Last updated July 13th 2014

Candle Lighting Ceremony - Doing Business in India

Candle lighting ceremony

For one week, 20 students from my MBA program at Tel Aviv University were transported to one of the top management schools in India, Mumbai’s S. P. Jain Institute of Management and Research (SPJIMR). The focus was doing business in India, but the scope was learning in all its forms: from acquainting ourselves with the subtleties of daal from Gujurat versus Maharashtra to being welcomed to a 5000-guest Hindu wedding to seeing firsthand the incredible level of industry at India’s largest slum Dharavi. Within it all, we were asked to see how we could fit into the picture as entrepreneurs. The lessons were enormous and have profound implications for us and for anyone wanting to do business in India.

  • The role of tradition: at the beginning of any ceremony or the opening of any business, a lamp is lit. Light symbolizes knowledge and the lighting of a lamp is considered an auspicious occasion. But more than that, tradition is at the heart of business here and any would-be entrepreneurs must understand that an untraditional approach to business rules. Case in point, the Indian corporate world, long accustomed to family-run businesses, was stunned by pharmaceutical SunPharma when they hired the former CEO of TEVA, Israel Makov, as Chairman.

  • India and Israel have some not inconsequential commonalities: both gained independence around the same time; both are highly religious; both were named after powerful rulers; and both are democracies that have thrived despite incredible obstacles. For that reason Israel’s success serves as a beacon of hope for Israel. “Israel is an economic miracle and India wants to be an economic miracle,” Professor Umesh Dhand told us.

  • Doing Business in India Tel Aviv University Course

    Israeli security company BGI Engitech operates out of India

    India’s relationship with Israel is strong and growing: right now, India is Israel’s largest defense partner, 2nd largest exporter, and 8th largest trader. Trade in 2001 was $200M, in 2010 $4.7B, and in 2013, $6.6B; joint ventures exist in nanotech, biotech, water, alternative energy, and space and aeuronautics; and since 2006, India and Israel have cooperated on water technology. “India and Israel share mutual trust,” Dhand continued.

  • The importance of personal relationship when doing business: “no matter how good your good product is, it’s not important if the person sitting in front of you doesn’t like or respect you,” Jonathan Miller, Israeli Consul General in India, told us. “Until the other person knows who you are and likes what he sees, it will be very difficult to do business here.”

  • The potential: there are currently 1.2B people in India and their average age is 25. That compares to 40 in Europe. The middle class is growing rapidly alongside an increasing pace of urbanisation. Consumers are confident and opportunities are emerging in both B2C and B2B.

  • Doing business in India - Mumbai cooking

    The endless flavors of Mumbai cooking

    But, India is an emerging market and products and services must be redesigned to address the Indian consumer: for example, at $2000, the Nano by Indian manufacturer Tata is the cheapest car in the world. Products designed for mature markets are overdesigned for the Indian market. The Nano has manual windows and just introduced power steering. Anything more would be considered over-engineering. Ford was successful introducing economy car Fiesta to India only after they received input from Indian engineers. Companies in India need to get the price-performance equation right.

  • Two Youths Posing for the Camera - Doing Business in India

    Two youths posing for the camera

    B-to-C companies introducing existing products to India succeed only after doing their research on regional culture and consumer habits: Tupperware failed until they realized that Indians recognize spice boxes as circular not rectangular. LG Electronics failed until they realized that white refrigerators are easily stained by spices and launched a line of colored fridges.

  • Outsourcing is getting much more sophisticated: one company visit took us to e-Clerx, the first public knowledge processing outsource (KPO) company in India. At one point, offsourcing meant manufacturing; later, it meant information technology; now, in e-Clerx’s case, ousourcing spans data management, analytics and reporting, content and commerce, and even highly-regulated, international financial transactions, all under the umbrella of “specialized support.” “All the Fortune 500 companies are here” Professor Oscar D’Souza told us. Indeed, it’s a $108B market.

  • Half of the population is considered to be at the bottom-of-the-pyramid (BoP): .5B Indians lack asset ownership, have no access to banking, and suffer through a vicious cycle of underdevelopment. Serving them requires a change in mindset from seeing resource constraints as imagination constraints, from seeing the poor as wards of the state to seeing them as an active market, and from trying to adapt existing technologies to innovating new ones specifically for them.

India is a nation of contrasts: 70% of the population live in villages but the cities have the costliest real estate, there’s widespread poverty but also the highest number of millionaires, and there are the highest number of illiterate people but also the greatest minds. India is “a place to make a fortune if you understand it better,” Dhand told us. So while the nation welcomes foreign investment and enterprise, success will only follow extensive research.

Read more about the S. P. Jain Institute of Management and Research (SPJIMR).