B2B companies like Rippling, Sprinklr, and Twilio are setting up their GTM functions here. However, what works for the world doesn’t necessarily work for India — which implies that these countries need to rethink, revamp, and rejig their business models, tech, and offerings to compete against local incumbents.

The Make in India directory

“It has to start somewhere, it has to start sometime. What better place than here, what better time than now?” Guerrila Radio, song by Rage Against The Machine

This section is a compilation of all the resources, help, and connections you might need to build out of India. This is a living document, if you have additions to be made, let us know here.

Starting up 101

So you’ve decided to build out of India. We’ve compiled a list of step-by-step guides to the different aspects of setting up a business, from registration and licensing to applying to different government subsidies that you might find helpful in your journey.

However, remember that these are meant to be a starting point, and aren’t prescriptive. To learn more about setting up a business, we recommend that you either check out the Ministry of Corporate Affairs, or seek professional guidance from a chartered accountant or lawyer.

Some additional reading

• Remote’s guide to hiring in India
• Deel’s guide to expats and digital nomads visiting India
• Oyster’s primer on employment laws in India
• Rippling’s guides to work permits in India
• Plum’s guide to employee benefits in India

Global hiring and payroll platforms

The most common approach for companies beginning to expand into India is to work with common hiring and payroll platforms. These firms enable you to hire people in other countries by acting as the legal local employer on your behalf. Here’s a list of common payroll providers working out of India.

Health benefits offered in India

In 2020, the IRDAI released a circular, making it mandatory for companies to offer their employees medical insurance. Global companies setting up in India have traditionally offered great employee health benefits to their team. Here’s what a typical employee benefits plan looks like for global companies setting up shop in India.

For a deeper understanding of the state of employee health benefits in India, refer to Plum’s flagship report.

Top Indian company law firms

You can rely on employers on record for the most part, but it is best to enlist the help of counsel. Not only will this ensure that you have your bases covered, but it will also help you during rare cases of litigation. We’ve compiled a list of tier-one law firms you can consider working with.

Covering risk with business insurance

While we’re on the subject of litigation, you should consider getting your firm a business insurance policy to ensure your risks and liabilities are covered.

• Liability Insurance — covering financial loss resulting from incidents bodily injury, property damage, or personal and advertising injury caused by your business operations or products.
• Cyber insurance — coverage against data breaches, cyber attacks, network damage, and business interruptions.
• Directors and officers insurance — protection from litigation against your board of directors.
• Errors and omissions insurance — for potential legal claims arising from your professional services.
• Employee dishonesty insurance — covering financial losses caused by immoral activities of an employee, such as theft, embezzlement, or forgery.
• Asset protection insurance — for protection from unforeseen damage to your physical assets.

India’s trade associations

These organisations represent the interests of trade and commerce in India, and act as an interface between issues and initiatives. We’ve compiled some of the more relevant ones in this guide.

India’s Special Economic Zones

In April 2000, the Special Economic Zones (SEZs) Policy was announced in India. The objective was to overcome the multiplicity of controls and clearances, an absence of world-class infrastructure, and an unstable fiscal regime. Today, there are seven SEZs in India under the Central Government of India.

In addition, the country’s various State Governments have SEZs in their respective states. Today, 270+ SEZs are operational in the country, and about 64% of the SEZs are located in five states – Tamil Nadu, Telangana, Karnataka, Andhra Pradesh and Maharashtra. Access the complete list here.

Top VCs in India

India is the second largest destination for venture capital in the Asia-Pacific region. Not only have international firms expanded on their India funds, we’re also witnessing local firms thrive in the ecosystem.

Top startup communities in India

The Indian startup ecosystem is supported by network effects, and the country is rife with communities of founders, thinkers, builders, and doers — divided by function, united by a common goal to build the best products out of India.

Fantastic talent and where to hire them — India’s colleges

Every year, India generates 70000 high-quality engineering graduates and another 20000 humanities and b-school graduates. The cream of the crop study in the country’s best colleges. We’ve compiled some of the top colleges you can hire talent from — based on NIRF rankings and cultural parameters.

India’s startup hubs

The best way to describe India’s startup ecosystem is through this excerpt from The Indus Valley Report, by Blume Ventures

We’ve built our starter guides for you to learn more about each city, their history, and what sets them apart as places to set up your business. Each Starter Guide covers networking communities, a curated list of office spaces, popular VCs headquartered there, and lifestyle-based activities. Check them out.

Starter guide to India’s top cities

Starter Guide to Bangalore : For Founders & Builders by Plum

Starting your journey in Bangalore? Our Starter Guide to Bangalore covers the best spots, local tips, and essential info for newcomers.

starterguide.plumhq.com

Starter Guide to Chennai - For Founders & Builders by Plum

Beginning your startup journey in Chennai? Explore the vibrant startup ecosystem with our detailed starter guide to Chennai for founders and builders.

starterguide.plumhq.com

Starter Guide to Hyderabad- For Founders & Builders by Plum

Beginning your startup journey in Hyderabad? Explore the vibrant startup ecosystem with our detailed starter guide to Hyderabad for founders and builders.

starterguide.plumhq.com

Starter Guide to Mumbai- For Founders & Builders by Plum

Beginning your startup journey in Mumbai? Explore the vibrant startup ecosystem with our detailed starter guide to Mumbai for founders and builders.

starterguide.plumhq.com

Starter Guide to Delhi - For Founders & Builders by Plum

Beginning your startup journey in Delhi? Explore the vibrant startup ecosystem with our detailed starter guide to Delhi for founders and builders.

starterguide.plumhq.com

Readings, reports, musings, and meditations on India

A lot of what you’ve read in this piece comprises titbits from all the different things we’ve read in preparation for this piece. It’s only right that we share them with you for your perusal.

Conclusion

And that brings us to a close. We hope this guide has helped you understand India a little better. This is a living, breathing document, and will be updated as and when India’s economic and social outlook evolves. Consider this a V1 and if you have any recommendations, resources, or information you’d like to contribute, please fill this form, and we’ll be happy to add them.

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