ENORMITY TEMPTS MARKETERS TO MAKE A PASSAGE TO INDIA

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BOMBAY-India, the world's second most populous nation, is drawing marketers encouraged by its 1990 liberalization.

Prime Minister P.V. Narasimha Rao put India on the investment map four years ago by scrapping a law limiting foreign companies' holdings in Indian ventures to 40%. India's cash reserves from foreign investment are $20.5 billion, and the Reserve Bank of India predicts 5.5% growth in the economy in 1995-96.

The numbers are attractive-nearly 36% of India's 936 million people are between 15 and 34-but the middle- and upper-middle classes are bigger draws. About 100 million Indians earn $1,150 to $1,800 annually, and another 35 million earn between $1,800 and $2,500, studies show.

That's enough to attract recent entrants Sony, Whirlpool, JVC, Grundig, Akai, Panasonic, General Motors, Kellogg, Levi Strauss, Pizza Hut and Domino's Pizza.

The opening of the telecommunications market, projected by some to hit $32 billion by 2000, is drawing interest from AT&T, the Baby Bells, Alcatel, Siemens, Sprint and Telstra, who have bid for licenses for the basic and cellular market.

With combined billings of $708 million, the ad industry grew 37.4% in 1993-94, and most international agencies have a presence here.

But India's changing nature tests marketers. "The key issue facing marketers in India today is that the learning curve that has been accumulated over the last two decades is totally irrelevant today," said Sorah Mistry, McCann-Erickson India CEO, indicating that the movement to a free market economy is forcing changes in marketing tactics.

There are other hurdles, too. A revived 2% tax on any work contract-including advertising-to be deducted automatically through income tax, means agencies are forced to retail every receipt. The tax was included in the government's budget, which was finalized in the last week of March and has been approved by Parliament.

A government ban keeping foreign media from publishing here continues. A complete ban on tobacco advertising-tobacco ads are now banned on TV only-is being proposed by the Health Ministry but hasn't begun yet to wind its way through government channels.

Most proponents of a free market fear the steady and inevitable rise of the Hindu right-wing Bharatiya Janata political party in the '96 general elections. The party maintains a hawkish line on the multinationals in India and actively indulges in religious rabble-rousing and the threat of expelling multinationals as a platform to garner votes.

Whatever the perceived roadblocks, most marketers look at the clear path beyond. "The price of entering over non-entering is too great," said Mr. Mistry. "Given the flat growth of most Western markets, the opportunities far outweigh the risks of coming to India."

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