Doing business with India - cultural perspectives by vuquyhai

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									Academic Year 2008/2009 Semester 2

Doing business with India
Lecturer: Dr. Nguyen Thien Phu

Group 2 report
Vũ Qúy Hai Huỳnh Thị Ngọc Bích Huỳnh Thị Thu Hòa Chu Thị Kim Oanh

This report is jointly made by the four members of group 2, namely:

A. Introduction, India factfile and overview of Indian Culture by Vũ Quý Hai B. Cultural Dimension in-depth Analysis Hofstede‘s 05 Cultural Dimensions by Huỳnh Thị Ngọc Bích C. Logistic Infrastructure of India by Huỳnh Thị Thu Hòa D. Starting a business in India: guidelines & procedures by Chu Thị Kim Oanh


Introduction, India factfile & Overview of Indian culture: 1. Introduction: India - The Land of Mystery and Diversity
India is a fascinating country. It is home to thousand year old ornately sculptured temples, the world famous Taj Mahal, modern skyscrapers and slums. It is framed by the daunting Himalaya‘s in the north, the Arabian Sea and Pakistan in the west and the Bay of Bengal and Bangladesh in the east. The southern tip of India is washed by the waves of the azure Indian Ocean separating it from Sri Lanka. India contains an astonishing variety of geographical features from stretches of eternally frozen glaciers, deep rain forests, fertile valleys, blistering deserts, and palm sprinkled silvery beaches. It is an ancient land, with an absorbing history. The Neolithic Indus Valley civilization, almost 5000 years ago, extended much over what is now Pakistan and western India. The Aryans spread the Vedic civilization until the 1st millennium from the west through the Gangetic plains in the east. In the south, Dravidian culture was prominent and flourishing. Great religions were born, vast empires rose and fell; and waves of invaders repeatedly attacked India for its treasures.

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Did You Know …? Chess was invented in India ? India has the most post offices in the world ? Until 1896 India was the only source for diamonds ? The number system was invented by India? Arybhatta was the scientist who invented the digit zero ? India is the only other country, other than the US and Japan, that has built a super computer indigenously? Algebra, Trigonometry and Calculus are studies that originated in India ?

From the 10th century Islamic empires were established, ending with the Mogul Empire. European colonialism began in the 17th century, ushering in a new era in the region, by Portugal, Holland, France & lastly, Britain. India gained independence in the late 1940‘s mainly through the non-violent movement for freedom and justice led by M.K. Gandhi, which left an incredible impression throughout the modern world. Over thousands of years, geographical, historical and religious influences have weaved the colorful fabric of Indian culture, one of the oldest know to humanity. Tall, fair skinned and green eyed Aryans, small framed Asians and dark skinned Dravidians, have all left a complex demographic profile in the society. Religion, in many forms, is the basis of India‘s cultural context. This is entwined with every aspect of life and culture in India. The diversity is reflected in the 18 major languages and 1652 dialects. Hindi is the Doing business with India – group assignment Page 1

National language but use of Engish remains extensive in education and business. Traditions, rituals, art, music and dance, drama, literature, movies, recreation, sports and cuisine all have their distinct flavors depending on the region of the country. It never fails to amaze observers, who witness bullock carts competing with motor vehicles, street vendors selling their wares in the shadow of fashionable shopping centers and snake charmers existing amicably with physicians and scientists. Independent for only 50 years, modern India is also a struggling young country, trying to meet up with the challenges of a staggering population of 1.1 billion, a vastly diverse democratic society and fast advancing global technological progress. After extensive economic reforms in the early 90‘s, India‘s economy began to grow at a high rate as markets opened up for international investment. Foreign companies realizing India‘s potential have made efforts to get more involved. Both imports and exports are growing and overseas markets are being explored by newly confident Indian entrepreneurs. Presently, India is emerging as an economic super power with vast human and natural resources and knowledge base. Traveling in India can be a colorful, inspiring and interesting experience. It can also be confusing, chaotic and frustrating. Many love it, some are challenged by it, but no one can come back indifferent. India almost demands response from its visitors. It is essential to get reliable information when planning a trip to India. Health and safety tips from a travel organization or health clinic are very important. More and more foreigners are visiting India for reasons other than sight seeing. Companies are sending their employees as expatriates and consultants are being invited to live and work in India. To meet their needs, many local and international organizations are available to assist with obtainable resources. Indian embassy and consulates are good sources for such a search. The spirit of India eludes easy definition or explanation. India is many things to many people and each individual comes away with a unique experience.

2. India Factfile:
India is billed as the ―World‘s Largest Democracy‖. Modern day of India began with the dissemination of the British Empire and partition in 1947. India is now: the largest producer of tea; second largest cemnet produer; the 4th largest pharmaceutical industry terms of volume; the only country to develop its own supercomputer, aside from the US & Japan; one of six countries in the world to develop its own satellite launch technology. the largest producer of movies in the world; the largest center for diamond cutting and polishing; Doing business with India – group assignment Page 2


the world's 2nd largest fruit and vegetable producer; world‘s 4th largest economy. world-class recognition in IT and ITES (IT Enabled Services), bio-technology & space. largest English speaking nation in the world. 3rd largest standing army force, over 1.5 Million strong. 2nd largest pool of scientists and engineers in the world 5,000 year old ancient civilization 325 languages spoken-1,652 dialects 18 official languages 29 states, 5 union territories 3.28 million sq. kilometers – Area 7,516 kilometers - Coastline 1.17 billion people



5600 dailies, 15000 weeklies and 20000 periodicals in 21 languages with a combined circulation of 142 million. GDP $576 billion. (GDP rate 7.3% as of 2008). GDP per capita 2008: $1,016 (nominal); $2,762 (PPP) Parliamentary form of government Life expectancy: 67 years (men), 72 years (women) (UN) Monetary unit: 1 indian rupee = 100 paise Internet domain: .in International dialing code: +91

3. India Culture overview: Business dress
• Normal business dress for men is a suit and tie. However, since India has a warm climate, often just a full sleeved shirt with a tie is also acceptable. It‘s also important to select neutral colors that subdued and not very bright. For foreign women, pantsuits or long skirts that covers the knees are most acceptable. The neckline of the blouse or the top should be high.


Meeting and Greeting
• When doing business in India, meeting etiquette requires a handshake. However, Indians themselves use the

namaste. This is where the palms are
brought together at chest level with a slight bow of the head. Using namaste is a sign of your understanding of Indian etiquette.

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Culture Clash
• Culture is a shared, learned, symbolic system of values, beliefs and attitudes that shapes and influences perception and behavior. Different societies have different cultures. Culture clash can occur when parties do not appreciate the differences and meanings.

Holy bath in ganga river at the sun shine is one thing that Indians must do at least once in their life - Aggressiveness by outsiders can often be interpreted as a sign of disrespect: • It may lead to a complete lack of communication and motivation on the part of the Indians, but you can expect some of them to be very aggressive. - One needs to take the time to get to know individuals in order to develop professional trust: • Indians are very good hosts and will therefore, invite you to their homes and indulge in personal talk. All this is very much a part of business. One is expected to accept the invitation gracefully. Taking a box of sweets, chocolates or a simple bouquet of flowers would definitely be a welcome gesture. - Indians respect people who value their family: • They will allow family to take priority over work, whenever necessary. - Criticism about an individual's ideas or work needs to be done constructively without damaging that person‘s self-esteem.

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- Indians are used to a system of hierarchy in the work place: • Senior colleagues are obeyed and respected. Supervisors are expected to monitor an individual's work and shoulder the responsibility of meeting deadlines. Therefore, it is important to double check and keep track of time. - In a group discussion, only the senior most person might speak: • Does not mean that the others agree with him. They may maintain silence, without contradicting him (or you) out of respect for seniority. Westernized Indians on the other hand can be quite assertive and direct and it is fine to treat them in the same manner. - Politeness and honesty go a long way: • Establishes the fact that your intentions are genuine. - Women are treated with respect in the work place: • They feel quite safe and secure in most organizations in India. Foreign women working there will find it easy to adapt to an Indian work environment. However, they need to plan their wardrobe carefully, keeping in mind the conservative dress codes in India. - Humor in the work place is something that some Indians are not used to: - Most traditional Indians are teetotalers/vegetarians: • Their eating habits need to be respected westernized Indians are more outgoing and do socialize and drink.

Business Card
• • • When doing business in India, business cards should be exchanged at the first meeting. It is a good idea to have it translated into Hindi, more as a sign of respect as apposed to linguistic necessity. Be sure to receive & give with your right hand Make sure the card is put away respectfully and not simply pushed into a trouser pocket.

• Meeting should be arranged well in advance. This should be done in writing and confirmed by phone. Avoid meetings near or on national holidays such as Independence Day, Diwali or either of the two Eids. Avoid the heat by scheduling between October and March. It is advisable to schedule your appointment at least a couple of months in advance. If you are making your appointments before coming to India, do emphasize that you will be in India for a short period of time, if this is the case. Though not essential, it often helps in getting an appointment if you have an Indian contact. Punctuality is expected, although being 10 minutes late will not have disastrous consequences. Flexibility is paramount. Family responsibilities take precedence over business so last minute cancellations are possible when doing business Doing business with India – group assignment Page 5



When entering a meeting room you must always approach and greet the most senior figure first. Meetings should always commence with some conversations. This is part of the ‗getting to know you‘ process. Favourable topics of conversation are the latest business news, the fortunes of the Bombay Stock Exchange or cricket. Avoid talking about personal matters and if new to India; do not comment on matters such as the poverty or beggars.

• •

• Traditional Indian dishes are eaten with the hands. When it is necessary to use your hands, use only your right hand, as the left hand is considered unclean. It‘s considered acceptable, however, to pass dishes with the left hand. • Offering food from your plate to another person is not culturally acceptable, since this practice is seen as ‗unclean‘.

Business Eating
• • Business lunches are preferable to dinners in India. However, in recent times, business dinners and ‗powers breakfasts‘ are also becoming popular. Mostly, business meals are organized in either high-class restaurants or in five-star hotels. Some of these places are very much in demand, and you will need to book your table in advance.

• When negotiating avoid high pressure tactics. Do not be confrontational or forceful. Criticisms and disagreements should be expressed only with the most diplomatic language. Indian society has an aversion to saying ‖no‖ as it is considered rude due to the possibility of causing disappointment or offence. Listen carefully to Indians‘ responses to your questions. If terms such as ―We‘ll see‖, ―I will try‖ or ―possibly‖ are employed then the chances are that they are saying ―no‖. Once terms have been agreed you will be expected to honour them. When negotiations end successfully, continue the relationship building process with a celebration dinner.


Tips for India
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Tip #1: Always do a reconnaissance to understand the versatility and diversity of India. Tip #2: Don't judge India from your experience with taxi drivers or people in tourist
locations. Tourist don't see the kind generous people of India because many less desirable people gather at the same places where the tourists visit.

Tip #3: Communication makes the critical difference. Tip # 4: Never shake hands, touch or sit close or next to a woman unless offered. Tip# 5: Especially in public places it would be prudent to keep a respectable distance
between a man and a woman.

Tip # 6: You many never know the mistakes you are making. Tip # 7: The Indian wants to know everything at the first meeting don't be offended. Tip # 8: A foreigner's value is equated to the money that can be obtained from him or her. Tip # 9: The more you want something, behave as if you couldn't care if you don't get it.


Cultural dimension in-depth analysis: Hofstede’s 05 cultural dimensions in India society:
Cultural Overview

India is a country of both diversity and continuity. It is a creative blend of cultures, religions, races and languages. The nation‘s identity and social structure remain protected by a rich cultural heritage that dates back at least 5,000 years, making India one of the oldest civilizations in the world. One of the fundamental components of Indian culture, vital for your business organization to succeed, is an understanding of the traditions and ways of communicating with others that form the basis of India‘s society.


Key concepts and values

Hinduism and the traditional caste system - In India, religion is a way of life and must be respected in order to maintain successful business relationships. Despite the elimination of the traditional caste system, that was a direct outcome of Hinduism, attitudes still remain and both aspects of Indian culture still influence the hierarchical structure of business practices in India today. Fatalism - The concept of fatalism stems from one of the most characteristic traits of Indian culture – spirituality. The notion of Karma and that everything happens for a reason is still significant in the decision making process of many Indians. It also influences the concept of time in India and as a consequence business negotiations may take longer and are never rushed. Collectivism - India‘s strong sense of community and group defined orientation mean a greater acceptance of hierarchical settings. In India, there is a noticeable lack of privacy and a smaller concept of personal space, where several generations often live together under one roof. For Indian

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business practices this places an additional importance on interpersonal contacts, avoidance of conflict and a more indirect approach to communication.

3. 3.1

The five cultural dimensions influencing business practices Power distance

―When addressing a person, it is advisable to prefix the name with a 'Mr.', 'Mrs.’ or 'Miss', or the professional title of the person ['Doctor' or 'Professor'] unless the person asks you to refer to him by his/her first name. ” According to our research Indian people are very sensitive to the rank/position of people, and such awareness shapes their behavior towards it. They are used to a system of hierarchy in the work place, senior colleagues are obeyed and respected. Discussion is almost always lead by the most senior person. Supervisors are expected to monitor an individual's work and shoulder the responsibility of meeting deadlines. The hierarchy system is stemmed from the Indian caste system. Castes are primarily associated with Hinduism but also exists among other Indian religious groups. Castes and caste-like groups, those quintessential groups with which almost all Indians are associated, are ranked. Within most villages or towns, everyone knows the relative rankings of each locally represented caste, and people's behavior toward one another is constantly shaped by this knowledge.



India is a collectivist culture and their strength is that they work well in teams. Individuals tend to do things together, for example, if one person gets up to get tea, he may ask several people to follow. Indians usually have lunch together in the office as oppose to eating alone. Moreover, In India, there is a noticeable lack of privacy and a smaller concept of personal space, where several generations used to live together under one roof. For Indian business practices this places an additional importance on interpersonal contacts, avoidance of conflict and a more indirect approach to communication. Indian collectivism is derived from traditional Indian family values. Historically, the traditional, ideal and desired family in India is the joint family. These members eat the food cooked at one hearth, share a common income, common property, are related to one another through kinship ties, and worship the same idols. Indian people are raised this way, and the interdependence among family members has been rooted in their value since they were young. Therefore it creates a sense of harmony, interdependence and concern for others.



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Women in business are very common in India, and they are treated with respect in the work place. However, one should wait for a female business colleague to initiate the greeting. Indian men do not generally shake hands with women unless female initiate it. ―Tula shanbhar mula hou det‖ (May you be the mother of a hundred sons) is a common Hindu wedding blessing. In Mumbai they say ―ashta putra soubhagyawati bhav‖, which mean ―may you be a mother of bright 8 son’s‖ Statistics reveal that in India males significantly outnumber females and this imbalance has increased over time. For parents, they value boys more than girls as boys generally do more laborious tasks and are normally become the breadwinners. For a girl, being good mother and housewife is valued. Women and men should take different roles in society, and women should be family oriented. India has witnessed gender inequality from its early history due to its socio-economic and religious practices that resulted in a wide gap between the position of men and women in the society.


Uncertainty Avoidance

Indians appreciate punctuality but may not reciprocate it. It is advisable to make appointments at least one month in advance and confirm them when arriving in India. A flexible schedule will prove useful. They prefer indirect communication other than direct communication. The uncertainty avoidance in India is relatively low compared with other cultures. The concept of fatalism stems from one of the most characteristic traits of Indian culture - spirituality. The notion of Karma and that everything happens for a reason is still significant in the decision making process of many Indians. It also influences the concept of time in India and as a consequence business negotiations may take longer and are never rushed.


Long Term Orientation

Indian‘s have a sense of shame that is shared amongst a group of people and relationships are viewed by order of status. It is expected that the Indian businessperson will need to plan further out in their business plans because of their need for Long-Term Orientations. It‘s interesting to note that even when Indians travel abroad they work very hard and sacrifice a lot for long-term benefit, which is the education of their children. Staying put in one job is also an indication of long term orientation and this once was very common in India, however this is changing due to economic growth. Analysis of India 05 cultural dimensions is as follows:

• • • • •

Power distance: highest i.e 80% Individualism: 45% Masculinity: 55% Uncertainty avoidance: 35% Long Term Orientation: 61 %
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Key findings for doing business with India

India, home of the sacred River Ganges and the Himalayan mountains, has a history of invasion and migration that has influenced both its culture and its economy. Following the economic reform process of 1999, India‘s market has continued to strengthen and expand. Geographically, India benefits from its close proximity to the major Indian Ocean trade routes and together with the country‘s rich centre of mineral and agricultural resources, India‘s economy is witnessing significant inflows of foreign investment. India is also recognized for its fiercely competitive education system and is one of the largest providers of experienced scientists, engineers and technicians, making it an attractive market for foreign business.


Working practices India

Indians appreciate punctuality but may not reciprocate it. It is advisable to make appointments at least one month in advance and confirm them when arriving in India. A flexible schedule will prove useful. • • Business appointments should ideally be made for late morning or early afternoon, between the hours of 11 and 4. Making decisions is often a slow and thoughtful process in Indian culture. Deadlines should not be rushed as impatience is seen as aggressive, rude and disrespectful.

 Structure and hierarchy in Indian companies
• Within the system of hierarchy in the Indian work place, senior colleagues and especially elders are obeyed and respected. Discussions are almost always lead by the most senior person. Final decisions rest with the highest-ranking business executives, therefore it is important to maintain strong relationships with senior figures in Indian business.


 Working relationships in India
• • • It is the responsibility of the senior management to monitor, check and look after their Indian subordinates. Face and self-esteem is an essential part of Indian culture, therefore any individual criticism in business situations must be done carefully and with sensitivity. Despite the distinguished hierarchical system, the relationship between an Indian boss and his employee can be similar to that of close relatives. This is a direct influence of the community life experienced for thousands of years in India.


Doing business in India

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 Business practices in India
• Meetings in India will generally begin with friendly small talk. This may include personal questions about your family and is seen as a way of building rapport and trust before business. In India , the family unit is highly valued, therefore showing interest and respect towards your Indian counterpart‘s family is vital for establishing successful relationships. In Indian culture disagreement is rarely expressed in a direct manner. The word ‗no‘ is often avoided and is replaced by other non-verbal cues and indirect communication. During negotiations, trust and well-established relationships with your Indian counterparts must be in place before any form of business can take place.

• • •

 Indian business etiquette (Do's and Don'ts)
• • • • • • Do use titles wherever possible, such as ―Professor‖ or ―Doctor‖. If your Indian counterpart does not have a title, use ―Mr‖, ―Mrs‖, or ―Miss‖. Do wait for a female business colleague to initiate the greeting. Indian men do not generally shake hands with women out of respect. Do remain polite and honest at all times in order to prove that your objectives are sincere. Don‘t be aggressive in your business negotiations – it can show disrespect. Don‘t take large or expensive gifts as this may cause embarrassment. If you do take a gift make sure you present the gift with both hands. Don‘t refuse any food or drink offered to you during business meetings as this may cause offence. In addition, it is useful to bear in mind that traditionally, Indians are vegetarians and do not drink alcohol.

Indian Culture Quiz

Shaking your head from side to side is a non-verbal signal for ‗no‘. False: It is a visual way to communicate to the speaker that you understand what they are saying or that you agree with him In India, the word ‗caste‘ can be translated as ‗colour‘. True During a group meeting, it is customary to greet the youngest member first. False: is customary to greet the oldest members first as a sign of respect.

2. 3.

4. 5.

Feet are considered unclean; therefore you must never point your feet at a person. True. When greeting business colleagues it is polite to bow deeply from the waist and say ―namaste‖ three times. False: The correct way is to hold your hands together below your chin, nod or bow slightly, and say ―namaste". However, handshakes are also appropriate in contemporary Indian culture. Doing business with India – group assignment Page 11


Logistics infrastructure and Supply Chain in India:
Road network

From 1950 to 2004, Road Network has grown 8 fold to 3.31 Million Kms. National Highways form only 2% of the network, but carry 40% of the total traffic. Only 2-3 % of National Highway & States Highway are 4 lane, 15% are single lane, 85% of passenger and 70% of Freight moves through Road. Commercial vehicles ply on an average 300 km per day, compared to 600-700 km in developed nations. India has a vast network of National Highways (NHs) totaling to 65,569 km connecting important towns cities, ports and industrial centres of the country. In addtion, there are States Highway of 131,899 km, major district roads of 467,763 km, villages and other road of 2,650,000 km. Industrialization of the country has induced a traffic growth of 8-12 percent per year on many sections of National Highways and this growth trend is expected to continue. While the traffic on National Highways has been growing at a rapid pace, it has not been possible for the Government to provide matching funds due to competing demand from other priority sectors. This has led to a large number of deficiencies in the network. Many sections of the National Highways are in need of capacity augmentation by way of widening grade separation construction of bypasses bridges and expressways etc. Many bridges are in need of replacement. Out of 65,569 Km of National Highways, about 25,000 Km are under severe strain due to high volume of traffic. The traffic movement on National Highways is also hindered due to a large number of Rail-Road crossings where road traffic has to per force stop due to the frequent closures. Slow speeds, traffic congestion, high wear and tear of vehicles are some of the problems. The overall scenario on the highways has led to economic losses by way of longer turn around time for the vehicle fleeting rising vehicle operating costs and dissipation of human energy in the driving. Estimated loss due to lack of an efficient highway system is Rs. 20,000 cr./Year. This calls for urgent remedial measures. To motivate the inflow of resources for the development, maintenance and management of National Highways and to improve their efficiency, productivity and quality of service and to bring in competitiveness in providing highway services to road users. The Government of India in consonance with its general policy of liberalisation/globalisation of Country's economy welcomes private investment in National Highways and hopes that this measure would help in improvements of the existing highways and bring in the latest technology and improvements of the existing highways and bring in the latest technology and improved management techniques. The users are already accustomed to pay fee for use of bridges on National Highways for the last two decades. Other highway projects have also been awarded to private sector recently and the experience gained in the process has been utilised in framing these guidelines. Until 2007, notable National Highway Plans are National Highway Development Project (NHDP) valuedUS $13 billion for 1998-2007 with four/six laning of the highway of 5,846 km connecting Bombay, Delhi, Calcutta and Chennai (Golden Quadrilateral) and North-South and East-West corridors project of 7,300 km Doing business with India – group assignment Page 12

connecting Kashmir to Kanyakumari and Silchar to Porbandar, target Completion date is December‘07.


Railways in India are the Largest Network in Asia. Freight and passenger traffic carried by Indian Railway has recorded an impressive growth. This has been possible due to conscious efforts put in by the railways in improving the productivity of the assets and modernization and technology upgradation in various fields. In some areas like track, signalling, communication systems, computerization, etc., the technology in use is comparable to that in the very advanced countries. India has attempted modernization and technological upgradation of the system to generate maximum capacity with minimum investment and to provide rail transport at the least cost. 68% Revenue of Railway comes from Freight, 89% of its freight is commodities like coal, fertilizers, cement, petroleum products, food grain, finished steel, iron ore and raw material to steel plants. At present, High Density Network (HDN) connecting Bombay, Delhi, Calcutta and Chennai carries 65% of the total rail freight traffic and 55% of passenger traffic.


Sea port
India has vast coastline of 7,517 kms. There are 12 major ports and 184 minor and intermediate ports in India. The responsibility for development and management of major ports rests with respective Port Trusts under the Central Government. The state government administers the minor ports. Major ports handled approximately 82 percent of the All-India ports was about 8 percent more than the traffic handled in 1998-99. The average turn around time and output per ship-berth-day at major ports has shown improvement during 1999-00 as compared to the previous year. The government has finalized a scheme for joint venture formations between major port and minor foreign ports. An amendment to the Major Port Trusts Act for this purpose has also been carried out recently. Sixteen private sector projects involving an additional capacity of 58 million tones and an investment of Rs. 4427 crore have been approved by the government.


Air port
The Airport Authority of India (AAI) manages total 120 Airports in the country, which include 5 International Airport, 87 domestic airports and 28 civil enclaves. Top 5 airports in the country handle 70% of the passenger traffic out of which Delhi and Mumbai together alone accounts for 50% traffic. Passenger and cargo traffic has has growth at an average of about 9% over the last 10 years.

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It is estimated that the domestic passenger segment is likely to grow at 12% per annum. Anticipated growth for International passenger segment is 7% while the growth for International Cargo is likely to grow at a healthy rate of 12%. For cargo, tonnage handled increased 16 fold (in last 50 years), 255, 665 Tons of Domestic & 616,317 Tons of International cargo handled in 2003-04. The total cargo traffic handled in October 2003 has shown an increase of 3.5 percent as compared to the cargo handled in October 202. The international and domestic cargo traffic has increased by 4.3 percent and 2.1 percent respectively during the period. During the month of October 2003, 5346 thousand aircraft movements (excludes defense & other non-commercial movements), 4.033 million passengers and 88.59 thousand tones of cargo were handled at all the airports taken together.



1. Current Logistics services and challanges
India‘s GDP is USD 750 billion and would touch USD 1.4 trillion in the next two decades (as per Goldman Sach). Currently it is 10th largest economy. Logistics Cost accounts for 14% of GDP. Elements of Logistics cost
Customers' Shopping Handling & Warehousing Packaging Losses Inventories Transportation
0% 10% 20% 30%
6% 9% 11% 14% 25% 35%


The supply chain and logistic sectors in India have always been highly fragmented, characterized by numerous small market players, making the implementation of synchronized industry best practices difficult.

The Dynamics of the Supply Chain

Order Size

Customer Demand
Retailer Orders

Distributor Orders

Production Plan


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The escalating logistics and transportation costs resulting from India‘s infrastructure inadequacies are eroding the cost-savings achieved from manufacturing in India. Transportation is also high fragmentation (87 % of trucks with owners having 10 trucks or less). Logistics is complex value chains with many intermediaries (Shipper - Transporter - Broker - Financier - Truck Driver / Owner). Warehousing is also fragmentation amongst small C & F agents; there are primitive storage & material handling practices in most warehouses. Logistics Information Management seems low data connectivity across plants, warehouses, transporters and supply chain partners. Currently, new entrants with Logistics systems and equipment now establishing service offerings.

2. Current Logistics Industry Scenario
Increase in trend for outsourcing of Logistics Function. International Logistics players now expanding their base in India Service providers are investing heavily in creating infrastructure to bring efficiency in operations Service Providers efficient infrastructure has direct co-relation in reducing the customer‘s cost.


Starting a business in India: procedures & guidelines:

Doing business ranking
Economy Singapore Thailand Mexico China Vietnam India Indonesia
Ease of Doing Business Rank Starting a Business Dealing with Construction Permits Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business

1 13 56 83 92 122 129

10 44 115 151 108 121 171

2 12 33 176 67 136 80

1 56 141 111 90 89 157

16 5 88 30 37 105 107

5 68 59 59 43 28 109

2 11 38 88 170 38 53

5 82 149 132 140 169 116

1 10 87 48 67 90 37

14 25 79 18 42 180 140

2 46 23 62 124 140 139

Business Ranking table: The table is a part of the business ranking table (source from World Bank), it shows ease of doing business in some countries in Asia, Mexico and India. India ranks at 121 in staring a business among 181 nations in World Bank list. It is rather difficult for Starting a business although Employing Workers, Getting Credit, and especially Protecting Investors of India get a good position in the rank table. Starting a business in India takes 13 steps, at least 16 days, at most around 1 month, costs around 10,000 INR (203 $), with many procedures to complete, compared with Singapore (the first position) 4 steps in 4 days only and around 350 SGD (237 $). However, comparing with China with 14 steps during 41 days and around 1500 RMB (220 $), India still can be a better choice.

Detail of each step in 13 steps for starting a business in India is described in the table below: No: Procedure Time to Cost to complete: Page 15

Doing business with India – group assignment

complete: 1 2 3 Obtain director identification number (DIN) on-line Obtain digital signature certificate on-line Reserve the company name with the Registrar of Companies (ROC) on-line Stamp the company documents either at the Superintendent or an authorized bank 1 day 1-6 days 2-3 days INR 100 INR 400 to INR 2650 INR 500 Rs. 200 (for MOA) +Rs. 1000 (for AOA) for every Rs.500,000/- or part thereof +Rs. 100 (stamp paper for declaration Form 1) see comments INR 350 INR 66 for Fee and INR 5 for Application Form, (if not downloaded)


1 day

5 6


Present the required documents along with the registration fee to the Registrar of 3-7 days Companies to get the certificate of incorporation Make a seal 1 day Visit an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of 7 days India (UTI) Investors Services Ltd to obtain a Permanent Account Number (PAN) Obtain a tax account bumber for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department Register with Mumbai Shops and Establishment Act, 1948 Register for VAT before the Sales Tax Officer of the ward in which the company is located 7 days, simultaneously with Procedure 7 2 days, simultaneous with procedure 8 12 days, simultaneous with previous procedure 2 days, simultaneous with procedure 10 12 days, simultaneous with procedure 10 9 day, simultaneous with procedure 10


INR 55


INR 1,500 + 3 times registration fee for Trade Refuse Charges INR 5000 (Registration Fee) + INR 100 (Stamp Duty)



Register for profession tax

no charge


Register with Employees' Provident Fund Organization

no charge


Register for medical insurance (ESIC)

no charge

* Takes place simultaneously with another procedure.

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There is a down grade Starting a business in India, loosing 7 points from 114 in 2008 to 121 in 2009 although there is an little improvement in time (33 down to 30 days), cost (74.6 down to 70.1).

The summary of indicators of India (source: Ease of... Doing Business Starting a Business Dealing with Construction Permits Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business Doing Business 2009 rank 122 121 136 89 105 28 38 169 90 180 140 Doing business with India – group assignment Doing Business 2008 rank 120 114 131 89 114 25 33 167 81 180 140 Change in rank -2 -7 -5 0 9 -3 -5 -2 -9 0 0 Page 17

Summary indicators of India shows that there is not only a down grade in starting a business, but many other activities. India are loosing its points to make India become less attractive in investor's eyes.

Media in India:
The media in India is one of the most powerful tools used by the major powers to control and change the Indian public perception about them selves and about the world. The country consumed 99 million newspaper copies as of 2007—making it the second largest market in the world for newspapers. By 2008, India had a total of 60,000,000 Internet users—comprising 6.0% of the country's population, and 4,010,000 people in India also had access to broadband Internet as of 2008— making it the 18th largest country in the world in terms of broadband Internet users. India also ranks 8th in the list of countries by number of television broadcast stations by 1997 statistics.

End of assignment report

Group photo with Dr. Nguyen Thien Phu

Doing business with India – group assignment

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