DOING BUSINESS IN INDIA 15 th August, 1947 Indian Independence 26 th January, 1950 Republic- India New Delhi Mumbai Kolkata State of Orissa Chennai Transportation Hubs International Airports New Delhi Mumbai Chennai Kolkata International Sea Ports Mumbai Chennai Haldia 1
India Facts India is union of states with a parliamentary system of Government Population: Over 1.1 billion Capital: New Delhi Financial Capital: Mumbai 5,000 year old civilization 325 languages spoken 1,652 dialects 18 official languages 29 states, 5 union territories 3.28 million sq. kilometers - Area 7,516 kilometers Coastline Parliamentary form of Government Secular democratic constitution Worlds largest democracy since 55 years Fastest growing IT super power Indian Railways,the biggest employer in the world. Sanskrit Language most suitable for computer software India Facts Climate: Mainly Tropical Languages used: Hindi, English When doing business in India, English is the language of International commerce. Main Religions: Hinduism, Islam, Christianity, Sikhism, Buddhism and Jainism Currency: Indian Rupee (1 Rupee has 100 Paisa) 1 Canadian dollar = 44 rupees (current exchange rate) 1 Lakh = One Hundred Thousand, 1 Crore = Ten Million. 2
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 The diversity of India is unique in terms of geography, religions, culture, languages and attitudes and income Population:1.08 billion - 730 million in rural areas and 278 million in urban areas Age structure: 0-14 years 31.2 percent 15-64 years 63.9 percent 65 years and over 4.9 percent. India s labor force of 400 million. Major Industry Groups: Tata, Birla, Bajaj, Mittal, Kirloskar, Thapar, Mahindra, Ambani and Hindujas. Several new groups have emerged and occupy an important position Foreign participants: Major foreign banks, insurance companies, GE, U.S. and U.K. companies, Singapore based corporations and several international companies Key Sectors for Foreign Collaboration Technology, innovation and knowledge-based Biotechnology Telecommunications Electricity and Power Oil exploration and Refining Air transport, Roads and Highways, Ports and waterways Insurance, Banking and financial services Pharmaceuticals Auto industry and ancillaries Consumer durables 3
Fashion Health care Retailing Education Environmental and water purification technologies Industrial machinery Electronics Urban infrastructure Mining and Mineral processing Tourism Gems and Jewellery Design FDI Equity Inflows Top Investing Countries Rank Country Cumulative Inflows % of total (April 2000 to Nov 2010) value USD Million 1 Mauritius 52,398 42% 2 Singapore 11,557 9% 3 U.S.A. 9,204 7% 4 U.K. 6,269 5% 5 Netherlands 5,289 4% 6 Japan 4,631 4% 7 Germany 2,903 2% 14 FDI Equity Inflows Top Sectors Rank Sector Cumulative Inflows (April 2000 to November 2010) USD Million % of total value 1 Services (Fin & Non-Fin) 26,197 21% 2 Computer Software & Hardware 10,446 8% 3 Telecommunications 10,023 8% 4 Housing & Real Estate 9,356 8% 5 Construction activities 8,887 7% 6 Power 5,611 5% 7 Automobile 5,129 4% 8 Metallurgical industry 4,090 3% 9 Petroleum & Natural Gas 3,195 3% 10 Chemicals 2,767 2% 15 Indian Government Policy Initiatives Economic liberalization and full convertibility on current account and on capital account for foreign entities India fifth largest economy on a ppp basis Rural sector-social and economic reforms Trade liberalization: reduction in tariffs, compliance with WTO regulations and creation of special economic zones Legal system: Common Law. Independent Judiciary. Protection of intellectual property rights. Company law 4
Things to Note Average annual growth Rate: 7.5% Imports in 2007-2008 grew 27% and Exports 25% GDP at current price (2007-2008) $16 Trillion US dollar 100 of the Fortune 500 companies have R and D facilities in India India is World s second largest small car market India occupies second place in the world of software development, after USA India was the third country to make super computers India ranks as the 4th largest economy based on the purchasing power India was the sixth country to launch its own Satellites Things to Note There are 6,500 Indian companies listed on the Mumbai Stock Exchange, only New York Exchange has more India sends more students to US Universities and Colleges than any other country in the world, approximately 100,000 Middle class is estimated at more than 300 million with an income range of $75k-150,000 The world s largest producer of milk and second largest producer of food, including fruits and vegetables The pharmaceutical industry in India is second largest in the world Second largest English speaking scientific, technical and executive manpower in the world India has a legal system with English as a court language The Government offers Tax incentives to the companies that set up business in Special Economic Zones it has set up. Business/ Investment Climate Highly Skilled Manpower Liberal, attractive and friendly investment climate Polices on investment and business are liberal and transparent Under new rules, investors only have to inform the Reserve Bank of India of their investment Profits and dividends from sales is fully repatriable Rupee is fully convertible on current account. This gives freedom to foreign investors to repatriate foreign exchange at the existing market rate. 25% of total receipts in foreign currency account from exports can be retained in a capital account. Priority Sectors in India Agriculture food and beverage Service industries capital projects Information and communication Oil and gas equipment services India has very large iron ore deposits and is one of the largest producers of iron and steel. Coal and Bauxite also fall in this category. Electric power equipment services Aerospace and defense industry sectors Ports and Air Ports Telecommunications 5
Cultural Issues Almost all civil servants, Indian officials and business people speak English. Namaste is Hi and Namaskar is Hello, which is a formal way of greeting in India. You can greet your counterpart by saying Namaste or Namaskar. Hand shaking is also an established way of doing international business. I would however, suggest that while shaking hands you can say Namaste and this way you will observe both greeting traditions. When greeting a female business colleague, out of respect, one does not shake hands unless she puts her hand out first, even though a handshake is not considered disrespectful. During your first meeting, address your Indian counterpart with their title like Doctor or Mr./Mrs./Miss and last name, unless they suggest you call them by their first name. If you do not know their names, then sir or madam is acceptable. Cultural Issues Business cards are exchanged at the first meeting. If you are invited for a business dinner then business is conducted during the drinks which are served before the dinner. In Europe, it is other way around. It is suggested to take a small gift for the house if the dinner is at someone s home. Be polite when offered any drinks or food during the meeting. Most of the time tea, coffee or soft drinks are offered. If there are any dietary restrictions simply decline politely and normally optional items will be offered. Cultural Issues While doing business in India one MUST understand that cultural nuances are a way of life and should be respected for a successful business relationship to be developed. Before the business meeting try to set up cordial atmosphere using small talk like the weather and sports, for example cricket is national game for India and recently India has become number one in test cricket in the world. Try to avoid the criticism of India or their way of life and social structures or the political and economic climate at every stage of your business discussions and as well as during the informal and social gatherings. Avoid discussing issues related to poverty, religion, slums or any negative remarks. Try to work on establishing that you are looking for a long term business relationship. Let them know that you would be willing to make more visits to do business with your Indian counterpart or invite them to your country. Be polite & sincere and do not be aggressive in your business negotiations as it can be interpreted as sign of disrespect. 6