Business Passage to India
India is a faster growing economy than China. The UN Economic and Social Survey for Asia and the Pacific 2016 reports that India is expected to grow at 7.6 percent in 2017 compared with China’s 6.4 percent. Just looking at the growth rates, however, can be misleading to investors; India is not the easiest country in which to do business. In a recent World Bank report, India is ranked 132nd (out of 190) in terms of ease of doing business, and 166th in terms of starting a new business.
But, India has big ambitions in becoming more business friendly. A government report states that India is targeting a 90th rank on the World Bank scale in 2017-18, and 30th by 2020. They want to do better in five categories: starting a business, construction permits, paying taxes, trading across borders, and resolving insolvency.
An ongoing problem is the high level of bureaucracy in India. Some years ago, I was flying to Delhi and I sat next to a young businessman who worked for his father’s shoe company. Part of our conversation went as follows: “My father has a good shoe business, but the bureaucracy is very slow. Guess how many signatures we need to ship outside the country?” Knowing bureaucracy was perceived as a problem in India, I chose a high number. “Twenty,” I said. He grinned broadly, and said, “Three hundred and fifteen. And, of course, many of those people want to be paid for their signature.”
“India is more complex than most Westerners can imagine. It is more like a continent than a country, and is full of contradictions. You think you know India, think again!”
I’m sure things have improved, but governance is extremely complex in India. Central government wants to set overall policy, but local governments are very diverse. Sanjay Kumar in The Hindu Business Line says, “It is not unusual for neighboring State governments to have vastly differing legislations on labor, land acquisition, commercial taxes, priority sector categorization for incentives, and instate movements of goods…Very often, companies get lured with incentives and/or hinterland market access, yet realize much later that it doesn’t translate to improved returns on capital employed.”
In addition to bureaucratic complexity, there is cultural complexity. Prof. J. Singh of Pennsylvania’s Wharton School of Business says that Westerners can be lulled into a false sense of security. They will say to themselves, “but for people dressing a little different and talking a little different, they are just like me.” That is a false premise says Prof. Singh: “There are all kinds of nuances in the culture, implicit cultural norms that we don’t know about until we run afoul of them.”
Communication can be a problem, even though you might speak English and English is widely spoken. Let me explain this by distinguishing between low-context (USA) and high-context (India) cultures. Britain is somewhere in between.
Communication in low-context cultures like the US is direct and explicit. You don’t need to know more than the plain definition of the words used to understand the meanings. You take the words spoken literally; information is often written down and formalized in reports and e-mails. Business in a low context culture is a task to get done. To someone from a high-context culture, low context communicators can seem cold, impersonal, and untrustworthy.
Communicators in high-context cultures like India often leave things unsaid. A few words can communicate a complex message as many thoughts, ideas, expectations are understood as being implicit between the communicators. As well as words, shared background information, gestures, sighs, silences are important to the communication. High context communicators prefer face-to-face meetings over documents as it is important to build a relationship to truly understand one another. To a low-context communicator a high-context communicator can appear vague or unforthcoming, and, therefore, untrustworthy. Don’t expect bad news to be given directly.
You can see that communications between Indians and Westerners can be full of misunderstandings. The problems can be exacerbated because all parties may be speaking English and assuming shared understanding.
Americans will find that Indian-English is British-based and the different vocabulary, spellings, pronunciations, and word meanings can create confusion. ‘Cricket’ in India is a game, while in the USA it usually refers to an insect. A barrister in India is a trial lawyer in the States. Even British-English speakers might have trouble with the speed of speech in India as well as accents; they are also likely to find Hindu phrases that have been translated into English difficult to comprehend, e.g. ‘My friend is eating my brain’ which means my friend won’t stop talking.
Five tips for doing business in India
- Don’t rush. It can take at least a year to develop a good business relationship in India.
- After every phone call or meeting summarize your understandings in writing and share with all involved.
- Be aware that you might not hear bad news directly; that would be considered rude. You must be able to read between the lines. For example, a statement like, “Yes, but it will be difficult,” typically means no. Ask open-ended questions to get a fuller picture of the situation.
- Pay attention to the hierarchy in the Indian business. Focus your attention on the decision makers at the top.
- Recruit a highly respected local representative – someone you trust, and someone who has a great reputation in your industry. In addition, build an advisory network to help you gather business intelligence and offer advice. Tap into Indian business and industry associations.
Most important tip: Be adaptable and ready to improvise.
India is more complex than most Westerners can imagine. It is more like a continent than a country, and is full of contradictions. You think you know India, think again!
For more information on Indian business etiquette access our recent infographic here.
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