Pest Analysis for India

11 November 2016

The paper will use PEST political environment, economic environment, sociocultural environment and technological environment analysis to examine whether International Business activities have increased or decreased in the past 10 years in India. The summaries will study International Business contributed or not to the economic development of the India. First of all, let us focus on the political environment. India had a very long period of the Nehru-Gandhi dynasty, and then became the colony of the British for nearly 100 years. In 1947, India was independent, and became a republic country.

Due to British influence, India’s political structure is similar to Britain. India has a parliamentary system and a party system. There are more than eight national and two dozen regional parties in India. Among these parties, the Congress Party is the most influential party in the country. It had uninterrupted control of the government for 33 of the 44 years following independence. The Congress Party played a really importance role in India’s economic reform. For example, the aged P. V. Narasimha Rao led the Congress Party from 1991-1996 and was responsible for much of India’s free market reform in the early to mid-1990s.

Comparing with other Asian countries, India’s parliamentary system and party system makes the political environment relatively free and open. At the same time, the influence and authority of the Congress Party also makes India’s political environment relatively stable. However there are also lots of issues impacting India’s stable political environment. For example, the disputes about Kashmiri between India and Pakistan and the border issue between India and China are destabilizing factors. These issues have serious impact on the stable political environment of India. The paper will move into an analysis of the economic environment.

As the world’s second-largest population, India has a large domestic market. This huge market includes agriculture, manufacturing, service industry and information technology industry. With the huge market and number of industries, India’s economic environment became more and more attractive to the world since the 1990’s. The collapse of the Soviet Union in 1991 gave India a heavy blow, India lost of its major trading partner and faced tremendous political and social instability in 1990. Under the trend of globalization, India has undertaken a series economic reform. The “Washington Consensus” has played an important role on India’s policy.

The government embarked upon a plan of gradual liberalization toward a more market-oriented economy. Therefore India removed almost all import- and capacity-licensing restrictions. Subsidies were restricted, and tariffs were simplified and lowered. This series economic reform has made the India’s economic environment more liberal and open. The restriction of subsidies and the lowering of tariffs have attracted more Foreign Direct Investment into India’s market. The huge market and the open and free market policies make India’s economic environment attracting and competitive.

In third part of this analysis, the paper focuses on sociocultural environment. In 2010, India’s population was already 1. 15 billion and demographers expect that India’s population will surpass the population of China in 2030. In this huge nation, there are more than 650 dialects and numerous religions. Hindi was the most prevalent language and was spoken by roughly 30% of the population. English, which is only spoken by 2% of the population, was not considered an official language and was just the dominant language of government and business.

Religion has an important position in India’s sociocultural environment. Hindus, Muslim, Christian, Sikh and others religious groups make up India’s varies of Religious environment. Different religions have their different customs, for instance, Hindus considered the ox as god incarnate, so they did not eat beef. Multiple race and religion are the characteristic of India’s sociocultural environment but this characteristic also lead to some problems. Radical religious terrorists and organized terrorist attacks causes social instability. This is a disadvantage for India’s sociocultural development.

Last but not least, the paper will discuss the technological environment. India government attaches importance to education, both higher education and primary education. Many and many students have been enrolled in college technical programs since 2000. Taking advantage of the higher education of people in information technology and the English-speaking workforce, foreign companies have begun outsourcing information technology (IT) and back-office operations to India. Comparing with other Asian country, India’s technological environment has a more advantageous position.

From the PEST analysis, the paper has shown that India has a huge domestic market and population, and that the government implements free and open policies to attract foreign capital. Since the time of independence, India has advantage which the others Asian countries do not possess. An English-speaking workforce attracts the foreign investment. The foreign companies can pay low and hire a highly educated people in India. Although there are some issues, like social and political conflicts in India, the advantages from the PEST analysis still has great attraction.

Therefore, one can examine that International Business activities have increased in the past ten years in India and International Business continues to contribute to the economic development of India. Actually, facts have proven this assessment correct. From the Oversea Indian Facilitation Center website, we can find data about foreign direct investment trends: April 2000 – August 2010, report it states, “The cumulative amount of foreign direct investment (FDI) flows into India from April 2000 to August 2010 aggregates up to US$ 175. 4 billion, according to the latest data released on October 22, 2010 by the Department of Industrial Policy and Promotion (DIPP). ” (Foreign direct investment trends: April 2000 – August 2010) This report proves that International Business activities have increased in the past ten years in India and International Business contributes towards the economic development of India. Work Cited

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