Understanding India

Cultural intelligence is key to achieving sustainable business outcomes. Being able to read cultural cues and respond appropriately helps develop relationships, communicate effectively and build trust. While cultural and communication norms are changing as virtual modes of engagement increase, core cultural values remain an important factor in business. Not understanding the particularities of doing business in India can lead to missed opportunities, delays and lost engagements.

Communication

India is often referred to as country of contradictions and diversity. There is no one way of approaching India or doing business with Indian stakeholders. Even so, Indian stakeholders will tend to avoid conflict or taking a confrontational approach to discussions.

A handshake is the standard way to greet men and women in a business setting, whatever their age or seniority in India. When meeting with small independent retailers in non-urban/rural areas, people may be greeted by a potential partner with the word ‘namaste’. To reciprocate, the person should repeat the word with the palms of their hands together and a slight bow or nod of the head. More traditional Indian women will likely use this greeting with foreign men and, similarly, traditional Indian men with foreign women. Watch how the greeting is being initiated and then follow accordingly.

Business cards are generally exchanged before seating. In India, they are also referred to as visiting cards. When offering business cards, use the right hand with your details facing towards the recipient, and when receiving the business card spend a moment to acknowledge the details on it. The left hand is considered unclean and as such, should never be used alone to offer or accept a handshake, drink, food, money, gifts or business cards.

Indians prefer using formal titles and junior Indian colleagues may address their superiors by their first or last names, followed by sir or madam. Unless invited to do otherwise, it is acceptable to simply address senior men and women using their honorifics (Dr/Mr/ Ms) and their first name or last name (in India the last name is also commonly referred to as surname).

Staying connected with Indian stakeholders through multiple communication channels is key to building relationships and understanding cultural context. While the use of WhatsApp is widespread and critical to maintaining strong connections both professionally and personally, in-person meetings are also important to build trust.

Relationships

Indians base their business decisions on trust and intuition, so relationships are vital to business success. Face to face interactions are important and business people should expect to spend time in meetings and at lunches/dinners with potential business partners. In the first meeting, let the Indian host guide the initial stages of the conversation. Follow their lead as to when the small talk should end, and the business discussion should begin.

As with other parts of Asia, business in India can depend heavily on personal relationships. Trust is built on conversations and a joint understanding of people’s backgrounds and a lot of talk is expected to build familiarity. Potential business partners may ask about family and other personal topics, previous roles, hobbies and food. The intent is to find areas of commonality to connect over.

Navigating culture in business - the importance of core cultural values 

Hierarchy

Respect for elders and hierarchy are core values that permeate all aspects of Indian society. Indians also place importance on family and community. India is a relatively conservative society. It is important for visitors to be respectful of societal norms and traditional values, which continue to underpin many business practices. Younger Indians are less particular about decorum than older generations, but will still adhere to traditions and conventions, especially when around superiors or elders. 

Most multinational corporations with offices in India follow their own organisational hierarchy. However, Indian offices traditionally follow a highly structured hierarchy. Positions of power and authority are revered and roles in Indian business and society are well-defined. An Indian manager will not carry out tasks that could otherwise be completed by a more junior member of staff. Decisions are made at the highest levels and unless an owner or senior manager is at a meeting, a commitment or firm outcome is unlikely. Avoid raising disagreements or issues in a meeting with all team members present; it is important to cover issues in a private discussion with the Indian counterpart and agree on the approach to be taken with the wider team. Saving face – avoiding blame or any type of shameful situation – can also influence decision-making processes.

The importance of partnerships

Successfully navigating the Indian business landscape often requires local talent, expertise and partnerships, especially when dealing with local businesses. Local partners can be vital in establishing an Indian office or entity. Food and agribusiness, ICT, and professional and financial services can especially benefit from deploying local agents or distributors.

Identifying a potential partnership requires establishing business relationships that can facilitate introductions – a strong network of contacts often provides the basis for productive partnerships. After a potential partner has been identified, due diligence is essential. This includes understanding a company’s customers and clients, reach across India, support for product localisation, and in-market reputation.

The strength of a local partnership brings advantages across multiple aspects of a commercial operation – from procurement and contracting to gaining credit. Importantly, a local partner can often assist with bureaucratic requirements, including company and product-specific registration processes. Building a long-term and sustainable partnership takes time and patience. Austrade can help identify potential partners in India (details can be found in Section 5.2).

For a more detailed understanding of business culture, business etiquette and building long term and sustainable partnerships to deliver strong business outcomes visit the Asialink Business Academy.

India offers significant opportunities for informed and well-prepared Australian businesses. The Australian government rates country risk in India as low to moderate but doing business in any new market can involve a range of uncertainties. These should be identified and mitigated as much as practicable – and managed carefully once business operations are established.

Economic - including the potential for government default (sovereign risk), fiscal, monetary and exchange rate risk.

India’s economic outlook is relatively stable, with a BBB- from Fitch and an upgraded BBB rating from S & P. This reflects growing optimism about the country’s economic prospects, driven by increased quality of government spending and political commitment to budgetary tightening.

The Indian Rupee demonstrates notable stability in foreign exchange markets with the Reserve Bank of India (RBI) actively managing volatility.

Although the growth outlook in India is stable, using foreign currency always carries potential risks. Be aware of your exposure levels and seek advice when considering potential mitigations.

Political - including the potential for political instability and restrictive government policies.

Political risk in India is relatively low, though businesses should be aware of certain challenges, including policy differences across states. India boasts a robust democratic framework with established institutions and governance structures. However, its vibrant political landscape can sometimes lead to policy unpredictability. Businesses should be cognisant of regulatory changes, tax policies, and shifts in trade agreements that can impact operations.

While the risk of political instability is low, you may consider performing political risk due diligence for any major investments and be mindful of the political affiliations of potential partners.

Corruption - including the potential for bribery, embezzlement and conflicts of interest.

Corruption remains a concern in some sectors in India. In the public sector, 89 per cent of Indians believe corruption is a large problem and 39 per cent report paying a bribe to access public services. India ranks 96th out of 180 nations in Transparency International’s 2024 Corruption Perceptions Index.

You should familiarise yourself with Australia’s foreign corruption and bribery legislation and ensure you have a robust anti-corruption strategy before entering any foreign market.

Regulatory - including the potential for regulations that increase the cost of doing business, reduce the attractiveness of an investment or change the competitive landscape.

India ranks 128^th out of 184 nations on Heritage International’s Index of Economic Freedom. While the country has been experiencing strong economic growth and increased foreign investment, the regulatory environment remains inefficient and can create significant challenges. Legal frameworks and labour laws are complex and the informal economy is still a major source of employment. A long history of state involvement in the private sector heavily influences the competitive landscape. However, the government is actively working to improve some of these issues through programs like Digital India, which promotes transparency in government procurement processes.

A trusted local partner can help you understand, navigate and secure complex regulatory processes.

Intellectual property (IP) - including the potential for weak or underdeveloped IP protections and enforcement mechanisms.

India ranks 43^rd out of 55 nations on the US Chamber of Commerce’s International IP Index. India has bolstered efforts to combat film piracy in recent years, but it lacks a robust IP protection framework in other areas. It has yet to sign the Hague Agreement, which allows the protection of designs in multiple countries through a single application process.

Registration for patents, trademarks and copyrights can help mitigate IP risk. Conducting due diligence on potential distributors and partners and ensuring contracts and distribution agreements have an IP protection clause can also help mitigate risk. Continual product development and brand updates can deter counterfeiting. There are also technology solutions such as RFID tags and QR codes to authenticate products.

Geopolitical - including the potential for trade relationships, security partnerships and territorial disputes to impact business activities.

India generally has stable relations with its neighbours. However, tensions with neighbouring countries and contested regions can at times lead to diplomatic strains and, occasionally, border conflicts. More broadly, India fosters ties with a diverse range of countries in pursuit of its interests, including the Quad partnership involving Australia, Japan and the United States.

Boards and leadership teams should familiarise themselves with geopolitical issues that may impact your business and, if relevant, develop plans in response to potential scenarios. You may also wish to seek external advice.

Supply chain - including the quality of infrastructure, levels of corruption, corporate governance, supply chain visibility and timeliness.

Like many developing economies in Asia, India faces challenges related to corruption and the ongoing development of its transport and logistics infrastructure. As a result, supply chain risks may arise in certain areas.

Advice from a trusted partner or third-party logistics provider can help to navigate India’s complex logistics environment.

Climate - including the potential for extreme weather events and rising sea levels to impact trade routes, supply chains and infrastructure.

India’s geographic and climatic position makes it vulnerable to the impacts of climate change. The country is especially susceptible to flooding – physical and economic damage from floods is the greatest source of annual loss across India - and large fluctuations in crop yields. Compared to its global peers, India is poorly prepared to mitigate and manage the effects of climate change. However, the government is working with multilateral institutions, such as the World Bank, to address this.

Identifying and mitigating climate change risks–including their socioeconomic consequences–should be embedded in all elements of your strategy and operating model.

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