India: The Country and its Culture

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On this Page:

- India: Country Overview
- India: Business Culture
- India: Employing People
- India: Entry and Residence

India: Country Overview

Classical Indian culture was formed under a series of civilizations in the last three thousand years BC; the Gupta dynasty in the 4th to 6th centurries AD saw a flowering of Indian science, art, and culture. The Delhi Sultanate in the 10th and 11th centuries followed a Moorish invasion; later the Mughal dynasty ruled India from 1500 to 1800.

European powers began to infiltrate India from the 17th century onwards, initially for trading purposes. The British East India Company ran what amounted to its own government in India during the 18th century and the first part of the 19th century. By degrees Britain became the dominant power in India, and by the middle of the 19th century India was counted as a part of the British Empire.

A (mostly) non-violent independence movement led by Ghandi and Nehru brought about the creation of a separate, independent Indian state in 1947, although a substantial part of the peninsula became Pakistan. Wars between India and Pakistan led to the eventual creation of Bangladesh out of what had been East Pakistan. Both India and Pakistan have nuclear weapons.

The climate of India varies from tropical in the south to temperate in the hillier north. India has rich agricultural resources, and its mineral reserves include coal, iron ore, manganese, mica, bauxite, rare earth elements, titanium ore, chromite, natural gas, diamonds, petroleum and limestone.

The population is approximately 1.2 billion, second only to China, and is growing at 1.34% per year. The two largest cities are Delhi, the political capital, with 22m inhabitatnts, and Mumbai (Bombay), the commercial capital, with 20m inhabitants.

There are twenty official languages in India, testifying to its fragmented past; Hindi is the most widely spoken, being used by 41% of the population. For political, economic and commercial communication, English is very widely used. Literacy is only 61%, largely due to the exclusion of women from formal education in many regions.

India is a federal republic divided into 28 states and seven union territories. There is a bicameral parliament. The president and vice-president are elected by the members of the legislature; but real power resides with the Prime Minister, who is elected by the members of the largest political party. Currently the prime minister is Manmohan Singh and he has been in power since 2004.

The legal system is based on English common law and precedents play a large part in the judicial process, as they do in other common law countries. There is a Supreme Court; justices are appointed by the president and remain in office until they reach the age of 65.

India's economy was held back for a long time by protectionist, autarkic tendencies verging on cronyism. Liberalization began in the 1990s and large parts of the economy can now be described as open. Although agriculture is still the dominant sector, incentive policies have underpinned the growth of IT and other technology-based industries. Outsourcing has been a major growth sector.

Growth has averaged 7% for the last ten years, and the economy bounced back strongly from the financial crisis to clock up 10% growth in 2010. The deficit was on the high side at 6.8% in 2010 and inflation has been a problem. With low GDP per head of only USD3,400 there is ample scope for further rapid growth.

The currency is the Indian rupee. Currently, 1 Indian rupee = 0.022104 US dollars (45 rupees to the dollar).

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India: Business Culture

The key to understanding Indian business culture is hierarchy, as a result of the caste system, in which every person knows his or her place to a degree which is surprising and even offensive to egalitarian Westerners.

Although some evening out of the caste system has taken place, you should not over-estimate that. In a typical Indian organization, many tasks can only be performed by people of the appropriate caste; boss figures, who normally come from a higher caste, will not consider tasks that are reserved to lower caste members. It would be inappropriate, therefore, for a manager to make coffee for subordinates or move a table. Unsurprisingly, this can lead to inflexibility and delay.

The role of a manager is as prescriptive as the role of a cleaner: bosses must manage, and must do so in an authoritarian and complete manner. If working with Indian staff, very little should be left to the discretion or initiative of underlings. If you don't make it precisely clear what you want, the result will be confusion, and inaction.

Handshakes are normal when meeting people, but it is also possible to use the 'namaste', in which the palms of the hands are brought together at chest level with a slight inclination of the head. People should normally be addressed by their titles (Dr, Professor, Minister), with or without their personal names. Business cards are de rigeur on first meeting with an Indian businessperson. Although women have a lowly place in many Indian communities, they are perfectly well accepted in business situations, where apparent rank will count for more than gender.

Meetings should be well prepared, and should be conducted in a way that recognizes the relative seniority of the people present. If a senior manager is absent from a meeting without obvious cause, this can be taken as a sign that nothing much is to be expected from that meeting. During meetings, and other Indian business encounters, be prepared for a much higher level of chit-chat than in an equivalent Western situation. It is normal for an Indian to break off a meeting to take a personal phone call or socialize with colleagues.

While it may be difficult at first to understand the relative positions of individuals in the group with which you are negotiating or dealing, there are some pointers. It is highly probable that the members of a team will enter a room in the order of their relative importance, especially in the presence of a foreigner; and junior members of the team will constantly defer to their seniors in conversation and in bodily behaviour.

As in most Asian civilizations, confrontational tactics are not likely to be successful. There is also a bias against direct speaking: if an Indian uses phrases such as 'we'll see' you can probably take that as a 'no'.

It is normal to give gifts to Indians during a negotiation process; they should be wrapped and will not be opened during a meeting. Black or white wrapping paper should not be used; and one should avoid alcohol or foodstuffs unless you are sure of the religion of the recipient.

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India: Employing People

Despite a considerable body of law relating to employment, in practice it is quick and easy to find and hire staff in India, although there are certain sectors, such as outsourcing, where rapid growth has led to shortages. Overall statistics on employment and unemployment are next to useless, such is the regional and sectoral diversity of this enormous country.

Generally speaking, there is a large pool of available labour for office staff for managerial, supervisory, technical and clerical roles. Wage rates are generally very low compared with Western levels, although in certain specializations they may be comparable. Recruitment agencies flourish, and may well be the best first port of call for an intending employer. It is potentially misleading to quote figures, but an average office worker might expect to receive an annual salary equivalent to USD6,000; graduates would expect more; and it would be less in country areas. A 'dearness' or cost-of-living allowance can add significantly to the cost of lower-paid workers.

Almost all educated Indians (a minority of the population) speak English to an acceptable level.

The Indian constitution allows both the central government and state governments to legislate on employment matters, leading to potential confusion as to applicable law in a given situation. Business practices also vary widely between regions.

Some of the more important federal laws governing employment are as follows:

• The Workmen's Compensation Act, 1923, providing compensation for industrial accidents and occupational diseases.
• The Payment of Wages Act, 1936, and the Minimum Wages Act, 1948, requiring timely payment of wages, and setting up sectoral bodies to determine minimum wage.
• The Industrial Disputes Act, 1947, allowing reinstatement of workers by a court; there are grievance procedures; and establishments with more than 100 workers must establish codes of working conditions. A business employing more than 50 people needs government permission to make anyone redundant.
• The Industrial Employment (Standing Orders) Act, 1959, requiring some types of plant to define conditions of employment.
• The Maternity Benefit Act, 1961, doing what it says on the tin.
• The Payment of Gratuity Act, 1972, requiring employers to pay a 'gratuity' to some low-paid workers on termination.
• The Equal Remuneration Act, 1976, establishing equality in remuneration for men and women.
• The Child Labour (Prohibition and Regulation) Act, 1986, regulating child labour.
• The Trade Unions Act, 1926 providing for the registration of trade unions, but there is no requirement for employers to consult or involve them. Only 2% of the work-force is unionized.
• The Employees Provident Fund Act applies to establishments with more than 20 workers; 12% of pay up to Rupees 6,500 per month is applied to pension provision.

Under the Factories Act, 1948, a six-day 48-hour working week is normal; but in practice office employees work a five-day week of 37-38 hours. Work past nine hours a day counts as overtime, usually at double pay.

There is no statutory requirement for a written contract, but there are statutory norms which apply in the absence of a contract. There are laws requiring sik pay, maternity leave, bonuses and other benefits for workers, but they are not universally applied.

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India: Entry and Residence

Foreign nationals (except citizens of the countries of Nepal and Bhutan) require a valid passport or travel document and a valid visa to enter India. The Indian embassy or consulate in your country of residence will issue a visa.

• Tourist visas last for up to six months and their holders have no right to work in India; they are not extensible.
• Transit visa allow a stay of up to 15 days while en route to another destination.
• Business visas lasts for between three months and five years; an invitation letter from a resident Indian company is required, plus a request letter from the individual's company. They can be single- or multiple-entry.
• Employment visas (work permits) are necessary to live and work in India, and are usually obtained by the prospective employer, but the rules are not clear. It usually takes about three months to obtain a work permit and they allow the issuance of an annual 'stay permit'.
• Student visas are issued on request by an Indian educational institution.
• Medical visas permit an individual to enter India for medical treatment and last for up to one year; they are extensible.

The Ministry of Foreign Affairs is responsible for the issuance of work permits (employment visas) under the Foreigners Act. They are normally necessary for foreigners, although people with Indian ancestry may be exempted from the need for a visa. The family members of an individual holding a work permit are also permitted to work. Indian Consulates issue work permits and visas prior to arrival.

Normally a foreigner employed by a foreign or Indian establishment will require an Employment Visa, although if only short visits are being made a Business Visa may be sufficient.

The local Foreigners Regional Registration Office (FRRO), an agency of the Home Ministry, is responsible for registering the visas of foreigners employed by liaison offices in India and for supervision of the individuals during their stay.

Registration with the police is required witin 14 days of arrival in India (which may or may not be the same as registration with the FRRO in a given region). Documents required include a registration form in quadruplicate and a registration permit booklet, copies of passport and visa, a copy of the employment contract, copies of a letter of recommendation from the parent company, six passport photos. An HIV/AIDS test result must also be filed, within 30 days.

Non-citizens of Indian origin may take advantage of the 'Persons Of Indian Origin' or 'Overseas Citizenship Of India' schemes, under which PIO or OCI cards are issued permitting long-term residence in India, without obtaining Indian citizenship as such.

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