GREAT 186 IDEA: Do Business in India
President Obama was warmly received when he and First Lady Michelle Obama visited India in November 2010.
“I'm here because I believe that in our interconnected world, increased commerce between the United States and India can be and will be a win-win proposition for both countries,” Obama told the U.S.-India Business Council.
The president pointed to $10 billion worth of export contracts that support 54,000 jobs in the United States.
India, with 1.2 billion people, is an attractive market for big and small U.S. companies. The Indian economy is projected to grow 8 percent in 2011, and a growing middle class is eager to buy American goods ranging from computers to clothing. More than 60 percent of the population is under 35, making it even more attractive for U.S. exporters.
Business expansion is rampant in Mumbai, New Delhi, and Bangalore, where there is a vast pool of cheap, skilled labor.
There are security issues and political instability, so you need to be aware of those issues.
Firsthand information is always best, so when I met Bobby Mukherji, an Indian architect, he agreed to share some tips for Americans interested in working on projects in India.
More Thoughts on Doing Business in India
- Learn how India's Foreign Exchange Regulation Act affects financial transactions.
- Find an accountant who is familiar with Indian accounting rules and regulations.
- Cultivate personal relationships. Bring American-made gifts that are not widely available in India.
- Make sure your Indian business partner has a good reputation, as well as good contacts.
- Learn as much as you can about the culture and what to expect before making travel plans.
- Book hotel rooms in advance. Many, especially in major cities, are filled with foreign businesspeople.
- Be on the lookout for torn or damaged bills. Many merchants won't accept money with holes. (Banks staple the notes, and the staples often rip up the bills.)
Offshoring and Outsourcing in India
Even if you don't plan to sell products to India, you might consider hiring people there to conduct all sorts of operations. The outsourcing industry actually started in India and has grown to about $47 billion a year, capturing more than half of all offshore outsourcing.
The United States and Europe are the largest customers for the Indian outsourcing industry. The United States accounts for 60 percent, and Europe 31 percent. Financial services companies represent 41 percent; high-tech/telecom, 20 percent; manufacturing, 17 percent; and retail, 8 percent, according to federal government reports and Financial Express.com. In 2009, offshoring companies employed about 2.2 million people in India.
India's outsourcing industry is expected to surge nearly fivefold to $50 billion by 2012.
Be prepared to encounter gut-wrenching poverty in the midst of great wealth. “An American who has never been exposed to the Indian culture will find the conditions extremely different from anywhere else in the world,” said Mukherji.
He recommends hiring a driver to get around, but you won't need to hire an interpreter because most Indians speak English. The business infrastructure is getting better, but you will probably experience power outages and telecommunications issues, although mobile phones are prevalent.
“India is an extremely friendly, social place,” said Mukherji. “Personal relationships are very important. There is a lot of weight given to word-of-mouth agreements, and people respect that.”