7 Tips For Doing Business in India: Challenges & Big Opportunities (2018)

Updated on October 19, 2018 by Asher Fergusson

The Cultural Elephant in the Room: Understanding Cultural Differences When Doing Business in India

You’ve heard that India is an emerging economic superpower, and you’re thinking about doing business there. That may be a good idea. But there are a few things you need to know.

As is the case in entering any new market, there are opportunities—and there are hurdles.

Among the most significant barriers to business success for Westerners doing business in India are the ones created by cultural differences.

First, here’s the good news about doing business in India:

  • World’s fastest growing large economy: In 2018, India’s economy inched ahead of China’s to become the world’s fastest-growing large economy. This year the GDP is projected to increase at a healthy 7.8 percent.
  • The world’s youngest country: By 2020, the average age in India will be 29. That year, India will become the world’s youngest country, with 64 percent of the population in the working-age group. India’s youthful demographics may add two percent to the GDP growth rate, giving the economy an unprecedented edge.
  • India’s expanding middle class: Estimates for the size of India’s middle class now range from 300 to 400 million people. By 2025, that number could increase to as many as 550 million.
  • Around 130 million people in the India speak fluent English as a second or third language. Chances are, if you’re doing business in the country, most everyone you’ll interact with will at least be somewhat conversant in English. That, of course, makes life easier for English-speaking business people who come to the country to do business.
  • Business opportunities: In such a booming economy business opportunities abound. So far it’s mostly been the larger multinational companies that have leveraged their extensive resources to benefit from the economic growth in India. But small and medium companies stand to profit, as well, if they play their cards right.

Opportunities beckon—but there are plenty of challenges, too

India has problems with bureaucracy, poor infrastructure, inflexible labor laws, to name but a few. Businesspeople must do due diligence. But the biggest stumbling block of all for Westerners seeking to do business in India is often downplayed or overlooked entirely—the one created by cultural differences. While you may be well prepared in other critical areas, make sure you don’t neglect the cultural factors that can destroy trust, damage reputations, kill deals or cause your venture to fail entirely.

How do you prepare for cultural differences in India?

A popular approach is to present lists of behaviors in the host country, ranging from those that are desirable to those that are taboo. Business travelers memorize checklists of do’s and don’ts—and then mistakenly feel as though they’re prepared to deal with cultural differences in the host country.

What’s the problem with that approach? Cultures have many layers. Those checklists tend to focus on the more superficial aspects of culture. We’re told, for example, “Don’t point the soles of your feet at people in Saudi Arabia,” “Don’t pat a child on the head in Laos,” etc. Because the checklists skim the surface level of culture rather than plumb its depths, they end up giving misleading advice about how to interact effectively. A particular tip may be an appropriate guideline, say, twenty percent of the time—but dead wrong in the situation you actually find yourself in. The deeper differences in cultural logic are missed. This is especially true when dealing with the complex set of cultural realities at play throughout the Indian subcontinent.

Most intercultural misunderstandings stem from deeper cultural differences—different ways of seeing power, hierarchy, identity, time, space, communication, context and relationships. These deeper cultural realities are a much greater factor in the success or failure of business transactions than most people realize.

Intercultural consultants can help you to understand the cultural differences at a deeper level. A deeper approach seeks to help the traveling businessperson know how to shift cultural frames of reference and behave in culturally appropriate ways in different contexts. Being able to do this is what we call “intercultural competence” or “global mindset.”

Here are a few key clues to help you navigate the cultural differences in India:

1. Beware of the assumption of similarity

“Projected similarity” is when people from other cultures appear more similar to us and our own culture than they actually are. Your Indian counterpart may speak English, dress in Western clothes, and may seem to be quite “westernized” from your perspective. But don’t be fooled: Culture goes much deeper than language or clothes. (Incidentally, both sides of the cultural divide can fall prey to the pitfalls of projected similarity. Your Indian counterparts may be downplaying the significance of cultural difference as well.)

Intercultural consultants hear it all the time: “In my meetings with Indians, I didn’t really notice many differences. Beyond the customs and etiquette, we seem basically the same.” But then, unseen differences lurking beneath the surface become cultural landmines: Team members begin misunderstanding and distrusting each other because of differences in communication style. Business deals fall apart because of different ways of relating to schedules and time. Joint ventures and mergers and acquisitions fall apart because of fundamental cultural differences not initially perceived.

It’s safer to assume differences than to assume similarities. Make an effort in advance to be prepared for the differences. Being prepared means, first of all, you have to be aware of your own cultural lens that you’re looking through. Second, do your research about the culture you’ll be interacting with. Ideally, get some intercultural training from a qualified intercultural professional.

2. Focus on relationship building

One of the most important cultural differences has to do with task-oriented cultures vs. relationship-oriented cultures. Most Western cultures tend to be more task-oriented. Many people in Asian cultures tend to be more relationship-oriented. These are generalizations, of course; there will always be variations and exceptions within any culture. In any case, task-oriented people tend to begin with the business at hand—and may or may not ever get to the relationship-building part.

Relationship-oriented cultures prefer to begin with the relationship—and then, maybe, get to the business. They would rather do business with people they know and trust. India overall is much more relationship-oriented than the U.S. When doing business in India, therefore, it’s a good idea to put more attention on relationship and trust building. Accept social invitations as much as you can. Get to know your counterparts more than you might in the U.S. You’ll find that business generally goes better when you take the time to build relationships.

To a task-oriented person, time spent schmoozing; going out to dinner or attending a wedding may feel like time wasted. But in a relationship-oriented culture, it’s often time well spent. Relationship and trust building, more than anything else, will help to ensure the success of your project. Ask about your partner’s family and talk about your own. Take advantage of opportunities to get to know your Indian colleagues and their families. Accept invitations to go out after work to their homes, to shows, to weddings or to see the sights. This is Indian hospitality. It allows them to get to know you. It’s impolite, by the way, to say “no” directly to an invitation. If you can’t attend, simply say “I’ll try.”

Keep in mind that Indians are proud of their rich culture and history and recent modernization. They care about how the world views their country. Show that you respect and admire India. Be genuinely curious about them personally and about their culture. Avoid contentious issues or questions about social problems. Focus on the positives: India’s role in IT innovation, space program, global takeovers, etc.

3. Understand how to work with a more indirect communication style

Though you will meet Indians who are more direct than many Americans—by and large, India tends to be an indirect communication style culture. The U.S., on the other hand, tends to be a more direct culture. Avoiding direct confrontation and preserving harmony are important Indian values. Indians generally do not wish to offend, disappoint or embarrass. They may tend to tell the boss what he or she wants to hear. They may avoid saying “no” directly because they don’t want to be rude or give bad news. Saying “yes” maintains harmony. But the Westerner needs to understand that saying “yes,” may simply mean “uh huh,” or “I hear you” or even, “yes, I will try my best.” As a result, in many cases Westerners misinterpret the Indian “Yes” to mean what it would mean in the context of the more direct U.S. culture. Due to these differences in communication style, a Westerner may believe that an Indian has committed to doing something when he or she has not.

In order to understand what’s being said, pay attention to the context. Listen to what is said after your Indian counterpart says “yes” in order to understand what is really meant. Ask for clarification, i.e., “So what you mean to say is…?”

When you need to say “no” to an Indian, try doing so more indirectly.
The Indian head wobble, a kind of head tilting from side to side, can mean “yes,” “I am acknowledging that you are speaking,” or simply “I am being agreeable.”
Avoid asking yes/no questions (i.e, “Can you do it by Friday?”). Instead, ask informational questions (“What time on Friday can it be completed?”)

4. Learn to navigate hierarchy

Traditionally, India tends to be a more hierarchical culture, whereas the U.S. tends to be a moderately egalitarian culture. In India, get to know how things work in the organization you’re interacting with; hierarchical dynamics in India depend on the situation. Clarify roles and understand hierarchies in your specific business setting.

In hierarchical cultures, status and position are respected. Power and authority are more centralized. Directives flow downward through a chain of command. Planning tends to be autocratic and paternalistic. Historically, many Indian businesses were family-owned. The father or grandfather dictated how things were going to be. In recent years many Indian business are combining global best business practices with Indian traditional ways into a hybrid management style. Nevertheless, many Indian bosses continue to be somewhat more autocratic than what we’re used to in the U.S.

For many lower-level Indian subordinates in the Indian hierarchy, their job is to do what they’re told—nothing more, nothing less. The subordinate is less likely to take initiative or “think outside the box” than their Western counterparts. Again, there will be exceptions, such as those who have studied at Western universities or at India’s best management schools.

In general in India, understand and respect the chain of command. Respecting the hierarchy usually means your work gets done faster. When possible, communicate directly with the highest levels of management of the organization (ideally business is discussed between members of relatively equal rank and status)—or else be patient with the subordinate’s need to check with the manager.

When working with hierarchical Indian organizations, it pays to respect age, seniority, and position. Use appropriate titles and forms of address that reinforce hierarchical structures and social status. Delegate tasks; be clear and explicit and check in more frequently to monitor how work is progressing. Be a good leader by giving clear directives, offering the appropriate feedback, and commanding respect.

5. Managing Indian “Stretchable” Time

The time zone observed throughout India is referred to as “Indian Standard Time,” or “IST.” The running joke, though, is that IST actually stands for “Indian Stretchable Time.” Many people in India tend to have a more flexible view of time than what Westerners are used to. Deadlines are more fluid and flexible. Westerners, by contrast, tend to manage their workflow with a much more rigid sense of time. Someone in India may tell you that your project will be finished by Thursday. But this is commonly understood to indicate a general intention to try to have the project done by then. In the Indian cultural context, it’s understood that factors outside of one’s control may influence the flow of events.

As a Westerner doing business in India, expect things to unfold at a slower pace. Meetings often begin with a fair amount of personal banter, which reinforces relationships. Meetings may be interrupted or run hours behind schedule. Interpret all schedules and agendas as flexible. As a general rule while doing business in India, build more time into your schedule to allow for inevitable delays. It’s important to be patient; patient people are more respected than those seeking to rush the process.

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There’s a saying in India: “I’m showing you the toes of the elephant so you know the elephant is there.” The impact of culture on doing business is often underestimated. When business deals fall apart due to cultural factors, many businesspeople fail to see the problems as cultural in nature. If you’re interested in doing business in India, don’t make the same mistake of failing to do cultural due diligence. The issues addressed here are some of the most important ones to understand and are a good start. Ideally, though, seek the help of a professional intercultural consultant who can help you build a global mindset—the skills and awareness you need to do business successfully in and with India.

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