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Risks to assess – JVs/Expansion/Investments

Over the past quarter, we have executed market intelligence and competitive intelligence projects in niche segments of India. One thing is clear – the Covid recovery has begun and there is a great investor (global and local) interest in key sectors across the economy – from energy, logistics, FMCG, technology and ‘new age’ sectors like mother and child care. But where there are opportunities, risks also abound, more so in a diverse set-up like India.  Here, I am coining down a few of them, essentially not in any chronological order:

  1. Global companies entering or operating in India need to be abreast with policy changes and the way they will impact the operations.  A current example would be the cryptocurrency segment which is still evolving in India in terms of laying down the policy formulations and what works for the country. Another sub segment of FMCG that has come to the fore is the toy segment which is on its way to become more consolidated and structured. Then, there are some subsegments such as apparels and fast moving medical accessories have benefited through the Make in India initiatives and have been quick enough to adapt to the changes in the pandemic times especially when supply chains were highly strained.
  2. To ensure business operability and sustainability,  companies also need to identify the location specific challenges that would include looking into local community issues,  business ethics of that particular region,  labour issues,  logistical challenges, ease of business indicators in that region/state, state level contingency and crisis management plans etc 
  3. One of the most important aspects but often viewed restrictively, is the geopolitical interlinkages with the business operability of the companies or segments.  Recently,  it happened with the API segment wherein Indo China military tensions had a strong bearing on the supply and demand of APIs in India.
  4. Extraordinary risks are often not given much thought in our daily business negotiations, however a pandemic like COVID 19 has changed the way we look at Black Swan events.  Business decisions need to incorporate events of such nature to ensure the de risking of supply chains, availability of essential commodities,  safety of manpower,  and ensuring business continuity. 

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