How to do business in India
Indian business scenario in a nutshell
India is not a country; it is a subcontinent. India is a unique blend of different climates, food tastes, dress codes, cultures, and languages. It is hence not advisable to try to create one single image of India, Indian people and doing business in India. Indian constitution acknowledges 23 languages, English among them. English is commonly spoken in bigger cities, educated people and in the software industry, but all over it is spoken perhaps by 10 percent of the 1.3 billion population.
India has improved significantly its ranking at World Bank’s Ease of Doing Business, currently at 63rd position, compared to the previous year’s 77th. The current government has made several legislative and policy changes enabling a smoother running of business in the country. At the same time, the World Bank has lowered the GDP growth estimate for 2019-2020 to 5.0%, which would be the 11 –year low rate. However, the economy is still growing at a rate much faster than most Western economies.
India is home for large industries and multi-industry conglomerates, but most of the companies the small and medium, often family-owned. The famous Indian ICT industry represents only a small fraction of the total business volume, but it is a fast-growing industry in a country, which produces 1.5 million engineers every year.
India has become an attractive destination for foreign investors. The automotive industry has a representation of almost all of the major global brands, and also retail is an attractive segment. IKEA and H&M have made massive entries into India in the past 5 years. Both the cleantech and infrastructure sectors offer lucrative opportunities. The government of India has invested a lot in the manufacturing sector since 2014 through a flagship program Make in India, making India an increasingly interesting destination for manufacturing and sourcing. It is important to bear in mind, that India with her 29 states and 7 union territories is very diverse and the legislative and investment climate varies between the states.
Understanding the business opportunity
Among the keys to a successful business in India, it is important to understand that there are no low hanging fruits. Not only are there lots of international players in the market, but Indian domestic industries are also developing fast, labor costs are low and entrepreneurial spirit is very strong. Study the business opportunity with a trusted local partner: identify the needs in the market place and avoid coming with “your product first” –attitude.
As part of the pre-entry phase, work on growth roadmap for 3-5 years span, as entering the Indian market needs s long term commitment. Work on your numbers, as according to the experience of most foreign entrants, not only the time needed but also financial investment needs to be doubled. One of my main “mantras” is the localization of the value proposition. Partner up with a qualified consultant to understand, what makes an Indian client tick – what are the USP’s of your product, how does your sales pitch go down in India. There is also a lot of domestic competition, so mirroring your offering against it is fundamentally important.
One of the many controversies of India is that Indians never fail to point out that India is a price-sensitive country, but on the other hand, the same people drive expensive cars, wear designer clothes and travel only in business class. When discussing price in India, prepare for showing the value of your product or service. The price is, after all, an issue in the absence of value.
Communication, management, and leadership
Accept that the communication style differs a lot from the typical Western-style, where the approach is to-the-point, direct and focused on agendas, milestones and meeting memos. In India, things are not done in a linear way, but more in an iterative manner. It may appear chaotic but it is comforting to understand that Indians manage chaos much better than we Westerners.
Indian communication style is more indirect, wherein unpleasant things may not be voiced and where promises can be given just to please a foreign business party. Cultural differences are apparent in management and leadership styles. India is a hierarchic country where many people are not willing to be accountable but rather hide behind their seniors’ backs. Younger professionals may need a lot of guidance, encouragement, and attention at the beginning.
Once they learn to work in a leaner organization where mistakes are not failures and where individual effort is praised, they have all the chances to become high performers.
Having said that, a boss is a boss in India and it is advisable to act as one – too much of “Buddhism” may be falsely interpreted and taken advantage of.
Summary of Keys for Successful Business in India
- Understand the business opportunity
- Evaluate the market entry mode and right partners
- The importance of patience, long-term commitment and relationship building
- •The implications of different communication, management, and leadership styles
At Asian Insiders India, we have over 10 years of experience of working with foreign companies, providing them support in evaluating the business opportunity and entering the market.
For more information on how to make the most out of the business opportunities in the fast-growing Indian market, have a look at our website: https://asianinsiders.com/service/asian-market-expansion/