Investors who set up a company in India for manufacturing purposes face higher overhead costs than those in China. For example, Chinese manufacturers pay less than half of what their Indian counterparts pay for power.

India benefits from abundant skilled, semi-skilled and manual labour qualified for a wide variety of industries. India's growth sectors - business process outsourcing, software development and pharmaceuticals - are attractive to foreign investors because of the low operating costs compared to western countries.

India is a cost-effective location in which to conduct business compared to most countries. However, costs are rising, especially compared to China. Because of economic growth and rising demand for skilled labour, investors who set up a company in India must contend with rising average salaries. The average annual salary of an Indian IT professional, for example, is now Rs620,000 (US$15,750).

However, because of rising salaries, India is also facing an influx of skilled expatriate Indians who once left the country in search of higher salaries and improved working conditions.

India is the world's second largest exporter of software (after the US). In 2006, almost 50% of Fortune 500 companies used Indian software and related services.

On the other hand, research and development (R&D) costs in India are 75% lower than in the US. Because of this, many US firms choose to outsource research and development (R&D) functions to India to i) tap India’s abundance of  skilled R&D experts and ii) reduce their global R&D costs.

India experiences low inflation, which consistently fell from 5.7% in 1997 to a 5-year low of 3.5% in January 2008.

For more reasons to set up a company in India, purchase our Asia Business Setup book, contact email@healyconsultants.com or call us in Singapore at (+65) 6735 0120.