India: a market overview

Exportlink special market report on India As the second-fastest growing economy in the world, India has already been targeted by UK Trade & Investment (UKTI) and Scottish Enterprise as an energy market with outstanding potential (click here to read the accompanying UKTI/Scottish Enterprise story).

But India is also a growing target market in other sectors, including electronics and IT, communications, engineering, pharmaceuticals and sports and leisure (this last having particularly exciting prospects in the run-up to the 2010 Commonwealth Games, which are being held in Delhi).

So here is some background material on doing business in one of the world’s emerging powerhouses…

India is the seventh largest country in the world, covering an area of over 3 million square kilometres, with a population of over a billion. It is made up of four distinct mainland regions, from the mountains and deserts of the north, to the central plains and southern peninsula, each with their own climate and characteristics. It is also the world’s largest democracy.

India’s internal geographic diversity is mirrored in the country’s linguistic, economic and cultural differences. There are, for example, over 800 dialects and 18 regional languages – but the good news is that English is the language of business.

Communications

Despite the vast scale of the country, however, India is well served by an advanced communication system, with good internal transport links and the world’s largest postal and rail networks – Indian Railways is the world’s single largest employer with a staff of over 1.8 million people. The number of passengers travelling on India’s rail network every day is the same as the population of Australia!

Despite its complexity, it is the very size of the country which provides the appeal for potential exporters with commercial opportunities throughout the country too good to miss.

India is the world’s third largest economy in purchasing power terms and its economic growth, although unevenly distributed, is steadily increasing. At a growth rate of 6%, it is estimated that in 25 years, its GDP will equal that of the US today.

India is currently the sixth-largest energy consumer in the world, but this is forecast to double by 2020. And India’s is a young population, with 39% currently under 18, compared with China’s 28%.

UK companies are often advised to think of India as a continent with a diverse range of cultures and languages, although the language of business is English, which is major advantage over other mega-markets like China.

So India’s long-term prospects are generally highly attractive.

Its wealth is principally generated by the northern states, including Punjab, known as “India’s breadbasket”, which has the country’s highest per capita income, along with the Union Territories of Delhi and Chandigarh.

While the service industries contribute over half of the country’s GDP, and modern agriculture is the highest employing industry (60% of the total), there is a huge variety of other sectors offering possibilities for UK companies to supply goods and services.

These include oil and gas, biotechnology, construction, environment, finance, electronics and IT, communications, engineering, pharmaceuticals, water and sports and leisure services.

In the build-up to the 2010 Commonwealth Games in Delhi, further opportunities are expected to open up in feasibility studies, cost control, high-tech sports equipment and the design of sports facilities.

Business etiquette in India

As with any other country, there are certain cultural nuances and codes of conduct which visitors to India should be aware of, which could make or break a fledgling commercial approach. Many are pure common sense, but others are less obvious. Here are the Top Ten business and personal points to note:

When planning your trip, check whether there are any public or religious holidays during your visit and, if possible, avoid the monsoon season (June – October) and high summer (June).

Appointments – make them in advance (especially hotel bookings), confirm a week before arriving and be on time, even if they’re not - it’s a sign of respect! Take advantage of personal introductions, which are seen as highly important.

Dress conservatively (both sexes) for business meetings and take plenty of business cards.

Be bold – risk and innovation are encouraged. When negotiating, be patient and expect to concede on price and terms. Don’t take “we’ll see” as a yes – Indians don’t like to say no!

Successful deals are often celebrated with a meal out – check dress code before you go and wait to be told where to sit. Guests of honour are often served first. Whoever issued the meal invitation will usually foot the bill - you can offer to pay but expect to be turned down. But do invite your host out on another occasion. Remember that Hindus and Sikhs don’t eat beef and many are vegetarian. Muslims don’t eat pork or drink alcohol.

Take a small first aid kit.

As with many cultures, don’t take it for granted that simple gestures such as pointing, winking or whistling are acceptable – they’re not!

PDAs (public displays of affection) are frowned upon (even with your husband/wife!)

Conversation - do’s: your own family, films, music, hobbies, sports (especially cricket!); don’ts: politics, sex, poverty. Never criticise India or its customs.

Show deference to older people.