Personal experience of doing business in India and how to check an Indian company in current realities — Part 1

My name is Anna Rudneva, I am an expert and co-founder of an export consulting company — neraconsult.com. This article contains my experience of doing business in India, the peculiarities of the mentality and business environment, as well as what India sells and buys from Russia.

Once again in the arena of export destinations, the Indian market shines and beckons. Many have read on the Internet that by 2025 the official population of India will be equal to China, and this is where we will live! Indeed, in the coming years, as they promised back in 2015, when I first became acquainted with this country, India will be one of the largest markets in terms of consumer demand. I will not compare India and China, but in the context of consumer markets I will say one thing — The average Chinese is many times richer than the average Indian.

India in many ways — the country of the state apparatus and everything that is there, being built and financed, is just passing into private hands. High level of bureaucracy plus corruption, widespread nepotism and clannishness — this, of course, leaves its mark. Everything is like people...

Since 2016, our company has been doing business in India in one commodity-export direction and three consulting projects. The commodity business was retained, it was not easy this year, but in consulting our partners made it clear that now we have a reputation &mdash ; high-risk partner, and therefore contracts are temporarily on stop.

But let’s return to the topic stated in the title of the article and continue on the merits. So...

How to do business in India?

It’s better to start by checking the market and understanding who your competitors are.

Despite the high level of development of the domestic market, and Covid has helped India increase domestic producers, this country trades a lot with China, the UAE, and the USA, both in exports and imports.

Before Covid, I flew to India 3-4 times a year, sometimes lived there for months, and it was strange for me that I could not buy Indian apples anywhere, since almost all of them were contracted for export for years to come by the Emirates and USA. But watermelons mmm… — the most delicious in the world!

From Russia (we do not take raw materials and military equipment) the following are traditionally exported: fertilizers, oil, paper and cardboard, shut-off valves, various types of lumber.

Imports to Russia from India are represented by: textiles, pharmaceuticals, seafood, tea, tobacco, clothing, leather goods, ceramic and plastic products.

You can check import duties in India on a special portal. For logistics, rates are now jumping, for calculation — ask your current cargo partners.

Indian VAT on average across the country is 18%, but there are states where there are 12, or like in Goa — no at all, but you can’t sell Goa any further. There is a tax portal for reconciliation.

Make calculations for cargo delivery to a point in India, it will be by air or sea, but do not make any commitments within India — risky. Serious and reliable carriers who are ready to deliver the cargo to your buyer’s warehouse inside India will charge the same amount as the cost of all your logistics to the border.

Payment forms usually 100% advances or letters of credit upon arrival of the cargo at the designated port. Currency — U.S. dollar. Now there is a problem with both the first and second options.

I don’t know yet about calculations in rupees and when to expect them. Now dollar payments to India take 4-5 days, and back the same. I do not rule out that the negotiations that began in March of this year, regarding settlements in national currencies, may drag on until next year.

In India, they only argue quickly and efficiently, in my experience, but do not make decisions.

Well, anyway..

You decided to enter the Indian market and found a partner there.

How to check an Indian partner?

Every legal entity in India has a registration number — PAN: CHNPP4909H, it can also be found as a 15-digit GST identification number — GTIN: 24СHNPP4909H1Z1.

It is assigned by state tax authorities to companies for registration in the VAT system.

On the official state portal you can check the following data using this number and company name:

• opening date and stage of activity (operating / liquidated),
• history of changes in directors,
• who has the right to sign documents in the company, within what time frame,
• download financial statements.

* Now from Russia this site works only through VPN.

Next, if the type of business activity is licensed and subject to special certification, then you can check whether your partner has permits or not.

Each state has a corresponding department and a registry with open data on companies with licenses and permits.

No one has canceled Google in checking contractors either. Searching by name or PAN number works well: the bigger the digital footprint, the better.