by David J. Karl

China is surely the pinnacle of the emerging markets, but India is like the nearby Himalayan summit in at least one important way: Just as the peak lures a growing number of mountaineers despite, or because of, its stern challenges, entrepreneurs are increasingly attracted to India even though dangers abound, the risk of heart break is ever present and there is more than an occasional disaster.  The place is strictly not for the timid or the unprepared, but those willing to brave a long, tough slog are increasingly finding their prize.

Nowadays the headlines about India are all about the slog.  Media accounts (here and here) of the long-running battles between high-profile Western companies – Vodafone, Nokia, IBM and Shell, among them – and the country’s tax authorities have put a big dent in the country’s investment reputation.  A new report by SPAG Asia, the India-based marketing and public affairs agency, concludes that the country is the most difficult place in Asia to do business.  The finding echoes a Bloomberg Global Poll released last September, which noted that India offers investors the worst opportunities in the coming year compared to other BRIC economies.  Another survey released a year ago concluded that within Asia India was the place where the impact of corruption was highest on the business environment.  Indra Nooyi, the Chennai-born chairman & CEO of PepsiCo, sums things up by noting that India has gone in a few years from a “must-invest” to a “must-deal-with” country

But for those willing to brave the slog and take the long view, the rewards are beckoning.  Despite Nooyi’s sour note, PepsiCo has announced that it will invest $5.5 billion in India by 2020.  Coca-Cola, which says that India could be one of its top five markets within the next couple of years, has made a similar commitment.  As Nooyi explains: 

If you look at India, it has a fantastic population base — young, middle class still big and growing, an entrepreneurial culture, thriving democracy, a country that in the long term still has lots of potential. We have to invest in the long-term fundamentals of the country.

Likewise, Muhtar Kent, Coca-Cola’s CEO, stated that “We think there’s potential” in India and that the company wants “to stay ahead of the curve” in the country.

This same perspective is reflected in an array of new reports.   A survey by the EY consulting firm (formerly known as Ernst & Young) notes that India remains an attractive destination for foreign direct investment and that global business leaders expect it to be among the world’s top three growth economies by 2020 on account of its solid domestic market, educated workforce and competitive labor costs.  The World Bank’s Multilateral Investment Guarantee Agency finds that India ranks just behind China as a landing place for foreign direct investment.  A surveyby the UN Conference on Trade and Development pegs India – just behind China and the United States – as the world’s third most attractive destination for investment by multinational corporations in the 2013-2015 period.