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International Resources: Global Market Profile: India

As part of its commitment to providing its members with market analysis and insight, PMA has compiled the following information about India from Attaché Reports submitted by the U.S. Department of Agriculture’s Foreign Agricultural Service, as well as the CIA World Factbook, embassy sites, and business etiquette reference guides.

Entering the Indian Market

India is comprised of 29 states, which differ vastly in resources, religion, languages, culture, food habits, living standards, and climate. Although Hindi and English are used commonly, India officially recognizes 18 languages, and is home to six major religions.

Indians prefer to do business with those they know. Relationships are built upon mutual trust and respect. In general, Indians prefer to have long-standing personal relationships prior to doing business. It may be a good idea to go through a third party introduction; this gives you immediate credibility.

Normal office hours are 10:00 a.m. to 5:00 p.m.; however, in some large cities [e.g., Mumbai], some places of business start working earlier to avoid congested traffic while commuting. Increasingly, among the business organizations, there is also a trend towards a longer working day, which can start as early as 7:30 a.m. and last till 8:00 p.m. Normally, lunch is for one hour, between 12:00 p.m. and 2:00 p.m.

Most Indians take vacations during the summers [April-June] and mid-December to mid-January. In addition, in Northern and Eastern India, a favorite time for taking vacations is around October, which coincides with Dussehra/ Pooja holidays.

India has a long list of holidays. Some of these--e.g., Independence Day [January 26th], Independence Day [August 15th], Gandhi Jayanti [October 2nd], and Christmas [December 25th]--are observed according to the western calendar. The others, which are Hindu, Sikh or Muslim festivals--e.g., Pongal/ Makar Sankranti, Holi, Idu'l Zuha, Dussehra, Deepawali, Muharram, Guru Nanak Birthday, etc.--follow the lunar calendar. The dates for the latter holidays are not the same in terms of the western calendar, and therefore, it is advisable to contact the local Indian Embassy/Consulate to find out the holiday list for that particular year.

Since India is a culturally diverse country, different parts of the country also celebrate festivals which are regional in nature. Thus, each state also has its own list of holidays. You can get this list from the Tourism Departments of the particular states.

It is common to begin meetings with small talk. In India, inquiring about family shows friendliness. Conversations are a way for your India counterparts to get to know and feel comfortable with you. Small talk is also used to help build relationships. Good conversation topics include politics, cricket, films, and Indian Economic Reform. Indian traditions and history are also welcomed topics. Try to avoid discussing Pakistan, poverty in India, and religions. Religious questions will be welcomed only if they are genuine questions about practices, traditions, or holidays.

Women executives, in senior positions, are a relatively new phenomenon in the Indian business environment. If you are a woman, you will normally find people respectful and courteous, but not very comfortable in working with you for business deals. You may have to make extra efforts to get them to discuss business with you.

Gift giving is customary in business culture. When giving a gift, it is not the value of the gift, but the sincerity with which it is given, that is important to the recipient. If invited to your Indian counterpart's home for a meal, it is not necessary to bring a gift, although one will not be turned down and it will be greatly appreciated. Chocolates are always a good gift. Indians do appreciate a gift which is representative of you or your culture. Do not give frangipani or white flowers as they are used at funerals. Roses are the safest flower choice for gifts. Yellow, green and red are lucky colors, so try to use them to wrap gifts, but never wrap gifts in black or white. A gift from a man should be said to come from both he and his wife/mother/sister or some other female relative. Hindus should not be given gifts made of leather; whereas, Muslims should not be given gifts made of pigskin or alcoholic products. Dogs are considered unclean, so toy dogs or anything with a picture of a dog should be avoided when choosing a gift. Gifts are not opened when received. If you are given a gift, wait until the giver leaves to open it.

Agriculture constitutes 19.9% of India’s GDP and 60% of the country’s labor force.

The most typical imported items found in India’s retail stores (in the city) are fresh apples, grapes, pears, and kiwis. The United States, Brazil, Australia, and Europe are some of the countries India imports from.

India is a major mango exporter. In May of 2007, mangoes from India were exported to the U.S. for the first time. Other major fruits produced in India are bananas, citrus fruits, apples, guava, and papaya.

In the vegetable sector, India is known for their onions, which account for 93% of fresh vegetable exports. Potatoes, tomatoes, cauliflower, and cabbage are other major fresh vegetable commodities.

Doing Business in the Indian Market

First impressions are important. Some differences are simply due to the language barrier; others are due to differences in deeply held traditions and practices. If you maintain a polite, patient and professional manner, the likelihood of committing a serious faux pas will be greatly diminished. To help bridge the gaps, we suggest:

• Appointments are mandatory and should be made in advance, preferably by a letter. Making appointments should be done anywhere from one to two months in advance. Reconfirm all meetings the week before and then again the morning of the meeting.
• It is a good idea to emphasize that you will be in India for a short period of time when scheduling meetings.
• The best time to schedule meetings is late in the morning or early afternoon.
• You should try to keep your schedule flexible in case of last minute changes.
• You should try to arrive on time for meetings. Indians are impressed with punctuality.
• Always send a detailed agenda in advance. Send back-up materials and charts and other data as well. This allows everyone to review and become comfortable with the material prior to the meeting.
• Power Points are a good medium for discussing business.
• Follow up a meeting with an overview of what was discussed and the next steps.
• This is a hierarchical culture, so greet the eldest or most senior person first. Also when leaving a group, each person must be bid farewell individually.
• Shaking hands is common, especially in the large cities among the more educated who are accustomed to dealing with westerners.
• Men may shake hands with other men and women may shake hands with other women; however there are seldom handshakes between men and women because of religious beliefs. If you are uncertain, wait for them to extend their hand.
• Titles are very important. Always use professional titles. If you have a university degree or any honor, put it on your business card.
• Business cards are exchanged using your right hand after the initial handshake and greeting. Be sure to present the text facing the recipient. Also receive business cards with the right hand.
• Business attire is conservative. Men should wear dark colored business suits.Women should dress conservatively in suits or dresses.
• The weather often determines clothing. In the hotter parts of the country, dress is less formal, although dressing as suggested above for the first meeting will indicate respect. Ask your counterpart what is appropriate to wear.
• In India, business lunches are preferred to dinners. Also remember, Hindus do not eat beef and Muslims do not eat pork.
• The word "no" has harsh implications in India. Evasive refusals are more common, and are considered more polite. Never directly refuse an invitation, a vague "I’ll try" is an acceptable refusal.
• Since they do not like to give negative answers, Indians may give an affirmative answer but be deliberately vague about any specific details. This will require you to look for non-verbal cues, such as a reluctance to commit to an actual time for a meeting or an enthusiastic response.
• Decisions are reached by the person with the most authority, and decision making is a slow process.
• If you lose your temper, you lose face and prove you are unworthy of respect and trust.
• Bargaining is common in India. Most Indians expect concessions in both price and terms. It is acceptable to expect concessions in return for those you grant.
• Try not to appear overly legalistic during negotiations. In general, Indians do not trust the legal system and someone's word is sufficient to reach an agreement.
• Do not disagree publicly with members of your negotiating team.
• Successful negotiations are often celebrated by a meal.
• If invited to your Indian counterpart ’s home, you should arrive on time and remove your shoes before entering.
• Politely turn down the first offer of tea, coffee, or snacks. You will be asked again and again. Saying no to the first invitation is part of the protocol.
• You should wait to be told where to sit by the host or hostess.
• It is not uncommon to eat with your hands. However, always use your right hand (whether using your fingers or utensils) while eating.
• Leaving a small amount of food on your plate indicates you were satisfied with your meal and are not hungry.
• Do not thank your hosts at the end of a meal. "Thank you" is considered a form of payment and therefore insulting.
• The head is considered the seat of the soul. Never touch someone else’s head, not even to pat the hair of a child.
• Beckoning someone with the palm up and wagging one finger can be construed as in insult, rather use your whole hand with the palm downward and make a scooping motion.
• Standing with your hands on your hips will be interpreted as an angry, aggressive posture.
• Whistling is impolite and winking may be interpreted as either an insult or a sexual proposition.
• Never point your feet at a person. Feet are considered unclean. If your shoes or feet touch another person, apologize.
• To point at something or someone, use your whole hand.

Consumer Preferences, Tastes, and Traditions

These ideas may help you focus your product approach. India is a country with a long standing tradition of vegetarianism. Religion plays a major role in the diet of many Indians. Due to the fact India is a crossroad to the East, many foreign influences have seeped into the culinary culture.

Desire for freshness is always very high while shopping for food. Many people in India go food shopping daily. Traditional spices and ingredients are also important in cooking and taste preferences. Trying new foods is common in India; however, if tailored to traditional Indian tastes, acceptance of food will be higher. Casual dining is where most Western style foods can be found.

Fruits and vegetables are viewed as seasonal commodities in India. Availability is not always guaranteed. It is common that consumers adjust their diets to the seasons.

Indians are cost oriented due to the lack of great amounts of disposable income. The reluctance to pay premium for commodities might jeopardize a sale. Also there is a large agro-industry that can supply commodities at competitive prices. The demand for high-value food items coincides with the Festival of Lights (from October to December). Many foods are imported, especially nuts, candy and fruits. It is advisable to introduce new items to the market during this time span.

Exporters to India must be aware that the refrigeration system, both in homes and in transportation vehicles, is lacking. Many homes in India do not have a refrigerator. Also while shopping, many consumers visit multiple stores. One store might be for fruits and vegetables, one for dairy and yet another for meat. Quality is very important, so when shopping, many Indians go to places that are reliable or trustworthy.

Export Business Reminders

Before coming to India, use the many sources of information, for example, the Foreign Agricultural Service, state agricultural offices, and state/regional trade organizations.

• Build at least a minimum team within your company to help on the Indian market.
• Use metric terms.
• Ensure that all sales documentation is correct.
• Be patient regarding requests for documentation, ingredients lists, production process, and quality assurance.
• Respond to such requests with diligence and in a timely fashion.
• Use letters of credit to reduce risk.
• Hedge export values with your U.S. bank if you are concerned about exchange rate risk.
• Set up wire transfers for payments.

Food Standards and Regulations

Food exporters will have to grapple with India’s varied food sector laws, particularly those pertaining to the use of additives and colors, labeling requirements, packaging, weights and measures, shelf-life, and phytosanitary regulations. India is currently consolidating the more than 20 laws covering food products which were previously administered by several different government departments.

Following the removal of quantitative restrictions on imports of food products in 2001, making India compliant with the World Trade Organization, the government of India issued several notifications to make imported food products comply with domestic laws. Details on India’s food laws are available in our “Food and Agricultural Import Regulations and Standards Country Report 2006” (IN6066), which can be accessed here.

Some of the major food laws affecting Indian food importers are:

The Prevention of Food Adulteration (PFA) Act, 1954 and PFA Rules of 1955

This is a basic statute established to protect consumers against adulterated foods, and it encompasses food colors and preservatives, pesticide residues, packaging, labeling, and regulation of sales. This is similar to the Federal Food, Drug, and Cosmetics Act of the United States’ Food and Drug Administration. PFA standards and regulations apply equally to domestic and imported products. The PFA Act and Rules, and recent notifications are available at: http://mohfw.nic.in/pfa.htm

The Standards of Weights and Measures Act, 1976, and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.

 This established standards for weights and measures to regulate interstate trade and commerce in goods that are sold or distributed by weight, measure, or number. The Rules formed under the Act require labeling regarding the nature of the commodity, the name and address of the manufacturer, quantity, date of manufacture, best-before date, and the MRP. These labeling requirements apply equally to imported and domestically packaged foods.

The Plant Quarantine (Regulation of Import into India) Order, 2003 and amendments.

These legislative measures regulate imports of planting seeds and agricultural products into India. These can be accessed from: www.plantquarantineindia.org/PQO_amendments.htm

The Food Safety and Standards Bill, 2005

India is in the process of enacting an integrated food law, which is called the “Food Safety and Standards Bill, 2005,” in order to establish science-based standards for articles of food and to regulate their manufacture, import, export, storage, distribution, and sale. The Bill will bring all existing food-related legislation under one umbrella, which will entail the establishment of a Food Safety and Standards Authority of India. The full text of the Food Safety and Standards Bill 2005, is available at: http://mofpi.nic.in/foodsfty.pdf

Advantages and Disadvantages to doing business in India

Information: Import/Export

Indian tariff rates are among the highest in the world and there are various duties, including safeguard and anti-dumping fees, and non-tariff restrictions such as import bans.

U.S. Exports to India

*Calendar Year and Year-to-Date Comparison (In Thousands of Dollars)

U.S. Imports from India  

*Calendar Year and Year-to-Date Comparison (In Thousands of Dollars)

 Trade Agreements

India and the United States have reaffirmed their commitment to strengthen and deepen bilateral trade ties between the two countries. The U.S.-India trade relationship has grown substantially over the past five years – with total two-way trade in goods increasing from $14 billion to over $26 billion. However, potential trade and investment flows between our two dynamic, growing economies could be far greater.

To enhance trade and investment flows, the two countries created in July 2005, the Trade Policy Forum – a standing bilateral committee chaired by Indian Commerce Secretary Kamal Nath and U.S. Trade Representative Rob Portman, to increase trade and investment flows. India is only one of three countries with which the United States has such a cabinet-level chaired trade forum. On the U.S. side, it involves representatives of the Office of the U.S. Trade Representative; the Departments of Agriculture, Commerce, State and Treasury; U.S. Customs & Border Protection; and the Small Business Administration.

Under the Trade Policy Forum, agricultural authorities in the two countries have successfully addressed a number of sanitary/phytosanitary (SPS) issues such as the recognition of India’s Agricultural and Processed Food Products Export Development Authority (APEDA) as eligible to certify Indian products as compliant with USDA organic standards and the initiation of Indian regulatory processes for the approval of two edible waxes on fresh fruits. Going forward, the two sides have agreed to continue consulting with respect to fumigation treatments, poultry, dairy, almonds, wheat, and additional edible wax approval, and also to explore possible joint initiatives in the area of biotechnology. In May of 2007, Indian mangoes entered the United States for the first time, due to the agreements on SPS.

India Annual Exporter Guide (2006)

http://www.fas.usda.gov/gainfiles/200610/146249184.pdf

Information regarding:
a) locating distributors or agents on pages 6-7 of the guide
b) market structure and trends available on pages 9-12 of the guide

India Related Links and Resources

Currency - the currency of India is the Rupee. Use the free currency converter to compare to dollars, British Pounds, etc.

Weather - visit Yahoo!'s up to date Weather for India.

News - check out all the latest Google news on India.

Intercultural Know-How - use the Intercultural Business Communication tool for tips on doing business in India.

Dialing Code - the international dialing code for India is +91.

Time - India is +5.5 hours GMT.

History - read about the long and rich history of India.

Government Resources

• India’s Ministry of Agriculture:   http://agricoop.nic.in/
• U.S. Embassy and Consulates in India:  http://newdelhi.usembassy.gov/contact_us_2.html
• Plant Quarantine Organization of India is one of the food safety regulatory bodies in India.
• Background Notes on India