The 5 most important things you need to know about Indian business culture

Having a good understanding of the norms, values and customs in India is essential to successfully doing business in the country. We will walk you through the cultural differences you need to be aware of as you take your first steps into the Indian market.

1. Preparation: a good personal relationship with your business partner is essential in India

Personal relationships play a big role in Indian business culture, so it is important to really take the time to build those relationships. For Indians, having confidence in the person being done business with weighs heavily. You are therefore expected to make the effort to get to know your partners and continue to invest in the relationship.

Indians talk more about personal matters during business meetings than we are used to in Europe for this reason. They will also ask you more questions about your private life. Don't shy away from these kinds of questions; it comes across as rude and disrespectful. Try to show interest in the business partner's private life yourself by asking questions and accepting invitations to events such as a birthday party of a family member of your business partner. If you are on a business trip to India is going, keep space available in your schedule for possible dinners and other activities.

2. The first meeting: consider local customs

Before you travel to India, it is important to plan all your appointments at least a month in advance. If you want to set up a meeting with someone you have not met in person, it may help if a third person makes the initial contact. If you already know each other, take the trouble to make an appointment by phone instead of sending an email, as personal contact is also very important for Indians in these kinds of small interactions.

The best time for an appointment is either late morning or early afternoon. It is also advisable to confirm the meeting the week before and call again the day before you get in the car.

A handshake is also the standard way to greet each other in a business setting in India. However, you must keep two things in mind. First, in India business culture is still very hierarchical. If you meet several people at the same time during a meeting, always greet the oldest person present first. Second, if you are a man, it is important that you wait until the female attendees take the initiative to shake hands with you. It is not common in India for men to initiate the greeting with a woman.

Greeting someone with the traditional "Namaste," placing both hands together in front of your chest and making a slight bow, is appreciated and shows respect for Indian customs.

Due to the strong hierarchical structure in India, people are always formally addressed by their title and last name and will also always address you by sir, madam or your title.

3. Etiquettes around business cards in India

When meeting for the first time, business cards are usually exchanged in India after the initial handshake and greeting. A business card always includes your company's full name, occupation, title or specialty, phone numbers, e-mail, and address and website.

Since people in India are used to addressing each other by titles, it doesn't hurt to include your own titles on your business card. This exudes a certain seniority that Indians are sensitive to.

When indicating your business card, always present the card with the text facing the recipient so he or she can read the text. Always give and receive a business card with the right hand or with both hands by holding the card at the ends.

When you receive a business card, always read what is on it, even if you do not understand the text. This shows respect and interest in your business partner. They will conversely do the same. Then put the card in a notebook, side pocket of your bag or the pocket of your jacket.

4. The business meeting: silences during the meeting are a sign of respect

In India, it is considered polite to arrive a little late for meetings and gatherings, but by arriving on time, you can win high praise from your Indian business partners with your punctuality. No strict agenda or schedule is maintained during meetings, so meetings often start and end late.

If you are meeting several people at the same time and they have already joined the conference table, it is good to know that the most important people always sit in the middle, with their assistants on either side. So the least important people always sit at the ends of the table, farthest from the center.

Meetings usually begin with small talk about personal matters and general small talk. This is an important part of doing business and therefore should not be cut short too soon. It is therefore smart to put your Indian partners in charge in this area during your first meetings; they will indicate when the business part of the meeting can start.

Business meetings in India are always very formal and quiet affairs. It is rude to talk loudly or point at other people in the room. Body language is also highly valued; a closed or aggressive attitude, such as folded arms or hands on hips, should therefore be avoided.

In addition, silence is a very normal and even important way in India to show respect for those present. Pausing before answering shows that you have listened carefully to your interlocutor and thought about your answer.

In some companies, interruptions in meetings are not uncommon and people may pick up their phones in the middle of the meeting. If that happens, to remain calm and not show irritation.

5. Negotiation is a long-term affair in India

Because in India trust plays a major role in doing business, you should not expect to be able to close a deal during your first meeting. In India, both the buyer and the seller play an important role in the negotiations and both have to ensure that they come to an appropriate agreement. Therefore, in India, negotiations take place in multiple rounds and closing a deal is seen as a long-term affair.

Therefore, if Indians say "yes" to your proposal fairly early in the negotiations, it does not mean that you have a deal. It purely means that they are listening to you and are interested. In India, everything is negotiable, so be prepared for aggressive proposals and considerable pressure from your business partner. Don't be alarmed by this and take your time to find a compromise point by point. The tough position Indians often take at the beginning of negotiations does not mean they are not reasonable.

Are you curious about how best to communicate with Indians?Read it here:

How does a foreign company deal with corruption in India?

Any foreign company doing business in India will eventually have to deal with corruption. Prime Minister Modi has made many changes in recent years to improve the situation in the country, but India still ranks 80th in Transparency International's corruption index. As an international company, you want to stay as far away as possible from paying bribes, because this can have serious consequences not only in India, but also in your own country.

Every year, Transparency International ranks 176 countries worldwide on corruption. India is ranked 80.

Clean business takes time

It is still not uncommon in India to be asked for 'speed money', an amount paid under the table to get a permit approved more quickly, for example. Despite the fact that in some cases it seems as if there is no other solution than to pay, we strongly advise international companies against this. Firstly, it is of course forbidden and secondly, it is perfectly possible to do clean business in India. 

For instance, the German IT company Optanium went to India to look for an accounting firm that could set up their entity in India without paying bribes. The process of setting up the company took longer, thirteen months instead of six, but it allowed Optanium India to get off to a flying start. An important tip is therefore to plan enough time for dealing with issues such as applying for licences or the release of your products from customs. 

It is easier for foreign companies not to cooperate with corruption'.

In an interview with Quartz, Ravi Venkatesan, former chairman of Microsoft India and author of the book 'Conquering the Chaos: Win in India, Win Everywhere', explains how companies should deal with corrupt situations. "It is easier for a foreign company not to participate in corruption. The local management can stand firm and say that paying bribes is against their company policy. If a hard line is taken, the bribe-takers will drop out." 

In addition, having a very strong administrative department is essential, according to Venkatesan. "Manage your business with competent, long-term administrative staff who can hold their own in discussions with officials. Many companies do not invest enough in these functions because they do not see them as the core of the business. Instead, they outsource these administrative tasks to local agents, who do pay the 'speed money' and simply bury it in their other expenses."

"Many companies in India do not invest enough in administrative staff. That makes them vulnerable to corruption."

- Ravi Venkatesan

Always your papers in order

Fortunately, there are more and more situations in India where corruption has been completely eliminated because those processes are now automated or better controlled, such as filing your taxes or getting your identification. If you make sure you always have all your paperwork in order and therefore never need special assistance, you can avoid corruption with ease.

Of course, the experts at IndiaConnected can help you ensure that your business is always and in every area compliant. 

3 reasons companies should keep an eye on India in 2023

Both the EU and the U.S. are in recession, China is in a serious economic slowdown, and on top of that we also face a very tight labor market in the West, especially when it comes to technical staff. Time for European companies to look across borders for new growth markets and smart solutions to our staffing problems. Here are three reasons why European companies want to keep an eye on India:

1. India is the fifth largest economy in the world

Still described as a "developing market economy," India's economy is in the top five largest and most influential global economies. The country's current GDP, according to World Bank data, is $3.4 trillion and is expected to grow to $5 trillion by 2024. India is one of the only countries that continues to show economic growth. In fact, India's economic growth will accelerate from the 6.1 percent it showed in the January-March quarter to 8.5 percent in the April-June period of the current fiscal year.

India is just too big and too influential to ignore any longer.

2. Made in India, the new making country

The manufacturing industry is growing at lightning speed in India. This is not surprising: the Prime Minister of India, Narendra Modi, launched the 'Make in India' program and invested big money to put India on the map as the world's new manufacturing hub. Under the Make in India program, foreign companies in more than 25 sectors benefit from attractive tax breaks. It's convenient for India that labor costs are rising in China and the trade war with the U.S. is heating up: that only strengthens India's cards. Manufacturing companies from around the world have noticed this too. GE, Siemens, Toshiba and Boeing, are just a few of the thousands of foreign companies that have opened production sites in India in recent years. They benefit from the abundance of technical personnel and also have access to a huge market for their products made in the country. Those who manufacture in India can serve the internal market better and more cheaply.

3. Spread risk

The growth engine of the European economy is exports. European exports are under increasing pressure due to the US-China trade war, the war in Ukraine and an overall slowdown in the global economy. ING advises with good reason that companies should open international offices to continue to benefit from economic growth across borders. The question is where to go? The EU, U.S. and China are obvious, but those are also highly competitive markets. For many companies, there is still a world to be gained in India, a market with healthy and steady economic growth. High time, therefore, to start exploring India.

What is your India strategy? These are your options

Your company sees opportunities in India. Not only as a potential market of 1.3 billion consumers, but also because there are options to make your production process cheaper and more efficient. But what all do you need to consider to make a successful start in India?

1. Invest with a long-term vision

India is a subcontinent with many different cultures, languages and therefore customer needs. It is therefore essential to have a long term planning and a lot of patience when entering the Indian market. Most Western companies that have made a successful start in India in recent years, by moving their production or opening a trading office, only really reaped the benefits 3 to 5 years later.

2. Define success

When you enter a new market, and specifically the Indian one, you need to define your goals and (real) financial expectations well and back them up firmly with data. It sounds a bit obvious, but we still see many companies leave the market prematurely because they start with too loose an idea of what success in India means to them. Firmly defining your goals will help you achieve a good starting budget that can handle the biggest surprises.

3. Starting smart with low costs

For many companies, finding a reliable business partner or working with a distribution partner, is the best start. If you are not yet sure if India is the right market for your business and want to test the market, it is wise to start with a business incubator. This gives you the opportunity to explore the market without immediately setting up a business and incurring the associated costs. Whatever you choose, the format should feel like a natural extension of your business and bring in the right local market knowledge. This will help you better understand the complexities of the market and overcome the initial hurdles during the start-up period.

4. Recruit the right sales managers

We all know the importance of having the right people on our team, but that counts even more when you are entering an unknown market. If you want to become a success story in India, you need people who are knowledgeable about your product, can build good relationships with partners and customers, and understand the local market. But where do you find these pearls in a country you don't know? Work with a reliable partner who has experience in this field and can support you in recruiting the right people.

5. Choose the right distribution partners

India has 28 states and is almost as big as the European Union. How will you sell your products there? And more importantly, distribute them quickly and efficiently? You will probably need regional wholesalers to help you distribute your product further to local sales outlets. Finding the right distributors involves a lot of work: background checks, verification, making appointments. Each of these steps is essential. For example, for many foreign companies, it is unclear how many distributors they would need to partner with to cover all of India. A local consultant with a good understanding of your market and experience in shipping your product can be of great help. This is an important step that often results in a successful start in the Indian market.

6. Don't forget the after-sales

The key to success in the Indian market is to offer a customized product or solution and a solid service network. You will always have to compete with low-cost producers from China in India, but that is precisely why you will have to distinguish yourself with excellent service. European products are rated much higher than Chinese products in India.

Workshop: Sales and distribution in India

India is a complex country, but also one full of opportunities for those companies who understand the market and want to invest in it. Get a better understanding of what you need to think about if you want to sell and distribute in India in a workshop tailored specifically for your business:

• Receive valuable feedback on your sales strategy from independent experts

• Expertise in various fields: sales, distribution, supply chain, legal, tax, recruitment, etc.

A workshop usually lasts about 2 hours during which our experts work with you to explore your issue and formulate possible answers and strategies. Afterwards, you will receive a concise report.