India is one of the key drivers of the global economy. Its GDP Annual Growth Rate averaged 6.12% from 1951 until 2017 and currently sits at 7.2% – making it 2017’s fastest growing economy. Inflation is currently at 3.8% and the unemployment rate is 8%. So what are the drivers behind these impressive numbers? And how can an overseas SME begin to do business there?
65% of India’s population was born after 1980. As of 2016, there were 440 million millennials and 390 million Gen Z teens and children. It’s the sheer size of India’s youth that will make India one of the world’s most compelling consumer stories in the next 20 years.
By 2022, India could overtake the U.S. to become the second-largest middle-class market in the world. It already overtook Japan in 2016, to move into third.
There’s more than one India within the subcontinent. The big differences – the haves and have-nots, languages, literacy levels, and the vastness of the geography (including the immense urban–rural divide) – make it challenging for any brand or company to satisfy everyone.
Business relationships are important. Indians will base their decisions on trust and intuition as much as on statistics and data. Be mindful of the importance of a good working relationship – take the time to engage in small talk and get to know your prospective partner. Rushing straight into the business issue is considered rude.
Although English is the official language of business in India, things can easily get lost in translation. Indians have particular difficulty in saying ‘no’, lest it offend. Instead ‘we’ll see’, ‘yes, but it may be difficult’, or ‘I’ll try’ will be used. Listen carefully and be aware of the meaning behind these answers. Rephrasing the question is your best bet if you require a more definitive, concrete answer. Don’t attempt to force directness, as this can be counter-productive.
Punctuality is not always maintained within Indian business culture, be prepared for meetings to start and finish late. You should also be prepared for interruptions to meetings occurring on a regular basis.
A flexible approach is important and it is often best to be guided by the person with whom you are meeting. Handshakes are most common, although some Indians may use the namaste – a common greeting involving pressing your palms together with fingers pointing upwards, and accompanied by a slight bow. Always greet the most senior person first.
Indians place importance on and prefer using formal titles unless otherwise indicated. When exchanging business cards, always receive them with your right hand and put them away respectfully.
Decisions are generally made at the highest level. Unless the company director, owner or a very senior manager is present at a meeting, a decision is unlikely to occur. Roles are also very well defined. An Indian manager would not typically be expected to carry out tasks that are undertaken by someone at a lower level in the organization. This is rigidly ingrained and you’ll have to take account of this should you be setting up an office in India. Conversely Indian operations can be considerably more flexible than is expected in other cultures. They’re often prepared to take on time-sensitive and important tasks at the last minute.
Knowledge is power. Just as important as knowing your counterpart is understanding the numbers behind them. Our downloadable PDF contains in-depth insight and analysis to help you make the most of cross border trading with the world’s sixth largest economy.