India: A Land of Opportunity

SIFE School of Management Studies Team

Case for India

• India’s Tenth Five year Plan (2002-2007) estimates the creation of 100 million jobs in the next decade in the industrial sector.

• India ranked as the world’s second most favored destination for foreign direct investment.

• Liberal market reforms initiated in July, 1991 by Manmohan Singh’s (Current Prime Minister) structural reforms in power, telecommunications, infrastructure, electronics and information technology and oil and gas.

• Foreign investment in most sectors welcome except strategic sensitive sectors e.g. atomic energy and defense

• Foreign equity participation raised to 100 percent in several important areas

• Democratic Republic.• Market and central planning economy.• 300 million middle class and growing. • On a PPP basis the per capita income is about $ 25,000. • Of the 300 million about 50 million have a per capita income of

above $ 50,000.• Entrepreneurial-receptive to foreign investment and

collaborations• India’s labor force of 400 million.

Taj Mahal, Agra

The Golden Temple, Amritsar, Punjab

Buddhist Monuments at Sanchi

Qutb Minar and its Monuments, Delhi

Khajuraho cavesMadhya Pradesh

Largest Democracy in the World

Dr. Abdul Kalam Azad(The President)Top Scientist

Dr. Manmohan Singh(The Prime Minister)

Economist

Mr. Bharu Singh Shekhawat  (The Vice President)

Mr. P. Chidambram (Finance Minister)

In a Hindu dominated nation, a Muslim hold the post of President & a Sikh hold the post of Prime Minister

Macro Economic FactorsGDP $785 billionForex Reserve $ 150 billionIncome Par Capita $ 740.7Exchange Rate 44.67 Rs = 1 USDLiteracy Rate 64.8 %Unemployment Rate 7.32 %GDP Growth (2004-05) 6.1 %Population 1.08 billionTotal Area (Sq km) 2,973,190.00Growth Rate

- Industrial (2004-05) 9.0 %- Construction 10.8%- Export (2004-05) 24.41%- Import (2004-05) 35.62%

Export (2004-05) $ 79.59 billionImport (2004-05) $ 106.12 billionExternal Debt (2004-05) $ 123.3 billion

Major Exports• Engineering Goods, • Gems And Jewellery, • Textiles & Clothing, • Agro Products, • Chemicals, • Ores And Minerals, • Petrol And Products.

• Machinery, • Petroleum And Petroleum Products, • Chemicals, • Telecommunications Equipment, • Computer Equipment, • Food And Live Animals,• Crude Rubber,• Beverages, • Tobacco, • Clothing Etc

Major Imports• Crude Oil,

• Pearls And Precious Stones,

• Gold,

• Electronic Goods,

• Chemicals,

• Machinery and transportation equipment,

• petroleum and petroleum products,

• crude materials,

• foodstuffs,

• tobacco,

• textiles,

• iron and steel,

• Aircraft etc

Differences between Indian Culture & Western Culture

Basis Indian Culture Western Culture

Belief in Faith & Luck

Strong believers Believe in hard work & efforts

Belief in Spiritualism Strong believers Believe in Materialism

Public Appearance No body exposures. Considered obscene.

Fashionable clothes the in thing

Care of Old People Sons are expected to take care of their Parents.

Old parents are not cared for.

Respect for Women No religious ceremony is held without wife. Women given respect in traditional sense

Relegated to Old HomesWomen looked as objects of pleasure. Women are freein every aspect

Business Culture - India

Relationships and feelings play a larger role in decisions in India. In general, Indians tend to take larger risks with a person whose intentions they trust. Thus, one's credibility and trustworthiness are critical in negotiating a deal.

Showing hospitality is part of the negotiation process. Often meetings start by offering tea/coffee and snacks. It is courteous to accept the offer.

Business Culture - India

Indians are inductive in their approach to understanding things. In the Indian psyche, reality can be understood only in its overall context. Knowing the personal, social and historical contexts [of people, events, ideas, etc.] are a precondition to comprehending them accurately. Therefore, one should be prepared for questions and enquiries, which may not seem to be directly related to the subject. To people coming from more deductive cultures, this behavior often appears to indicate a lack of focus and digression.

Indians are 'polychronic' people, i.e., they tend to deal with more than one task at the same time. So be prepared for some distractions/ disturbances during the meeting, e.g., a secretary walking in to get some papers signed, or the conversation sometimes digressing into unrelated topics. One must appreciate that such behavior/occurrences do not show a lack of interest or attention.

Business Culture - India

In general, Indians are cautious in accepting a new idea or proposal. Openness to a new idea depends not only on its quality, but also on its source and endorsement. That is, information about who else has implemented it or who has proposed it has a major influence on the decision about a new idea. In making a proposal, you must include such details accordingly.

PowerPoint presentations are generally accepted to start the discussion. It is necessary, however, to send a more detailed proposal in advance. Often, the details of the proposal are vetted by some middle-level executive, who will then brief the superior about them.

Business Culture - India

Bargaining for the price or additional concessions is normal in India. Indian negotiators expect and value flexibility in negotiation. Therefore, sometimes a straightforward offer may be perceived as a rigid stand. It is always advisable to build some buffers in one's initial offer, which allow for bargaining later.

Indians usually do not express their disagreements openly and directly; doing so would be considered discourteous. Instead, when differences arise, they may circumvent them by statements such as 'we will discuss this later' or 'I will have to check with others about this.

Business Culture - India

Do not insist on commitment in the first meeting. Making a decision, in Indian organizations, is often a long-drawn out process. This is not only because of the bureaucratic nature of many Indian organizations, but also because a decision may have to be ratified by people who may not be present at the negotiating table.

• Box of Sweets• Chocolates

• Bouquet of Flowers• Household Items

• Liquor, but . . . .

Gifts

• Families• Tradition• Foreign Countries• Cricket• Politics & Religion

Poverty

Personal Matters

Military Spending

Topics of Conversation

Red Birth & Fertility Wedding DressBindi

Blue Heavens, Truth & Mercy

Black Death, Anger & Intolerance AlcoholSudra ( Low caste)

White Creation, Rebirth & Reincarnation

Brahmins (High caste)

Colors

Doing Business in India

If there ever was an example of what a heterogeneous society looks like, it is India. The differences between people due to region, religion, language and caste make it very difficult for anyone to impart general observations on the country. Behavior, etiquette and approach are all modified depending on whom you are addressing and the context in which you are doing business in India.

HierarchyOne of the most significant cultural influences on Indian culture is that of hierarchy. You will see this manifest in many ways when doing business in India. For example, only the owner or the most superior person of a company will make business decisions. Even if you are dealing with a manager, they will always go to the boss for a final decision.

• You may often find that, as a sign of respect, subordinates stand up when the boss enters a room. If you are unsure whether to rise or not, err on the side of caution and do so.• Women in business, especially in senior positions, executives, are a relatively new development. If you are a woman doing business in India, you will normally find people respectful and courteous, but not very comfortable in working with you for business deals. You may have to make extra efforts to get them to discuss business with you.

Meeting and Greeting

•Handshakes are exchanged on meeting. Indians themselves use the namaste. This is where the palms are brought together at chest level with a slight bow of the head. However as a foreigner doing business in India you would not be expected to use it.

•When addressing an Indian try and use the appropriate formal title, whether it is Professor, Doctor, Mr, Mrs followed by the family name.  

•Names speak volumes about an Indian’s background. For example, a Singh will usually (but not always) be a Sikh. The suffix “-jee” ( as in Banerjee) is a sign of a high caste. Arabic sounding names such as ‘Abdul’ will be used by Muslims.

•When doing business in India, business cards should be exchanged at the first meeting. English is the language of business so there is no need to translate your cards. Be sure to receive and give with your right hand. Make sure the card is put away respectfully and not simply pushed into a trouser pocket.

Building Trust

Doing business in India involves building relationships and establishing trust. It is vital that a good relationship is founded on two foundations.

1) on a business level, i.e. demonstrating strong business acumen, professionalism and qualifications and

2) at a personal level, i.e. relating to your partner and exhibiting the positive traits of trustworthiness and honour.

Meetings and Negotiations• Punctuality for meetings is expected, although being 10

minutes late will not have disastrous consequences. Flexibility is part of life!

• When entering a meeting room you must always approach and greet the most senior figure first. Never get ‘down to business’. Meetings should always commence with some conversation – good topics of conversation include cricket, politics and film.  

• If your doing business in India involves negotiations, always bear in mind that they can be slow. If trust has not yet been established then concentrate efforts on building a rapport.

• Indians do not base business decisions solely on statistics, empirical data and flashy PowerPoint presentations. They use intuition, feeling and faith to guide them. Always exercise patience, show good character and never exhibit frustration or anger.

Language

Different states in India each have different official languages. Central government only recognizes Hindi as the official language of India. However, when doing business in India, English is the language of international commerce.

Foreign Investment • Most sectors follow the automatic approval route

• FDI caps:Telecom up to 74 percent, Mining 74 percent, Private sector banking 49 percent, Insurance 26 percent.

(The government is seeking to increase the FDI caps further)

• FDI up to 51 percent in priority capital and intermediary goods sectors.

• Non resident Indians and overseas corporate bodies allowed 100 percent equity in key areas.