PESTEL analysis of India (Country Profile)
This detailed ‘PESTEL analysis of India (Country Profile)’ aims to address some of the political, economic, social, technological, environmental, and legal issues that shape India today. India is the second largest country in the world by population, and it is on course to become the No. 1 soon. It certainly plays a very important role in global trade and politics.
Political factors that affect India
India is one of the most powerful countries in the world. New Delhi is its capital. It neighbours two powerful countries i.e. China and Pakistan. Other neighbouring countries are Bangladesh, Myanmar, Nepal, Bhutan, & Sri Lanka.
India is the largest democracy in the world and enjoys a relatively stable political environment. However, its dispute with Pakistan over Kashmir has been an issue of grave political uncertainty.
Likewise, the recent Citizenship (Amendment) Act has led to mass protests and violence in many states of the country. Therefore, more needs to be done to listen to the concerns of the public to identify solutions.
Democratic will of the people reflected in the local and national elections is mostly respected and accepted by the political parties and people in general. This political culture of tolerance contributes immensely to maintain a stable political climate which is in fact a very important factor to attract foreign direct investment (FDI).
A major area of concern in India is corruption. It badly affects the business and political environment, posing a challenge to the country’s economic growth. It increases the cost of business operations and often negatively affects foreign direct investment.
Likewise, a lack of transparency in the political system, and an inefficient bureaucracy also need to be addressed. However, a growing public awareness and government initiatives are combating the challenges of corruption and lack of transparency.
Economic factors that affect India
A key element of this ‘PESTEL analysis of India (Country Profile)’ is the economic environment. India is one of the largest economies in the world in terms of nominal GDP. Its GDP in 2022 was worth around $3.46 trillion (O’Neill, 2022).
However, the consumer demand has weakened recently. Consequently, the economy is slowing down causing people a lot of concern. The recent lockdowns were also devastating for the country with a job loss of around 122 million people.
The corporate tax rate in India is 34.94%. It is worth noting that the country witnessed frequent corporate tax rate changes over the years (Trading Economics, 2022).
India is one of the largest coffee producing countries in the world. It is also one of the top agriculture producing countries. It has over 100 unicorns with a total valuation of $332.7 billion (IBEF, 2022). It has recently signed several free trade and other agreements with some of its trading partners.
India is also home to many global companies’ customer service centres. Its key exports are petroleum products, jewellery, pharmaceutical products, transport equipment, machinery, and readymade garments to name but a few.
On the other hand, India imports crude petroleum, gold, silver, electronic good, pearls and precious stones and many other things. Some of the top trading partners of India are China, UAE, Switzerland, Saudi Arabia, USA, and Qatar.
India’s domestic market offers numerous opportunities for both local and international organisations. The main sectors that are booming currently are information technology, telecommunications, healthcare, retail, and infrastructure.
India offers cheap labour and is likely to become one of the top three global economic giants over the next 10-15 years (IBEF, 2022). Accessible and affordable labour force has encouraged many multinational companies to outsource some of their business operations to the country.
Social factors that affect India
India has a gigantic consumer market with a total population of over 1.4 billion (Worldometer, 2022). Such a huge market is a great opportunity for multinational companies. No wonder why so many multinationals are operating in India!
India is a multi-ethnic, multi-lingual, and multi-religious country. Communal harmony is a great strength; however, it sometimes witnesses tensions in ethnic lines.
India is a melting pot of different cultures and religions. It is a secular country. Hinduism is the most widely practiced religion in India, followed by Islam, Christianity, Sikhism, Buddhism, and Jainism.
India’s caste system is an ancient system of social stratification that is still in practice today. The caste system is based on a hierarchical structure. However, over time, it has become less rigid, and there is now a lot of social mobility.
India has a world-renowned film industry. It is also world renowned for some of the sports e.g. Cricket and Hockey. IPL (Indian Premier League) attracts cricket legends and talents to the country.
Indian cuisine is world-renowned for its delicious flavours and spices. It is heavily influenced by different regions and cultures. Common dishes include curries, dals, biryanis, and tandoori. Therefore, tourists can enjoy a wide variety of traditional dishes!
India is a very attractive market for multinational companies. Standard of living is gradually improving, and the country has a growing middle class with good disposable income.
However, it is worth noting that India still suffers from poverty with millions of people live on less than $2 a day. Likewise, poor wealth distribution is also another massive problem.
Technological factors that affect India
An important element of this ‘PESTEL analysis of India (Country Profile)’ is the technological environment. India is very advanced technologically. No wonder why more and more tech giants including but not limited to Facebook, Microsoft, Amazon, and Apple are investing billions of dollars in the country!
India is a key destination for outsourcing work in IT. With an advanced IT infrastructure and highly skilled IT work force, it offers enormous opportunities for entrepreneurs to embark upon technological projects such as software development and upgrades, e-commerce, mobile apps, business solutions, and many more.
The Indian government is investing heavily in technology, with initiatives such as Digital India and Make in India. These initiatives are aimed at creating an environment that encourages innovation and entrepreneurship.
However, prestigious Indian Institutes of Technologies (IITs) need to carry out more research on areas such as 5G, artificial intelligence (AI), and biotechnology to prepare graduates for future employment opportunities and challenges.
Environmental factors that affect India
While India has made a lot of progress over the years, it still faces a number of environmental challenges e.g. air pollution, water pollution, floods, resource depletion such as water and forest, loss of biodiversity, and diversion of consumer waste into rivers. Expatriates may sometimes find it difficult to live under some of these environmental challenges.
However, it is worth mentioning that India has some of the greatest tourist attractions on earth that attract millions of tourists each year. Attractions such as Taj Mahal, Char Dham, Red Fort, Qutub Minar, the Golden Temple of Amritsar, and the Gateway of India mesmerise people with their stunning looks.
Likewise, affordable hotel price, delicious food, incredible wildlife, and wonderful rail journeys are some other factors that many tourists consider while selecting India as their holiday destination.
India is home to a wide variety of wildlife, including elephants, tigers, leopards, rhinoceroses, and sloth bears. It is also home to over 400 species of birds, including peacocks, parakeets, and flamingos.
Legal factors that affect India
The last element to address in the ‘PESTEL analysis of India (Country Profile)’ is the legal landscape. As mentioned above, India is a famous destination for foreign direct investment. Depending on the scope and the business needs, foreign investors can set up a company, branch, or a limited liability partnership in the country.
The Constitution of India protects people from discrimination. Likewise, people’s sensitive personal data is protected by the Sensitive Information Rules. However, a report by Outlook India (2022) has questioned about the rampant corruption in the lower courts of the country.
Summary of PESTEL analysis of India (Country Profile)
India is a vast and diverse country with a rich historical and cultural heritage. It has a unique social system, complex political system, and diverse cuisine. It is also home to a wide variety of wildlife and is making strides in the field of artificial intelligence.
India is one the most powerful countries in the world in terms of GDP and political might. It has very good foreign relations with both the USA, and Russia. However, its relations with both China and Pakistan need to improve for the future stability and progress of the region.
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You may also like reading SWOT analysis of India (Indian National SWOT). Other relevant articles for you are as follows:
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Last update: 03 January 2023
IBEF (2022) About Indian Economy Growth Rate & Statistics, available at: https://www.ibef.org/economy/indian-economy-overview (Accessed 16 July 2022)
O’Neill, A (2022) India: Gross domestic product (GDP) in current prices, available at: https://www.statista.com/statistics/263771/gross-domestic-product-gdp-in-india/ (accessed 03 January 2023)
Outlook India (2022) ‘Corruption Is Rampant In The Lower Courts’, available at: https://www.outlookindia.com/magazine/story/corruption-is-rampant-in-the-lower-courts/281457 (accessed 15 July 2022)
Trading Economics (2022) India Corporate Tax Rate, available at: https://tradingeconomics.com/india/corporate-tax-rate (Accessed 02 January 2023)
Worldometer (2023) India Population, available at: https://www.worldometers.info/world-population/india-population/ (accessed 03 January 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.