Negotiations In India
The negotiating style in India is relationship-based. Therefore, negotiations in India include private conversations in which there is no business talk. All in all, negotiations in India are long-lasting and require patience.
From a Western point of view, it can sometimes seem that too much time is spent on the unimportant, while the actual subject of negotiation falls by the wayside. However, those who feel that small talk is being used to delay or stalling should keep in mind that this is how the Indian relationship culture works.
The final phase of contract negotiation is, according to Indian understanding, a matter for the decision-maker only. Those who have participated in the negotiation process so far will withdraw from it because they have fulfilled their mission and prepared the way for a decision. So now it’s up to the boss to finish the job.
As negotiations in India can take several days and the end cannot be foreseen in advance, buying an open return flight ticket is advisable. Having to catch a plane shouldn’t be an excuse to break off negotiations prematurely. Taking enough time to achieve a good result is essential.
Indian Negotiation Strategy
It can get rather theatrical at the negotiating table, as Indians are very price-conscious and always demand the best quality at the lowest price. Price negotiations in India are, therefore, often like haggling at an oriental bazaar.
You should determine in advance with your head office exactly what lowest possible price and what additional services you may be able to offer. If you only start to think about a possible price range during negotiations, you will lose out.
Never immediately quote the price that you have in mind, but instead allow yourself some leeway. The Indian party will always negotiate hard and use their whole repertoire: moaning, complaining, crying because they have already given you their shirts off their backs and are now being driven into ruin.
Decision-making Process In India
In India, the final decision is made by the person at the highest level of the hierarchy. Think about whether you should also do this and send your boss to be the final decision-maker or whether you should delegate specific responsibilities to lower management levels. Make it clear to the Indian delegation that the person’s word to whom responsibility has been delegated is final and no longer negotiable. If you do not make this clear, Indians will always expect the boss to intervene later.
Verbal agreements should be taken as a declaration of intent as to the direction the final decision could go. However, to establish the importance and binding nature of an issue, it is necessary to draw up a written statement.
Hiding difficulties is part of Indian courtesy. It is therefore essential to thoroughly review all statements and promises. Trust and taking everything at face value can quickly result in disaster.
The custom of sealing something with a handshake and saying “My word is good” is not common in Indian culture. You should, therefore, always take notes on conversations. If important interim goals have been achieved, have them recorded in a Memorandum of Understanding.
What is written in black and white is binding. That is often the Western view. In contrast, the Indians take a “yes, but” attitude to contracts. A contract is binding at the time of signature, but this does not preclude renegotiation if the context changes. This is not to complicate things and undermine the binding nature of agreements but to take account of new circumstances.
According to Indian understanding, contracts are in flux rather than a fixed point of reference, which is why agreements are implemented flexibly and pragmatically. Many Westerners, on the other hand, with their more factual orientation, their preference for precision and their irrefutable rules that offer security and keep risks as low as possible, attach more importance to a fixed set of agreements.
Contracts should therefore always be drawn up by your legal department, possibly with recourse to lawyers with specialist knowledge of India, if possible following international law. If there is a breach of contract, you should seek legal expertise. Despite all initial enthusiasm, the contract should always include clauses regulating a possible worst-case scenario and defining procedures for separation. Only written documents have evidential value in arbitration proceedings or court.
The Indian team may insist on a specific date for signing the contract and does so on the grounds that the stars are in a particularly favourable constellation. Although such an approach may seem unusual, you should nevertheless respect it during negotiations in India and not take it as a flimsy excuse to waste time or hold parallel negotiations with competitors.
Relying on the power of the stars is an expression of Hindu piety, according to which the planets are divine. Thus, the calculations of astrologers are a contribution to the divine blessing of business. In India, moreover, it is often customary to celebrate a religious ceremony (puja) to sign a contract. A priest is invited, who prays and asks the gods for their goodwill.
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Extract from Business Culture India, Courtesy of CONBOOK Verlag