Doing busines in india- a book review-param

BOOK REVIEWON

TITLE:- DOING BUSINESS IN INDIA FOR DUMMIES

SUBMITTED TO PROF VS CHAUHAN sir,

Presented by P svsn Parameswarao,I sem MBA Bhartiar

DOINGBUSINESS

ININDIAFOR

DUMMIES

- Ranjini Manian

ABOUT THE AUTHORRANJINI MANIAN is a linguist, pioneering business woman, Multi-cultural expert, lives in chennai.

She is founder & CEO of GLOBAL ADJUSTMENTS, a one of top 10 cool companies (Business India rating).

An editor of India’s only free cultural magazine – ‘At a Glance’.

Received several awards included a commendation from President of India.

• The book is directed primarily toward professionals who explore opportunity of the Indian economy .

• for managers for forming Indian strategies.

• for foreigners who is willing to set up a business in india and need a basic guide to understand indian environment.

• (book is written keeping from foreignerspoint of view & solely meant for them)

Table of contents :•

Introduction.• Part I: Brushing Up on India Business Basics.

Chapter 1: So You Want to Do Business with India. Chapter 2: Understanding Breaks and Brakes in Emergent India. Chapter 3: Making Sense of India: A Business Viewpoint.

• Part II: Getting Your Business Up and Running. Chapter 4: Putting Together a Business Plan. Chapter 5: Starting Up in India. Chapter 6: Doing Business from Abroad: The Long Distance

Relationship. Chapter 7: Building Your Team India. Chapter 8: Dealing with the Powers That Be. Chapter 9: Counting Your Rupees and Paise.

Table of contents cont…d

• Part III: Going About Your Business in India. Chapter 10: Enjoying Your Stay in India. Chapter 11: Making the Sale. Chapter 12: Establishing a Manufacturing Presence. Chapter 13: Legal Landmines.

• Part IV: Ensuring an Indian Success Story. Chapter 14: Understanding Indian Culture. Chapter 15: Being on Your Best Behavior: Indian Etiquette. Chapter 16: Avoiding Potholes on the Road to Success.

• Part V: The Part of Tens. Chapter 17: Ten Tips for Training Your Team India. Chapter 18: Ten Cultural Tips. Chapter 19: Ten Tips from Chanakya, the World’s First Management

Guru. Chapter 20: Ten Ways to Enjoy Your Downtime in India.

The book highlights the following:How to create an effective business plan for

your indian venture.What to consider when choosing an appropriate

entity for your indian business.How to train your indian team.Where to find invaluable resources for your

business.What to expect as far as rules & regulations that

govern business in india.How to communicate with your indian

colleagues, partners & employees.

SO YOU WANT TO DO BUSINESS IN INDIA,THEN WHY?

India has a population of more than one billion people.

Salaries in India are often much lower than elsewhere in world and quality is still good.

Natural resources are abundantIndians are hardworking, well educated &

have english language skills.India is an ancient civilization & a young nation. (youngistan)

What makes india now an Attractive place to do business

• Prior to liberalization, FDI was restricted • by ceilings on equity participation,• curbs on technology transfer, • export obligations & government approvals.

• Since 1990’s after continued liberalization efforts, india’s economic doors open wide for international,

• Total FDI is now possible in many fields,For e.g.100% FDI in march 2005 in construction industry ,you name any

construction & it is being constructed by international companies.

India’s GDP rate has grown by an average of 7% annually since 1994.

Evidence of india’s economic potential• India 3rd largest investor base in the World.

•India is a 3rd country to build a super computer on its own

•The country is a supply source for a vast list, from traditional list like tea to cutting edge software

•Largest manufacturer of motorcycles•Ranks 3rd in bio-technology development

•The country is a commercial launcher of satellites for both military & communication purposes,both nationally & internationally

•India has a 2nd largest cultivable land in world

•Indian road network 2nd largest in world

•It produces 38million tons of steel, annually •& what not ,Many more…………………..

Business opportunities abound

The following industries list have shown fastest growth & most potential for foreign business ventures in india

• Automobiles & auto components• Business process outsourcing• Communications• Healthcare• Hospitality• Information technology• Infrastructure development

As per FICCI, The following areas are sure to be long term growth industries:

The future belongs to these industrial areas: Bio-tech and bioinformatics Food processing Metals & minerals Oil & gas

OPEN FOREIGN POLICY:-India adopted international policy soon after its independence.

India’s non-alignment policy is an advantage from business prospective that it allows companies from countries like U.S., China, and south africa & others to operate with equal ease in .

i.e. every country enjoys equal opportunities in india without any discrimination.

Other reasons to setup shop in india

• A favourable time zone and geographic location. E.g. an office located in india can communicate

• business with Australians in the morning, Europeans in the afternoon, and Americans at the end of the day.

portions of populationPopulation age segment is as follows:0-14 yrs old = 31%

15-64 yrs old = 64%Over 65 yrs old = 5%i.e. india has enormous workforce that rest of the world can draw, especially women

account for 28% of the work force,each year more and more women join the salary ranks, which means more power on spending,

clearly we can see marketing opportunities opening up

Potential Pitfalls

Two of major hindrances for doing business in India.1. Cutting through remaining red tape.

BureaucracyCertain hoops such as obtain electricity connection, environmental clearances, land approvals and other formalities can be difficult to jump through.

2. Breaking through language barriers. people having varying english language abilities and proficiencies with different mother tongue & accents.

Business communities in india• The marwaris:- a entrepreneurs community from rajasthan

in north.commerce, finance industrial manufacturing are their preference.surnames - Goenka or Jhaver.

• The gujaratis:- A business minded group. Diamond trade attracted them to belgium.their last names are shah & mehta.

• Jats:- Agriculturists by tradition,official farming class of punjab, common surnames- chauhan or Dalal

• The chettiars:- Tamil community,traditionally merchants & lenders.they finance for shopkeepers, sur names ending appan or aiah e.g. meyappan, muthaiah etc.

• Baniyas:- they concentrated along west coast of India. As bankers, money-lenders, sur names are like gujarati.

• Jains:- country’s most prosperous trading groups. Last name jains, e.g. as in case of family that owns -Times Of India

• The ezhavas: In the state of kerala, matriarchal form of society, they made name as merchants, land owners, cultivators. Panicker or ashan are often surnames.

• The Nadars:- Translates as lords of the land, business people & merchants,known to be hard working,.nadar as last name, e.g. famous HCL founder –Shiv Nadar

A few core questions you should consider before begin of business plan• What’s the product or service that your

business proposes to provide• What need does ur product or service propose

to fulfill• Who are your potential customers and why do

you think they will buy ur product• How will you reach your customers• As a planning tool, ur business plan should:i.Guide you through various phases of business planii.Help you identify road blocks & obstacles & establish alternatives.

Exploring investment routes

No-No Investment areas:• You can invest in any industry except the following due to

strategical, political & religious concern:

Atomic energy Arms & ammunition Railway transport Mining or certain materials like iron,manganese,

gold,diamonds ,copper & zinc etc.

Since india wants to keep the control of these vital & sensitive industries to protect soverignity of country.

For Foreigners Starting up in India

Seeking approval for business: • The govt of india allows FDI through two

routes;• 1. Automatic route(AAR)• 2. Govt Approval- an OK from FIPB

(foreign investment promotion board)

Choosing a business address• Govt of india classifies india’s cities as Tier I,II & III

cities based on population,infrastructure, & spending power.

• Considering tier I cities:-Tier I cities provide largest & most qualified labor pools, best infrastructure, and feature most modern buildings. refered as metro cities,

overseas companies tend to operaes in cities like mumbai,Newdelhi, Chennai, Bangalore and hyderabad.

Bangalore is silicon valley of india(IT), chennai is detroit of india(favoured by automobiles mfrs)

Because of overcrowding, and costs rise, tier II & III cities are being considered for establishing

• Some remote areas even found themselves in international business scene.

• These tier II & III cities can offer advantages;– Competitive infrastructure– Good quality of life– Highly educated population– Proximity to primary cities.

*Pune with its quality infrastructure is one example of tier II city.

*Companies like IBM,Microsoft and Dell are leading the charge into Tier III cities.

Consider the following up-coming cities of business destinations.

• Bhubaneswar in the east• Chandigarh & jaipur in the north of india• Kochi & thiruvananthapuram in southern state of

kerala.• Mangalore & Mysore in the south.

Your Choice of location should be based on following:- Access to and cost of utilities.

Availability of infrastructureAvailability of skilled man powerProximity to resources etc…

Taking advantages of benefit of location

• SEZs(Special economic zones): It is an area that designed to provide a globally competitive, duty free, cost-effective environment to export oriented businesses such as manufacturing, trade & services.

• SEZs features many benefits:– Good infrastructure including roads,water

supply,drainage, and electricity.– Developed land & Bldgs with certain standards.– Customs clearance facilities available on site.– Tax advantages also available.

There are currently 7 SEZs operational in india at these locations:

Chennai, Falta(west bengal), Indore, Jaipur, Kandla(Gujarat), Kochi(kerala),Noida(UP), santa Cruz(maharastra),Visakapatnam.

Over 40 new SEZs have been approved & are at various stage of completion.

The following are few of indian business locales of future:

Bhadohi(kanpur) Dronagiri(maharastra) Hassan(Karnataka) Kulpi(West bengal) Paradeep(orissa)

Export oriented units & parks

• Exported oriented units(EOUs) offer a host of advantages many of same as SEZs. They can also provide a technological skills pool and industrial base.

• Business parks such as software & technology parks can also provide an attractive situation for some companies & offer various infrastructure benefits & other perks.

Joint ventures• A joint venture is a financial or technical collaboration

that can take many forms,including an alliance with an indian firm, a take over,.

• An example from mining industry where foreign companies that specialize in mining of bauxite form JVs with existing indian aluminium smelters.

For a JV, Pay special attention to following:• Contribution by two parties• Exercise control• Exit options• JV entry pricing• Legal implications, governing laws & arbitration• Management of the company• Mode of investment

BUSINESS PROCESS OUTSOURCING The most popular types of outsourcing are:

Direct outsourcingIndirect outsourcingBuild own transferCaptive outsourcing

If you want to use BPO, you have to follow few steps to get u there:1. Request a proposal.2. Sign a memorandum of understanding(MOU)3. Start agreement negotiations4. Get an outsourcing agreement5. Review service provided6. Take a call

The following areas are some of most common in Indian BPO

Computer programmingCustomer care & technical supportData entry/processing/conversion services.Human resources & administrationInsurance & processingLegal servicesMarket research analysisMedical transcriptionRemote network maintenance & monitoringTelemarketingTypesetting & publishingWeb-based training

Planning your outsourcing strategy• The length of time needed to get a BPO up

and running in india depends on various factors:

LocationThe process being outsourcedState government policies.

You can find plenty of information like approximate costs etc instarting BPO operation in India @ following websites: www.dqindia.com www.expresscomputeronline.com www.idcindia.com/about/about.htm

Bumps in the BPO Road

Some Problems

• A shortage of skills• Cost increases and management

investment• The problem of overpromising• Scam artists

Other modes of entry

You have number of options for starting up your business in india :

Indian companies shopping for overseas investors

Foreign companies setting up distributions arrangements with Indian.

Foreign business franchising in IndiaForeign businesses selling directly to indian

consumers

Putting your plan ready into action• To get your business rolling,refer to following

steps:• 1. you need to make name of your company officially by

getting it approved by Registrar of companies, & have to submit name along with memorandum of association & articles of association to ROC.

• 2. The next stop is superintendent of stamps or an authorised bank to get the MOA & AOA stamped

• 3. Back to ROC, take duly stamped papers along with you, pay registration fees,inreturn get a certificate of incorporation.

• 4. Have a company rubber stamp made.• 5. Now you need a PAN for tax registration from nearest

UTI.

• 6. Visit the assessing office of income tax department to get yourself a tax account number.

• 7. Next comes your business registration( under mumbai shops & establishment act).• 8. Register for Value Added tax.• 9. Register for professional tax.• 10. Register in the employees provident fund

organisation• 11. Finally, register with employees state

insurance corporation for medical insurance

• Indian economic law: 20 essential law which you need to be familiar.

THE INDIAN CONTRACT ACT (1872)NEGOTIABLE INSTRUMENTS ACT(1881)WORKMEN’S COMPENSATION ACT(1923)SALES OF GOODS ACT(1930)PAYMENT OF WAGES ACT(1936)INDUSTRIAL DISPUTES ACT(1947)MINIMUM WAGES ACT(1948)FACTORIES ACT(1948)EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISION ACT (1952)MATERNITY BENEFITS ACT(1961)

PAYMENT OF BONUS ACT(1965)MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT(1969)INDIAN PATENTS ACT(1970)PAYMENT OF GRATUITY ACT(1972)COPYRIGHTS ACT(1975)ARBITRATION AND CONCILLATION ACT(1996)GEOGRAPHICAL INDICATIONS OF GOODS ACT(1999)TRADEMARKS ACT(1999)DESIGNS ACT(2000)COMPETITIONS ACT(2002)

FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY (FICCI):

• It is the direct and indirect voice for more than 2,50,000 business units of all sizes and types. Works towards promoting global trade investment,acts as international business forum, offering information and guidance to investors from abroad.It has also a vast database of important contacts & details of companies registered with it.

Confederation of Indian industries(CII)- its non-government,non-profit organisation, to• promote the growth of industry in india by working with various industries and Govt.

• Further, The Book further supplies information to understand Indian culture, Its Etiquette,Making sale, Establishing manufacturing presence, Tips for training your team in India,Cultural tips, ways to enjoy your downtime in India, etc…

• It is recommended that ten chankya tips mentioned in this book is very useful to read which is an add -on to a business mind.

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CONCLUDING…………

Any Questions that I can answer

& Exhausted