How to Do Business in India
November 30, 2017
India is located on the Indian subcontinent in South Asia. With its population of 1.3 billion, India is the most populous democracy in the world. India has an exceptionally rich culture and history, its roots going back to one of the world’s oldest civilizations (the Indus Valley Civilization).
Due to its diverse geography, history, and culture, India provides many opportunities as well as great challenges for small businesses from the US.
India is one of the fastest growing major economies in the world, with an average growth of 7% per year. The country’s diverse economy includes traditional farming, modern agriculture, various industries and services, as well as handicrafts. India’s main agricultural products include rice, wheat, tea, cotton, lentils, potatoes, dairy, and fish. The most important Indian industries are textile, pharmaceuticals, chemicals, food processing, mining, and software.
Even though almost half of the population works in agriculture, the economic growth is mainly driven by the services sector (in 2016, about 45% of the GDP came from services).
The Indian workforce includes a significant amount of well-educated, English-speaking professionals who provide the backbone of the services industry. IT and business outsourcing, as well as software engineering, are the major services India provides on an international level.
The value of export/import
India’s import totaled at about $376 billion in 2016. The main imported products are crude oil, fertilizer, machinery, plastics, chemicals, and steel.
One of India’s main export partners is the US: our country is the recipient of about 16% of India’s export which totals around $268 billion. Petroleum products, machinery, chemicals, precious stones, pharmaceuticals, mineral fuels, and apparel are among the most exported goods. With regards to agricultural products, US importers mainly seek spices, rice, cereal, tree nuts, essential oils, as well as processed fruits and vegetables.
Sourcing products from India is a great opportunity for US businesses to get both exotic and everyday goods at an unbeatable price. With the advance of the internet, you’re only a web-search away from finding indispensable supplies at great prices. If you want to cut your operating costs and offer your own goods at a lower price to your customers, sourcing from India is the way to go. And the best thing is: paying your Indian supplier is as easy as sending an email. With Veem, you can send payments to India quickly, securely, and with no hidden fees, unlike with a traditional bank transfer.
Introduction to India
India is a federal parliamentary republic, consisting of 29 states and 7 union territories. The Constitution of India divides the power between the federal government and the states. The states and two territories (the National Capital Territory of Delhi and Puducherry) have elected governments and legislative bodies, while the rest of the territories are governed by the federal government.
The main religion of India is Hindu, followed by 79.8% of the population. Other main religions include Muslim (14.2%), Christian (2.3%) and Sikh (1.7%).
The Indian legal system is based on the British model; however, there are different personal law codes applying to Muslims, Hindus, and Christians.
The capital of India is a district of the National Capital Territory of Delhi, which is both a city and a union territory. Delhi’s population is about 11 million (with 650,000 inhabitants living in actual New Delhi). Delhi is the largest commercial city in the northern part of India. The city’s main employer is the central government; the largest service industries in Delhi are banking, IT, telecommunications, and media. The official languages are Hindi, Punjabi, and Urdu. Delhi’s population is mostly Hindu.
Located on the west coast, Mumbai is the capital of the state of Maharashtra. With its 12 million inhabitants, Mumbai is the largest city of India, and it serves as the country’s center of trade and commerce. The city’s known for its key financial institutions, as well as its significant textile, entertainment, IT, and jewelry sector. The Port of Mumbai is a great hub of trade. The official language is Marathi. The majority of Mumbai is Hindu, with a significant Muslim minority (20%).
Formerly known as Calcutta, Kolkata is the capital of the state of West Bengal. With its population of 4.5 million, the city is the main trade and commercial center of eastern India. The former capital of the country suffered a significant economic downfall after India gained independence. However, from the late 1990s, new investments were made in the IT sector which helped the city get back on its feet. Today, Kolkata hosts major industries like steel, cement, heavy engineering, pharmaceuticals, food processing, agriculture, and IT. The official language is Bengali. The main religion is Hindu, but there’s a significant Muslim minority (20%) in the city.
Located in the south of the country, Bengaluru (also known as Bangalore), is the capital of Karnataka. With about 8.42 million inhabitants, Bengaluru is the country’s main IT exporter, with a significant biotechnology sector present as well. The official language of the city is Kannada. Bengaluru population is mainly Hindu, with a 10% Muslim minority.
On the Bay of Bengal in eastern India, Chennai is the capital of Tamil Nadu. Its population is about 7 million. The city has a significant automotive, software, hardware manufacturing, apparel (including leather), and financial sector. The most widely used language is Tamil, and the overwhelming majority of the city is Hindu.
The rupee (INR) is India’s national currency. Inflation is currently at around 4.5%. Over the past year, the exchange rate of USD to INR has fluctuated between 63-68 rupees.
The most widely used official language of India is Hindi, with English as a subsidiary official language still commonly used in political, commercial, and national communication. Altogether, there are 22 official languages recognized by the Constitution and used in different regions of the country. Hindi is spoken by 41% of the population, while Bengali is at 8.1%, Marathi at 7%, Tamil at 5.9% and Urdu at 5%.
Holidays in India
General working hours are from 9 am to 5:30 pm. India observes IST (India Standard Time), which is UTC +5:30. India usually doesn’t utilize Daylight Saving Time.
There are four national holidays celebrated country-wide.
|Republic day||January 26||Nationwide|
|International Worker’s Day||May 1||Nationwide|
|Independence day||August 15||Nationwide|
|Ghandi’s birthday||October 2||Nationwide|
Each year, the government issues a list of holidays that central government offices are going to observe (though these might not affect the operation of businesses). These usually include religious holidays from India’s main religions (in 2017, the list featured 14 holidays, including Good Friday, the Prophet Mohammad’s birthday, and Diwali). In addition, each state may choose another 3 holidays to observe.
Because of India’s vast cultural diversity, each religion has its own festivals (observed by some, but not all of the states) that may cause a delay in business. Make sure to ask your partner before making arrangements for negotiations.
Communication from the US
Since many business people use English on a daily basis, emailing in English should work well in most cases.
Indian business culture is more formal than in America, and this translates to communicating via email as well. Here are a few tips for you to follow while corresponding with your Indian partner.
- If this is your first communication, introduce yourself, and explain how you got their email address.
- Use a formal and polite tone. Run a spell-check to make sure your email is error-free.
Refrain from abbreviations.
- Always fill in the Subject box.
- If you’re forwarding an email, delete all the forward data from the body of the email.
- Don’t send too many attachment and make sure they aren’t too large.
- Always use a few pleasantries at the beginning and the end of your email.
Making calls from the US
Here’s how you can dial an Indian phone number:
- Dial 011 to exit the USA
- Dial 91 for India
- Dial the 10 digit phone number of your partner
Traveling to India
India uses the metric system; however, since the conversion from the British Imperial system occurred in the second half of the twentieth century, many people still understand Imperial units. Cars drive on the left side of the road.
US citizens need a valid passport and a valid visa to enter and exit India. There are different types of visas, make sure you get the one required for the nature of your visit. If you’re visiting India for only touristic purposes and plan to leave the country within 60 days, you may be eligible to apply for an e-visa.
Visa regulations can often change; make sure to check the website of the Indian Embassy to the US to see the most current regulations.
Using a Cell Phone in India
India’s cell phone coverage is excellent save for some remote rural areas. However, since India uses GSM frequencies 900 and 1800 MHz (while US GSM networks operate on 850 and 1900 MHz), your cell phone might not be compatible with the Indian network. Since roaming costs are high, your best bet is to get an Indian SIM card for your phone if you plan to spend a lot of time in the country.
To buy a SIM card, you’ll need to provide a copy of your passport, as well as proof of your Indian address (this may be your booking certificate from your hotel). The most convenient way to get a SIM card is buying one at the airport when you arrive. Airtel, Vodafone, and Reliance are trusted service providers. You may recharge your prepaid card from any street vendor that carries your cell phone provider’s logo.
SIM cards have a limited life: after 3 months of inactivity, they go out of circulation.
If you have a satellite phone, don’t bring it to India: chances are it might be illegal. India only permits the use of Inmarsat-based satellite phones on its territory; no other satellite phone is allowed on the subcontinent.
The major cities of India are well connected to the internet, with broadband access widely available. Most rural areas still use dial-up connections, or have no internet at all. Another issue is censorship: central and state governments may censor or even block content on the internet. Freedom House categorized the internet in India as Partly Free.
Major Trade Shows
Trade shows provide an excellent opportunity to meet potential new partners and customers, as well as showcase your own company. Read our article about how to make the most of your participation at a trade show. Here’s a list of India’s major trade events:
|India International Trade Fair||New Delhi||Fall||Most consumer goods and services|
|AAHAR International Food and Hospitality Fair||New Delhi||Spring||Food|
|ACETECH||Mumbai, New Delhi, Bengaluru, Hyderabad||Fall-Winter||Architecture, building materials, design and innovation|
|Index International Interiors and Design Fair||Mumbai||Spring||Design, Architecture|
|Global Exhibition on Services||Greater Noida City||Spring||Services|
|International Garment Fair||New Delhi||Winter||Apparel|
With its diverse cultural, ethnic, and religious landscape, a single “Indian business culture” is difficult to pin down. In fact, it’s almost impossible to make generalizations without knowing the exact area and religious background your partner comes from, which makes your job a bit more difficult. However, if you read our tips below and approach your Indian business relationships with an open mind, you’re bound to succeed.
The Indian way of life is a bit slower than what we’re used to in America. Expect a longer negotiation process that includes a few personal aspects, like talking about your families. Be patient with your partners and take the time to develop your relationship, because that shows you respect your partners and it will likely aid your business dealings.
Women’s rights are less evolved in India than in the US. You may find less female top managers, and typically, women have to work harder to earn the same respect as men. LGBTQI rights are generally not recognized; same sex marriages are not legal, and in some parts of the country, discrimination against same sex couples is common.
Hierarchy in Indian Businesses
Hierarchy is very important in Indian business culture. Decisions are usually made at the highest level, which means that unless the top manager is present at your negotiations, a decision won’t be made (unless the absent top manager has already given permission to their subordinates). Lower ranking employees are generally not asked for their input on matters outside of their strict job descriptions. Day-to-day communications might become slower if your contact person needs to get authorization for various actions.
Similarly, a manager is not supposed to do a task that is below their level and to suggest something like this is considered impolite.
It’s easy to get lost in the rich customs and habits of Indian business culture. Our most important advice for you is to be respectful and follow the lead of your partner. Take the time to get to know your partner and be patient with the process, however slow it may seem to you.
The First Meeting
First impressions are very important in Indian business culture as well. Make sure you follow our tips to ensure the success of your meeting.
Indian businesspeople generally prefer a more formal dress-code. A suit is advisable for men (although ties are not always compulsory), while women are encouraged to wear a pant suit instead of skirts, as showing legs is not common in India. If you wear a blouse, make sure to choose one with a higher neckline.
Almost all colors in India have meaning, which is why it’s best to avoid bright colors when dressing for a business meeting. Choose pastel or neutral colors like gray, navy blue, or cream. Black is also accepted.
Be punctual when arriving for a meeting, although your partner may not arrive on time. It’s important to schedule your meetings well ahead of time, and confirm it several times as arrangements may change. Re-confirm your meeting 24 hours before it’s supposed to start.
Expect your meeting to start late and run late. Interruptions might occur as well, which causes delays as negotiations are put on hold while your partner sees to the matter at hand. Be patient and don’t act annoyed or put out.
Introductions occur according to ranking. Seniority is determined by position within the company, university degree, age, and profession (additionally, in more traditional parts of the country, the ancient caste system is still honored as well).
Many Indians have adopted the handshake to go with introductions and greetings. However, there are some who still use the traditional Indian ‘namaste’ gesture: putting their hands together in front of their chest and giving a small bow. When first introduced to your partner, make sure to follow their lead and use the greeting they’re most comfortable with.
Always introduce yourself to the eldest or most senior person present in the room. Indians are very formal in addressing people: make sure to use the title of the person (like doctor, professor, etc) you’re speaking to. If your partner has no titles, use Mr. and Mrs. You can also address a person as Sir or Madam.
When you receive somebody’s business card, make sure to reach for it with your right hand. Look at it, then put it away respectfully (not into your back pocket). It’s advisable to carry a business card case to store all the cards you receive.
Expect a few rounds of small talk to precede the negotiations. As family and professional lives are not rigidly separated in India, you may get questions about your family, and may ask similar questions in return.
Safe topics for small talk are politics, sports, movies, and India’s rich culture. Avoid talking about religious beliefs, as well as the conflict between Pakistan and India.
Body language is important. The usual social distance between business partners is 3 feet. Make sure not to stand with your hands on your hips, as this pose may be interpreted as aggressive and angry. Also, try not to point your feet at your partner.
Touching is not accepted, especially not touching somebody’s head (not even a child’s), as the head is perceived as the house of the soul.
Small gifts like flowers or chocolates are very often exchanged. The recipient thanks the gift-giver but in general, doesn’t open the gift in front of them.
If you give a gift to a follower of the Hindu religion, make sure not to give them leather, as Hindus are vegetarians and may consider your gift offensive (especially if it comes from a cow that is a sacred animal).
Negotiations with Indian partners take more time than you’re typically used to. Be patient and don’t rush the process, as it might be considered rude and drive your business partner away. Trust and intuition are very important for businesspeople in India, especially when making business decisions; make sure you make a good impression.
Indians don’t like saying “no” to a question. Instead, they say “maybe,” “we’ll see,” or even say “yes” while shaking their heads. Read between the lines, and try to re-formulate your question in a way that allows your partner to answer with something else than a direct “no.”
Touching and prolonged eye-contact is not common in business communication.
You may be invited for a business meal. If so, make sure to eat with your right hand, as the left hand is considered unclean by some Indians.
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Making a Payment
The easiest way to pay your Indian supplier is through Veem. Veem enables its customers to send international payments quickly, securely, and easily. It takes as much time as sending an email. You can track all your payments online, and there are also no hidden fees, unlike traditional wire transfers through your bank.
Regulations and Permits
Sourcing your supplies from India is an excellent idea if you want to get great products or services at a lower price. Don’t be alarmed by the distance and different regulations: you only need to learn the process once. Here’s a short guide for you to follow.
The U.S. Customs and Border Protection (CBP) regulates importing to the US. You won’t need an import license from the CBP, however, other agencies might ask you to apply for an authorization, depending on the nature of products you’re sourcing (for example, plants and animals, medication, dairy, food, and brand apparel). Your state and local authorities may also need you to obtain a permit.
Imports from India are subject to tariffs and duties. This calculator of the Harmonized Tariff System (HTS) lets you know exactly how much customs duty you’ll have to pay.
When your imported products arrive at the US border, you need to present the entry documents at the port of entry with the CBP. In addition, if you were required to obtain a permit from any other agency because of the nature of your goods, you may need to notify them as well about the arrival of your shipment. These are the entry documents:
- Entry Manifest (CBP from 7533) or Application and Special Permit for Immediate Delivery (CBP from 3461) or other form of merchandise release required by the port director
- Evidence of the right to make entry
- Commercial invoice or a pro froma invoice when the commercial invoice cannot be produced
- Packing lists, if appropriate
- Other documents necessary to determine merchandise admissibility
The CBP then examines your shipment, which takes a maximum of 10 business days. After that, you have to pay any customs duties or tariffs imposed upon your goods before they are released from the CBP.
The easiest part of the whole process is paying your Indian supplier. With Veem, sending international payments is fast, secure, and has no hidden fees. It’s as easy as writing an email.
Hire a Customs Broker
Exporting to India may be a great opportunity for your company to grow. India is an important trade partner of the US, and there is a long list of products Indian importers regularly buy from US suppliers, including optical and medical instruments, machinery, cotton, planting seeds, and various services.
There are two ways to export your goods to India. You may decide to do it all by yourself, which gives you an opportunity to keep your prices lower and control the whole process. However, if you don’t want to tackle Indian customs and unfamiliar regulations, you may hire a customs broker to help you with the paperwork and everything else you might need.
US Passports and International Travel
Embassy of India Visa Services
US Customs and Border Protection Importing and Exporting
US Customs and Border Protection Tips For New Importers and Exporters
Office of the United States Trade Representative: About Trading with India
Information on Custom Duties and Import Procedures in India