MNCs must look beyond low cost operations to succeed and grow in India: McKinsey

Global interest in India is accelerating, finds a McKinsey report.

Between 2021 and 2023, 984 international firms established operations in the country—three times the number from 2019 to 2021. India now hosts over 1,500 Global Capability Centers (GCCs), with around 60 per cent focused on IT, business process management, engineering, and R&D. The trend is expected to continue, with more than 250 new GCCs likely to be established over the next three to five years.

To succeed in India, multinational companies must move beyond low-cost operations and adopt a strategic, India-specific approach. Thriving in this dynamic and diverse market requires more than just capital—it demands intent, insight, and adaptability, according to the McKinsey report.

Winning in India hinges on four critical actions: taking a long-term view, empowering local leadership, tailoring products and pricing, and deeply localising operations. These strategies not only help companies navigate India’s complexities but also unlock growth opportunities in one of the world’s fastest-growing economies, the report adds.

Estimates suggest that by 2030, India could gain $0.8 to $1.2 trillion from shifting global trade flows. Simultaneously, its manufacturing sector is poised for rapid expansion, with the potential to grow its share of GDP from 16 per cent in 2023 to 25 per cent by 2030.

However, despite the government’s pro-business stance, challenges remain, it notes.

Companies often face complex regulations, labour unrest, and bureaucratic red tape. The consumer market, while vast, is highly fragmented, with significant variations in preferences and purchasing power across regions. While some multinationals have flourished, others have struggled—or exited the market altogether.

Published on April 15, 2025