The appetite of international consumer brands for expansion into India remains strong, buoyed by the success of household names such as Starbucks, which recently announced that its joint venture with Tata Consumer Products recorded an 8% year-on-year sales increase in the final three months of last year. Tata Starbucks now has more than 470 outlets across 70 cities and aims to reach four figures by 2028 despite intense competition from local and international rivals and an increasingly crowded market.
Multinational pharmaceutical and healthcare company Sanofi also recorded an 8% uplift in net sales in Q424, while during the same period Mothercare and Reliance Brands Holding UK announced a joint venture that will operate the Mothercare franchise in India as well as Nepal, Sri Lanka, Bhutan and Bangladesh. Reliance Brands first acquired the rights to the Mothercare brand for the Indian market in 2018 and currently operates 87 stores across 25 cities.
PepsiCo has been perhaps the most active international consumer brand in the world’s most populous country during the first quarter of 2025. In January it was revealed that it had formed a strategic partnership with Tata Consumer Products to co-develop and market packaged snacks in India.
In the same month it was widely reported that the soft drink company was interested in acquiring a minority stake in Haldiram Snacks Food, which describes itself as the world’s leading manufacturer and exporter of Indian sweets and snacks.
In an investor call to discuss the company’s second quarter 2024 results, PepsiCo Chairman and CEO, Ramon Laguarta, described India as a ‘big growth space’ for the company. “It is an investment area for sure,” he said. “The opportunity is massive. You take a decade perspective and we are putting infrastructure on the ground and a lot of investing in the brands to make sure that we build the scale to capture what is going to be I think a high demand market for many, many years.”
As a favoured location companies seeking to diversify their operations and investments beyond China to reduce reliance on a single market or supply chain, India is becoming a reliable trading partner as well as a global consumer hub suggests Amit Baraskar, Vice President & Head of Treasury at Thomas Cook India.
“There are several important considerations for consumer brands looking to enter the Indian market, including lower dependence on external trade leaving the country less exposed to rising tariffs and varying tax impacts with respect to special economic zones such as GIFT City in Gujarat, which offer a plethora of tax and other incentives that are relatively unexplored,” he says.
India also offers lower exposure to geopolitical conflict than many other Asian countries, although regulatory restrictions and penalties can lead to difficulties in doing business or in repatriating profits.
To succeed in India, consumer brands need to have a flexible, localised approach that takes into account opportunities and challenges that come with operating in such a diverse and complex market. A deep understanding of consumer preferences, a focus on digital transformation and a local presence are key to success, suggests Manoj Dugar, Head of Global Payments Solutions, Asia ex Greater China at HSBC.
“Indian consumers are known for being price sensitive,” he says. “Brands need to strike a balance between offering quality products while ensuring affordability. There is a need to serve different segments with different product solutions according to what they can afford.”
Given the proliferation of smartphones, a digital-first strategy is essential for consumer brands entering India – which includes optimising website apps and improving ecommerce experiences. “In addition, although urban areas drive much of the country’s consumption, the rural market also presents significant growth opportunities,” says Dugar. “Brands need to have a clear strategy for tapping into this segment, which represents a large portion of India’s population. Given that India has a complex regulatory landscape with varying rules across states and sectors brands must also navigate policies related to product standards, labelling, taxes, foreign direct investment norms and labour laws.”
Rajiv Arya, National Head for Accounting and Business Support at New Dehli-based advisory firm ASA suggests product pricing is probably the single most important financial consideration that drives the consumer market with Indian consumers being more sensitive to pricing than quality. “Brands need to understand and comply with India’s foreign direct investment policies, which can vary depending on the sector,” he explains. “They also need knowledge of tax implications including tariffs, consumer taxes, corporate income taxes and other applicable regulatory requirements that impact product pricing.”
As a price and value sensitive market, It is imperative that extensive research is conducted into local pricing standards.
Then there are legal and compliance requirements, including labour laws, environmental laws (in the case of manufacturing) and intellectual property rights. For example, India has regulations prohibiting single use plastics that fast-food brands have had to work with when setting up in the country.
“Selecting an appropriate entry structure and clearly estimating operating costs and investment requirements is crucial,” adds Arya. “There are other costs such as currency fluctuations, cost of funding and securing funding at reasonable rates, establishing an efficient supply chain and after sales service network (keeping in mind local challenges) and forming strategic partnerships with local entities to help gauge market changes, manage distribution networks and navigate regulations.”
He notes that many successful companies in India owe their success to localising their product. “This has also helped them create new products that they export from their Indian facilities across the world, which is what McDonalds and Coca-Cola have done very successfully.”
Anuj Chande, Head of the South Asia group at Grant Thornton UK observes that Indian consumers are increasingly aware of international brands through travel and social media and find these attractive if they are available on their doorstep. “India is an extremely price sensitive market and consumer brands need to be aware of this,” he says. “Whilst pricing may seem on the low side by international standards, the sheer volumes make up for this. Brands also need to be conscious of looking to reduce costs by local sourcing or manufacturing and to be aware that India is a vast country with different cultures.”
This final point is taken up by Arya, who agrees that navigating the Indian market requires careful consideration of cultural diversity as well as the level of competition from foreign and domestic players and logistical and other issues brought about by the sheer size of the country. “India remains a highly attractive market for international consumer brands for a number of reasons, including that Indian consumers are becoming more discerning and open to global trends and lifestyles with growing demand for quality, convenience and personalised experiences,” he says.
Market heterogeneity is also a theme for ANZ Economist Dhiraj Nim. “Indian consumers are diverse in their approach to consumption, so success for consumer brands relies on targeting the right market. Burgeoning consumption among major cities has typically meant a large consumer base for luxury products, for example, but discovering an ideal price point has been a challenge for global firms. Furthermore, they often encounter logistical and supply chain challenges.”
Arya also refers to rapid growth of e-commerce and digital platforms – including the simplification and wide usage of digital payment systems – creating new avenues for brands to reach consumers. Internet and smartphone penetration as well as data connectivity across the country has transformed consumer behaviour and continues to rise. “Last but not the least, the colonial mindset legacy (the belief that the west are trendsetters) is deeply engrained and foreign expensive brands still define personalities,” adds Arya.
There is general acknowledgement of the importance of having a local finance team that understands the nuances of the market in terms of payment preferences and banking options.
“Having a local finance team is a must due to a comparatively stringent regulatory framework, for example overseas direct investment regulations around remitting monies out of India and restrictions on making India a part of cash pools,” says Baraskar. “Functioning of banks, fintechs and payments systems is rather different and the real pros and cons can be understood and brought out only by deep diving, which requires a strong local presence,” he adds. “This cannot be achieved with remote handling of the finance function.”
Arya notes that India has not followed the development path of other markets. For example, it has a diverse range of payment preferences ranging from cash to credit cards to UPI, while the tax and regulatory landscape is complex and constantly evolving.
“A local finance team and an experienced consultant will have in-depth knowledge and experience of local and federal laws and other regulations and will ensure that the company complies with all applicable regulations,” he says. “This helps avoid penalties and legal issues that can be expensive and drawn out.”
A local finance team in India is critical to effectively navigating the country’s complex regulatory environment as well as staying up to date on consumer preferences, whether that is what they want to buy or how they want to pay.
That is the view of Dugar, who notes that the Indian financial sector is governed by regulations from the Reserve Bank of India and number of other financial bodies. “A thorough understanding of the lie of the land and deep knowledge in local rules and regulations in taxation, foreign exchange and data security are necessary,” he says. “The Indian payments landscape has been significantly transformed by technological advancements and changing consumer behaviour. Once largely dependent on cash and checks, the focus has now shifted towards digital payment methods such as UPI, mobile wallets, net banking and debit/credit cards. This evolution has transformed the way businesses and consumers engage financially, creating a more connected and accessible payments ecosystem.”
Understanding and integrating local payment methods is essential to aligning with changing customer preferences, especially in highly consumer-oriented industries. Consumers demand and expect intuitive, seamless and personalised experiences.
By providing such an experience, merchants can drive positive brand perception and build consumer loyalty. Offering frictionless payments is a big enabler for merchants – online or offline – to simplify and improve the shopping experience for their customers. “India’s fintech landscape is rapidly changing, with new payment technologies and platforms emerging frequently,” adds Dugar. “An intimate knowledge allows companies to curate the right mix of financial solutions for themselves and their customers.”
On the consumer side, the payments landscape in India has dramatically changed in the last few years with the rise of digital payments, concludes Nim. “The banking sector has many large players with competitive but often differentiated reach and offerings. Foreign brands may also have to engage finance experts with knowledge of local regulations to bring in or take out foreign currency.”
