Differences in the way of doing business between Indian states

India is almost as big as the European Union and has more than twice as many people. It is therefore no wonder that there are major differences between the various Indian states in terms of language, demography, politics and economic growth. It is important to take these differences into account when drawing up a business plan. Because what works inGujarat does not automatically work in West Bengal…

The regional differences between Indian states

To succeed as a European company in India, you need to be aware of the country’s large regional differences. India is a fragmented market with large, and often underestimated, regional differences in language, culture, infrastructure and wealth, all of which influence the regional business culture. Indian states can therefore be better compared to individual countries than to, for example, the Dutch provinces. India’s most populous state, Uttar Pradesh, has the same number of inhabitants as Brazil and the southern state of Tamil Nadu has an economy as large as that of Hungary.

There are also large demographic differences between the Indian states. For example, the south of India is older, has more money to spend and is better educated than the rest of the country. In contrast, northern India is younger and relatively poor. North Indians mainly speak Hindi, while south Indians prefer to communicate in English or their regional state language, such as Kannada or Malayalam. German wholesaler METRO, better known in the Netherlands as Makro, discovered after their start in India that there are major differences between the groceries that customers in a certain region put in their shopping carts and adjusted their assortment accordingly by adding more local products. It makes sense, really, because Finns also have different preferences than Spaniards.

“METRO discovered that there are major differences between the groceries that customers in different states in India put in their shopping carts.” — Mark Alexander Friedrich, Head of International Affairs for METRO

Don’t make one business plan for all of India

For a successful start in India, thorough market research is a must. The regional differences are not only obstacles, but can also work to your advantage, depending on your sector and product. The southwestern states, such as Maharashtra and Karnataka, are a suitable base for technical sectors such as the automotive industry, engineering, but also for outsourcing IT and Research & Development teams Northern states such as Punjab and Haryana have, among other things, a flourishing agricultural sector, which offers opportunities for the food processing industry and the renewable energy sector.

Starting in the right regions is also essential for selling your product in India. European products almost always fall into the highest market segment in India, so it is smart to start in regions where people have sufficient income and there is also a real demand for a more exclusive, expensive product. “Approaching India as one country by working with just one distributor or partner is one of the most common mistakes European companies make in India,” says Klaus Maier, CEO of Maier + Vidorno, IndiaConnected’s partner in India. “In Europe, you wouldn’t ask an Italian distributor to set up your network in Norway either. An Indian partner or distributor who is active in a specific state only has a good network there and will not be able to successfully expand sales to other states. Anyone who takes India seriously therefore starts with four dedicated, local managers or distributors who understand your product and the regional market well. With them, the market can be mapped out and the logistics network can be set up, one of the biggest challenges for international companies in India. In this way, the Indian market can be conquered successfully step by step.”