Great presentation from the Indian School of Business that describes the nuanced culture of business in India.

1. Doing Business in India S Subramonia Sarma Indian School of Business

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3. Experiences fromLiving and Working in India as an Expatriate Gerd Hoefner Executive Vice President Siemens Information Systems Ltd., Bangalore, India

4. “Experiences living and working in India” … “What do people in Europe or the United States usually have in mind when they think about India?” (“… and probably about the Indians?”)

7. Family oriented – long-term relationship, bonding

8. Not very ambitious – easily content

9. Intellectually oriented – information / knowledge seeking

10. Non confrontational - comfortable with directed performance

11. Very low level of risk aptitude

13. Hospitable – to outsiders

16. India has a lot to offer in terms of culture, nature, history, philosophy, experience, and what not! I myself as well as my family, we definitely love India!

17. British economist Joan Robinson said about India that “ whatever could be said about it, so could the opposite.” (Land of contradictions)

18. Democracy Education Population Poverty Culture Diversity History Space

19. Different cultural approach Everything is not put on paper Lot of things are implied and on trust Flexible schedules and attitudes Follow-up required in everything, with everyone, at all times Regional clusters of skills and activities Many times, loyalty more important than merit Strong beliefs – destiny, karma

22. Indirect, subtle communication

23. Not necessarily results in a first discussion

24. Face to face meetings are necessary

25. “No problem” does not mean that there is “no problem”!

26. To nod the head means not necessarily agreement!

28. India - snippets Number of listed companies NSE – 1,400, BSE – 5,000(NYSE-3,000, NASDAQ-3,600) Market Cap India – 1.04 Tr(World 38 Tr) Funds raised – 25 b FT 500 – India 10 (market cap 210 b) USA 181 (6.2 Tr) Populated metros 3 in top 10 - Delhi 20m; (Tokyo 35m; Seoul 22m) 20% of villages no electricity; 56% of rural households do not have electricity 66% Thermal; 26% Hydro; 2.8% Nuclear; 5% renewable India needs 100,000 MW additional generation capacity by 2012

29. India - snippets Housing 5% in urban and 23% in rural areas do not have permanent housing Health care expenditure $ 125 per capita (US – 5,274) 61 doctors for 10,000 persons Infant mortality 62/1000 (US - 2/1000) Persons below poverty line – 24% (down from 56% in 1974) Great market Shampoo Sachet; Mobile telephone; Colour TV Amul; Nestle; Bajaj, Tata Indicom; Nokia; Nirma; HLL ITC - e-Choupal, Godrej - Adhar; Tata - Kisan; HLL – Shakti Number of cars – 18/1000 (US – 765/1000)

30. Rising From the Ashes Two actions, dictated by compulsion, have been the key to India’s great economic leap forward Economic crisis of 1991 (India’s rating downgraded to Junk status – and sold “family silver” or gold to recoup status) Economy liberalised (Competition and free trade encouraged) Led to building of a resilient economy Y2K Confidence that India can exploit global opportunities Era of globalisation and free trade now seen as opportunity rather than threat Virtuous cycle of growth, savings, and further growth

31. Fastest Growing Free Market Democracy 9% Average GDP Growth Rate in last 3 years Services and Industry – Twin Engines of Growth Service Sector Share of GDP – 54% Industry Sector Share of GDP – 26% Large domestic market Great supply of qualified man power

32. Meeting Challenges to Growth Investing in infrastructure creation Rises to $ 50 billion (4.9% of GDP) by 2009 Roads, airports, railways and urban infrastructure receiving attention Encouraging public-private participation Special Economic Zones (SEZ) being created Roads, Ports Inland transportation (rivers/canal; rail)

33. Infrastructure Gears Up Telecom: Explosion in Connectivity Tele-density improves dramatically Almost 50% in September 10; 2.8% in 2000 Fastest growing telecom market in the world 600 million mobile subscribers (Sept 10); 1.6 million in 1999 One of the lowest tariffs in the world NLD > 1000 km. (Rs 30 in 2000 to Rs. 1.00 now) Broadband: A Revolution in Progress User base 12.0 m (Sept 10) from 0.75 m (Nov 05) $ 6 starter pack; 0.4 GB download/upload limit Bridging the digital divide Pipeline delivers e-education, e-health, e-governance

34. Future Growth Engines Service Sector story well known and will continue Manufacturing sector prospects very attractive Global trade opportunity higher $ 14.5 trillion in goods in 2010 $ 5.0 trillion in services in 2010 CII – McKinsey Study $ 300 billion in exports by 2012 $ 70 billion in apparel, auto parts, speciality chem., elec. Goods World Bank survey on investment climate and mfg. Companies can expect incremental, consistent, positive change Govt. keen to encourage food, textile, leather industries Can offer employment to rural and under-educated workers

35. Future Growth Engines Manufacturing Competitiveness Driven By Availability of skilled labour Strong engineering and managerial capabilities Availability of Raw Materials Enlightened focus on quality (many Deming Award winners: Mahindra & Mahindra, Rane Brakes) Made in India for the World Kodak KB 10 – Global sourcing from Bangalore Toyota: Transmission components from Indian JV

36. Future Growth Engines Agriculture 22% of GDP; 10% of exports Accounts for over 50% of employment Enormous potential for growth 11% of world’s arable land World’s second largest rice and wheat producer World’s second largest vegetables producer Produces 10% of world’s fruits Largest milk producer in the world

37. Future Growth Engines Agriculture: Exploiting Potential Critical infrastructure facilities for commerce to be set up Cold chains, refrigerated transport, quality packaging Share of crops with commercial potential in crop portfolio increasing Horticulture and Floriculture seeing rapid growth Fostering development of agro industries with non-farm employment potential Focus on Organic Farming Enormous potential: 70% of arable land does not use fertilizers Over 600 Million T of agri-waste available for compost

39. Factories laws, Excise & Customs laws, Income tax, Labour laws

40. Company laws

42. India - opportunities India as market for global products and services India as a source of products and services for global markets India as a laboratory for products and services for other emerging markets Growth - Middle Class 8% in 1980 (65 million) Projected 32% in 2010 (400 million) By 2020 reach 50% middle class – significant impact on politics

43. Opportunities Galore Media and Entertainment - 25 b USD Pharmaceuticals  30 b USD Retail  45 b USD Infrastructure (road, power, rail, air)  350 b USD Real Estate  50 b USD KPO  8 b USD

44. India – Specific Opportunities Logistics Knowledge Educated Man power Population Services Contract Manufacturing, marketing Research and Development, Design services, Information Technology Support services – BPO, KPO, Client support Burgeoning market for goods and service Hospitality, Tourism

45. Doing business with India Sourcing from India Industry bodies Market access, finance Contract manufacturing Locate partner Market access, finance Selling to India Industry bodies Supplier access, finance, market intelligence Contract marketing Locate partner Supplier access, finance, market intelligence JV India Set up shop in India Entire business operations World Own

46. Risk-reward conundrum High Risk Low Reward High Reward Low Risk Market, Regulatory, Operations Set up subsidiary Set up JV Contract marketing Contract manufacturing Sell to India Source from India

48. SME Structural network created had contributed to the growth Entrepreneur development (NISIET, SISI) Marketing support (SSIDC) Finance (Bank, SFC, NSIC) Technology support (CSIR, Tool Rooms) Ancillary development Raw material supply (SSIDC) Consultancy support (SISI,ITCO, NPC) Fiscal and Non Fiscal Incentives and support

49. RISKS Reward Potential Options in funding PE Funds, Public equity Commercial Banks Venture Capitalists TDB/ Angel Investors TIFAC/ DST GROWTH Commercial operations Proof of concept Idea Concept

50. Micro Finance – an introduction 6.10 million Self Help Groups, covering 86 million lives Main actors – MNC banks, Private banks NABARD, SIDBI, ICICI bank, Citi bank About Rs 18,000 Cr (USD 36 billion) lent e-choupal of ITC ; eKutir of Intel Great effort to provide cash to the needy as against 3600% annualized interest level traditional credit channels not able to reach a major portion for productive purposes leverage group dynamics of the societal fabric capacity building and liberating rural women

51. Micro-finance – Contributory factors and Challenges Increasing aspiration levels of the target groups Stipulations relating to Priority Sector Became very fashionable – propagated by Nobel Laureate as also a great academic in the strategy area Overall cost of credit is almost 35% to 42% No attention to viability of trades/ small businesses taken up Unmanaged risks in their lives/ livelihood Low productivity in terms of poor yields or higher costs Unfavorable terms in input/output market transactions