A consultancy chief provides a checklist for Indian businesses planning to expand into the US market, including insights into some basic structural aspects.
The United States of America is a haven for business ventures, for entrepreneurs and business entities around the world. There is always a scope for growth due to the immense exposure provided to different companies, irrespective of their background or culture.
India and the US have a long-shared history, and our bilateral relations have continued to be healthy. The total bilateral trade (goods and services) that the US does with India was $126 billion in 2017. Initially, this went up 10.4 per cent from $114.2 billion levels in 2016. Bilateral trade has witnessed an average 5.6 per cent annual growth rate for the previous five years.
Some of the sectors the two countries can find opportunities are Infrastructure Financing, Financial Inclusion and the Bond Market.
Is the US still a preferred destination
In a recent study titled “
”, approximately 25 per cent of engineering and technology US start-ups have at least one immigrant founder. Another report titled “
” by the National Foundation for American Policy stated that India is the leading country of origin for immigrant founders of billion-dollar companies in the US. Specifically, California is a preferred destination for headquarters, with 32 out of 44 immigrant founded companies setting up base there.
For example, Indian entrepreneurs Raviteja Dodda and Yashwanth Kumar began an omnichannel marketing automation platform called 'MoEngage' in California in 2014. With funding from marquee investors such as Exfinity Ventures and Helion Venture Partners, MoEngage has also received supported by a US based accelerator called 'The Alchemist'.
As the Indo-US innovation corridor extends, there are considerable advantages to both nations.
, which can set up business units in the US and manufacturing units in Indian cities such as Bangalore, Pune, and Chennai, offer compelling business advantages such as market access and intellectual property transfer, among others. While it may not be economical to place founders and key employees under the
scheme, the IER's revival could be a step towards setting up Indo-U.S. focused startups and allowing ecosystems to thrive in both countries.
The US Citizen and Immigration Services are taking steps to bring back IER: A proposed regulation to promote entrepreneurship in the US.
Why should Indian companies invest in the US
- The US is considered to be the most diverse market in the world
The United States of America receives immigrant applications from virtually every corner of the world annually. The thriving population of 325 million people from across the world assures a unique cultural diversity within the country. Businesses can profit immensely from developing the skills of their employees through cross-cultural training courses that will help to harness cultural richness in the US successfully.
- The easiest way to get a citizenship of the US for an entrepreneur
The US also offers an option for entrepreneurs to settle in the country. If a business is willing to invest $1 million or a minimum of $500,000 in areas with high unemployment rates, prescribed by the US government, then the investor/ business owner can receive conditional permanent citizenship along with their spouse and any unmarried children, less than 21 years of age.
- Choosing the right company structure in the US
International investors can form either a Limited Liability Company (LLC) or a Corporation (C). However, the corporation is exclusive to US citizens or residents only. Developing a C-corporation is beneficial due to scalability and can be made public. Also, investors prefer C corporations for business funding.
- Legal environment in the US
The legal system in America is fairly business friendly and encourage entrepreneurship. Business-disputes are solved through litigation and the government dedicates special resources to answering queries and problems from businesses and academics on a real-time basis.
- Government support for entrepreneurs in the US
Many state and local governments offer various incentives to attract foreign businesses in their specific regions. Such incentives commonly include income and real estate tax concessions, financing and chances to buy or rent working offices at meagre costs.
- Political interference in business in the US is negligible
In the United States, politicians may express concerns about foreign investments from time to time, but restrictions on most foreigner investors are few and far between. Working Americans invite foreign ownership of businesses except in situations where jobs are threatened. And, foreign investments that create jobs are always healthily invited.
The United States is a recognised leader in research and development (R&D). There is greater access to advanced technology and infrastructure. Workforce usually has excellent sckills, particularly in the technical department, often with very specific knowledge needed by niche industries. In addition to the strong infrastructure, a knowledgeable workforce and strong innovation culture, the US also offers a powerful network of international business cooperation.
- Business culture in the US
The US operates on an individualistic culture with individual acknowledgement and monetary achievement as its strong motivating forces. In the US, employees are motivated by upward mobility, personal accomplishment and loyalty for their profession, besides individual professional success, rather than an analysis of them done by their employers.
- The US a good market to enhance brand recognition
The US pulls in organizations from everywhere throughout the world that is looking to participate in the open business environment in a visibly large economy. Foreign organizations can benefit from the generally solid market for products and services, as well as presenting and marketing new brands.
- The US is known as the largest market in the world
The US market is one of the world's largest and most sophisticated markets. America alone accounts for 28.9 per cent of the world's aggregate market. The demand in the US is varied and does not depend on a small number of sectors. A good, well-marketed product in America can easily find mass appeal and demand.
- Options available for funding your business in the US
You can get a wide range of funding sources, from banks and investment firms to venture capitalists and angel investors who enable innovation and expansion, providing organizations in the United States an important advantage.
I firmly believe that the Indo-US relationship will further strengthen in the years to come. By enhancing cooperation and taking advantage of the opportunities listed above, it will be a win-win situation for both countries.
Harsh Patel is the Founder & Global CEO of Water and Shark.