Country guide India: this is what you need to know about India if you want to do business in the country

India offers interesting opportunities for those looking to tap a new (large!) consumer market, looking for a highly skilled and affordable workforce, or setting up production in a reliable hub with excellent export opportunities in Asia.

Before European companies delve into the business opportunities offered by India, it is also important to have a good understanding of the country, its politics, economy and culture. So that when you take your first steps into the Indian market, you are well prepared. IndiaConnected has therefore listed the most important things you need to know about India.

The Indian economy

In 2022, the Indian economy passed that of the United Kingdom, officially taking the fifth spot among the largest economies worldwide.

India has had consistently high growth rates ranging between 4 and 8 percent year-on-year since the 1980s.

Due to its rapidly growing middle class, India is the third largest economy in the world in terms of purchasing power. In terms of purchasing power parity, India's GDP is estimated to reach $13.1 trillion by 2023.

The sectors that contribute the most to GDP are the service sector and the industrial sector. They account for 53.8 percent and 25.9 percent of GDP, respectively. They are also the country's two fastest-growing sectors, due in part to the country's high level of education and relatively low wages. India's largest sector is still agriculture, which employs nearly 60 percent of India's population. This sector contributes about 20 percent of GDP.

India is one of the favorite destinations for investors worldwide, according to the World Investment Report by the United Nations Conference on Trade and Development (UNCTAD). In the fiscal year 2022-2023, nearly $71 billion in foreign direct investment (FDI) entered the country.

The political system in India

India is a democratic republic with a federal structure. At its head is a president, this is currently Draupadi Murmu. The duties of this president are largely ceremonial. The country's president and vice president are elected every 5 years by a special electoral college.

Executive power lies with the council of ministers (the cabinet), who are led by a prime minister, currently Narendra Modi. The president appoints the prime minister, who is nominated by the ruling political party or coalition. The president then appoints ministers on the advice of the prime minister.

The Parliament of India has two chambers, the upper house called the Rajya Sabha, and the lower house called the Lok Sabha.

Key cultural aspects of India

India is a large and diverse country, better compared to the EU than, say, Germany.

The different Indian states in fact, like European countries, have their own cultural characteristics in terms of religion and language, among others.

Religion

India has six major religions: Hinduism, Islam, Christianity, Sikhism, Buddhism and Jainism. Hinduism is the largest religion in the country; nearly 80 percent of India's population adheres to this religion. Adherence to the other religions is largely concentrated in specific states in the country, for example, concentrations of Muslims are highest in the states of Jammu and Kashmir and Assam, and the number of Sikhs is relatively high in Punjab. In addition to the six major religions, India also has several minor religions, which holidays people get time off from work therefore often varies by individual.

Language

In terms of language, India is also very diverse, with as many as 122 languages spoken in the country. In its constitution, India has recognized and established 22 of these languages as the official languages in the country. The most important of these 22 is Hindi, which is the native language of about 40 percent of India's population and is the official language used by the federal government. English is the second official language of the government and is used by the government mainly in the southern states, where Hindi is neither the official language nor accepted. English is the second most widely spoken language in the country and plays a major role in academic and business contacts in India. Those who travel to India therefore need not worry about communicating with Indians; English is spoken in all states.

Sectors and industrial clusters

The Indian states also differ in terms of climate and available resources, so most states have their own specialties. For example, the southwestern states such as Maharashtra and Karnataka are a suitable base for technical sectors such as automotive, engineering, as well as outsourcing IT and Research & Development teams.

Northern states such as Punjab and Haryana, among others, have thriving agricultural sectors, creating opportunities for food processing and renewable energy industries.

Are you curious about where and what interesting opportunities exist in India for your product or service? In our sector overview, we have listed industry clusters, growth opportunities and other important information for you by major sector.

What to watch out for when working with Indian professionals

The frustration of Europeans in India is well known: why doesn't my Indian business partner just clearly tell me how things stand? On the other hand, Indians struggle with Europeans' matter-of-factness and directness, which they usually perceive as blunt. Culture and communication trainer Nandini Bedi of IndiaConnected, explains where the mutual discomfort comes from today.

Communication in Europe vs. India

A few years ago, I asked an Indian woman who worked at Tata Corus what for her is the biggest difference between Europe and India. "It took me a long time to get used to the professionalism and directness of the people there," she replied. I think that directness is an expression of transparency. Simple, efficient, clear. What you see is what you get. A transparent, clear and honest message in which nothing is hidden.

This reasoning that focuses on transparency and efficiency contrasts sharply with what Indians care about: the underlying explanation. This is why Indians take their listeners through their sometimes wordy story, so their final answer does not come as a surprise, let alone a slap in the face. Their answer is usually nuanced - and their story takes you past their considerations. This is how Indians usually communicate: indirectly.

As a European boss, partner or client, it is therefore smart to scrutinize your own way of communicating and teach yourself ways to deliver your message in a softer manner with the necessary underpinning. This will prevent you from putting off a potential business partner or colleague because they perceive your way of communicating as rude.

In India, 'no' will not be easily said

In Europe, in almost all cases you will get an honest understanding of how feasible your plans or ideas are, how long it will take to realize a project and how much it will cost. Things are different in India, where they will tend to give you the answer they expect you want to hear. Therefore, a "no" is not found in the vocabulary of an Indian.

Because of this, it is important that you learn to read between the lines and ask the right questions in order to get the fairest possible understanding of the situation. In addition, India requires a more flexible attitude from Europeans in terms of deadlines and budgets, which is simply one aspect of doing business in India that you need to consider.

Of course, there are ways to learn how to set up a working environment where, by European standards, there is open communication by all parties. In our workshop "Working Efficiently with India," we train your teams in Europe and India, separately or better yet, together. The result of the workshop is more mutual understanding, more efficient communication, more job satisfaction, increase in efficiency and better results.

We answer questions such as:

• Which communication strategy works?

• How do I get good feedback from my employees in India?

• How do I manage my team efficiently in India?

• How do I develop proactivity in my Indian team?

Wondering how we can support your organization?

4 things to watch out for when recruiting remote staff in India

India, with its large and highly skilled talent pool, can provide a remote solution to those hard-to-fill technical vacancies, such as IT professionals, data specialists, software developers and engineers. However, when looking for new colleagues in India, there are a number of cultural differences that need to be taken into account that will affect how best to recruit.

1. Draw up a clear competence profile

In the Netherlands, we are used to working independently, whether at home or in the office. A manager does not tell his team exactly how the tasks should be done, but what goal should be achieved. In India, this is traditionally different. There is a stricter top-down culture where there is more micromanaging. Despite the fact that the Indian work culture is currently undergoing a development that leads to more independence of the employees, it is still an important aspect for you as a Dutch employer to take into account in your search for suitable personnel. 

Your remote staff will soon be working as full colleagues with your Dutch team and you must therefore be sure that they fit in well with your company in terms of independence and way of working. It is therefore important that you draw up a detailed competency profile, preferably with an experienced HR professional or psychologist, that clearly shows what you are looking for. Establish what qualities a remote colleague must have to function well within your organisation. 

2. Choose senior candidates

It may be tempting, when searching outside the Netherlands, to choose junior candidates who can save you a lot of money. Resist that temptation. Junior employees in India are generally job hoppers; they do not climb in position and salary by working for the same company for a long time. Every time they make a move, their salary increases. European companies that opt for cheaper, junior employees therefore often face a high turnover rate in India.

To ensure that your remote colleagues will engage with you for the long term, it is therefore advisable to focus on senior candidates who have experience with multiple employers. They may not offer the same cost savings - although even with experienced employees you can get up to 50 per cent cheaper in India than in the Netherlands - but they do offer you the certainty that they will make a deliberate choice for you and your company and will not leave quickly. 

3. Take assessments under the guidance of psychologists

To be sure that the candidates you have selected on the basis of your competency profile actually possess the right qualities and skills, it is advisable to have assessments conducted by experienced psychologists. With a psychologist you can adjust the assessments in such a way that the specific characteristics that are important for your company are also properly tested. This may not always be the case with a standard assessment. 

Since you are focusing on more experienced candidates, it is important to not only look at flexibility and social skills, but also at the candidate's ability to develop. As an employer, you want to be sure that your new colleague is competent and still wants to and can grow in certain areas. This is not only important for you, but also for your employee, because the position will then challenge them and offer scope for personal development. 

4. Prepare the team in the Netherlands well 

It is essential that your Indian staff connects well with your Dutch organisation, but for this your team in the Netherlands must also be well prepared for a new colleague sitting at a distance. For example, everyone must be prepared for the fact that more English will be spoken, not only in one-to-one conversations with the new colleague but also in meetings he or she attends. It is also important that a colleague who is working remotely is not forgotten and that there are enough contact moments as with colleagues who are physically present in the office. For example, have the team schedule a daily online coffee moment in which not only work-related matters are discussed, but normal things can also come up. This is like meeting each other at the coffee machine. 

Finding suitable remote personnel who fit in with the Dutch culture can be a challenge without the help of professionals who have access to that large, Indian talent pool and understand what these personnel need to do to function well within a Dutch organisation. IndiaConnected can support you at every step in this process, from drawing up the competence profile to psychologist-led assessments.