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Country briefing: Insight into India

4/18/2013

India GraphicAs part of the “Best Practices in Global Business Education” webinar series hosted by UNC’s Center for International Business Education and Research (CIBER), Professor Nicholas Didow and Dr. Jay Swaminathan, faculty director for CIBER, presented a country briefing on India along with five UNC Kenan-Flagler undergraduate students. The hour-long webinar featured an overview of India’s history, politics, culture and markets, and provided suggestions for successful entry into India’s business landscape aimed at those who have little to no market experience in the country.

Home to one of the oldest civilizations, India’s history has been shaped by Britain’s colonial rule and its ongoing conflict with Pakistan, which has resulted in three wars since India gained its independence in 1947. Although one of the BRIC (Brazil, Russia, India and China) countries and one of the world’s fastest growing emerging markets, India still bears remnants of Britain’s legacy when it comes to business.

With a political system similar to that found in Britain, India’s parliament is divided into an upper and lower house with the lower house holding control over monetary decisions so that the Indian people have a greater say in the nation’s financial future. However, politics in India are much more corrupt than in Europe, with much bureaucratic red tape and assassinations not uncommon. Additionally, India is the second most populous country in the world, and it is predicted that the country will be home to more than 1.5 billion people by the year 2030.

Religion plays a key role in not only the personal lives of many Indians, but it also has an impact on the country’s business values. More than 80 percent of the country is Hindu, with significantly smaller populations of Christians, Muslims, and Buddhists. When it comes to the meaning of work, Hindus believe that work is a divine duty, and do not correlate reward to work in any way. This perspective results in much greater risk taking in the realm of business, because Hindus believe that any outcome is dependent on destiny or God’s will. Furthermore, although the majority of Indians speak Hindi, all business in India is conducted in English.

Contributing to India’s recent success as an emerging world market is the diversity of its industries, with a strong presence in everything from village farming agriculture to information technology services. Agriculture occupies more than half of the nation’s workforce with the service sector represents more than half of the country’s economic output. Combined with the highly skilled and cheap labor provided by the work force, many of India’s industries are poised for foreign investment.

Three key market areas the presenters identified as open to opportunity were the automobile, retail and beer industries. In addition, outsourcing has become a major area of growth for India as the workforce has made the transition from simple task outsourcing like telemarketing and IT help to knowledge process outsourcing of more advanced tasks like accounting and legal advising.

However, even with such recent success, the business landscape in India still faces a number of challenges. Almost 30 percent of the country’s population falls below the poverty line, unemployment rates are near 10 percent and there is significant inequality in terms of literacy rates for men and women. Yet perhaps the greatest obstacle to efficient market growth in India is the nation’s lack of infrastructure.

With a poor road system that makes it difficult to get products to the market in time, almost 20 percent of produce is lost to poor storage facilities in the agriculture sector alone. The comprehensive rail system, a remnant of the British colonization, remains congested and in desperate need of repairs, and although India boasts 13 major ports, most water traffic is inefficiently routed through the Mumbai port, making transportation costs significantly higher than in other world markets.

Given these conditions and factors that have a critical impact on India’s industries, the presenters offer several suggestions for individuals considering entry into the country’s markets. When entering a meeting with Indian business people, proper etiquette dictates that the senior-most employees are greeted first, either with a handshake or Namaste. As Indians value trust above all else in business, building strong relationships with business partners is key to success. The presenters argue that a joint venture with Indian business partners offers the best market entry strategy.

Dr. Swaminathan closed the webinar session with the argument that although the country’s economy has slowed down a bit in the last couple of years, the dollar can go a long way in India. “Among the BRIC countries, India has the youngest population and they have a ‘can do’ attitude,” he says. “They have the aspirations for the next biggest innovations.”