"Doing Business With India" By Neeti Dewan, The Executive Yogi™.  Geographically speaking, India is the seventh largest country in the world with its capital in New Delhi. Its population is approximately 1.02 Billion (per census 2001), second only to China.   Its people speak scores of different languages and dialects, although English is the official “Business Language”.  It is a secular state and has no official religion.  Its literacy rate is over 65% and growing steadily.  India’s time zone is approximately twelve hours ahead of Pacific Standard Time.

If you have an interest in the stock market, you may have heard of the SENSEX.  It is a "Market Capitalization-Weighted" index of 30 stocks representing a sample of large, well-established and financially sound Indian companies. It is the oldest index of the Bombay Stock Exchange in India.

The recent trend of various multinational Western firms has been to outsource its services to India.  India is on its way to becoming the world’s hub of call centers and IT based business processes.    What factors are behind this extraordinary growth phenomenon?    India’s success in attracting foreign investment in recent years is partially due to its change in world outlook.  Rather than being an inward-looking economy, India has opened up to foreign investment.    The lack of a language barrier is also a major factor.  India’s English-speaking and highly educated work-force is in high demand.  Indian culture values education highly and has over 500,000 university graduates in technical fields each year.    Another benefit is the moderately low cost of living compared to American and European standards, which allows firms to keep wages and other business costs down.    Doing business in India is not always a smooth ride.  Although it has an English-speaking workforce, the spoken language is often accompanied by a heavy accent which may be difficult for Americans to understand.    Many of us have experienced first-hand the frustration of dealing with a customer service call that is being answered in India, during which we are given a standard “book-answer” for a problem we may be experiencing.    It may surprise you to know that in India, businesses have to deal with cumbersome labor laws.  Firing a non-performing employee can pose a big challenge.    As India’s economy continues to expand exponentially, it can be expected to aggressively integrate with the world economy.  There will no doubt be challenges along the way.    But, with the right government vision, business sector leadership, and westernization of the Indian workforce through the right training programs, India is poised to be a fertile ground for achieving high levels of sustainable growth at rates of 8 to 10% per year.

What Steps Can You Take To Get Started?   Begin by planning a visit to India to familiarize yourself with its people, culture, and business environment.  This trip can have two-fold benefits:  You can enjoy a wonderful vacation to this exotic and ancient colorful land, and at the same time research the feasibility of your business venture.   Set up meetings with possible Indian corporate partners in your area of expertise/product line/service.     If you decide that you want to move forward with setting up a business venture in India, then the next step is to determine what form to conduct your business under.   In India, a company set up with foreign investment must be incorporated under the Indian Companies Act with the Registrar of Companies and Ministry of Company Affairs.   You can choose to set up the company as a Liaison/Representative Office, Branch Office, Project Office, 100% Wholly Owned Subsidiary, or Joint Venture Company.     The foreign owned company must conduct all its Indian operations through this company.     Starting a business as a Joint Venture Company may be the easiest way to get introduced to the Indian market due to the established Indian connections and business acumen you can leverage off of from the Indian partner company.     Once you set up the company, you need to determine if the business requires an Industrial License and whether there are any other filing and notification requirements.     In order to determine if you are in proper compliance with the corporate, tax, labor laws, and legal requirements of the country, it is always a good idea to hire a local accounting and/or law firm to assist in navigating through corporate compliance.     As you begin to do business, pay attention to the cultural differences between the East and West.  When you hire employees, don’t be surprised if some of them refuse to call you by your first name but rather refer to you as “sir” or “madam.”  That is how bosses are traditionally addressed in India.      When meeting with prospective customers and vendors, be prepared to socialize and entertain with food and drinks.  Deals are often signed only after people have spent some time with you in a social setting and you gain their trust and respect.     It is customary to present a small token gift to the person you are meeting.  Dress protocol for business meetings is generally “formal:” suit and tie for men and a business suit or dress for women.     Large and mid-sized Indian corporations are comfortable conducting business with both men and women.  However, if you are dealing with a small business, it is a good idea to have a team comprising of both men and women.    Listed below are some resources that you may find helpful to you:    The Department of Industrial Policy & Promotion, Government of India at http://www.dipp.nic.in.   Department of Company Affairs under Ministry of Finance at http://www.mca.gov.in.   Foreign Direct Investment (FDI) Policy:  Reserve Bank of India, Foreign Investment & Technology Transfer Division, Exchange Control Department, Shaheed Bhagat Singh Road, Mumbai, 400001.  Telephone:  91-22-2266-1603; http://www.rbi.org.in.  Details on tax structure in India:  http://finmin.nic.in/topics/taxation/index.html.    Ernst & Young Private Limited (International Big 4 Accounting Firm), Floor 2, Capital Court, LSC Phase III, Olof Palme Marg, Munirka, New Delhi 110067, INDIA.  Telephone:  91-1141540000.  Many useful resources and guides can be found on their website:  http://www.ey.com/global/content.nsf/India/Home.

Read other articles By Neeti Dewan, "The Executive Yogi™:   "Bollywood: "India and the United States Meet on The Big Screen."   (With US Corporations Eyeing India's Expansive Economy, Neeti Dewan Shows Us How We Can Use Bollywood To Gain Insights Into Indian Culture!)  "Work Life Balance is Good for Your Mind and Heart." (Taking a break from the grind in Cabo San Lucas.)