The Opportunities — and Pitfalls — for Non-resident Indian Entrepreneurs

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Some 25 million people of Indian origin do not live in India, according to the country’s ministry of overseas affairs. The Indian government recognizes them as People of Indian Origin (PIO). A high-profile subset of this group (though, strictly speaking, it is a classification for tax status) is the Non-resident Indian (NRI), which is loosely considered to mean Indians who have emigrated in recent times. Their ranks include many highly successful scientists, entrepreneurs and corporate executives, including PepsiCo CEO Indra Nooyi, Microsoft CEO Satya Nadella, former Citigroup CEO Vikram Pandit and Google chief business officer Nikesh Arora.

During the recent Wharton India Economic Forum, participants in a panel titled, “NRI: Leveraging Your Roots,” discussed how people with this designation can use their Indian roots and the resources at hand to build successful careers both in India and abroad. They also discussed the social and economic challenges this group faces, and, at a time when India’s growth rate has slowed, what kind of role NRIs might play in enabling India’s further emergence as a global economic leader.

The panel of four prominent NRIs included Sanjay Govil, founder and chairman of Infinite Computer Systems; Munish Narula, who founded Tiffin.com, Tashan Restaurant & Lounge and Tiffin Bistro, now part of the Narula Restaurant Group; Prasad Setty, vice-president of people analytics and compensation at Google, and Kanika Dewan, founder and chairperson of Ka Design Atelier and group president of the Bahrain-based Bramco Group. The moderator was Jagmohan Raju, a Wharton marketing professor and director of the Wharton-Indian School of Business Program.

Govil, who at Infinite provides mobility solutions and IT services to some of the world’s largest corporations, said the most important factor for any entrepreneur is “believing in what they want to do.” Passion is a very important driving factor, he noted, adding that NRIs need to be focused on customer satisfaction. “As you pursue your dream, it is also very important that you are constantly evolving your concept because the marketplace is constantly changing,” he stated.

“Being an entrepreneur is following your dream, listening to your customers and constantly reinventing your products and managerial strategies.” –Munish Narula

The second panelist, Narula, was formerly an investment banker. He founded Tiffin.com, a web-only and delivery-only restaurant concept that soon evolved into a multi-platform operation offering a full e-commerce website, delivery and takeout, dine-in and catering. Following up on that success, Tiffin has opened five more locations in the Philadelphia market, and is exploring growth opportunities in both the U.S. and India. Narula said that although the required skill-set and drive are the same whether you are an entrepreneur in India or an NRI, there is “a little bit of additional pressure” associated with being an NRI.

Narula began his U.S. business career on Wall Street, but for all the wrong reasons, he noted. “I had a miserable time on Wall Street, because my only motivation was the money.” In his current career as a hospitality sector entrepreneur, “I found what I love, and I love what we do.”

Like Govil, Narula saw entrepreneurship as an opportunity to pursue his own dreams. “Being an entrepreneur is following your dream, listening to your customers” and constantly reinventing your products and managerial strategies to respond to the needs of those customers, he noted. “If you are not adapting to the market needs and demands, your company will die at some point. I don’t think that being an NRI differentiates your skill-set from others, but it does give you a bit of an edge, and it gives a bit of [additional] pressure.”

At Google, India-born Setty has spearheaded the company’s well-known data-driven approach to attract and retain the best talent by creating a positive and productive environment, and rewarding its employees in innovative ways. Although Setty believes that NRIs are playing an important role in Silicon Valley and in some Indian companies, he said that they could be playing an even more significant role if more of India’s talented young NRIs were directed into research-focused careers. “If India wants to lead the world, there needs to be a lot more research that is done there,” Setty noted. “Last year, there were only 125 computer science PhDs” in India. Although the country produced a large volume of engineers, “very few [PhDs] were doing the hard-core research” that India needs.

Eliminating Bureaucratic Corruption

Dewan stressed the importance of eliminating the deeply ingrained corruption in Indian bureaucracy. Dewan’s firm is responsible for the design and construction of the new Terminal Three of Delhi International Airport, the world’s third-largest. She recalled a particular incident that dramatizes the problem. Her firm was working on the Mumbai Airport, and had acquired rented accommodations for several hundred workers. Some people came by and said “get out of this accommodation.” When Dewan asked them why, she was told she needed to provide a payoff to a local inspector. She rejected making such a payoff because of corporate policy. She added that these types of illegal payments go beyond “the flavor of corruption to literally criminal activities. We believe the outside world or the developed world, as we call it, is going to change that.”

“If the rules change on the fly, it is very destructive for business.” –Sanjay Govil

According to Dewan, India has been “very accepting” of non-Indians arriving from the U.S. or elsewhere, armed with skills and good ideas for doing business. Apart from welcoming this “reverse brain drain” from the West, India also provides entrepreneurs with access to a vast labor pool from the country’s huge number of villages. “That is where India needs to go to tap into the resources that are within, but we need to organize ourselves in an efficient manner; [and] this is where quality control, corruption come into play.”

Infrastructure is such a large issue, she added, and there is huge opportunity for kickbacks; this is where politicians earn their bad reputation. India’s geographical position “allows it to bring in lots of intellectual property from [both] the Middle East and Asia — which will help us — but we have to learn from the West to be able to avoid these kinds of issues.”

Govil said that accountability and inconsistency in governmental policies are major challenges for NRIs and other entrepreneurs doing business in India, so the government needs to focus on improving the consistency of its policy initiatives. “If the rules change on the fly, it is very destructive for business.” For example, a few years ago, the government was setting up special economic zones that were supposed to be tax-free. Although several companies showed interest in setting up centers for research and manufacturing in the zones, that policy was suddenly reversed. Rather than provide investors with tax-free treatment, they were now to be subject to a minimum tax of 20%. “The commitment of the government was there for three years, and then that changed,” Govil pointed out. These sorts of reversals create “indecisiveness and uncertainty in the industry. And that’s why we have seen a significant reduction in investments in India.”

In a second example of governmental inconsistency, Govil cited a new law governing corporate social responsibility or CSR. Every company having a net worth, income or net profit above certain threshold levels needs to spend at least 2% of the average net profits for the past three years on CSR activities. The challenge for NRIs and other business leaders in India, noted Govil, is that “we don’t even know if this 2% will be tax-deductible.” Too many Indian laws seem very ambiguous with gray areas that “create problems with accountability,” he added.

Future Directions 

Has India fully capitalized on the potential of the IT industry? In response to this query by moderator Raju, Setty noted that India has “certainly become very important” for Google. However, he argued that there is still a shortage of content available in local languages and that the industry needs to try to get Indians to become “more used to using the Internet for e-commerce.”

“You can’t be scared. You have to share your problems and work as a team.” –Kanika Dewan

E-commerce sites such as FlipKart and Snapdeal have enjoyed growth, but they have hardly penetrated the Indian market. For its part, Google is working with local R&D teams to address the specific needs of its Indian users.

Govil stressed that NRIs should “do something that you really want to do.” He also advised entrepreneurs to take advantage of India’s very talented labor pool. “Use India as a source of human capital. That is the biggest thing India has going for it, whether it is in infrastructure, IT, or whatever,” Govil noted. Ultimately, he added, Facebook’s recent acquisition of WhatsApp for $19 billion is really a big play on the Indian consumer, who will be using its online messenger service in ever larger numbers in the future.

Dewan advised female NRIs to prepare themselves for various forms of intimidation. In her sector — design and construction — “they expect women not to put their foot down so much,” she said. On one occasion, for example, a male business colleague asked her, “Shouldn’t you be shopping?” rather than attending a business meeting. Dewan noted that women should “retaliate, and stick to your guns. Get your team to support you. You can’t be scared. You have to share your problems and work as a team.”

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