Business Environment in India - Business Environment | Business Environment - B Com PDF Download

Business Environment in India:

The characteristics of each dimension of Indian business environment are as follows:   

1. Demographic Environment: With the population growth rate of 1.2% (on 2013) and about 127 billion people, India is second most populous country of the world. It provides a huge market to the business firms for their products. In India, 56.9 % population lies between the age group of 15 to 59 years, with a literacy rate of 74.04% (2011 census). It signifies that India is a large potential source of cheap and efficient workforce. The urban population in the country is also increasing at a fast rate i.e. 2.4% (census 2011). The 31.3% (census 2011) share of total population lives in urban areas.

2. Cultural & Social Environment: The cultural and social environment is a very important aspect of business environment. It influences all the 4P‟s of marketing (i.e. product, price, promotion and place) which play a crucial role in the success of a business firm.      
In India, there is huge diversity in terms of caste and religion. There is a great linguistic heterogeneity as more than 200 languages are spoken by different groups in the country. 

3. Economic Environment: After opening up the FDI in different sectors, India has become one of the attractive investment destinations of the world. India holds 6.43% (in 2011) share of world GDP. According to the World Bank report, it is third biggest economy in terms of purchase power parity (PPP). The present Industrial growth rate of India is 3.4%. As per the latest report of PwC (Price water house coopers), India will become third largest economy of the world by 2030.

4. Technological Environment: The technological growth rate of India lies between 0.7%- 1.1%, which is comparatively 3% lower than other economies. The per capita R&D expenditure was also very low as $9.5 in 2009-10. It was 2.4% of World Gross Expenditure on R&D in 2009-10. As per the study of US based National Science Foundation, India is far behind in term of technology competitiveness from its Asian compatriots. India scored only 33 points out of 100 points scale as against 83.7 points for Japan and 42.6 points for South Korea.

5. Political Environment: India has a parliamentary system of government that decides the regulatory and legal framework of the country. In India, a business is regulated by different bodies, such as, SEBI, IRDA, CBDT, FIPB, etc. Recently, the government has replaced 56 years old Companies Act with new Companies Act 2013. The government is also planning to adopt uniform direct tax system i.e. called Direct Tax Code (DTC). The new NDA government has changed the 64 years old Planning Commission with a new body. Since the independence, GOI has signed more than 50 trade agreements with other countries in order to facilitate foreign trade.