Business in exile: how to find your niche in India

India is an exotic, controversial, not very expensive country to live in and favors small businesses. Everyone, including foreigners, can do it without any obstacles.

This is what attracted entrepreneurs Vasily Popov and Olesya Prokhorova, who are now developing several projects in India at once. They talked about what local realities they had to deal with and what determines commercial success in this Asian country.

Dossier

Vasily Popov. Graduated from the Altai State Technical University (specialty "world economy"), then moved to Yekaterinburg, built a career in the companies "Energomashcorporation"; and ABB-Engineering. Lives in Delhi with his wife and three children.

Olesya Prokhorova. Graduated from Altai State University with a degree in journalism. Immediately after graduating from high school in 2003, she left for Yekaterinburg, where she worked on television. She traveled extensively in Southeast Asia, wrote children's books for the Moscow publishing house "Bely Gorod"; and articles for the Profi-travel portal. She came to India with her designer husband and son.

$1000 for all formalities

When Vasily Popov first came to India in 2006, he had a contract with a Russian company in his hands. “I lived on the embassy territory, I didn’t even see Indians every day,” — he laughs. When the project was closed a year later, Vasily returned to Yekaterinburg for a short time, then again got a job in India — and eventually settled in Delhi.

«In 2008, a partner from Russia came to me — Denis Gazukin. In Barnaul, he had one of the first companies that dealt with payment terminals. We decided to build the same business on the Indian "fields", — recalls Vasily.

Starting a business in India turned out to be easy. All that was required from a foreigner was a passport with a business visa, and the law firm took care of all other formalities

Approximately $1,000 and one month were spent on company registration, about $6,000 more — for the opening of production and office rent. There were no particular difficulties at this stage — Indian firms do everything clearly, and the state as a whole favorably treats small businesses.

Subtleties of mentality

Difficulties began later. As it turned out, in order to reach at least some agreements with the Indians, you need to hold countless meetings, negotiations, write dozens of letters and make many calls — locals are not inclined to make deals without first getting to know each other and a long discussion.

"It took us about a year to put the terminals in the subway— all this time we discussed the details. As the Indians themselves joke, people here are not slow, they are just not in a hurry to get anywhere, — ironic Vasily.

After the terminals were installed, a new circumstance opened up: the locals were in no hurry to trust their hard-earned money to soulless machines.

"We have installed about 200 terminals in Delhi, including those near the metro, but the Indians were wary of them — due to their mentality, contact with a person is more interesting for them than interaction with a machine, », — says Vasily.

According to him, other major players who tried to develop the payment terminal market in India also faced the same problem — regardless of the investment, no one has achieved serious success in this field.

In 2012, the partners decided to freeze the project, but the company, key personnel and production of terminals were kept — to manage current orders. And in 2016, the topic suddenly “fired”: large oil and gas companies, ministries and even the Indian army became interested in terminals, but already information ones.

“Now we are not investing a single rupee in the promotion of this project, but we are monitoring tenders. Recently, for example, we won a tender from the Indian Ministry of Health for 26 million rupees (about $ 380 thousand - editor's note), we will supply them with information kiosks. We are getting ready to participate in other state projects, », — outlines Vasily's immediate plans.

Did not match the business plan

Olesya Prokhorova came to India in 2011. According to her, the direction for life and business was chosen spontaneously: “My husband and I had the experience of wintering in Southeast Asia, but we had never been to India before moving. We decided that there is a large field for the development of stretch ceilings. Since my husband Alexander was an interior designer, he knew all the features of this product. They asked Vasily Popov, whom they knew back in Yekaterinburg, he supported, they say, there is nothing like that, come. And we arrived».

The business associated with stretch ceilings, the couple decided to develop together with Vasily Popov — established Top Ceiling. The equipment was purchased in China, and several demonstration samples were made. Investments in the first stage amounted to $35,000.

"Our main trump card was that there is a long rainy season, after which leaks are inevitable, stains appear on the ceilings, the plaster crumbles… Local residents are forced to do cosmetic repairs almost every year, — says Olesya. — Stretch ceilings help to avoid this — even if something leaks, the ceiling is enough to dry, and it looks like new.

However, new technologies also faced peculiarities of mentality here: potential customers needed to see and understand how it works. So the first orders happened not earlier than a year later, and the Russians were very surprised.

«White ceilings are the most popular in Russia, and in India — multicolored. As we bought 5 thousand square meters of white linen, so it is almost all in the warehouse, — says Olesya. — The demand here for spectacular fluorescent ceilings — backlit, with prints of clouds, sky, flowers...»

“We planned that we would work with stretch ceilings in the mass segment. However, now among our clients are mainly large customers — hotels, restaurants, clinics. Therefore, although we reached operational payback in about a year, we have not yet reached what was written in the business plan, — says Vasily. — Currently the local target — turnover of 12 thousand dollars a month, which, in principle, was achieved last month. And in the near future there are plans to still go with ceilings "to the masses".

Taxes — through an intermediary

It costs just over $100 a year to promote stretch ceilings. These funds are spent on a subscription to paid portals dedicated to construction and interior design.

"In addition, from the very beginning we have compiled a database of more than 400 companies in Delhi that are engaged in interiors and design, now a sales manager works with them. But even here there is a nuance: Indian companies are very slow to respond to requests. You will write to ten companies — Well, if at least one answers. Therefore, now we are being rescued by word of mouth, which has already begun to bear fruit, — explains Vasily.

In general, the attitude towards foreigners in India is friendly — sometimes they are trusted even more than the locals. It is believed that the quality of imported products and technologies is higher, and working with foreigners — more reliable. Nevertheless, foreign businessmen themselves cannot do without the help of local specialists, at least take taxes. The taxation system in India is more complex and confusing than in Russia, while the company cannot submit reports on its own — this must be done by an accounting company registered in a special register.

«We give them documents — invoices, bank statements, and they are already preparing all the reporting. The cost of services depends on the volume of business, — explain Olesya and Vasily. — All accounting is conducted in English, so it is easy to control it.

Competition with locals

With all the favors to small businesses and foreigners, the main difficulty of doing business in India, according to interlocutors, is still the need to compete with Indian companies. Labor here is inexpensive, and Indians, unlike foreigners, are willing to work for very low wages.

In order to survive in a rather tough competition, partners optimize costs. For all of the above projects, one office is rented, consisting of several rooms, where you can meet with clients or negotiate. All production was also gradually accumulated in one workshop, in one part of which automatic kiosks are assembled, in the other, ceilings are produced, in the third — organized warehouse for materials.

Life hacks for those who decide to do business in India

India is called the land of contrasts for a reason, so when you move here, you need to be prepared for anything. Here you can start a business and earn good money, or you can lose all your savings overnight.

So, while this material was being prepared, Indian Prime Minister Narendra Modi announced a global monetary reform. Late in the evening of November 8, the news announced that all banknotes in denominations of 500 and 1000 rupees from the next day are considered illegal and withdrawn from circulation. Old money can be exchanged for new ones only until November 24 (and, in a very limited amount, the limit per day is 2,000 rupees) or handed over to the bank, explaining the origin of these funds. If the amount exceeds two lacs (200,000 rupees), then their owner will have to pay a 90% tax to the state. Here is such a radical measure against corrupt officials and shadow business.

Here are some recommendations from Vasily Popov and Olesya Prokhorova for those who would like to move to India and start a business in this country:

• Think carefully about what you will be doing. What works effectively and is sold in Russia may not be in demand at all in India. It might be worth starting the business in test mode first.
• Be social — you will need to personally get acquainted with partners and clients, meet with them often and negotiate. E-mails in this country will not solve many issues.
• Remember that in India, all business is based on interpersonal relationships and connections, so it will take time to make a certain circle of acquaintances. But later on, all successful contacts will work for you.
• Keep in mind that India is highly competitive and has a huge population. It is difficult for foreigners to compete with Indians, since locals have less costs and more connections. Therefore, it is better to choose areas that are not yet very developed in the local market.
• Learn English (the main language of communication) and memorize at least basic words in Hindi — they are useful in everyday life.