What: The HBR reviews the key success factors for multinationals operating in India, where their subsidiaries often do better than their international ones.

Why it is important: India is another world and department stores should start preparing themselves in welcoming and accommodating this entirely new population.

Indian subsidiaries of multinational companies are outperforming their parent firms, as evidenced by their significantly higher price-to-book (P/B) ratios. Factors contributing to this include better growth prospects, higher profitability, and more efficient asset utilization in the Indian market. Despite the parent companies' size and established presence, Indian subsidiaries, such as those of Unilever, Nestle, and Siemens, show significantly better performance metrics.

The rapid growth of India's middle class, combined with urbanization and increased disposable income, offers tremendous market opportunities. India's urban transformation is progressing at a pace unmatched globally, with the middle-class population projected to increase from 31% in 2021 to 63% by 2047. This expanding consumer base, along with lower production and distribution costs in India, have resulted in higher profit margins for these subsidiaries.

India's rapid GDP growth, projected to be the fastest globally in the 2020-2029 decade, also indicates promising market opportunities. By 2075, India is expected to be the second-largest economy in the world after China.

Given these factors, it's crucial for multinational companies to develop an India-specific strategy to leverage these growth opportunities. Such a strategy should include significant resource allocation to India, customization of products and services to cater to local preferences and cultural nuances, and leveraging India's digital infrastructure, known as the "India Stack". This strategy should focus on creating products specifically for the Indian market, produced in India using local raw materials, and distributed using local channels and digitally enabled infrastructure.

Does your company have an India strategy?