How U.S. Businesses Can Succeed in India in 2015 12-23

How U.S. Businesses Can Succeed in India in 2015

On January 26, 2015, President Obama will become the first sitting U.S. President to visit India twice. Ahead of Indian Prime Minister Narendra Modi’s visit to Washington last September, the U.S.-India Business Council found that its large company members were prepared to invest $40 billion into India by 2017. This at a time when Brazil’s economy is stuttering, Vladimir Putin’s expansionism has made Russia a pariah, and the rich world is looking for someone other than China to love. In the hyperbole of online media, one headline reads, India is the last BRIC Standing.

The U.S.-India love first peaked in July 2008 when India’s government of the time risked its very survival in support of a nuclear energy deal led by Washington. But both trade and political alignment lumbered slowly forward until the current quarter and many American executives had become flustered with their India initiatives.

Until now.

Today there appears to a second gold rush to India. Silicon Valley venture capitalist, Douglas Leone of Sequoia Capital, told the Economic Times of India in October, “We could not be more thrilled. We don’t have 25-30 category leaders in the United States; we don’t have [as many] in China right now, but we have it in India.” In the same month SoftBank of Japan committed to investing $10 billion into India over the next several years and CEO Masayoshi Son proved his seriousness by pouring the first billion into an Indian e-commerce company (Snapdeal) and a car-sharing service (Olacabs).

It’s not just frothy internet startups that are doing well in India today.Boeing India’s Dennis Swanson told Business Week that he expects to sign a new strategic partnership with an Indian company in 2015. Boeing is America’s largest exporter and the only American defense contractor to have crossed $2 billion in sales to India. America’s largest insurer, Allstate, announced plans to invest $1 billion in its India operations. Domino’s Pizza declared that they sell more pies in India than any other country other than the United States.

Federal and state government officials have also lined up to promote their respective causes in New Delhi, from Commerce Secretary Penny Pritzker, to South Carolina Governor Nikki Haley. Hundreds of lesser known companies, organizations and officials have joined the scramble. And we expect that President Obama’s visit will spark a further acceleration of business interest in India.

While some companies will do very well in India, we expect many others to be disappointed. But it won’t be “India’s fault,” in our view. In June 2013, Dallas-based Mary Kay exited from India after six years and over $20 million invested. At the same time Amway and L’Oreal thrived in the same market and personal care sales boomed across most of India. Earlier, GE found that it could not make a go in the appliance business in India. Abbott Laboratories of Illinois acquired Piramal Healthcare Ltd.’s branded generic-medicine unit in India for $3.7 billion in 2010, predicting it would grow at 20% a year for a decade. Two years later sales were stagnant in dollar terms.

We believe that American companies have a huge upside in India over the next several years. But they need to be alert to the following four signposts.

Choose the right India country manager: 

The role of country manager for India can mean many things depending on the scope of operations and the structure of an organization. First of all, headquarters needs to be clear about their vision of their role in India over the next 2-5 years and recruit to match that vision.

Sometimes, we see companies enter India with an executive who is the rough equivalent of a regional sales manager in the United States when their visions of India are much grander; he or she is typically not empowered to seize transformational opportunities in India while at the same time, his or her voice is not heard loudly enough at global headquarters. 

We’ve also seen the reverse, where a retained search firm convinces an American company with very modest goals for India to hire a leader used to running a thousand-person organization. In India’s class-conscious culture, such a person might struggle at having to personally perform tasks that they routinely delegated two or three layers down. They will definitely find themselves under-challenged. When they quit, the American company’s brand and reputation takes a hit in India.

We cringe at hiring processes that emphasize the ability to “communicate effectively with headquarters” over the skill of dealing with Indian companies and government officials. Of course it would be ideal to hire a manager who is equally adept in Peoria and Pune, but there is a paucity of such talent in a growing emerging market. While India is complex, it is an open society and an expatriate sent to India can learn to be effective in India, provided they have an open mind, a sense of humility, and the tenacity to manage the Indian operation for four years or more. 

David Mulford, U.S. Ambassador to India from 2004 to 2009, was more successful in part because his long tenure enabled him to gain trust, respect and apply his learning effectively. Many other recent ambassadors have returned to Washington in two years or less.

Prepare to adapt:

 Muhtar Kent, the Turkish-American CEO of the Coca-Cola Company, lived in India as a boy and now oversees a business where India is a top 10 market in case volume and where his company is investing another $5 billion. “… In India, appearances can be deceiving,” he wrote earlier this year in an essay in Re-Imagining India.

 “For outsiders there is always a hint of mystery. Even if you live and work there, you can never be entirely sure you understand. It is best to assume that you do not. If you come to India with some grand, pre-determined strategy or master plan, prepare to be distracted, deterred, even demoralized.”

In our conversations, we hear this yearning to see the Indian markets as American executives “wish it to be” from the trivial to the substantial:While flexibility is important in any new market, India stretches the assumptions and belief systems of many seasoned international business people. If you and your company are not prepared to be humble and open about dealing with India, it may be best to stay home. We don’t mean to suggest that you compromise your integrity or core values or that you tolerate any corruption, but be ready to do things in India that you may not need to do in other markets. Kent goes on to say that the key to their success in India “has been learning to see the Indian market as it is, not as we wished it to be.”

• “Why can’t Indian Standard Time be nine or 10 hours ahead of EST? What is this business about nine and a half hours?”
• “What is a crore of rupees? Why can’t they count in millions and billions like everyone else?”
• “Why are there so many levels of duties, taxes and “cesses” in India?”
• “Reserve Bank permission? I never have to deal with the U.S. Federal Reserve, what is this all about?”
• “I have one distributor for all of Australia. Why do I need five in India?”

Take India as it is and you can learn to thrive. Complaining about why it is different will gain neither friends nor sales.

Value, not price: 

The common wisdom is that India’s buyers seek the lowest possible price and are prepared to compromise on quality. And rarely is an American product or service the low-price leader in India’s market. Add up Indian taxes and channel costs and the price of American products looks worse compared to a local player.

The reality is that usage assumptions of many imported products are not attuned to the Indian market. For example, interest rates are higher in India than the USA and credit is not easy to come by. So cash flow is king in most Indian businesses and if you can document how your product or service can improve your Indian customer’s cash flow, a high ticket price becomes much less of a factor. In the United States, a machine may be used six hours a day for five days a week. An Indian executive may want to buy the same machine and run it 16 hours a day for six or seven days a week. Low-cost Indian repair and maintenance crews can tune up the equipment at night.

American equipment is often sold bundled with a host of features, accessories and services that may have no relevance to the market in India. Many times, the product can be unbundled thoughtfully and the final configuration offered in India may not be lower cost but can preserve or even improve gross margins.

Don’t ignore governments as a customer: 

Other than in the defense sector, American companies have generally hesitated to engage with India’s government, fearing corruption, long sales cycles and the pressure of a low-bid tender process. Today, however, there is opportunity in government sales.

India has 29 state governments in addition to the union (central or federal) government. Some of the states and their cities have more nimble and forward-thinking officials who are committed to modernization and rapid growth and they should no longer be ignored by new entrants. 

These sales are decided in state capitals across the country and most American companies should choose no more than four states as initial targets. Buoyed by economic growth, New Delhi also has a lot of money to invest in infrastructure, in medical services, in technology and more. By March 2015, the Modi government will announce its new budget for fiscal year 2014-2015 and this will affect many policies and procedure followed by the central government. This will be a good time to re-assess whether India’s federal government will be a more promising market for foreign companies.

With Obama’s upcoming visit, we expect the conditions for U.S.-India activity to continue to be favorable. If you’re not rethinking your India goals, now is a good time to do so.

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President Obama at the Kelogg School of Management 10-04

President Obama at the Kelogg School of Management 

President Barack Obama arrived on the Northwestern University campus Thursday to deliver a major address on the economy to students at the Kellogg School of Management.

Obama to Kellogg: Business is the future

The president spoke on the economy to Kellogg students on Northwestern’s campus

Speaking to an assembly of Kellogg students, President Barack Obama on Thursday said the business leaders of tomorrow are the key to a strong economy.

"There is a reason why I came to a business school instead of a school of government," Obama said. "I actually believe business is the greatest force for prosperity and opportunity that the world has ever known."

Obama called for Kellogg students, as future business leaders, to pursue mindful growth.

“As you engage in the pursuit of profit, as you should, I challenge you to do it with a sense of purpose,” Obama said. “As you chase your own success, as we want you to do, I challenge you to cultivate ways to help more Americans chase theirs.”

'A clear-eyed look’

Obama, who delivered the commencement address for the Class of ’06, said he wanted Thursday’s speech to be “a clear-eyed look at our economy.”

In a speech that touched on issues including education, health care and energy, the president also spoke on the importance of parity for women in business, praising Dean Sally Blount '92 for her work in this area.

"Let's do what Dean Blount is doing here at Kellogg," Obama said, speaking of Blount's work with the White House.

He also called out Northwestern’s commitment to nanotechnology, which has helped produce startups such as lithium-ion battery maker SiNode Systems.

‘All in this together’

“But I also believe in a higher principle: we're all in this together,” Obama said. “That's the spirit that made the American economy not just the world's greatest wealth creator, but the world's greatest opportunity generator.”

The speech at Cahn Auditorium reflected the president’s desire to spread his message to the students who will be at the forefront of tomorrow’s growth.

“This is a university that is brimming with the possibility of the new economy,” Obama said as he began his address. “You can’t help but visit a campus like this and feel the promise of the future.”

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Shut down over 10-17

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Jon Carson, BarackObam​a.com (info@barackobama.com)

Schedule cleanup

03:22AM

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To: shyamsunder Panchavati

Shyamsunder -- After 16 days, it's finally over. Legislation is on its way to the President's desk and he'll sign it, ending the shutdown and avoiding default. The government will open once again, hundreds of thousands of Americans will go back to work, and millions will see vital services restored. That's in no small part thanks to what you did. Over the course of the last several weeks, more than 1.2 million OFA supporters made their voices heard -- and you kept speaking out. Volunteers organized hundreds of grassroots events across the country. We drove calls to Congress, and we absolutely dominated the conversation online to keep the pressure on the lawmakers responsible -- including hundreds of thousands of Facebook shares and more than 600,000 tweets holding Congress accountable. OFA exists to make sure the voices of ordinary Americans are heard in Washington. When we wake up tomorrow, there's going to be a lot more work to do on the agenda Americans voted for last fall. But today, we can say with certainty that our cause won out -- after weeks of frustration from Capitol Hill, this result is proof that grassroots organizing really does matter. Thanks for all you've done -- get ready for what's next, Jon Jon Carson Executive Director Organizing for Action

OBAMA SAYS NO GOOD REASON TO CONTINUE SHUTDOWN 10-12

OBAMA SAYS NO GOOD REASON TO CONTINUE SHUTDOWN

 WASHINGTON (AP) — With talks having stalled between the White House and House Republicans, a bipartisan group in the Senate is polishing a measure that would reopen the government and prevent a first-ever default on the country's bills.

The negotiations in the Senate come as the chamber meets in a rare Saturday session to vote on a Democratic measure to lift the government's borrowing cap through the end of next year. Republicans are poised to reject it amid talks among the group of rank-and-file senators — talks monitored with the full attention of Senate leaders.

The group's focus is on a proposal by Sen. Susan Collins, R-Maine, and others that would pair a six-month plan to keep the government open with an increase in the government's borrowing limit through January.

House Republicans, meanwhile, are slated to meet Saturday morning to get an update from their leaders as matters come to a head.

President Barack Obama on Friday privately turned away a House plan to link the reopening of the government — and a companion measure to temporarily increase the government's borrowing cap — to concessions on the budget.

Publicly, top House Republicans said negotiations were on track. Obama called House Speaker John Boehner at midafternoon Friday, and Michael Steel, a spokesman for the leader of House Republicans, said, "They agreed that we should all keep talking."

Privately, the channel between the White House and the House wasn't bearing fruit, said aides on both sides. The aides required anonymity because the talks were private and they weren't authorized to discuss them by name.

"It wouldn't be wise, as some suggest, to just kick the debt-ceiling can down the road for a couple months, and flirt with a first-ever intentional default right in the middle of the holiday shopping season," Obama said in his Saturday radio and Internet address.

On Friday, a daily briefing by White House press secretary Jay Carney was delayed until after the stock market closed, and Carney said Obama "appreciates the constructive nature of the conversation and the proposal that House Republicans put forward." Yet, the spokesman said, "He has some concerns with it."

A House GOP aide and a White House official cast developments in a more pessimistic light, both requiring anonymity because of the secret nature of the talks. Among the options to be presented to a House GOP conference was a condition-free debt limit increase for just a few weeks and a continued closure of the government in hopes of concessions from Obama.

In the face of disastrous opinion polls, GOP leaders have signaled that they will make sure the debt limit is increased with minimal damage to the markets. But they're still seeking concessions as a condition for reopening the government.

Obama met Senate Republicans on Friday and heard a pitch from Collins on raising the debt limit until the end of January, reopening the government, and cutting the health care law at its periphery. It would also strengthen income verification for people receiving subsidies through the health care law and set up a broader set of budget talks.

The Collins plan would delay for two years a medical-device tax that helps finance the health care law, and it would subject millions of individuals eligible for subsidies to purchase health insurance under the program to stronger income verification.

At the Capitol, Collins said Obama said the proposal "was constructive, but I don't want to give the impression that he endorsed it."

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US shutdown enters 2nd week as debt default looms 10-09

US shutdown enters 2nd week as debt default looms

The United States appeared to be headed towards default, with the fast approaching October 17 deadline of debt ceiling increasing, as the Government shutdown entered its second week, amid opinion polls showing fast dip in the approval rating of the Opposition Republican Party.

The White House and the Democratic party leadership in the Congress, by late last night, were appeared to be working towards to convince the Republican party to agree to a long-term $1-trillion debt limit increase.

But the Republican leadership did not appear to do this without any condition.

“We’re not going to give the President a clean debt ceiling increase that’s a recipe for disaster for our country,” said John Cornyn, the Republican Senator from Texas, who is also Co-Chair of the Senate India Caucus.

Still there did not appear to be any resolution to the Government shutdown, that entered its second week today.

Even though the Pentagon recalled majority of its furloughed employees, hundreds and thousands of federal employees remained without work, thus without pay too, this badly affected the performance of the Government. This is the first such shutdown in 17 years.

Meanwhile, a Washington Post-ABC News survey found that 70 per cent of Americans disapprove of the way Republicans are handling budget negotiations, up from 63 per cent last week, with 24 per cent approving.

At the same time President Barack Obama’s approval rating on budget matters ticked up slightly over the same time period — from 41 per cent to 45 per cent — but 51 per cent disapprove, the poll said.

Earlier in the day, Obama ruled out any negotiations with the Republicans unless they reopen the Government.

“We’re not going to negotiate under the threat of further harm to our economy and middle-class families. We’re not going to negotiate under the threat of a prolonged shutdown until Republicans get 100 per cent of what they want,” he said.

White House Press Secretary, Jay Carney, said Obama is ready to negotiate with Republicans but not under threat.

“He is ready to do that, just not under threat of shutdown, not under threat of default,’’ he said.

The prospect of a default had a direct impact on the market yesterday, with a drop in the stock market fell. The Standard & Poor’s 500 index down 14.38 points, to 1,676.12.

Meanwhile, top Wall Street Executives yesterday warned that any effort to pay interest on US debt before other obligations such as Social Security, would pose severe risks to financial markets and the economy, The Wall Street Journal said.

Speaker of the US House of Representatives, John Boehner, alleged that Obama is putting the economy at risk by refusing to negotiate with the Republicans over spending and the debt ceiling.

“The President’s refusal to negotiate is hurting our economy and putting our country at risk,” he said on the floor of the House.

(This article was published on October 8, 2013)

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Message from the President to U.S. Government employees 10-04

Message from the President to U.S. Government employees.

Message from the President to U.S. Government employees from White House

Every catastrope is a fodder for the humorists and cartoonists. They thrive on it.

Just a couple of them....

       

       

Government Shuts Down as Congress Misses Deadline 10-02

Government Shuts Down as Congress Misses Deadline

Senate Rejects House Bill to Delay Part of Health Law; Obama Gives Notice to Workers

President Barack Obama told the country’s military in a video from the White House early Tuesday that he would lean on Congress to reopen the government as soon as possible.

WASHINGTON—After three years of ducking crises with last-minute deals, Congress finally ran out of ways to patch over its differences. Unable to meet a midnight Monday deadline for funding the government, lawmakers allowed it to shut down.

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Associated Press

President Barack Obama speaks at the White House on Monday evening.

The White House ordered   federal agencies to suspend a vast array of activities   shortly before midnight, after a day of frantic legislative volleying left Senate Democrats and House Republicans at an impasse overgovernment spending and the 2010health-care law. The next steps to resolve the stalemate remained unclear.

House Speaker John Boehner spoke to reporters on Capitol Hill shortly after the government-shutdown deadline took effect, saying it wasn’t House Republicans’ intention to shut down the government, and that the House had voted to keep the government open. Photo: Reuters

In response to an impending government shutdown, President Barack Obama said on Monday that it could be prevented if the House follows suit with the Senate and funds the government without controversial demands.

Markets that have slipped recently face a test Tuesday, given that a larger deadline for Congress—over the need to raise the nation's borrowing limit—is less than a month away.

Government Shuts Down

With no budget deal reached in Congress by the midnight deadline, the government shutdown was felt throughout the country Tuesday, from closed museums and national parks to the furloughing of employees deemed non-essential.

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Mike Segar/Reuters

A sign announced the closure of the Statue of Liberty, a U.S. National Park, in Battery Park, New York, .

Many federal workers reporting to their agencies Tuesday morning will undertake a half-day of shutdown preparations before more than 800,000 employees in the government's workforce of about 2.9 million are sent home. While essential functions  such as law enforcement and air-traffic control will continue, a large number of federal activities, among them Internal Revenue Service audits and surveillance for flu outbreaks, will be suspended.

"Unfortunately, Congress has not fulfilled its responsibility. It has failed to pass a budget and, as a result, much of our government must now shut down until Congress funds it again,'' PresidentBarack Obama   said in a video message to military and defense personnel around the world.

He added that personnel in uniform would remain on duty. "The threats to our national security have not changed, and we need you to be ready for any contingency,'' he said.

On Capitol Hill, a day of rapid-fire legislative maneuvering between Senate Democrats and House Republicans over the terms of a short-term spending bill collapsed late Monday. House Republicans said they planned to appoint a set of negotiators to work out a budget resolution with a small group with senators. But the GOP move came with no concessions on the party's central demand—that Democrats agree to scale back the new federal health law—and it brought lawmakers no closer to reaching a budget deal.

Congress finally ran out of ways to patch over its differences. Unable to meet a midnight Monday deadline for funding the government, lawmakers allowed it to shut down. Colleen McCain Nelson reports. Photo: Getty Images.

Senate Majority Leader Harry Reid  (D., Nev.) rejected the move, saying he wouldn't enter negotiations until the House agreed to reopen the government by extending its funding for several weeks. "We like to resolve issues, but we will not go to conference with a gun to our head," Mr. Reid said on the Senate floor.

Republicans denounced Senate Democrats for refusing to negotiate. "Our hope this evening is we will be able to put reasonable people in a room," said House Rules Committee Chairman Pete Sessions (R., Texas).

The first partial federal shutdown since 1996 came amid a fight that was less over spending levels than over the federal health-care law championed by Democrats, the Affordable Care Act. Driven by a set of combative Republican conservatives, the GOP-led House moved a series of bills to fund federal agencies for several weeks while delaying the start of the health law or stripping it of funding.

The Senate rejected each one, saying Democrats wouldn't negotiate changes to the health law as a condition of funding the government.

It was a clear indication that in an era of divided government, Congress is proving increasingly unable to fulfill its basic job of setting budget and spending priorities.

Markets in Asia on Tuesday morning sold off modestly as the deadline for a U.S. government shutdown passed, while the dollar declined slightly in Asia trading. Stocks sold off across the globe on Monday.

The coming days will likely be marked by intense political maneuvering, with both sides trying to seek political advantage. Polls suggest the GOP would bear the blame for any repercussions, but Republicans believe that Democrats will face political risk as well, because they are defending a health-care law that remains unpopular in many quarters.

In their final exchange, in the waning hours before Monday's deadline, the House passed by a 228-201 vote a short-term spending measure that would have funded agencies through mid-December while delaying for one year the law's requirement that most individuals carry health insurance or pay a penalty. It also would have limited government subsidies for lawmakers' own health-care premiums and those of their staffs. The Senate rejected it shortly afterward, 54-46.

After 1 a.m., with the shutdown of agencies already triggered, the House voted again to support the same proposal, returning it to the Senate with a measure that would set up a negotiating committee. The vote was 228-199.

To limit the impact of the shutdown on the Pentagon, Congress passed and Mr. Obama signed legislation just before midnight that would ensure that all members of the military be continued to be paid for the duration of the shutdown, even as hundreds of thousands of other government workers will be furloughed without pay.

Republican lawmakers on Monday had been faced with a choice. With the Senate rejecting changes to the health law, they could have pushed once again for the Senate to change its mind, or deferred their fight against the health law to another day and passed a funding measure shorn of health-law provisions.

After a 90-minute meeting of the House GOP on Monday afternoon, Republicans decided to press again with another attempt to curb the health law.

While Republicans rallied behind their hang-tough strategy, through the day there were clear signs of growing anxiety about political fallout to the party from a shutdown.

"It is moronic to shut down the government over this," said Rep. Devin Nunes (R., Calif.).

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AFP/Getty Images

House Speaker John Boehner, center, walks to a House Republican meeting Monday.

Even before the new move was advanced, some Republicans were urging GOP leaders to drop the fight over the spending bill.

"We have tried robustly on the spending bill, and it hasn't borne fruit," said Rep. Doug Lamborn (R., Colo.). He said the GOP could use other tactics to fight the health law, but "for this week, we may have to give up."

Others said they were eager to press the fight against the health law. "Obamacare is slowing the economy down even more than a government shutdown would," said Rep. Marlin Stutzman (R., Ind.), before a closed-door GOP meeting on Monday. "It's creating chaos for the American people."

The tea party and other conservatives have for months pressured congressional Republicans to try to undercut the law before Tuesday, when a crucial milestone will be passed—the launch of a new system of health-insurance marketplaces for individuals to buy policies.

Sen. Ted Cruz   (R., Texas) led the unsuccessful fight in the Senate to pass the House's initial legislation to eliminate money for the health law while funding the rest of the government.

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