Indian Business Model: 10-Point Formula

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1. Family Base Indian society is family-based ; family is the smallest social, economic, and cultural unit. Families drive the Indian economy; about two-thirds of national income comes from family-based sectors. Economic decisions are heavily influenced by family considerations. Ventures are started not just for individuals but for the entire family, with siblings, children, and grandchildren inheriting them. The entire family contributes to savings and funds for a venture (parents, grandparents, siblings, in-laws, relatives, friends, community). Senior family members (father, mother, wife) are always consulted or informed of economic decisions. 2. High Level of Savings Indian society is savings-oriented ; people save in every possible way. Taught from youth to minimize needs , making spending unnecessary beyond a limit. Saving is a part of Indian culture and way of life, regardless of wealth. Even those with insufficient money try to save for tomorrow by sacrificing today. Spending more than necessary is considered a sin in traditional Indian system. Savings are in various forms, not just gold and bank deposits, but also indigenous avenues. It's difficult for the government to calculate the exact quantum of savings. Composition of Household Savings Financial savings (bank deposits, life insurance, provident/pension funds) are slightly more than physical savings in the household sector. 3. Self-Employment A self-employed person works for themselves, not for a specific employer with a consistent salary. They earn income by contracting directly with a trade or business. In 2021, 76.12% of total employment in India was self-employed (World Bank data). Types of Self-Employed People Independent Contractors: Hired for specific jobs, paid only for work performed, no worker's compensation, no taxes deducted, equal opportunity laws don't apply. Examples: Doctors, lawyers, actors, accountants, journalists. Often perform multiple jobs and are not limited to one field. Sole Proprietors: Own the business alone. Partnerships: Two or more self-employed persons forming a business. Self-Employment vs. Entrepreneurship vs. Startup Entrepreneurship: Designing, launching, and operating a new business; includes all new organizations, even small businesses not intending to grow. Startup: Temporary new organization created with the intention to grow larger, beyond the founders and owners, and hire employees. A self-employed individual is not the same as a business owner (who may hire employees). Self-employed individuals both own the business and are the primary operator . Business owners can also be "silent partners" not involved in day-to-day operations. Advantages of Self-Employment Freedom & Flexibility: Do what they love, set customized working hours, decide what work to do, often work from home (saves commuting time). Be Your Own Boss: Unlimited creativity, control over business decisions. Sense of Pride & Achievement: In creating a successful business and ability to make changes. 4. Highly Entrepreneurial Nature Indians are hard-working with a strong desire to be independent and achieve. Desire to leave something better for children and future generations drives saving and entrepreneurial activity. Many entrepreneurial activities take shape, despite increasing preference for jobs among the English-educated. Global Entrepreneurship Monitor (GEM) 2002: India was the second most entrepreneurially active nation (17.9% of population). Close personal and community relationships mean one person's entry into business influences others to follow suit. Success of one person encourages others; successful individuals often induct relatives and acquaintances into their businesses. 5. Non-corporate Sector as the Core of the Economy Includes non-company entities in non-agricultural, non-government activities (excludes private/public sector companies). Consists of partnership/proprietorships, self-employed persons, and cooperatives. Often referred to as "un-organized," "informal," or "residual" sector. Has the largest share in national income, manufacturing, services, savings, investment, taxes, credit market, employment, and forex earnings . Significant in service sectors: construction, trade, hotels, restaurants, non-railway transport, storage, real estate. Largest contributor to national income, savings & investments, and taxes. Accounts for largest share in manufacturing & service activities and employment. 6. Community Orientation and Higher Social Capital Families extend to close-knit relatives, forming wider circles. Indians have one of the largest circles of relatives, including friends, colleagues, neighbors, and acquaintances. Tradition of "Atithi Devo Bhava" (Guest is God); strangers are treated as guests, even allowed to partake in food without permission. Indians treat everyone with warmth and affection, accommodating diverse groups. Each family takes responsibility for its members. Indian society is largely self-functioning , resulting in very low expenditures on social security, old-age homes, and administrative/judicial infrastructure. Social orientation remains a basic foundation of life; people live like a well-knit society. Reduces government burden in maintaining society. Sociologists emphasize that nations thrive when people live together as groups. 7. Faith and Relationship in Economic Affairs Economic transactions among known people are based on faith . Faith-based transactions are easy, fast, and reduce transaction costs, not relying on state machinery. Facilitated by close-knit relationships and social capital. Many daily economic transactions depend on faith, not just non-monetary or small sums. Even larger financial transactions are undertaken on faith and goodwill (e.g., village loans without third-party knowledge, oral agreements for assets). Though traditional arrangements are waning, a large presence of faith-based transactions persists at all levels. Raising funds or borrowing from a "good person" is possible due to relationships. In Gujarat, a Patel's good reputation can attract capital for a new venture. Investment decisions in non-banking finance companies are often based on the reputation of the people behind them. Study in Karur textile cluster showed most financial transactions were based on faith and goodwill; financiers gave funds based on borrower's reputation, not documents or pledges. 8. Driven by Norms and Values Economic and business systems in India have always been based on basic norms and values. Sages and scriptures advised traders to conduct affairs based on principles (e.g., Arthashastra principles for fair trading). Arthashastra Principles for Fair Trading: Locally produced and imported goods for public benefit. Buffer stock built during excess supply, adjusted to market price. Commodity gluts managed by canalized sales through state-controlled outlets, selling from accumulated stock without profit margin. Surplus unaccounted stocks sold for public benefit. Large profits foregone if harmful to the public. No artificial scarcity; constantly demanded commodities always available and not restricted. Basic minimum disciplines observed in business transactions, despite deviations due to changing times. Higher values observed in close-knit non-corporate sectors (e.g., in Tamil Nadu's ghee industry, traders refuse to open a second outlet if another promoted by their men exists). Even in modern corporate sector, norms are observed in vital matters (e.g., fewer hostile takeovers compared to Western countries, respecting companies promoted by others).