Why India, Why Now: A Five Forces View for MNCs

Same country. Opposite outcomes.

Ford lost more than USD 2 billion in India and stopped making cars here in 2021.

Apple’s partners have since exported about USD 50 billion worth of iPhones from India.

Same country. Same price-conscious customers. So what made the difference?

That was the question on the table when Martin walked into his board meeting with two slides.

Martin is the CFO of a mid-sized German engineering company. His competitors are already in India. His customers keep asking when his company will be. His first slide showed the world’s fourth-largest economy, foreign investment rising fast and new trade deals with the UK, Switzerland and, soon, the EU. His second slide showed Ford.

The chairman looked at both and asked just one thing: “Which one is the real India?”

Martin is a composite of several leaders I have sat across the table from. Some were taking their first step into India. Others had been here for years and were deciding whether to double down or scale back. Different companies, same question.

My honest answer has always been: both slides are true. India rewards companies that understand how its market really works, and it punishes those that assume it works like home.

So let me do what I would do with Martin’s board. Look at India through the five forces that decide whether a company makes money in any market, using what is actually happening in 2026. Then look at the trade agreements that are quietly redrawing the map for every multinational that makes, sells or sources here.

First, the slide everyone likes

Let me start with the good news, because there is plenty of it.

• India is now the world’s fourth-largest economy, having overtaken Japan, based on IMF projections cited by NITI Aayog in 2025.
• Foreign direct investment reached USD 58.85 billion in FY 2025-26, up 18% on the year before.
• Singapore was the largest source, at about USD 19.8 billion of equity. Investment from the United States more than doubled, to about USD 11.2 billion.
• Software and hardware attracted the most money, at about USD 13.9 billion, followed by services.

The number I would underline for any board is the US one. American money more than doubled in a year when US trade policy towards India was anything but simple. Serious investors are not just talking about India. They are arriving.

But here is what that slide does not tell you: whether you will make money once you are here. Ford arrived too. That is where the five forces come in.

India through the five forces

Michael Porter’s five forces ask one simple question: how much of the value you create will a market actually let you keep? Here is how I walked Martin’s team through each one.

1. Competition: fierce, and fought on price

India is not an empty market waiting for global brands. You will meet strong Indian groups, fast local startups and other MNCs who arrived years before you. And Indian customers compare every rupee.

This is the force that beat Ford. When it announced its exit in September 2021, Ford said it had built up more than USD 2 billion in operating losses over ten years, and that demand had been much weaker than it forecast. A great global brand is not a pricing strategy.

Martin’s first reaction was, “We are premium. We do not compete on price.” My reply: in India, everyone competes on price. The only question is whether your value is clear enough to justify yours.

2. New entrants: the door is open, staying in is the hard part

Legally, India is more open than most boards assume. Most sectors, including IT services, most manufacturing and renewables, allow 100% foreign ownership without prior government approval. Which also means your next competitor can walk in just as easily as you.

The real barriers are distribution across a huge and varied country, building a team you can trust, and the years it takes to earn customers’ confidence. And one rule to check on day one: if any of your investors has owners from a country sharing a land border with India, you may still need government approval under Press Note 2 (2026 Series).

3. Suppliers: far stronger than their reputation

Ten years ago, many MNCs imported key parts because local suppliers could not meet global standards. In many sectors, that is no longer true, helped by the government’s production-linked incentive (PLI) schemes.

Apple is the proof. Its contract manufacturers have exported about USD 50 billion worth of iPhones from India over roughly five years under the smartphone PLI scheme, including more than USD 16 billion in just the first nine months of FY 2025-26. If India’s supplier base is good enough for Apple, it deserves a serious look from you.

Talent is the other side of supply. India has a deep pool of engineers and finance professionals, but experienced senior leaders are scarce and expensive. Martin’s plan had budgeted for neither. It does now.

4. Buyers: they hold the power, and they know it

Indian customers, whether households or large corporate groups, have more choice than ever. Consumers compare prices in seconds and switch without a second thought. Large Indian companies negotiate hard and expect local invoicing, local stock and someone on the ground to call when something goes wrong.

For many of the companies I work with, this is the moment a local entity stops being an option and becomes a requirement. A quote from overseas is easy to ignore. A local partner who can deliver next week is not.

5. Substitutes: a cheaper local option, and now a cheaper import

For almost every product, there is a “good enough” Indian alternative at a lower price. That was always true.

What is new is a second kind of substitute: imports made cheaper by India’s free trade agreements. A competitor shipping from the UK or Switzerland may now land in India at a lower duty than before. Once the EU deal takes effect, so might Martin’s German rivals.

That is why I tell clients the trade agreements are not a policy story for the newspapers. They change the make-or-import decision for every MNC serving India.

Four trade deals in thirteen months

For years, India had a reputation for being slow and careful with free trade agreements. Then, between October 2025 and October 2026, four new agreements came into force. Here is the map as it stands today.

In force

• UAE and Australia: both in force since 2022. A wider upgrade with Australia is still being negotiated.
• EFTA (Switzerland, Norway, Iceland, Liechtenstein): in force since 1 October 2025, with a shared aim to bring USD 100 billion of investment into India over fifteen years and support one million direct jobs.
• Oman: in force since 1 June 2026. Indian exporters now have duty-free access for about 99% of what they sell to Oman by value, and Oman’s ports open a route to the wider Gulf and East Africa.
• United Kingdom: in force since 15 July 2026, with India’s tariff cuts on UK goods phased in over several years.
• New Zealand: in force since 20 October 2026, with duty-free access for all Indian exports.

Agreed, but not yet in force

• European Union: talks concluded in January 2026. Signing has been reported as expected in December 2026, followed by ratification. For a German company like Martin’s, this is the one to watch.

Still in negotiation

• United States: an interim framework was announced in February 2026, with talks on a fuller agreement continuing.
• Canada: negotiations started in March 2026.

So what does this mean for an MNC?

Look at it from both directions.

Selling into India: if you make in a partner country, some of your products may now enter India at a lower duty. For some product lines, importing may beat making locally, at least for a while.

Selling from India: if you make in India, you can now reach the UK, EFTA, the UAE, Oman, Australia and New Zealand on better terms. That can turn an Indian plant from “a factory for India” into “an export hub for six markets”.

But here is the warning I give every client: none of this works unless you meet the rules of origin. Lower duty applies only if enough of the product’s value or processing genuinely comes from the partner country. I have seen companies build an entire business case on an FTA, only to discover at customs that their product did not qualify. Check your bill of materials against the rules first. Build the plan second.

Three more things that change the maths

1. US tariffs: plan for a range, not a number

If part of your India plan is exporting to the US, look at how many times the rate changed in 2026 alone:

• 6 February: an interim US-India framework set the tariff on Indian goods at 18%.
• 20 February: the US Supreme Court struck down the tariffs imposed under emergency powers (IEEPA).
• 24 February to 24 July: a temporary 10% surcharge applied instead.
• Since 24 July: India faces a 10% tariff under Section 301, on top of normal duties.

Four changes in under six months. Any business case that depends on one tariff rate is already out of date. Model at least three.

2. The right structure from day one

Your legal form decides your tax, your liability and how easily you can grow. A wholly owned subsidiary suits most companies that will invoice Indian customers and hire staff. A liaison office is a low-risk way to test the market, but it cannot earn income. A branch office is a special case, partly because its profits are taxed at a higher rate than an Indian company’s. Changing structure later is possible, but it is slower and costlier than getting it right first.

3. The paperwork does not stop after you arrive

Even without prior approval, foreign investment has to be reported to the RBI, for example on Form FC-GPR within 30 days of issuing shares. Where government approval is needed, build months, not weeks, into your timeline. And look at PLI schemes, state incentives and locations like GIFT City before you pick a city, not after you have signed the lease.

At Exactitude International , this is exactly the work we do with foreign companies coming to India: choosing the route and structure, setting up the entity, and keeping the compliance calendar clean once they are here. In my experience, the companies that do well are rarely the ones with the biggest budgets. They are the ones that asked these questions first.

So, which slide was the real India?

Martin’s board did not leave that meeting with a yes or a no. They left with a better question. Not “should we go to India?” but “on what terms can we win there?”

That is the question I would leave with every MNC leader reading this. Before you enter or expand, try answering these honestly:

1. Competition: can we win at Indian price points, or only at our home ones?
2. Staying power: what will keep us here in year ten, not just year one?
3. Suppliers and talent: have we actually tested local sourcing and local leaders, or simply assumed they are not ready?
4. Customers: do our buyers need us to invoice, stock and serve locally?
5. Substitutes: who can now reach our customers more cheaply, from within India or through a trade deal?
6. Trade agreements: do our products meet the rules of origin, in both directions?
7. Tariffs: does our export plan still work at three different US tariff rates?
8. Structure: is our entity and compliance plan built for the business we want in five years?

Ford and Apple came to the same country. One left with losses. The other’s partners built an export engine. Some of that difference was the industry, and some was timing. But a large part of it was how well each one read India.

India does not reward the companies that arrive first or loudest. It rewards the ones that arrive prepared.

If you run an MNC’s India business, or are planning one: which of these forces has surprised you most? I would like to hear from both the newcomers and the veterans.

#IndiaEntry #FDI #FreeTradeAgreements #MNC #DoingBusinessInIndia #Strategy

For awareness only; not legal, tax or investment advice. Trade and investment rules are changing quickly, so please take professional advice for your specific situation.