India's growing market for consumer goods, already in the top ten (Exhibit 1), could reach $400 billion by 2010—making it one of the five largest in the world. Add the fact that during the next few decades India will likely surpass China as the world's most populous country, and it is clear that multinational consumer goods companies seeking faster growth must begin to focus on the subcontinent.

Multinationals in the grocery, durable-goods, and packaged-goods sectors have been entering India since 1991, when restrictions on foreign investment were relaxed. Some companies have adopted a specialty-player strategy, catering to a small segment of "global Indians" and marketing products much as they would be marketed to any such customer around the world. These companies concentrate on a few big cities. Their business model is low risk and easily rolled out, can often be sustained initially through imports, and requires a limited distribution network. Although businesses of this kind can be profitable, their sales volumes are typically modest and will grow only as fast as the segment does. In many ways, this strategy misses the point of entering a market as large as...