Selling to India – Overview & Tips

Selling to India – Overview

Selling to India –  Last year, India’s GDP is estimated at $3.7 trillion, surpassing both the UK and France, and positioning it as the 5th largest economy globally (sources: S&P Global, Forbes India). According to a PWC report, India is forecasted to overtake the USA and become the 2nd largest trading nation in the world by 2050 (PWC).

Recently, India was credited with producing 3.5% of the world’s Gross Domestic Product (GDP). India has a stable democratic government. It has a population of 1,409 million people (17% of the world’s population), with over 45% of the population under 25 years of age (source cia.gov).

Indian Business Culture

India is a vast populated country with a diverse collection of people, cultures, and creeds. As the saying goes, “There are many Indias in India.”

English can be used for business negotiations as it is widely used in written and oral communication.

In India, ‘small talk’ and enquiring about one’s family is a great way to start a business meeting. Spend time developing contacts and relationships with these contacts. Indians place great value on relationships. They avoid conflict and may use indirect communication to avoid saying “no.” They will use many other words to avoid saying “no.” Be prepared to work on interpreting the true meaning of a response.

**Tip** When it comes to negotiations, it is recommended that you prepare a set of indirect questions that will allow you to build up a true answer. Avoid pressing your Indian counterpart to give you a direct answer.

Other details which can have a positive impact:

• Keep flexible times – Indians tend to be more relaxed about time than other countries.
• Meetings may start and finish late, and interruptions are common.
• Indians tend to be more relaxed when business cards are given out. However, it is best practice to receive the business card with the right hand and show respect for it.
• Keep in mind that India has a robust hierarchical culture. This means that decisions tend to be made at the highest level.
• Formal titles are used in India. Indians prefer using Mr or Mrs when addressing or being addressed by someone.
• Offer discounts: Indians frequently negotiate for the best price.

Setting up in India

India has a reputation for being a challenging country due to its scale, size, culture and laws.

One simplistic option is to think of India as four different territories:

1. India North –

• States include Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh and Uttarakhand, and the Union Territory (UT) of Chandigarh (which is the capital of both Punjab and Haryana states).
• Main cities: Delhi.
• Population: +300 million.

2. India East –

• States include West Bengal, Bihar, Jharkhand, Sikkim, Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Tripura, and Manipur.
• Main cities: Kolkata.
• Population: +270 million.

3. India South –

• States include Tamil Nadu, Karnataka, Kerala, Telangana, Andhra Pradesh, and Odisha; and the Union Territories of Puducherry (Pondicherry), Lakshadweep Islands, and Andaman & Nicobar Islands.
• Main cities: Chennai, Bengaluru (Bangalore), Mangaluru and Mysore.
• Population: +290 million.

4. India West –

• States include Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, and Goa.
• Main cities: Mumbai, Ahmedabad, Surat, Vadodara, Rajkot, Pune, Nagpur, Aurangabad, Panaji, Raipur, Indore, Bhopal, and Gwalior.
• Population: +280 million.

Companies considering entry into India have a selection of options which they carefully need to choose from, including:

• Direct export to India – (Find your customers).
• Selling online to India – (Find your customers).
• Direct sales in India using local representation.
• Setting up a corporate or non-corporate entity in India.
• Establishing a franchise in India.

India Banking and Finance

The unit of legal tender in India is the India Rupee ₹ (INR). India has an extensive, well-established banking and financial system.

The Reserve Bank of India (RBI) is the central banking institution. It is the sole authority that issues bank notes and is the supervisory body for banking operations in India.

Foreign Exchange Controls exist in India under its Foreign Exchange Management Act.

Selling to India – Tariffs and Non-Tariff Barriers

Tariff

India has very few trade agreements with other countries and trading blocks.

Tariffs and duty rates undergo continual review and may change without notice. It is worth visiting India’s Customs Service to determine any customs or import taxes in India for your goods or services.

Non-tariff barriers

India often applies anti-dumping laws on foreign products to protect its domestic producers. Please click the link to find a list of anti-dumping notices issued by Indian Customs.

India imposes restrictions on the sale or use of certain products, including:

• Livestock products.
• Chemical products.
• Motorcycles.
• Pharmaceuticals products.

Some products, such as animal fats, are banned from being imported into India. When selling to India, you should always establish if your products are allowed to be imported.

Product labelling, certification and packaging

India accepts labels in either English or Hindi for imports and uses the metric system.

There are two central label vetting systems in India. The first is Indian Customs, and the second is India’s Food Safety & Standards Authority.

Indian Customs are strict and ensure that imported items have the legally required information before these enter the retail market or are sold for consumption. India Customs check that labels have the following:

• Name and address of the importer.
• Generic or common name of the commodity packed.
• Net quantity in terms of standard units of weight and measurement.
• Provide the month and year of packing in which the commodity is manufactured, packed, or imported, along with the maximum retail sales price (MRP) at which the packaged commodity may be sold to the end consumer.

So, Indian Food Safety & Standards require the following to be placed on labels:

• Name, trade name or description.
• Name the ingredients used in the product in descending order of their composition by weight or volume.
• Please provide the name and complete address of the manufacturer/packer and importer. Also, include the country of origin for the imported food (if it is manufactured outside India but packed in India).
• Net weight, number or volume of contents.
• Distinctive batch, lot or code number.
• Month and year of manufacture and packaging.
• Provide the recommended month and year for optimal consumption of the product.
• Maximum retail price.

Where appropriate, the product label also has to contain the following:

• The purpose of irradiation and license number in the case of selling irradiated food in India.
• Extraneous addition of colouring material.
• Non-vegetarian food – any food which contains whole or part of any animal, including birds, freshwater or marine animals, eggs or product of any animal origin as an ingredient, not including milk or milk products – must have a symbol of a brown colour-filled circle inside a brown square outline prominently displayed on the package, contrasting against the background on the display label near the name or brand name of the food.
• Vegetarian food must have a similar symbol of the green colour-filled circle inside a square with a green outline prominently displayed.

Certification

• Used garments require a certificate of fumigation, which an approved authority in the country of origin must provide.
• An approved authority in the country of origin must issue and certify a sanitary certificate to accompany livestock imports.
• Plants, plant products and leaf tobacco require phytosanitary certificates issued by an approved authority in the country of origin and certified by an approved organisation.
• Leaf tobacco must be accompanied by a special certificate stating that it is free from Ephestia Nutella or that the pest does not exist in the country of origin.
• Port wine requires a certificate indicating alcoholic content, and spirits may need a certificate of maturity.

Packing

I recommend using steel strapping. Exporters should ensure that any packaging used can protect the products from extreme weather and climate changes, as well as the rigours of transport and handling.

Methods of quoting and payment

There are exchange controls in India. Foreign currency money transfers from India are subject to restrictions under the FEMA.

Use an irrevocable letter of credit (L/C) payable at sight to commonly settle international transactions. It offers protection to both the exporter and the importer.

Agree on payment terms in advance. Ensure all parties understand the agreed-upon terms and have your client, representative, or contact sign a mutually agreed document.

Quote prices in either US dollars or Indian rupees. These are the best currencies to use when selling to India.

It is best practice for sellers dealing with new customers to use secured payment terms such as 100% payment before shipping, letters of credit, sight drafts or bills of exchange.

Documentary & Clearance Requirements

Documentation required when selling in India

Apart from any applicable certifications, India has no formal import documentation requirements.  So, apply the standard mandatory documents required for international imports. These documents include:

• Bill of lading or airway bill.
• Commercial invoice cum packing list.
• Bill of entry.

Customs process

It is best practice to use a shipping forwarder who has extensive knowledge of the customs process and documentation requirements for India. The forwarder can arrange for customs processing of your products.

Business Risks When Selling to India

Companies wishing to operate in India should commit to the highest level of corporate behaviour and familiarize themselves with the country’s laws and penalties for bribery of foreign officials.

Intellectual Property Protection

India’s IP regime falls short of global best practices and standards. India’s inadequate IP enforcement affects inward investment from foreign companies and should also concern companies selling to India.

In 2016, India established its first IP Crime Unit. Please visit the India Patents Office to find more information.

Dispute resolution

India is a quasi-federal nation comprising 28 States and 7 Union (federally administered) Territories, with a diversity of cultures, languages, religions, and customs. India’s legal system is based on English common law, and the judiciary is somewhat autonomous. Hiring a local legal representative is standard practice. However, court delays can last many years, making litigation very expensive and lengthy. This can be a challenge when selling to India.

Sourcing Products from India

India is becoming more attractive for foreign companies as a country from which to source products. One key challenge is maintaining the quality of the products produced in these factories. Goodada Inspections offers Quality Control Inspection Services across India.

Selling to India – India Web Resources

The Associated Chambers of Commerce and Industry of India
Confederation of Indian Industry
Federation of Indian Chambers of Commerce & Industry
Reserve Bank of India
Export-Import Bank of India
Indian Renewable Energy Development Agency Limited
Industrial Development Bank of India
Export Credit Guarantee Corporation of India Limited
Insurance Regulatory and Development Authority 
Life Insurance Corporation of India
Securities and Exchange Board of India  
National Securities Depository Limited
National Stock Exchange of India
Stock Exchange, Mumbai 

 About the Author

Aidan Conaty is the founder of Goodada & TCI China. Aidan is a qualified Management Accountant and has a background is in Supply Chain Consultancy.

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