Professional Documents
Culture Documents
PESTLE Analysis of India For Luxury Center For Awnings and Blinds
PESTLE Analysis of India For Luxury Center For Awnings and Blinds
The Republic of India, the seventh largest country in the world with regards to geographical area , the
second largest in population with 1.26 billion people, and the most populated democracy located in the
south of Asia bordering the Arabian Sea, the Bay of Bengal and the Indian Ocean. It shares land borders
with Pakistan to the west, China, Nepal, and Bhutan to the north-east; and Burma and Bangladesh to the
east.
India is also a member of the Bay of Bengal Initiative for MultiSectoral Technical and Economic
Cooperation (BIMSTEC) and the South Asian Association for Regional Cooperation (SAARC).
The Republic of India consists of 28 states and 7 union territories, following a parliamentary system of
democracy. With regards to the market exchange rate it stands as the 12th largest economy and in
purchasing power as the 4th largest. Since 1991 the various economic reforms have made it into one of
the fastest growing economies of the world, however it is still plagued by high levels of poverty,
illiteracy, malnutrition and disease. It is also a pluralistic, multilingual and multi ethnic society.
(Wikipedia)
PESTLE analysis
“PESTLE analysis, which is sometimes referred as PEST analysis, is a concept in marketing principles.
Moreover, this concept is used as a tool by companies to track the environment they’re operating in or
are planning to launch a new project/product/service etc.”
“PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic, S for Social, T
for Technological, L for Legal and E for Environmental. It gives a bird’s eye view of the whole
environment from many different angles that one wants to check and keep a track of while
contemplating on a certain idea/plan.”
(Wordpress)
Political
This area covers the various factors of the government which intervenes with the various areas of the
economy, looking into the various policies of the government, such as the goods and services and the
amount of support that the government provides for business. Many political decisions and policies
have a great impact on various areas of business, such as the quality of the work force, the health and
lifestyle of the consumers and the quality of the available technology and infrastructure such as the
roads railways etc.
“According to its constitution, India is a "sovereign, socialist, secular, democratic republic." Like the
United States, India has a federal form of government. However, the central government in India has
greater power in relation to its states, and has adopted a British-style parliamentary system.”
The Indian National congress emerged as the nation’s largest party in May 2009, at the Lok Sabha
elections, with Prime Minister Man Mohan Singh. The party president Sonia Gandhi heads the Congress
Lok Sabha delegation. Although the INC has a strong history of political dominance over the past 12
years its performance in the national elections had steadily declined, it was surprising when the INC won
the elections in 2004 and in November 2005, the congress regained chief ministership of Jammu and
Kashmir state, under a power sharing agreement.
The Political state is more or less unstable, moreover the upcoming elections and the results is
prophesied to create a state of instability in the country, but a stable government is what is predicted to
ensure a recovery from the fall of the economy.
"A potential additional source of uncertainty is the coming general elections. A stable new government
would be positive for the economy," Reserve Bank of India (RBI) governor Raghuram Rajan said in his
foreword to the eighth edition of the RBI's Financial Stability Report 2013.
(Bhalla, 2013)
India: Indices:- Comparison with the rest of the world
Corruption Perceptions Index (2012)
94
62
53
152
79
60
100
119
46
84
KOF Index of Globalization
107
16
68
14
56
24
(Global Edge)
Proposal: Increase in surcharge from 5% to 10% for domestic companies where total income exceeds
Rs 10 crore.
Impact: The effective corporate tax rate for domestic companies stands increased from 32.45% to
33.99%. Effective minimum alternate tax rate stands revised to 20.96% from 20% earlier, resulting in
higher tax outgo.
P: Increase in surcharge from 2% to 5% for foreign companies where total income exceeds Rs 10 crore.
I: The effective corporate tax rate for foreign companies such as branches of overseas companies and
other similar entities shall stand revised to 43.26% from 42.02%.
I: The effective rate of DDT shall be increased from 16.22% to almost 17%.
P: Dividends received from foreign subsidiaries by India Inc will continue to be taxed at the
concessional rate instead of at the corporate tax rate. Thus, the effective tax rate will be 16.995%.
I: This will incentivize Indian companies to repatriate excess cash lying in overseas subsidiaries to India.
P: Remove cascading effect of DDT in respect of dividend received by a domestic company from its
foreign subsidiary.
I: The Indian company shall not be liable to pay DDT on the dividend distributed to its shareholders to
the extent of dividends received from its foreign subsidiary. This will bring in tax efficiency by
eliminating multiple levy of tax on the dividend distributed by the Indian company.
P: Increase in rate of tax on royalty and fees for technical services for non-resident tax payers under
the Income Tax Act from 10% to 25% in respect of agreements entered into after March 31, 1976.
I: This would increase the tax rate of royalty and fees for technical services paid to non-residents where
income is taxable under the provisions of the Income Tax Act. Non-residents can continue to avail of
lower tax rates under the Double Taxation Avoidance Agreement, where applicable. Tax treaties such as
those with Netherlands and Singapore prescribe for a lower tax withholding of 10% which will continue.
I: This will provide a much needed boost to the manufacturing sector. The additional deduction would
be over and above the depreciation claimed by such a company.
I: Earlier, only borrowings in foreign currency were eligible for the beneficial withholding tax of 5%.
Liberalizing this requirement by extending the benefit of such reduced withholding tax of 5% will further
augment long-term low-cost funds from abroad for infrastructure companies.
I: According to the FM, buyback of shares is often used as a tool to avoid DDT on distribution of income
in the form of dividend. Henceforth, distribution of income by an unlisted company by way of buyback
will also be liable to tax at 20%. However, there would be no tax liability in the hands of the
shareholders.
P: Difference between stamp duty valuation and sale price of land or building or both will be regarded
as business income where sale price is less than stamp duty value, even if such assets are held as
stock-in-trade.
I: There will be additional tax liability in cases where land or building or both are treated as stock-in-
trade and the sale value is less than the stamp duty value. Earlier, this was applicable only to land or
building held as capital asset.
P: Where tax due from private company cannot be recovered, the burden can shift to a director. It is
clarified that the tax due shall include interest, penalty or any other sum payable.
I: The proposal seeks to put the litigation on meaning of the term 'tax due' at rest. This would cast an
additional obligation on the director.
I: Payment of commodity transaction tax shall be allowed as a deduction where income arising from
commodities transaction is included under business income. The treatment is aligned with the
treatment in respect of securities transaction tax.
The Industrial policy of 1991 known also as the new industrial policy of Liberalisation, Privatisation and
Globalisation, was a step taken by the Indian to create a relaxation on the various government
regulations and restrictions in the economy. Through this policy the main aim of the government was to
increase the foreign investment and to increase flow of trade into the country.
ECONOMIC
”The economic growth rate was expected to be at 7.5-8 per cent next year, Deputy Chairman of
Planning Commission Montek Singh Ahluwalia said today.
Speaking at the ninth V Narayanan Memorial lecture at Sastra University Srinivas Ramanujan Centre
here, he said the growth rates shot up in 1960-70s and picked up in 1990s.
The reforms are to be carried gradually in large diverisifed highly democratic country and to bring
changes it takes time.
In 2000s in five year period it went up to 9 per cent. In 2008 financial crisis crept in and the growth rate
came to 6 per cent and in 2009 it went to 9 per cent and then to 9.3 per cent.
In 2011, growth rate again went down to 6.2 per cent and in 2012-13 to 5 per cent.
"We have become globally integrated and we can't do for India independently. The problem consists of
one third from domestic factors and two-third from global factors," he said.
The global economy was turning around and in 2014 it will be better. Post election who ever in power
the growth rate will be 7.5-8 per cent, he said.”
(Kumbakonam, 2013)
GOVERNMENT BOND 10Y 8.85 01/01/2014 8.73 02/28/2014 8.83 8.59 8.37 [+
GDP ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
GDP CONSTANT PRICES 14300.67 08/15/2013 14480.41 11/30/2013 14528.42 14785.00 14080.80 [+
GROSS FIXED CAPITAL FORMATION 4806.43 08/15/2013 4849.56 11/30/2013 4928.71 4718.62 4940.24 [+
GROSS NATIONAL PRODUCT 88981.17 06/29/2012 89947.80 12/31/2012 106060.51 116960.51 127453.71 [+
GDP PER CAPITA 1106.80 12/31/2012 1109.15 12/31/2013 1109.15 1166.91 1206.28 [+
GDP PER CAPITA PPP 3340.60 12/31/2012 3347.08 12/31/2013 3347.08 3487.77 3570.03 [+
GDP ANNUAL GROWTH RATE 4.80 09/30/2013 4.20 12/31/2013 4.20 4.00 5.00 [+
GDP GROWTH RATE 0.60 06/30/2013 0.67 09/30/2013 0.72 0.77 0.78 [+
L AB O U R ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
P R IC E S ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
CONSUMER PRICE INDEX (CPI) 241.00 10/15/2013 242.86 11/30/2013 244.34 267.00 291.57 [+
M O NE Y ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
FOREIGN EXCHANGE RESERVES 16573.40 12/31/2013 16779.46 01/31/2014 16346.44 19159.52 22132.95 [+
T R AD E ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
CURRENT ACCOUNT TO GDP -4.60 12/31/2012 -4.67 12/31/2013 -4.67 -6.52 -7.37 [+
FOREIGN DIRECT INVESTMENT 2048.00 10/15/2013 2121.48 11/30/2013 2192.69 2301.98 2176.38 [+
G O V ER N M E NT ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
GOVERNMENT DEBT TO GDP 67.57 12/31/2012 67.53 12/31/2013 67.53 66.54 66.02 [+
GOVERNMENT BUDGET VALUE -5095.57 11/30/2013 -3846.42 12/31/2013 -4563.48 -4410.17 -4487.50 [+
B U S I NE S S ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
C O NS U M ER ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
BANK LENDING RATE 8.75 12/15/2013 8.73 01/31/2014 8.63 8.66 8.42 [+
DISPOSABLE PERSONAL INCOME 71640930.00 06/30/2011 72583395.98 12/31/2011 102186944.51 110036322.82 120387308.14 [+
T AX E S ACTUAL F OR EC A ST 2 01 3 2 01 4 2 01 5
CORPORATE TAX RATE 33.99 01/01/2013 35.00 09/30/2013 34.00 34.00 34.00 [+
PERSONAL INCOME TAX RATE 30.00 01/01/2013 30.00 12/31/2013 30.00 30.00 30.00 [+
The country’s life expectancy average is 67.48 years, male: 66.38 years and female: 68.7 years. The
country spends on an average 3.9% of its GDP on the health of the nation (2011 est.) The hospital bed
density is 0.9 beds / 1000 population (2005 est.)
The literacy level of a country is one of the main indicators of the level of development. The level of
literacy generally indicates certain traits of modern civilization such as modernization, urbanization,
industrialization, communication and commerce.
India has a lot to offer regarding social life through a variety of features. The several diversities in India
with regards to ethnicity, language, religion, class, caste groups in the Indian society, regional
differences, economical, and various differences in the urban rural lifestyles and gender distinctions.
Moreover there is a significant difference between the north and south of India, especially with regards
to the system of kinship and marriage. Even through all these complexities and diversities in the Indian
life, several of the common cultural themes increase a feeling of social harmony and order.
(Asia Society)
Technological
Indian science and technological research and development have been a key feature in bringing various
social and economic changes to the country. The country has not stepped back, rather taken a step
forward to develop the various techniques and skills of its work force and ensuring the development of
advanced technology making it a highly modern, industrialized society, relevant in the eyes of the rest of
the world as a high competitor. The main drive towards the progress of the country is the availability of
high technology, industrial infrastructure and a skilled workforce. With regards to the field of research,
India stands among the top countries.
(IBEF, 2013)
Legal
“The important legislations for regulating the entire corporate structure and for dealing with various
aspects of governance in companies are Companies Act, 1956 and Companies Bill, 2004. These laws
have been introduced and amended, from time to time, to bring more transparency and accountability
in the provisions of corporate governance. That is, corporate laws have been simplified so that they are
amenable to clear interpretation and provide a framework that would facilitate faster economic growth.
Secondly, the Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India Act,
1992 and Depositories Act, 1996 have been introduced by Securities and Exchange Board of India (SEBI),
with a view to protect the interests of investors in the securities markets as well as to maintain the
standards of corporate governance in the country.”
(India.gov.in)
Though there are several laws regarding the corporations, Luxury center will be able to work in its
purview easily and without trouble.
(Srivastava, 2008)
With regards to labor laws of India there are several acts governing the same. They are:-
Environmental
The Climate in India varies from tropical monsoon in the south to temperate in the north. The major
issues in India in regards to the environment are:- Deforestation, soil erosion, overgrazing,
desertification, air pollution from industrial effluents and vehicle emissions, water pollution from raw
sewage and runoff of agricultural pesticides, and the tap water is not portable throughout the country,
moreover growing population is overstraining natural resources.
The various environmental factors are important for the business as the raw materials for the
production of the end products used in the business can be grown in India. India being a country with a
focus on agriculture will be a big advantage for the business (Luxury center for awnings and blinds).
Recommendations
As per the PESTLE analysis conducted, I would recommend that even though there are various factors
which may seem very time consuming and problematic, the changes of the company succeeding is very
high. The company will have all the requirements available to it such as, the raw materials produced in
the country and the ability to import, availability of a skilled workforce, and most of all a customer base
which has not been fully utilized. Though there are many uncertainties, as per the various forecasts,
there is a bright future for the country and the businesses operating in it.
Works Cited
(n.d.).
Bhalla, A. (2013, July 29). Associated Newspapers ltd. Retrieved January 3, 2014, from Mail Online India:
http://www.dailymail.co.uk/indiahome/indianews/article-2380988/Its-official--crime-pays-politics-
Study-shows-candidates-facing-criminal-charges-likely-win-elections.html?ito=feeds-newsxml
CIA World Factbook. (2012, April). Global Edge. Retrieved January 3, 2014, from A Michigan State
University website: http://globaledge.msu.edu/countries/india/government
CIA World Factbook. (n.d.). The World Factbook. Retrieved January 3, 2014, from opengov:
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
Focus Economics. (2013, December 16). FocusEconomics. Retrieved January 3, 2014, from
http://www.focus-economics.com/en/economy/charts/India/Inflation
Global Edge. (n.d.). Michigan State University. Retrieved January 3, 2014, from Global Edge:
http://globaledge.msu.edu/countries/india/indices
IBEF. (2013, December). Indian Brand Equity Foundation. Retrieved January 3, 2014, from
http://www.ibef.org/industry/science-and-technology.aspx
Kumbakonam. (2013, December 29). The Indian Express ltd. Retrieved January 3, 2014, from The
Financial express: http://www.financialexpress.com/news/indias-gdp-growth-rate-likely-to-touch-7.58-
pct-in-2014-montek-singh-ahluwalia/1212528
Srivastava, D. R. (2008, October). GlobaLex. Retrieved January 3, 2014, from Hauser Global Law School
Program, New York University School of Law:
http://www.nyulawglobal.org/globalex/india_legal_research.htm
The Indian Express. (2013, December 30). The Indian Express ltd. Retrieved January 3, 2014, from An
Indian Express ltd website: http://www.indianexpress.com/news/2014-elections-potential-source-of-
uncertainty-for-indian-economy-says-raghuram-rajan/1213310/
Times of India. (2013, March 1). Bennett, Coleman & Co. Ltd. Retrieved January 3, 2014, from The TImes
of India: http://articles.timesofindia.indiatimes.com/2013-03-01/union-budget/37372007_1_tax-rate-
corporate-tax-dividend-distribution-tax
UNCTAD. (2013). UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPEMENT. Retrieved january 2,
2014, from www.unctad.org: http://unctad.org/sections/dite_dir/docs/wir2013/wir13_fs_in_en.pdf