By Sigurd Neubauer
India is one of the world’s fastest growing economies. New Delhi is also becoming increasingly important – both as a market for American investors but also strategically – at a time of ever-increasing tensions between Washington and Beijing.
While India is a vibrant democracy, understanding how its complicated and perceived messy politics impact the country’s regulatory environment and political stability are paramount for any potential investor. With that objective in mind, we reached out to Nabik Syam, a partner at P&A Law Offices, a major firm with several branches across India. The firm also has representation in the United States spearheaded by Anand S. Pathak.
In our multi-part series, we discuss cultural norms, business etiquette and Indian’s recent decision to open up strategic sectors such as defense, pharmaceuticals and aviation, among others, to international investors. In our second part, we discuss India’s political and regulatory environment.
India, the world’s fifth largest economy, is opening up its strategic sectors to international investors
Culture and business etiquette
We begin our conversation by discussing business etiquette and the role of culture. Syam describes India as “diverse and deeply religious,” which is important for any foreign investor to understand in order to successfully navigate a country of 1.3 billion people and the world’s fifth largest economy. “Family values and bonds are very strong, and cultural activities and festivals are held year-round,” he says.
Social media etiquette or lack thereof, like in the United States, can present hurdles for doing business in India, Syam cautions.
“With social media being active and nearly every second Indian having access to cheap data and mobile phones, care should be taken not to hurt any cultural sentiments, and every cultural sentiment is closely intertwined with religion. An understanding of the deep and diverse heritage of India, its people, languages, and history need to be taken into consideration when framing policy matters. In day-to-day interactions, care should be taken to share mutual respect.”
On how business negotiations are carried out, the lawyer describes Indians as “very intense entrepreneurs and negotiators.” Because India has a liberal economy, international and domestic deals often require advisors and consultants from both sides to bring them to a successful fruition.
“Generally, all negotiations are time bound since both parties will always keep alternative options,” he adds.
With social media being active and nearly every second Indian having access to cheap data and mobile phones, care should be taken not to hurt any cultural sentiments, and every cultural sentiment is closely intertwined with religion
When it comes to finding success in negotiations, Syam explains that it will depend on the facts and circumstances of every matter. “If things are documented in emails and term sheets, there will be no requirement to understand hidden messages. In India, all business dealings, negotiations at corporate levels are documented and draw on meeting minutes. It is always advisable to insist on proper documentation and replies in respect to all negotiations within a certain time frame.”
Understanding subtleties are, of course, important in any culture. Within the Indian context, Syam explains that generally, if there is genuine interest, a specific timeline will be set for future steps. If no such timelines are promised or provided, and the response is “we will get back to you,” it should be understood that the parties are still not convinced.
In India, all business dealings, negotiations at corporate levels are documented and drawn as minutes of meeting
Family is everything in India, Syam explains in response to what role it plays in exploratory talks with potential partners or corporations.
“In case where the business is family owned, and not a public limited company, which is held by public shares, the family shall always play an important role in exploratory talks. Even where a family holds substantial shareholding in a company though not a majority stake, that family can still have a role in exploratory talks.”
Indians take pride in their rich, diverse and vibrant culture
The country’s main asset is its human capital, the lawyer explains. “India is the youngest nation in the world in terms of population size. Projections indicate that from 2020 onwards, the average age of India’s population would be the lowest in the world, at around 29 years of age. The country also possesses a large workforce proficient in English who are technically qualified in various fields such as engineering, medicine, information technology and so on,” Syam says.
Indians are very intense entrepreneurs and negotiators
On what some of the misconceptions potential international investors may have about India, Syam says that they tend to center on its workforce not being skilled. He adds that other misconceptions center on the system being slow; processes taking time; inadequate law and order; and poor infrastructure.
Disclaimer: The views expressed are the personal views of Nabik Syam and are purely informative in nature and do not constitute an opinion or an advice in respect to any of the issues in any manner whatsoever.
Misconceptions about India tend to center on its workforce not being skilled; the system being slow; processes taking time; inadequate law and order; and poor infrastructure