Business In IndiaWhat should you know about doing business in India? For a country whose population is over 1.1 billon and half are under age 30, there are a couple things. India’s GDP is growing at about 9% per year. While China is famous for manufacturing low-cost products…..India is known for low-cost services. Business process outsourcing and technology is not this country’s only claim to fame. They make some pretty damn good movies too. Recently, India has moved into telecom, pharmaceutical, financial services, automotive and Bollywood. Over the past year, venture capital and private equity have invested almost $8 billion dollars into Indian firms. English is spoken and Indians have a strong entrepreneurial spirit.
Bangalore is home to many industries and is one of India’s larger cities. There is a minor problem. The infrastructure stinks. Airport delays, power outages, traffic jammed roads, potholes and cows, dogs and rickshaws on the highway, slow growth. There is limited mass transit and companies such as Infosys spend millions on transportation for their employees. The IT boom is but a fraction of India’s economy. It is primarily agricultural. Most of the farmers are poor. The conventional road from poverty to prosperity usually makes manufacturing the pit-stop. Indian manufacturing is underdeveloped. This is due in part to socialist policies that exist to protect small business at the expense of growth and economies of scale. China has been more successful in obtaining foreign investment and developing a growing manufacturing sector. India has been very successful in devolving a technology and service sector that has made customers of many large U.S. companies.
In 1947 India wins its independence from Great Britain. The next year, Prime Minister Jawaharlal Nehru sets up government monopoles in strategic industries and introduces economic controls. In light of socialism, these regulations discouraged private sector business. In 1980 India began to break out of its socialistic shell. By the 1990’s foreign investment came pouring in. 20 seconds. India is culturally part of the Western world. However, there are several societal forces that have a major impact on the way the country does business. • Caste System: You probably remember this one from social studies class in high school. A hierarchy stratifies the Indians place in society. Brahmins dominate the technology industries as they stress emphasis on education. Other upper castes dominate politics. It’s extremely difficult for someone of a lower caste to “move up.” • The Family: For better or worse, Indians involve family members to a great extent within their business. Family business management usually has trouble distinguishing between business and personal issues. • Hinduism: I could spend another whole web site on Hinduism. But I’ll keep several thousand years to a few sentences. Indians believe in reincarnation and that the good or bad you do today will come back to you in future lives. Hinduism is made up of many dharmas. or codes of conduct. Individuals select which dharma to observe n a given situation. Therefore Indians may appear inconsistent when deciding which dharma to follow. • Corruption : Every country has its share of corruption when it comes to business. Not like India. Bribery and corruption is widespread. • Cricket: Do you love baseball as much as Indians love cricket? I doubt it. The foreign businessperson who knows the difference between a bowler and a batsman will be way ahead of the others. Other Indian passions include food and Bollywood.
For a Western business to succeed in India, you have to blend in. Do your market research and become as indigenous as possible. If you’re walking down the street with an Indian associate and he takes your hand don’t freak. It’s not sexual….it expresses friendship. Working with the Indian government is not one of life’s pleasures. Years of socialism have not made the government business friendly….especially to foreign interests. Indian firms have mobilized their government to protect their interests against foreigners. Many regulations are certainly negative towards foreign companies. When operating in India, be sensitive to nationalism. Indians are not generally positive to others who do business in their country. As I said early localize and form supply chain partnerships with area businesses. When it comes to contracts and legal documents, Westerners know they must follow the written word. In India, what is viewed as “fairness” can override a contract. Yes, it’s frustrating. But when it comes to negotiating an agreement, be flexible, not rigid. Like China, India is a country that consumes massive raw materials and is need of an infrastructure tune-up. But when it comes to low cost technology services and consulting, India can’t be beat. Go From India To Global Business
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