Overview

• Businesses based in the United States searching for growth opportunities in India should cautiously research the market and cultural trends of the country before investing in their foreign operations. 
• Because India has a population of over 995 million people and has one of the lowest per capita incomes of any country in the world, companies may struggle to justify entering into many Indian markets.
• As a country that adopts an economic policy focusing on self-sufficiency, governmental control of manufacturing industries and import substitution, India has typically been known to avoid participation in international business. 
• Although this approach has led to fast expansion in the industrial sector of India’s economy, productivity growth has slowed due to a lack of domestic and foreign competition.  Therefore, as a company considering expansion in the Indian market, you should be aware of the risks and evaluate the most important factors in making your business venture successful.

Country Summary

• Government:  India’s government is considered a constitutional democracy.
• Similar to the British Parliamentary systems, India established the Constitution of India that created a tri-party system of government designed to keep all parts of rule in check.  That is, by distributing the power equally among three main components no single branch of government can become too powerful. 
All 25 states of India are represented in the national Parliament as well as seven Union territories.
• Gross national product as of 1998:  $424.4 billion ($440 per capita).  ***Expressed in U.S.D.
• India of one of the world’s poorest nations. 

Economic Data

• India’s total amount of external debt has risen from $31.6 billion in 1983 to $72 billion in 1991.  India’s debt service ratio is near 35%, which means that they are spending an increasing amount of money to pay for the principal and interest payments of their external debt while incurring more debt. 
• · Agriculture in India gives jobs to about two-thirds of the country’s workforce and is the single most important sector of the economy, making up 29% of the total GDP.  The most important crops in India include rice, tea, sugarcane, wheat, jute, cotton, coffee, spices, and cashews.  Raising livestock is also a central part of India’s agricultural economy.

Exports:

• The 1999 estimate of the India’s exports was $42.4 billion, which is roughly 10% of the country’s total GDP. 
• India’s major commodities include cotton, coffee, nuts, textiles, and rice. 

Imports:

• The 1999 estimate of the total value of India’s imports was $59.43 billion, which is about 14% of the country’s total GDP.  
• Because India strives for self-reliance, they are hesitant to import many foreign goods.  Therefore, import commodities for India tend to be items that they have a difficult time producing either due to their lack of local resources or because they lack the technology to produce these goods.  These items are mostly limited to heavy and light machinery, industrial equipment, chemicals, processed food, and rubber.  

Business Culture

• Always be polite and treat people with respect.
• Typically, people do not shake hands when greeting each other. 
• Status is determined by a person’s age; therefore, managers or more elite business executives are mostly older men. 
• Only business practices that do not contradict popular religious beliefs and social customs will be accepted.
• In India, the boss makes all of the decisions by himself and solely accepts all of the responsibility.
• An argument that appeals to both feelings and faith will most likely be more convincing to an Indian than one that is solely based on objective facts and evidence.