Category Archives: India

New Year. New Rules. Are You Ready?

It’s The New Year in the Gregorian Calendar (as opposed to the Julian Calendar or the Islamic Calendar), which means that it’s the new year in most English Speaking and/or countries where a branch of Christianity is the dominant religion, including the US and the UK. That means, for many of you, you have a whole new set of rules and regulations to deal with. Are you ready?

For example, the eight edition of the International Commerce Terms (Incoterms 2010) take effect today. For example, no longer can you use DAF, DES, DEQ, and DDU as they have been replaced with DAT and DAP. The Advance Cargo Declaration is now mandatory in the European Union, which now includes Estonia (not to be confused with Elbonia). Accounting reglations specified in the HITECH Act take effect today and affect suppliers in the US Health Services & Medical Devices supply chain. Minimum wage goes up in ten (10) different states today, and this will no doubt lead to increases in logistics costs for SMEs, who already have to contend with the increases in small package courier costs at FedEX and UPS coming into effect on Monday.  And for those of you sourcing internationally to low-cost countries, let’s not forget that the GSP went away on January 1!  (And now those low cost countries aren’t so low cost anymore!)

For those of you in the chemical industry, you have to deal with the new reporting and filing requirements for the classification, labelling, and packaging of chemicals in Europe, courtesy of the European Chemicals Agench. For those of you in the energy industry in India, you need to be cognizant of the new UK Renewable Energy Certificate Regulation, and be compliant if you want to take part in REC trading. And for those of you reading down under (or, from your perspective, up over) in the automotive industry, all new vehicles must be fitted with electronic stability control (ESC) systems. (Well, unless you’re in Victoria, then you have until November, but why be compliant in only one state when the other five will follow suit in 10 months?)

And I’ve only scratched the surface. It’s a new year, and it is bringing new challenges. Are you ready?

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How Will India Become The #2 Economy …

… if it can’t get control of the rampant bribery that plagues the entire country? From what I’ve been reading, the situation hasn’t improved any since KPMG did their 2008 study that found that 84% of Indian Businesses pay Bribes (as quoted on hindustantimes.com). According to this recent article over on NDTV, India [is still] among the top bribe paying country (according to a recent Transparency International study). According to the recent study, 1 in 2 Indians (54%) have had to grease the palm of authorities to get things done. Even more worrying is that bribes to the police have almost doubled since 2006 and bribes to judiciaries for registry and permit services are up as well. In other words, it’s not the private sector that is the problem, it’s the public sector!

And if the public sector is the problem, which is especially true in Bangalore which tops in India’s bribery chart (commonfloor.com), how are they going to continue to grow in a global economy when country after country is adopting anti-bribery laws, like the Foreign Corrupt Practices Act in the US or the Bribery Act in the UK (that follows the recommendation of the OECD Anti-Bribery Convention that is attempting to eradicate bribery in all of the 34 member countries). Especially when the problem is so bad that it’s said that even [the] blind are witness to bribery in India (thaindian.com)?

I don’t have any answers. Some people are suggesting that legislation may be the answer (equitymaster.com), but if officials can be bribed to ignore it, it won’t solve the problem. If you have any ideas, please feel free to leave a comment.


Bribe, bribe, everywhere a bribe
Preventing the transaction, breaking my bank
To do this or do that, you must make a bribe

Cultural Intelligence VI: India

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group and Global Supply Training which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with India, India, like China, has a long cultural history with roots that go back at least to the Indus Valley civilizations in 3,000 BC. (Recently, archaeologists have discovered abandoned and buried port cities and temples over 6,000 years old, suggesting their culture could be much older.) And while the official languages are Hindi and English, India has 5 languages in the top 20 spread across its 28 states, 6 union territories, and the National Capitol territory of New Delhi. As a result, its society is a bit fractured compared to China (where differences are primarily North/South), with mild to moderate differences in culture and behavior, but there are a number of common threads that, once unwoven, will make your dealings with India easier.

With respect to Locke’s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), power distance is generally quite high as India is based on the caste system (which you must never bring up) and its values and beliefs are still strongly held (despite the movement by some of the newer consulting organizations to abolish the system within their four walls). While they may attempt to be monochronic in their dealings with the west, they are a polychronic culture that does not work by the clock. Buyers and sellers are roughly equal, and any inequalities will be due to any personal relationships that exist between the parties. They are tolerant of uncertainty and even known to take risks and experiment. Harmony underlies almost all of their religions and every aspect of their daily life, and face must always be given. Despite the caste system, and the fact that tasks are collective exercises, they are very individualistic and highly personable (as privacy is rarely indulged in or sought).

With respect to non-verbal communication, it is moderately indirect, as you should not refuse a request outright, but there is a strong history of bartering, so you are free to debate the pros and cons of any situation, as long as your “no”s are indirect and gentle and you tiptoe around delicate issues (such as caste and familial privacy). Unlike some Asian cultures, they can, and you can, get quite loud, but only if you are passionate about what you are saying.

As with any well established culture, there is a lot of non-verbal communication that occurs, and a number of actions that are taboo. For example, while limited touching is permitted (such as same-sex handshakes, and collegial backslapping between members of the same sex, as long as you never touch someone’s head), you should not stand with your hands on your hips, whistle, wink, or point your feet at a person. Hand gesticulations, which many Indians are prone to use when speaking passionately, should only be used if they speak English and you have a basic understanding of their language. You don’t have to be as reserved in your facial expressions as you would with other Asian cultures, but you need to take your cues from those around you, as the degree of expression permitted is situational. While direct eye-contact may be made, it is seen as intrusive by many, so you will again have to take your cues from those around you. Distance, due to crowding in many cities, is minimal, generally only two to two and a half feet. And it is critically important to always maintain an agreeable attitude, even if you don’t agree (as you can always indicate your disagreement indirectly (by indicating that you’ll consider the request, get back to them later, or try). Of course, if dealing with an Indian in North America who is used to your culture, all this goes out the window as they can be very adaptable and will attempt to tune their behavior into your cultural norms in their attempt to maintain harmony and an agreeable attitude.

Meetings, which often begin VERY late, will often begin with small talk and fail to follow a structure. Like other Asian cultures, they will want to get to know you professionally and personally before they get down to business. Remember that time is an expression of eternity in India. Meals are common, and the etiquette is to politely refuse the first offer of food or drink. You will be asked again and again. Just remember not to thank your hosts after a meal. A thank you is considered a form of payment and is insulting. When negotiating, be humble and polite and prepared for concessions on both sides. It is expected. (Although if you were to observe a meeting between two Indian teams, you might find that whoever has the most passion and screams the loudest wins.)

Finally, learn what Namaste is.

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The New Wild West … India? Really?

I found this recent article over at India Knowledge @ Wharton on “a ground-level view of India’s new opportunities and challenges” to be quite interesting and quite humorous when it said that Wharton’s Cohen described the India as “the Wild West”.

What was the Wild West? It was a new frontier that was untamed, lawless, and fraught with as much danger as there was perceived opportunity. In comparison, India contains one of the oldest cultures on the planet, it has more laws at the country, state (& territory), district, and municipal level on the books than most other countries combined, and the biggest dangers are poverty and disease, which are much less of a risk for visitors than they are for the locals. In the Wild West, almost everyone carried a gun and many disagreements were settled by a dual. That’s certainly not the case in India.

While it is a land of opportunity, as it is projected to become the 3rd largest producer of GDP in the next 30 to 40 years, and currently loses 0.5% of its GDP due to logistics and supply chain inefficiencies alone, it’s certainly not wild. If anything, it’s the exact opposite.

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