Originating in the Indus Valley Civilisation, India is home to an astounding 1.3 billion people. Its citizens belong to various religions, castes, tribes and cultures, but they all come together to form a diverse and vibrant country that thrives on its feeling of community. India is the 7th largest economy in the world based on nominal GDP. It also happens to be the world’s 3rd largest economy based on GDP measured in Purchasing Power Parity terms.
India, with all it’s 29 states and 7 Union Territories, is one of the largest democracies in the world. The 71-year-old country, which fought for its freedom from Colonial rule, has turned its economy a full one hundred and eighty degrees in its short life. In 1947, India’s future seemed bleak and the economy was at an all-time low. Today, India stands out as a country with immense potential and young blood: 50% of the country’s population is below 25. 66% of the population is also between the ages 15-64. The IT industry is growing at 10.1% year-on-year. The sector is broken up into IT services, Business Process Management, research and development, and software products for export. 58% of India’s Economy is agrarian based. Its Economic culture is similar to its character. It is people driven, with a special focus on one-on-one relationship building. Indians value human contact and intimacy, and the country thrives on respect, tolerance and warmth.
Indians are a very family-driven lot. Most large and mid-level businesses in India are family owned and family operated. A classic case would be where the head of the family/patriarch is the head of the business too, and his favourite family members hold key positions in the company. The lines between work life and personal life are usually blurred. Colleagues and work acquaintances are treated like close friends. Respect is paramount in these situations, and a good example is how they greet each other, hands folded and a small bow towards the head of the company. Such family-owned companies are key players in most sectors and prove to be reliable and fruitful partners.
The country’s economy has grown at 8.2% year-on-year. Top foreign direct investments are from countries such as the UK, Japan, Singapore, the USA etc. The major sectors that attract the highest FDI are the service sector (17%), the Telecommunications sector (8%) and the Computer software and hardware sector (8%).
India with its multitude of religions, cultures and languages comes with a plethora of festivals. Almost 21 Working days are forfeited due to these festivals, and the festivities usually surround the main day for at least a couple of days; there are times when work isn’t taken seriously, and there’s a celebratory atmosphere.
Indians believe in their gut instincts and faith more than in dry data and PowerPoint presentations. They analyse not just the product/solution presented to them but the presenter him/herself. Impressions matter, and it’s vital that you gain their trust before they decide to do any business with you. This can be easily achieved by sharing previous success stories or finding common connections. Impatience and pressure tactics will never work in one’s favour as Indians are diplomatic by nature, and quick decision-making isn’t one of their strong points. They do, though, mostly have an optimistic outlook.
After 200 years of colonial rule, Indian business culture is a unique mix of British and Asian sensibilities. Indians mostly dress in formal western attire and emphasize building a personal foundation. The average Indian workday starts around 10 am. Indians also believe in networking and it is not uncommon to carry a small gift or token for them when you meet for the first time.
The current government has taken several initiatives to ensure ease of business. Through implementation of demonetisation and the Goods and Services tax, we can expect the fundamentals of the economy to strengthen through increased tax collection and greater financial inclusion. India’s Unique identification system – AADHAR – and Jana Diana Yojana (opening bank accounts for the economically weaker sectors) has enabled the states to transfer financial resources to the poor in a progressive manner with minimum loss and reduced corruption.
Estonia is subtly making its presence felt on the Indian Market. Bilateral trade between India and Estonia peaked at 380 Million in 2012 with Estonia being a net exporter to India. The balance of trade is clearly in Estonia’s favour; major exports to Estonia from India have been textiles, electrical machinery and equipment, iron and steel, coffee, tea and spices. Major import items from Estonia have been fertilisers, wood pulp, electrical machinery and equipment. Today, Estonia is known in the right circles in India by its nickname as the e-state, with many government delegations visiting the e-Governance Academy. The scheduled visit of Andrus Ansip, Vice-President of the European Commission to the India Mobile Congress, will only further create awareness about EU initiatives in the digital economy, with Estonia being a frontrunner.
Major investments from Estonia to India have been in the IT and software (Fortumo) and Clean technology sectors, whereas Indian investments in Estonia have been in Pharma, Auto ancillaries and ICT. Both countries have signed a double tax avoidance treaty. There are good prospects for cooperation in ICT, smart cities and IoT-based solutions, food products, wood and clean technology.
A hierarchical business structure, an emphasis on the human being along with the product, and a vibrant, young work ethic make India a very hospitable and welcoming country for various business interests. With new government policies being implemented to encourage business and trade, India is rising on the global business scene, making its presence felt. The current market is attractive for Estonian companies provided the products or innovations find a good product-to-market fit and a suitable partner. Estonian promoters need to have a carefully planned longer-term strategy, with patience and persistence being the key pillars to success in the growing economic climate.