India may have found a place among the well-known emerging markets in the global economic community, but the concept of good governance still remains blurry, largely due to the bribery, fraud and corruption that have accompanied the sudden growth of international subsidiaries in the region. Running a subsidiary in an environment that combines lax governance with
minimal regulatory standards means
successful operations may depend on a company’s willingness to go out of its way to determine the ‘unspoken’ laws of
business in that country, and to align itself with reputable local allies so it doesn’t fall foul of international or local laws.
The key issues for any business will be reviewing and understanding local and international laws enough to remain compliant with them, avoiding conflicts due to cross-cultural barriers, conducting thorough due diligence on people and companies that may become partners in the business, and involving local professionals in the managing of the subsidiary through board membership.
The corporate secretary can play an active role in dealing with these challenges.
According to Shriram Subramanian, managing director of Bengaluru-based InGovern Research Services, India’s financial picture is solid. It is the second most populous nation on the planet and has a GDP growth rate of 8 per cent; it boasts a high savings rate among its citizens, which bodes well for future consumption; and with a population that has an average worker age of 28, rates of disposable income are likely to rise over the next 30 to 40 years.
India is home to 23 exchanges and remains attractive to international investment, with multinationals like Bank of America, Berkshire Hathaway, Chevron, Citco and Deloitte & Touche setting up subsidiaries throughout the nation. This increase in foreign investment, coupled with a growing demand for global services, has cast a favourable light on India’s potential for profit.
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