Differences in the way of doing business among Indian states

India is almost as large as the European Union and has more than twice as many inhabitants. No wonder, then, that there are major differences between the various Indian states in terms of language, demographics, politics and economic growth. For a successful start-up in India, it is therefore important to take these differences into account when drawing up a business plan. Because what works in Gujarat does not automatically work in West Bengal.

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The regional differences among Indian states

For a European company to succeed in India, you must be aware of the country's vast regional differences. India is a fragmented market with large, and often underestimated, regional differences in language, culture, infrastructure and wealth, all of which affect the regional business culture.

Indian states are therefore better compared to individual countries than to, say, the Dutch provinces. Indeed, India's most populous state, Uttar Pradesh, has as many inhabitants as Brazil, and the southern state of Tamil Nadu has an economy as large as that of Hungary. 

There are also large demographic differences between Indian states. For example, southern India is older, has more to spend and is more educated than the rest of the country. Northern India, on the other hand, is younger and relatively poor.

North Indians primarily speak Hindi, while South Indians prefer to communicate in English or in their regional state language, such as Kannada or Malayalam. The German wholesaler METRO, better known in the Netherlands as Makro, found out after their start in India that there are big differences between the groceries that customers in a certain region put in their shopping cart and adjusted the assortment accordingly by adding more local products. Logical really, Finns also have different preferences than Spaniards.

"METRO found out that there are big differences between the groceries that customers in different regions in India put in their shopping cart."

- Mark Alexander Friedrich, Head of International Affairs for METRO

Do not make one business plan for all of India

For a successful start in India, thorough market research is a must. Regional differences are not only obstacles, but can also work in your favor depending on your sector and product.

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.

Starting in the right regions is also essential for selling your product in India. European products almost always fall in the highest market segment in India, so it is smart to start in the regions where people have sufficient income and there is real demand for a more exclusive, expensive product.

"Approaching India as one country by working with only one distributor or partner is one of the most common mistakes European companies make in India," says Klaus Maier, CEO of Maier + Vidorno, IndiaConnected's partner in India.

"In Europe, you wouldn't ask an Italian distributor to set up your network in Norway either. An Indian partner or distributor operating in a specific state has a good network only there and will not succeed in successfully expanding sales to other states. Therefore, those who take India seriously start with about four dedicated, local managers or distributors who understand your product and the regional market well. With them, the market can be mapped and the logistics network set up, one of the biggest challenges for international companies in India. In this way, the Indian market can be conquered step by step, successfully." 

Selling successfully in India with the right strategy

For anyone looking to conquer the Indian market, IndiaConnected has put together a special guide in which we offer you insight into the steps to take to successfully start and grow your sales in India.

From preparing your first export shipment to India to setting up a solid after sales service, we guide and advise throughout your India journey.

Six tips to enjoy working in India

Working in India is a joy - at least if you have a bit of an adventurous European merchant's spirit. Michel Koopman, who runs the Leela hotel in Gurgaon, is just such a person. "It's fun to work with Indians," Koopman says enthusiastically. "The fact that they speak English helps tremendously. Quite a difference from China. If you make a joke there, they don't understand you. With Indians, you can laugh."

Gosse Wielinga at the Suzlon factory in India (Photo: Suzlon)

Gosse Wielinga who works for the large Indian wind energy company Suzlon also has an "incredible time in India." Wielinga thrives in the informal corporate culture at family-owned Suzlon, which he compares to the Dutch polder culture.

Or take Jos van Haaren, former research leader at the Philips innovation campus, who recently returned to Eindhoven. During the interview, he seemed almost homesick for India. "I would have liked to have stayed longer," he said with regret in his voice.

Even hockey coach Paul van Ass, who was sacked after only five months as national coach of the Indian hockey team, has good memories of India. He hopes to do business there again.

Jos van Haaren at the Philips Innovation Campus in Bangalore (Photo: Berkeley - Haas)

Six tips to make working in India a joy:

1. Take young employees by the hand

"Indians are very ambitious, they fight to get ahead. You can see that at the baggage belt at the airport: everyone is in the lead. You can see it on the work floor as well. There are a lot of young people who are very driven. The trick is to take them by the hand and tap into their potential. That gives me great satisfaction. Gosse Wielinga, Suzlon Energy

2. Enjoy the game

"To make a good deal, you have to play the game Indian style. That means sometimes you have to say you have no time or not answer the phone. Then you play the difficult European, while your staff massage the other party in the meantime. This way of doing business can be frustrating in the beginning, but after a while you learn to enjoy the game. Then you become half an Indian." Gandert Roosen, Roosen Industries.

3. Use an interpreter

"Of course, many Indians speak excellent English, but even though you speak the same language, that doesn't mean you understand each other. An interpreter who knows both cultures can bridge the gap between Europeans doing business in India and their Indian executives, partners and/or employees." Gosse Wielinga, Suzlon Energy.

4. Give smart feedback

"Never publicly attack a manager. That is fatal. If you want to share critical ideas, do it in private. That is often appreciated and they usually do something with it." Gosse Wielinga, Suzlon Energy.

5. Set aside more time than usual to prepare properly

"Many foreigners who have been to India on business are dead tired when they get back on the plane to Europe. This is often because they do not take enough time in India. If you have an important meeting on Monday, fly the Friday before. That way you can acclimatise and appear fresh and sharp at your appointment." Gosse Wielinga, Suzlon Energy.

6. Be flexible

"In India, it is often not quite clear how things work. If that bothers you, working in India takes a lot of energy. But if you can deal with it, it's actually a lot of fun. As a foreign company or employee, you have to ask yourself whether you can thrive in such an environment." Jos van Haaren, Philips.

Realize effective collaboration and higher efficiency with your Indian team

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New ambassador to India focuses on business

The political relationship between India and the Netherlands is excellent. Marten van den Berg, the new Dutch ambassador to India, is mainly concerned with socio-economic cooperation between the Netherlands and India. "We are trying to create optimal conditions for Dutch companies to invest in India."

Ambassador Marten van den Berg (photo: NL Embassy New Delhi)

No stranger

The new Dutch ambassador in New Delhi is certainly no stranger to India. Thirty years ago Marten van den Berg already visited India as a tourist. "I arrived at the old airport in Delhi in the middle of the night," he recalls. "Even then it was bursting with people, but the poverty was a lot greater than today." Over the past few decades, Van den Berg regularly led trade missions to the subcontinent from the Ministry of Economic Affairs and the Ministry of Foreign Affairs. "I think I've been to India about 15 times in total," he says. 

Big turnaround

Now that Ambassador Van den Berg is living in India, he likes it very much. "The diversity of the country, the fascinating culture, the warmth of the people: India is a great country." His position as ambassador, for the first time in his career, does mean a big change. "We lead a totally different life here than in The Hague. Work and private life are intertwined: in the residence in New Delhi, all kinds of social activities and content workshops are constantly being organized." In addition, the ambassador is on the road a lot. Mumbai, Chennai, Hyderabad, Lucknow, Bangalore. "And in December I was in Odisha at the Hockey World Cup. Unfortunately, the Netherlands lost the final."

Employees of the Netherlands Embassy in New Delhi (Photo: NL Embassy New Delhi)

Economic cooperation central

Van den Berg is primarily concerned with improving socio-economic cooperation between India and the Netherlands. "That forms the heart of our agenda, because there are no thorny political issues." Central to that socio-economic cooperation are the 17 development goals of the United Nations. These so-called SDGs are not only the guiding principle for Minister Kaag of Foreign Trade and Development Cooperation, but also the starting point for the Indian government. Van den Berg: "Both countries really have a common agenda, for example to eradicate hunger in the world, to achieve affordable and clean energy, to promote gender equality and to provide clean water. It's not a one-way street."

The Netherlands and India have so much to offer each other.

Business case

What role does the Dutch embassy in New Delhi play in this regard? "We bring companies and knowledge institutions together and together develop business cases that parties can step into," says Van den Berg. "The waste problem in Indiakan be tackled with Dutch knowledge in the field of recycling and extracting energy from waste. With the help of Dutch expertise, we can also contribute to affordable health care for all Indians. And Dutch institutes like TU Delft and Deltares can also be very helpful in preventing floods like last year in Kerala." The question is: how do you ensure that Dutch companies and institutions actually do that? "We try to create optimal conditions for companies to invest in India. We do that by putting them in touch with the right parties, but sometimes also by providing venture capital. When there is a good business case, private investors are quite willing to step in, we find." 

Investment climate

The investment climate in India has improved solidly under the current Indian government, according to the Ease of Doing Business Index of the World Bank. Van den Berg does have a comment about this list. "The World Bank only measures in New Delhi and Mumbai. The differences within India are large." Moreover, it remains to be seen whether the current government's reform policy will be continued in the coming years: in a few months India will go to the polls. "The opposition is doing better than expected last year, but it looks like ruling party BJP will still win. But you never know, anything can happen in the last months before the elections. It will be exciting."

Annual visit

Van den Berg does not think that any change of power in New Delhi will have much impact on the cooperation between the Netherlands and India. "The relationship between the Netherlands and India has been excellent for years. Prime Minister Rutte was in India in 2015 and 2018 and Modi visited the Netherlands in 2017. They have agreed to meet annually. I think it would be wise to stick to that: The Netherlands and India have so much to offer each other."