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How small Indian entrepreneurs can make it big in the US

October 14, 2013 19:22 IST

Organisers of business conferences often know that Indian business delegations to the US have a high failure rate.

Keeping this in mind, when the Maharashtra delegation of small and medium businesses arrived in the US on October 9, the Indian consulate decided against holding a standard reception replete with boilerplate speeches.

Rather, the consulate put together a programme that would increase the chances of things working out for them. They held an event on Lex Terrae (law of the land).

At the event, Ajay Tyagi, a licensed foreign consultant, offered useful tips to the delegation.

Tyagi said any entrepreneur testing the American markets would have to be aware of factors ‘within and without the company’. The latter involved the kind of entity being considered, visa issues, legal challenges involved, tax implications across jurisdictions, learning how to open bank accounts, and so on.

He described how international trade regimes differed markedly from Indian ones.

While the World Trade Organisation’s General Agreement on Trade and Tariffs generally governed international trade, India’s norms on foreign direct investment, including the Foreign Exchange Management Act and Reserve Bank of India regulations, had to be respected, too.

A friend of Tyagi had started a company in the US. It was legal in all respects. But the funds had come from the bank account of his son, then studying in the United Kingdom. The company was jeopardised by the fact that such a deal was illegal.

The relationship between the federal and state governments is more ambiguous in the US than in India, with federal jurisdiction holding wherever there was a grey area.

Delegates were informed that the work culture of the two countries differ widely, too. For example, in India subservience is expected of employees while in the US they are expected to speak up, encouraged to take decisions, and not just blindly follow orders.

“Rank and title are not as important as in India,” he said, adding that in a result-oriented culture procedural excuses were frowned upon. People preferred being direct and when an objection was raised it was not necessarily a slight.”

Tyagi warned entrepreneurs that they had to avoid any appearance of money-laundering, tax evasion, and remember that legal costs could be exorbitant in the US.

Entrepreneurs should not make deals too quickly, as it took an average of seven interactions to establish trust in the US.

Pankaja Chinta, an intellectual property attorney at Cittone and Chinta, alerted India businessperson on the need to verify intellectual property claims, ensure that one had the right to use the technology, the limitations permitted on usage, how to plan on expanding what a patent covered and what to do when patents or user rights ran out.

Pointing out the Indian Supreme Court’s decision permitting the production of generic versions of a drug there, Chinta said the differences in patenting regime had to be kept in mind.

India’s Consul General in New York Dyaneshwar Mulay, a native of Kolhapur, Maharashtra, said there was a lot of untapped manufacturing potential in India, especially in smaller towns.

One of the delegates, Vijay Bohe, said he was looking for partners who could give his solid but low-profile Adhik industrial catering service legitimacy among the foreign firms opening shops in India.

Bohe is perhaps the grittiest kind of entrepreneur: having failed his 10th grade, he became a truck driver before he raised funds to buy and run his own truck.

He opened a small food facility, and then, cajoled by officials from Kehin FIE who came to his outfit from companies in the area, decided to run the Japanese company’s facility for them.

Now he wants to serve big foreign companies such as GE, India, GM, and Ford in Chennai.

"I will enter a joint venture with a (reputed) American company and capture the market there,” he said.

Who said chutzpah was an American preserve?

Image: Speakers at the event. From left to right, Pankaja Chinta, Roger Sengupta and Ajay Tyagi.

P Rajendran in New York