Understanding the fabric of India

As Australian and US businesses look to expand their markets and diversify from traditional trading partners, Governments are paving the way for increased trade and security arrangements. Whilst the QUAD has created great government to government dialogue between Australia, India, the US and Japan, how do Australian and US businesses commence dialogue with local treading partners and succeed in the Indian market?

The World Bank’s latest data projects India’s GDP to reach an impressive $3.4 trillion, propelling the nation into the ranks of the world’s fifth largest economies. This feat is characteristic of India’s consistent performance as the fastest growing major economy, underscored by a recent statement from Prime Minister Modi, who confidently predicts India’s ascent to the third largest economy by 2027. This bullish outlook is underpinned by several factors, including visionary policy directives, stable governance, a favourable business climate, robust geopolitical relationships, and an environment conducive to innovation and trade.

As India emerges from the shadows of poverty, a growing demand for goods and services is being witnessed, rendering the nation an attractive destination for foreign businesses keen on investment and expansion. Notably, key sectors such as technology, healthcare, retail, automotive, defence, and infrastructure have served as avenues for foreign investors, catalysing India’s remarkable economic trajectory.

Today, with a staggering population of 1.4 billion people, English established as an official language, a democratically elected government, and a diaspora of educated citizens capable at bridging cultures, India has emerged as an alluring alternative to our traditional trading partners.

While the allure of Indian business prospects is undeniable, navigating its complex market landscape presents formidable challenges. Establishing and managing a business in India whilst trying to understand its intricacies demands considerable time and effort. Compliance with numerous local, state, and federal laws, securing the right permissions, licenses, and authorisations, and adjusting to the preferences of Indian consumers stand as pivotal conditions for achieving success.

Over time, companies have deployed diverse strategies to penetrate the Indian market. Suzuki’s partnership with the government in 1983 to launch Maruti Suzuki, a venture that continues to flourish, stands as a good example. Concurrently, Tata and Starbucks, Bharti and AXA General Insurance, Cadila and Bayer Zydus Healthcare, amongst others, have harnessed the power of joint ventures to secure their foothold. On the flip side, corporate giants such as IBM, Amazon, Coca-Cola, Pepsi, Google, HP, Nestle, and Sony have boldly charted their own pathways to success.

Nonetheless, for every success story, there exists a tale of struggle. Notably, in December 2022, the Indian government disclosed that 2,783 foreign companies and their subsidiaries had ceased operations in India between 2014 and November 2021. Motorola, Nokia, Vodafone, Chevrolet, and Walmart are examples of companies that encountered hurdles due to cultural disparities and the intricacies of conducting business in India.

Intricately woven into the fabric of Indian business is the need to comprehend its diverse and intricate environment. Businesses who have succeeded in India invest in cultivating relationships and trust with local stakeholders, recognizing the pivotal role personal connections play in shaping business interactions. As they say – “Your network is your net worth”.

The merits of patience, flexibility, and adaptability are crucial in navigating bureaucratic complexities and cultural differences. Prioritizing compromise during negotiations lays the foundation for enduring partnerships. Foreign entities must also demonstrate an astute awareness of the regulatory framework, tax structures, and compliance norms governing Indian commerce.

India’s hierarchical social structure places a premium on respect for authority and age, a principle that reverberates through business interactions. Communication often unfolds in an indirect and polite manner, necessitating active listening and a keen sensitivity to non-verbal cues. The nuances of timing and flexibility in scheduling meetings mirror the relatively relaxed nature of India’s business culture. To truly thrive, a nuanced understanding of the varied cultural landscapes across different states and regions is a must, serving as a bedrock for tailoring business strategies accordingly.

The crux of success hinges on capturing the local sentiment and honouring the prevalent culture. The revered status of the cow, the transformative impact of the Navratra festival turning carnivores into vegetarians, and the coexistence of English and local languages exemplify the intricate tapestry of Indian society.

This landscape, rich with contrasts, necessitates careful navigation.

The Indian penchant for ‘jugaad,’ the art of resourcefulness and innovative problem-solving, coupled with careful negotiation alludes most new entrants into the Indian market. This ethos can be harnessed in business to adapt to unique challenges and craft alternative solutions, albeit with a vigilant eye on potential regulatory implications.

Fluent communication in the Indian context is an artistry characterised by subtlety and indirectness. Politeness and lengthy phrasing are the norm, with individuals often veering away from direct negative feedback. Skilful active listening and skilled interpretation of non-verbal cues are pivotal in unlocking the underlying meanings within conversations, averting misunderstandings.

An often-misunderstood aspect by many investors is the intense competition across sectors. India’s consumer market, in particular, is a bustling arena teaming with local and international players vying for consumer attention. Foreign enterprises must impeccably tailor their offerings, services, and marketing approaches to resonate with the unique preferences of Indian consumers.

Impatience and unfamiliarity with Indian business customs can lead to stumbling blocks. The cultivation of relationships and trust is an endeavour that matures with time, demanding patience. Hastening into decisions or negotiations risks misinterpretation and the squandering of opportunities. Thriving in the Indian market necessitates an unwavering long-term vision and a willingness to recalibrate strategies to align with local dynamics.

Several critical sectors have propelled India’s economic ascent, functioning as beacons for foreign investment. The Information Technology (IT) and Business Process Outsourcing (BPO) domain, renowned for its skilled workforce and cost-effectiveness, exemplifies India’s global IT prowess. Simultaneously, the pharmaceutical sector, with its expansive generics market, is a significant contributor to India’s economic tapestry. The nation’s escalating renewable energy sector has garnered substantial attention, underpinned by the government’s commitment to sustainability. Additionally, the burgeoning consumer market, buoyed by a burgeoning middle class and amplified disposable incomes, unveils lucrative avenues for foreign businesses.

India unfolds as a land of boundless possibilities for foreign enterprises, albeit necessitating meticulous planning and a deep-rooted understanding of local markets and consumer behaviour. The complex interplay of cultural nuances holds sway over business outcomes, spotlighting the paramount need for adaptability and innovative strategies. India rewards the tenacious, the curious, and the visionary, beckoning those who dare to forge meaningful connections with consumers and surmount the challenges with resilience.


Rashmi Rai – Vaxa India Partner

As a business development and education specialist, Rashmi has extensive experience in identifying and delivering positive outcomes providing maximum impact or her clients and her local community.

Based in Delhi, she has a Bachelor’s degree in Arts with Hindi Honours and a Master’s degree in Arts with a focus on Language, both from Banaras Hindu University and holds a Bachelor’s degree in Education from Mumbai University.

Vaxa Bureau’s trade facilitation services help organisations and businesses looking to gain an advantage for their product or service into Australasia and the Indo Pacific.Our team consist of honorary diplomats, defence attaché’s and retired senior military officers, trade and policy advisors, professional services experts and supply chain and logistics specialists with extensive experience working at the highest levels of government and business across the region.