As multinational corporations expand their global footprint, choosing the right location for subsidiaries is a strategic decision that affects cost structures, market access, and long-term profitability. India, often referred to as the "world’s back office" and a leader among emerging economies, is a popular destination for subsidiaries. However, other emerging markets such as Vietnam, Indonesia, Brazil, Mexico, and the Philippines also present compelling advantages.
This article presents a comparative analysis of India versus other emerging markets across key business dimensions including economic environment, talent pool, infrastructure, regulatory climate, and geopolitical risks.
GDP (2024 est.): $3.94 trillion
Growth Rate (2024 est.): 6.8%
India boasts one of the fastest-growing major economies, driven by services, manufacturing (Make in India initiative), and digital sectors.
A growing middle class and large domestic market make it attractive for both B2B and B2C businesses.
Vietnam: Rapid growth, strong export orientation, low inflation, and a rising tech sector.
Indonesia: ASEAN's largest economy, stable macroeconomic indicators, growing consumer base.
Brazil: Resource-rich, but growth is often hindered by political and fiscal instability.
Mexico: NAFTA/USMCA member, proximity to the U.S., diversified industrial base.
Philippines: High remittances inflow, services-driven economy, but slower industrial growth.
Verdict: India has a robust and resilient economic foundation, but countries like Vietnam and Mexico offer faster industrial setups and are more integrated with Western markets.
Workforce: Over 500 million
Education: Strong engineering and IT talent, large English-speaking population.
Labor Cost: Competitive wages, though rising in urban centers.
Key Strength: Massive availability of technically skilled labor for IT, finance, and analytics.
Vietnam/Philippines: Low-cost labor, young population, improving English skills.
Indonesia: Large labor force but with lower levels of English and tech specialization.
Brazil/Mexico: Skilled workers in manufacturing, automotive, and oil sectors; higher wages than in Asia.
Verdict: India is superior for high-skill talent in IT and services, while Vietnam and the Philippines offer low-cost options for manufacturing and BPO.
Rapidly improving infrastructure under government initiatives like Smart Cities and Digital India.
World-class digital payments and fintech ecosystems.
Inconsistent physical infrastructure in Tier-2 and Tier-3 cities.
Vietnam/Indonesia: Infrastructure improving with FDI in ports and industrial parks.
Mexico: Better physical infrastructure than India in industrial regions.
Philippines: Advanced in digital services but struggles with physical connectivity.
Brazil: Reasonable infrastructure but faces bottlenecks in logistics and transport.
Verdict: India leads in digital infrastructure; however, physical infrastructure still lags behind Mexico and Vietnam in manufacturing zones.
Significant improvements in World Bank’s Ease of Doing Business rankings in recent years.
Still faces challenges: bureaucratic hurdles, complex tax structures (despite GST reforms), and slow judicial processes.
Vietnam: Business-friendly policies, special economic zones.
Mexico: Open trade policies, especially with the U.S.
Indonesia: Recent omnibus law reform simplified labor and investment laws.
Brazil: Complex tax and regulatory systems.
Philippines: Relatively friendly to foreign investment but faces red tape.
Verdict: Vietnam and Mexico are currently more agile in enabling quick market entry and regulatory clarity compared to India.
Strategic partner to Western economies (QUAD, Indo-Pacific alignment).
Stable democracy with a robust legal system.
Beneficiary of China+1 strategy as firms diversify supply chains.
Vietnam: Major China+1 alternative, politically stable.
Indonesia: Neutral foreign policy, stable government.
Mexico: Beneficiary of nearshoring due to proximity to the U.S.
Brazil: Regional instability and political fluctuations present risks.
Philippines: Strong U.S. ties, but political uncertainty exists.
Verdict: India holds a strong geopolitical advantage due to its democratic stability, strategic location, and ties with Western powers.
| Country | Sectoral Strengths | FDI Trends |
|---|---|---|
| India | IT, fintech, pharmaceuticals, e-commerce, manufacturing (PLI Scheme) | $71.5B (2023) |
| Vietnam | Electronics, garments, furniture, semiconductors | Rapidly growing, ~$36B in 2023 |
| Mexico | Automotive, aerospace, electronics | High due to U.S. integration |
| Philippines | BPO, digital services, healthcare | Strong in services, low in manufacturing |
| Indonesia | Natural resources, mining, consumer goods | Increasing post-COVID |
| Brazil | Agribusiness, oil & gas, banking | Volatile, tied to political shifts |
India remains one of the most attractive emerging markets for establishing subsidiaries, particularly for knowledge-intensive sectors like IT, digital services, R&D, and finance. Its vast talent pool, growing domestic market, and geopolitical positioning offer strong long-term advantages.
However, for cost-effective manufacturing and rapid business setup, countries like Vietnam and Mexico often outperform due to better infrastructure, quicker regulatory processes, and strategic proximity to major markets (like the U.S. and China).
Each market offers unique strengths. A hybrid approach — with tech functions in India and manufacturing in Vietnam or Mexico — is increasingly becoming the optimal strategy for multinational corporations.