Despite India’s increasing attractiveness, Danish companies operating in the country clearly face numerous challenges that impact their growth and operational efficiency. One of the most significant concerns is finding and retaining qualified staff with 44 per cent of respondents identifying this issue. The companies that responded are primarily headquartered in Tamil Nadu (47 per cent) and Karnataka (27 per cent), in sectors like energy, health and environment and water.
In December 2024, the Royal Danish Embassy conducted a survey of the 78 members and partners of the Indo-Danish Business Association (IDBA), of which 32 responded. The survey aims to identify key trends and perspectives within the Danish business community in India. It focuses on the general sentiments towards the Indian market, including the appetite for further investments and identifies key challenges faced by the Danish companies.
The survey confirms the growing role of India as a market for Danish companies, with 70 per cent of the respondents expecting India’s importance to increase over the next five years. However, many companies face challenges both on the business side when it comes to competition, rising operational cost, talent attraction, bureaucratic delays, policy inconsistencies and the regulatory unpredictability.
Respondents cited that Indian businesses, particularly those with strong government connections, often secure contracts more easily, placing foreign firms at a disadvantage.
The pricing pressures from Chinese competitors in the renewable energy and wind energy sectors further compound these challenges, making it difficult for Danish firms to maintain profitability without sacrificing quality. The prevalent least cost selection (LCS) criteria in tendering processes was also highlighted as a challenge that makes it harder for Danish firms that prioritise high-quality products and services over cost-cutting, the survey said.
Cultural and structural differences between Danish and Indian businesses also play a role in operational challenges. Cultural misalignments, cited by 22 per cent of companies, stem from differences in business ethics, decision-making speeds, and employee expectations.
While Danish firms operate with a structured and long-term strategic approach, most Indian counterparts are accustomed to a faster-paced, hierarchical system which is important to understand in order to ensure success. Additionally, language barriers in customer service and R&D interactions create further difficulties in business operations.
There is a clear trend indicating that India is becoming an increasingly attractive market for Danish companies. A significant majority of companies expressed a positive outlook regarding their expected turnover in India for the next two fiscal years.
Overall, the findings suggest that Danish companies increasingly recognise India as a key market with strong potential for investment, growth, and innovation. The strongest trends are seen in investment, sales, and R&D, highlighting India’s role as an emerging global business hub. However, to fully capitalise on these trends, Danish firms need to navigate regulatory complexities and strengthen local partnerships, the survey said.