Sam-il PwC "Rapidly Growing Indian Financial Market, Optimal Time for Domestic Companies to Enter"

[Financial News] Amid the rapid growth of the Indian financial market based on rapid economic growth and population size, advice has emerged that now is the optimal time for Korean companies to enter the Indian financial market. 
Seungho Lee, head of the financial sector of Sam-il PwC, emphasized the need to broaden the understanding of the Indian financial market and the necessity of strategic market entry at a seminar held on the 26th at the Amore Hall on the 2nd floor of Sam-il PwC headquarters in Yongsan-gu, Seoul, under the theme of 'Strategies for Successful Entry into the Indian Financial Market'. He stated, “The Indian financial market, which is the fastest and largest growing in the world, is attractive, but there are two hurdles: cultural differences and a complex regulatory environment.” 
About 150 company officials attended the seminar that day.
In the first session, Chirag Vasa, a PwC India partner, introduced the structural characteristics and opportunities of the Indian market, focusing on the growth potential of the Indian financial market, population size, spread of digital finance, and foreign investment attraction policy support under the theme 'Understanding the Indian Financial Market'. He emphasized, “India is the fastest-growing financial market in Asia, and it is the optimal time for Korean companies to enter strategically.” Vasa further added, “As the middle class increases and the digital penetration rate grows rapidly, the growth potential in various financial sectors, including insurance and loans, is noticeably increasing.”
In the second session, Daeho Kang, a partner in the Sam-il PwC Deal Division, presented on 'Suggestions for Promoting M&A in the Indian Financial Market'. According to Kang, the demand for financial services in the Indian financial market is expanding due to GDP growth and the increase in the middle-class population, with the number of transactions recording an annual average of 21.7% from 2020 to 2024. Additionally, financial institutions are actively pursuing the acquisition of fintech companies to strengthen their digital capabilities. Foreign investment is also active, with investments from Japan, Singapore, and Korean companies increasing in recent years. In Korea, Mirae Asset Group officially entered the Indian retail financial market by acquiring shares of a non-banking financial company (NBFC) in 2023. However, due to India's unique cultural and institutional differences, there is a high possibility of unexpected conflicts arising, and there is a low level of trust in information and negotiation content.
Moreover, the screening for foreign investment and acquisition can be stringent, requiring significant time and cost to understand the approval process. Kang stated, “Understanding India's unique negotiation culture and performing accurate value assessments are key to successful M&A,” and emphasized the necessity of appointing advisory firms with local networks in each sector, documenting all agreements, conducting pre-analysis, and establishing specific strategies from the planning stage.
In the third session, Gyusang Jo, a partner at PwC Consulting, shared successful cases of entering the Indian financial market. Jo analyzed, “While domestic banks are continuously expanding their corporate finance business, Japan's megabanks are shifting from existing corporate finance to non-bank digital businesses.” Representative examples include Mitsubishi UFJ Financial Group (MUFG), Japan's largest financial group, acquiring shares of Indian fintech company DMI Finance in April 2023, and Sumitomo Mitsui Financial Group (SMFG) acquiring shares of Fullerton India Credit and Yes Bank to secure a local financial network in India. Jo emphasized, “For successful entry, it is necessary to establish an investment direction early in the entry phase, beyond mere market entry,” and suggested considering collaboration or investment with non-banking financial companies (NBFCs) and fintech, and continuously reviewing market fluctuation factors.
In the final session, Indae Park, a partner in the Sam-il PwC Tax Division, presented on 'Key Considerations for Indian Financial Market Regulations and Taxation', introducing major stakeholders of the Indian government, complex tax systems, and major tax policies. He specifically explained major regulations in India, such as sanctions related to free and fair competition, regulations on mergers and acquisitions, and restrictions on foreign share ownership. Park stated, “Although regulations have been significantly relaxed, there are hidden detailed conditions in each regulation that require review,” and emphasized the necessity of collaborating with experts capable of pre-structural design based on a deep understanding of the composition and regulation of the Indian financial market.

khj91@fnnews.com Hyunjung Kim, Reporter