Types of Government

Modern democratic governments can be classified into parliamentary,

presidential & semi-presidential forms on the basis of nature of relations
between the executive and the legislative organs of the government.
1) Parliamentary system – It is the form of government in which the
executive is responsible to the legislature for its policies and acts. Cabinet is
the nucleus of this system hence it is also called as the ‘Cabinet system’. The
Cabinet (the real executive) is responsible to the legislature & stays in office
so long as it enjoys its confidence hence it is also called as the responsible
government. It is described as ‘Westminster model’ of government after the
location of the British Parliament. This system is present in the UK, Germany,
Denmark, Sweden, Japan, India etc.
2) Presidential system – In this form, the executive is not responsible to
the legislature for its policies and acts. The executive is constitutionally
independent of the legislature in respect of its term of office. Hence, the
Presidential system is also known as non-executive or non-responsible or
fixed executive system of government. Such system is present in the USA,
Brazil, Russia, Sri Lanka etc.
3) Semi-presidential system – In a semi-presidential the President exists
alongside a Prime Minister & a cabinet. It differs from a parliamentary
republic in that it has a popularly elected head of state, who is more than a
purely ceremonial figurehead. In contrast to the presidential system, the
cabinet is responsible to the legislature, which may force the cabinet to
resign through a motion of no confidence. There are two separate subtypes
of semi-presidential system, namely premier-presidential system and
president-parliamentary system. France, Russia, Mongolia, Madagascar etc.
have the semi-presidential system.
1) Features of the Parliamentary System
A) In the Parliamentary system, the political party which secures majority
seats in the Lower House forms the government. The leader of that party is
appointed as the Prime Minister & other ministers are appointed on the
advice of the Prime Minister.
B) The nominal and real executives are different. The President is the
nominal executive (titular executive) while the Prime Minister is the real
executive. The President is head of the State, while the Prime Minister is
head of the government.
C) The principle of collective Responsibility is the bedrock principle of
parliamentary government. The ministers are collectively responsible to the
Parliament.
D) The ministers operate on the principle of secrecy of procedure and cannot
divulge information about their proceedings, policies and decisions. They
take the oath of secrecy before entering their office.
E) The ministers are members of both the legislature and the executive.
Hence there is a double membership. This means that a person cannot be a
minister without being a member of the Parliament.
F) The lower house of the Parliament (Lok Sabha) can be dissolved by the
President on recommendation of the Prime Minister and he can advise the
President to dissolve the Lok Sabha before the expiry of its term and hold
fresh elections.

Parliamentary System

Merits Demerits

1.      Harmony between legislature and executive A.    Unstable government

2.      Responsible government B.     No continuity of policies

3.      Prevents despotism C.     Against separation of powers

4.      Wide representation D.    Government by amateurs

 
2) Features of the Presidential System

A) The President is both the head of the State and the head of government.
As the head of State, he occupies a ceremonial position. As the head of
government, he leads the executive organ of government.
B) The doctrine of separation of powers is the basis of the presidential
system. The legislative, executive and judicial powers of the government are
separated and vested in the three independent organs of the government.
C) The President is elected by an electoral college for a fixed tenure. He
cannot be removed by the legislature except by impeachment for a grave
unconstitutional act.
D) President governs with the help of a cabinet. It is only an advisory body
and consists of non-elected departmental secretaries. They are selected and
appointed by him, are responsible only to him & not to the legislature.
E) President and his secretaries are not responsible to the legislature for
their acts. They neither possess membership in the legislature nor attend its
sessions.
F) The President cannot dissolve the Lower House of the legislature.

Presidential System

Merits Demerits

1.      Stable government A.    Conflict between legislature and exe

2.      Definiteness in policies B.     Non-responsible government

3.      Based on separation of powers C.     May lead to autocracy

4.      Government by experts D.    Narrow representation

3) Features of the Semi-Presidential System

A) Semi-presidential systems may sometimes experience periods in which
the President and the Prime Minister are from differing political parties. This
is called cohabitation.
B) Under the premier-presidential system, the prime minister and cabinet
are exclusively accountable to parliament. The president chooses the prime
minister and cabinet, but only the parliament may remove them from office
with a vote of no confidence. The president does not have the right to
dismiss the prime minister or the cabinet.
C) Under the president-parliamentary system, the prime minister and
cabinet are dually accountable to the president and the assembly majority.
The president chooses the prime minister and the cabinet but must have the
support of the parliament majority for his choice. In order to remove a prime
minister or the whole cabinet from power, the president can dismiss them or
the assembly can remove them by a vote of no confidence. This form of
semi-presidential system is much closer to pure presidential system.

Indian Political System:

India is a parliamentary democratic republic where the President of India

is the Head of State and the Prime Minister of India is is responsible for
running the federal government.

Government of India

The government of India is considered a parliamentary democracy, which

means that the executive branch of government is held accountable to
the legislative branch. Under this system of government, India has both a
President, who is the Head of State, and a Prime Minister, who is the Chief
Executive of the executive branch. This country is politically divided into
29 states and 7 territories. Its government is divided into 3 branches: the
legislative, the executive, and the judicial. This same model is used at a
state level as well. This article takes a closer look at the branches of
government in India.

Legislative Branch

The federal legislative branch of India consists of a bicameral Parliament,

divided into two houses: the Council of States and the House of the
People.
The Council of States, known as the Rajya Sabha, has a constitutional limit
of 250 members. Currently, 245 seats are filled in this parliamentary
house. The President may appoint 12 members for their expertise in
science, art, social sciences, or literatures. The remaining members are
elected by the legislative bodies at the state and territory levels of
government. The Council of States may serve for multiple, yet non-
consecutive, 6-year terms and every two years, 33% of the members
retire.
The House of the People, known as the Lok Sabha, is considered the lower
house of Parliament and has a constitutional limit of 552 members. The
President may appoint 2 of these members from the Anglo-Indian
community, if it is decided that this population is not represented in this
legislative body. Other reserved seats include: 84 for representatives of
the Scheduled Castes and 47 for representatives of the Scheduled Tribes,
both are groups of historically disadvantaged indigenous populations.
Representation in the House of the People is further determined by state
and territory population size and general election results.
Although the legislative branch is responsible for passing new laws and
regulations, its work must be reviewed and approved by the judicial
branch before it may become law. The legislative branch does have some
authority over the executive branch of government.

Executive Branch

The executive branch is responsible for the daily management of

government activities. This branch is made up of the Council of Ministers,
who are selected by Parliament, the President of the country, and the
Prime Minister.
The President leads the Council with guidance from the Prime Minister and
appoints a number of seats, including: state Governors, Attorney General,
Chief Justice of the Supreme Court, Chief Election Commissioner, and the
Cabinet Secretary. Legally, the President also acts as Commander-in-Chief
over the military.
The Prime Minister serves as the Chief of Government, leader of the
political party with majority representation in Parliament, an advisor to the
President, and the head of the Council of Ministers. This position also has
the power to dismiss Ministers and propose new legislation to Parliament.

Judicial Branch

The judicial branch of government is similar to that found in other

European countries as it has retained many features from the British
colonial era. This branch works independently of the executive and
legislative branches. It consists of the Supreme Court of India, the High
Courts at the state level, and the District and Sessions Courts at the local
level. The leaders of the Supreme Court are appointed by the President,
these positions include the Chief Justice and 30 associate judges, who are
recommended by the Chief Justice of India.

Indian Economic System:

Economic Systems Do you remember the three questions that every country must
answer when developing its economic plan? 1.What goods/services will be produced?
2.How will goods/services be produced? 3.Who will consume the goods/services? The
way a country answers these questions determines what kind of economic system it
will have: TraditionalCommandMarket

3 All economic decisions are based on customs, traditions, & beliefs of the past.
People will make what they always made & do the same things their parents did. The
exchange of goods is done through bartering. Bartering = trading without using
money Some examples: villages in Africa & South America, the Inuit in Canada,
Aborigines in Australia

4 All economic decisions are made by the Government. The government owns most
of the property, sets the prices of goods, determines the wages of workers, plans
what will be made…everything. This system has not been very successful. More and
more countries are abandoning it. This system is very harsh to live under; because of
this, there are no PURE command countries in the world today. Some countries are
close: Cuba, former Soviet Union, North Korea, former East Germany, etc. All of
these countries have the same type of government: Communist! The government is
in control of everything.

5 Economic decisions are made based on the changes in prices that occur as buyers
& sellers interact in the market place. The government has no control over the
economy; private citizens answer all economic questions. In a truly free market
economy, the government would not be involved at all. Scary… There would be no
laws to make sure goods/services were safe. *Food! Medicine! There would be no
laws to protect workers from unfair bosses. Because of this, there are no PURE
market economies, but some countries are closer than others. Some Examples: US,
UK, Australia, etc.

6 Since there are no countries that are purely command or purely market, what
does that make them? Most democratic countries have some characteristics of both
systems, so we keep it simple and call them: MIXED Of course, most countries’
economies are closer to one type of system than another.

7 Factors of Production There are 4 factors of production that influence economic

growth within a country: 1.Natural Resources available 2.Investment in Human
Capital 3.Investment in Capital Goods 4.Entrepreneurship The presence or absence
of these 4 factors determine the country’s Gross Domestic Product (GDP) for the
year.

8 GDP is the total value of all the goods and services produced in that country in
one year. It measures how rich or poor a country is. It shows if the country’s
economy is getting better or worse. Raising the GDP of a country can improve the
country’s standard of living.

9 “Gifts of Nature” Natural resources are important to countries because without

them, countries must import the resources they need (can be costly). A country is
better off if it can use its own resources to supply the needs of its people. If a
country has many natural resources, it can trade/sell them with other countries.

10 To increase GDP, countries must invest in capital goods: All of the factories,
machines, technologies, buildings, and property needed by businesses to operate. If
a business is to be successful, it cannot let its equipment break down or have its
buildings fall apart. New technology can help a business produce more goods for a
cheaper price.

11 To increase GDP, countries must invest in human capital. Human capital is the
knowledge and skills that make it possible for workers to earn a living producing
goods and services. This includes education, training, skills, and healthcare of the
workers in a business or country.

12 People who provide the money to start and operate a business are called
entrepreneurs. These people risk their own money and time because they believe
their business ideas will make a profit. Entrepreneurs must organize their businesses
well for them to be successful. They bring together natural, human, and capital
resources to produce goods or services to be provided by their businesses.

13 Not every country can produce all of the goods and services it needs. Countries
specialize in producing those goods and services they can provide best and most
efficiently. They look for others who may need these goods and services so they can
sell their products. The money earned by such sales then allows the purchase of
goods and services the first county is unable to produce. In international trade, no
country can be completely self-sufficient (produce all the goods and services it
needs). Specialization creates a way to build a profitable economy and to earn
money to buy items that cannot be made locally.

After India’s independence in 1947, the government set up a command economy.

Starting in 1991, India began to lift some government control and allow citizens a
role in running some of India’s industries. Today, India has a mixed economy that is
moving away from a command system. India’s government makes some decisions
about agriculture and industry, but free enterprise and entrepreneurship are very
common.

31 India’s GDP is $4.7 trillion (US dollars). It is ranked 4 th in the world. The
country’s GDP has been growing at a rate of about 8.5% per year. The GDP per
capita (value of goods and services produced per person) is $3,800.

32 India’s fertile land and ample water supply are its most valuable resources. What
are India’s major natural resources? Coal, iron ore, manganese, mica, bauxite, rare
earth elements, titanium ore, chromite, natural gas, diamonds, petroleum,
limestone, & arable land India has the fourth-largest coal reserves in the world.

33 India’s Coal Mines

34 What percentage of the land is arable (capable of being farmed)? 47.9% About
half of India’s land can be farmed, and its most important crops are rice and wheat.
What are the major agricultural products? rice, wheat, oilseed, cotton, jute, tea,
sugarcane, lentils, onions, potatoes, dairy products, sheep, goats, poultry, & fish

35 Indian Wheat Fields

36 India has invested heavily in the factories, modern machinery, and technology
that make up what is known as capital goods. Now, India is one of the world’s top ten
industrial nations. What’s produced in India’s factories? textiles, chemicals, food
processing, steel, transportation equipment, cement, mining, petroleum, machinery,
software, & pharmaceuticals Service industries are also booming in India, with
thousands of people employed to handle technology questions, airline reservations,
and customer service help for customers around the world.

37 Textile Factory

38 India has a booming industrial and technological economy. This specialization

makes it possible for India’s economy to focus on the businesses that are the most
profitable in the world market. India’s chief exports include: petroleum products,
precious stones, machinery, iron and steel, chemicals, vehicles, & apparel

39 What percentage of the population over the age of 15 can read and write?
62.8% (Male – 75%, Female -- 50%) How long are students expected to stay in
school? Most students drop out of school when they are 11 years old. India has made
investment in human capital a major priority over the past few decades. Although
India’s literacy rate is low, the rate among children is much higher. India’s
investment in human capital will benefit the economy greatly in the future as
educated children enter the workforce.

40 Middle School Lunch

41 What percentage of people do not have jobs? 8.5% of India’s workforce is

unemployed. What percentage of people live in poverty? 29.8% of India’s population
live below the poverty line and cannot meet basic needs. In 2011, India had the
largest concentration of people living below the international poverty line of $1.25 of
all Asian countries.

42 Entrepreneurship is rising dramatically in India. India has a high rate of

entrepreneurship, partly because the government supports new business owners
with training and facilities.

UK Political System:

The ‘countries’ of England, Scotland, Wales and Northern Ireland have distinct cultures and
proud independent histories that identify them. Acts of Union passed centuries ago brought these
countries into one political union.

This union is what is formally known as the United Kingdom of Great Britain a62nd Northern
Ireland – which is often considered a bit of a mouthful. The historical significance of the Union is
important because it underpins some of the political dynamics of the country and possibly
contributes as to why it has become so multi-cultural.

Norman Tebbit, once Member of Parliament, voiced a controversial opinion in 1990 that
suggested that a person’s origins were indicated by which national sports team they supported.

If you put this to the test today and ask a Scot which rugby team they support, their answer likely
won’t be England or Wales. Such proud differences are friendly, but the reasons for them stretch
back across centuries of historical conflict.

The politics in the United Kingdom operate within a ‘constitutional monarchy’ similar to some
other countries like Spain, Sweden, Thailand, Denmark, Japan, and the Netherlands to name a
few.  Whilst the Queen is head of state, the Prime Minister is head of government. Since 1999,
the UK government has shared executive powers with the devolved governments of the Scottish
Parliament, Welsh Assembly and Northern Ireland Assembly.

Each of the United Kingdom parliaments or assemblies has elected political parties.

In England, the most dominant are the Labour, Conservative and Liberal Democratic parties.
Meanwhile in the other regions notable parties are: The Scottish National Party in Scotland, Plaid
Cymru in Wales, and various unionist parties and Sinn Fein in Northern Ireland.

The UK Parliament in London is at the heart of the political system in Britain and is the legislative
body for the UK and British overseas territories.  Parliament has two legislative parliamentary
bodies, the House of Lords and the House of Commons.

The House of Lords includes three types of members, Bishops from the Church of England,
nobility (British honours system) and Law Lords (Judges). Its members are not elected and
appointed by the Queen on the advice of the Prime Minster. The House of Commons consists of
democratically elected Members of Parliament from various different political parties. Elections
are held every five years.

Below are brief introductions to the most well-known political parties in the United Kingdom.

Political parties in England

The Conservative Party (or Tory party) was in government for two-thirds of the twentieth century,
but it has been in opposition since losing the 1997 election to the Labour Party. Its modern
politics are considered to be ‘centre-right’.

The Labour Party was founded at the start of the twentieth century. In 1997 it won the general
election under Tony Blair, its first since 1974. The Party describes itself as the ‘democratic
socialist party’ and is considered to be ‘centre-left’.

The Liberal Democrats (Lib Dems.) are the third-largest party in the UK parliament. However the
Party has never been in government. Their ideology is described as giving ‘power to the people’
with politics considered to be ‘centre/centre-left’.

United Kingdom Independence Party (UKIP) has had a growing influence in the United Kingdom.
The party’s principal aim is the withdrawal of the UK from the European Union.

British National Party (BNP) is a ‘far right’ political party which is hugely controversial in the
United Kingdom. It aims to protect native British homogeneity by reducing UK immigration.

The Green Party’s radical politics are underpinned by core values to do with ensuring we look
after the natural environments around us.

Political parties in Scotland

Parties represented in Scottish parliament are, the Scottish National Party, Labour,
Conservatives, Liberal Democrats and the Scottish Green Party.

The Scottish National party is the largest party in the Scottish Parliament since elections in 2007.
It is a ‘centre-left’ political party.

Political parties in Wales

Parties represented in the Welsh Assembly include, Welsh Labour, Plaid Cymru, Conservatives
and the Liberal Democrats.

Currently Plaid Cmyru and Welsh Labour work together as a coalition government.

Political parties in Northern Ireland

The Northern Ireland Assembly elects the Northern Ireland Executive which consists of a number
of key ministers, including the First Minister. Each party has a share of ministerial positions.
 
Key political parties are: The Ulster Unionist Party, Democratic Unionist Party, Sinn Féin and
Social Democratic and Labour Party

UK Economic System:

In Britain anyone can sell pretty much anything (legal) to anyone with no
interference from the state. There is some oversight of businesses that
have safety implications, of course, but in terms of ownership, etc., there
is very little regulation.

It is very easy for foreign companies to invest in the U.K. As examples,

Nissan, Toyota and Ford all have huge plants in the U.K. Until recently so
did GM but they sold to Peugeot, so now Peugeot have huge plants here
(Vauxhall).

Britain as a country is a nation of traders, small and large, and we have

built our economy around that. We do also have a notable public sector.
At the last count, 5.4 million people were employed in the public sector,
compared to 26.7 million in the private sector. That means 16.8% are
employed in the public sector, but note that figure includes almost all
healthcare workers in the NHS.

The U.K. government takes 34.4% of GDP in tax (compared to 39.9% in

the US). So it’s about average in terms of the tax burden people have to
bear.

National debt is 81.58% of GDP, compared to 106.1% in the US.

So overall, the U.K. has a mixed economy whose private sector is more
liberalised than most western countries, is less indebted than the US,
takes less tax than the US and which manages to provide healthcare free
at the point of need. I think that’s pretty impressive.
Us

Key Difference: Indian Culture refers to the customs, traditions, religions

and set of rules that are followed in India, while the Western Culture most
commonly refers to culture that is followed in America and Europe.
This topic is always debatable and frankly there is never a winner as to
which culture is better. Both are different types of culture and customs
that are followed in different parts of the world. Indian Culture refers to
the customs, traditions, religions and set of rules that are followed in
India, while the Western Culture most commonly refers to culture that is
followed in America and Europe. Both the cultures differ from each other
in the traditional mindset, however, in today’s world both the cultures are
coming to a mix. The Indian Culture has been dealing with westernization
for a few decades now and the Western Culture has started developing a
taste for the exotic Indian food and yoga.

Indian culture can be broken down into two parts; traditional culture and
modern culture. Traditional Indian culture is the one that is followed in the
rural areas of India, while modern culture is in the urban areas. The
traditional culture has been on a continuous decline, with westernization
play a huge part in an attempt to bridge the gap between different
cultures. The Indian culture is one of the oldest cultures and has been
around for several millennia. It encompasses various different cultures
that are in the different part of the country.

Indian cultures place a lot of important on society; everything a person

does has an effect on society’s perception of the person. Everything from
going to a certain school, to dressing a certain way and even getting
married, reflects the type of person you are to the society. Major religions
part of the Indian culture includes Hinduism, Buddhism, Jainism, Sikhism
and even Catholicism. Family is the second most important part of a
person; from an early age a child is taught the importance of a family and
the part he/she is expected to play in the family. Girls are most commonly
taught about cooking, while boys are taught family business.

The Indian cuisine, now popular all over the world, has distinct and rich
flavors full of spices. The cuisine varies from region to region; northern,
southern, eastern, western and north-eastern. Food from each region can
be distinguished by uses of different herbs, spices and cooking
techniques. A variety of Indian food has also been influenced by Persians
and Mughals. India is also popular for its desserts, known as mithai.

Marriages also play an important part in a person’s life. Arrange marriages

still play a huge part in rural India, where families pick out a proper bride
and groom for the children to marry with their children’s permission. Love
marriages are gaining popularity in India specifically among urban areas.
Since a major importance is placed on family, Indian cultures suggest
living in joint families, where parents, male children, children’s spouses
and grandchildren, all reside in the same house. However, nuclear families
have started receiving more importance in urban families.
Clothing that is considered appropriate for women according to Indian
culture, includes salwar-kameez, chudidar, saris and clothes that are not
too revealing or tight in fitting. India is still a male-driven society and
gender equality is something that is still being fought for by women in
many rural places in India, where women are still considered lesser
compared to men. This is changing, are more women are fighting for their
rights to be considered equal in society. Indian culture is also popular for
its various different colorful festivals that take place throughout the year.

Western Culture received its start from the Ancient Greece and Ancient
Rome, which spread under the Roman Empire to different parts of the
world. It is heavily influenced by Christianity and was stagnant during the
Dark Ages. The Renaissance in the 14-17 century is considered to have
th

rebirth the western civilization, which was further promoted by the

Scientific Revolution and the Age of Enlightenment. In today’s definition
Western culture is most commonly associated with modern societies such
as US, UK and Europe.
The core importance of Western Cultures are placed on individuals, they
most commonly believe in making themselves happy first as an individual
rather than trying to placate the society. A person does as he wishes and
does all the things that make him/her happy, even if it does not please the
society. Major religions that influence the Western culture are Christianity
and Judaism. Similar to US being a melting pot for different types of
people from different countries, Western culture is also considered as a
melting pot of various cultures of different people from different countries.
It includes cultures from India, Latin America, Europe, etc.

Cuisine also varies in this culture; however, meat is the core ingredient in
almost all meals. Western culture includes cooking styles of Dominican
Republic, Puerto Rico, India, Italy, etc. Every person has their own way of
cooking a certain dish and ingredients can vary depending on the person.
The flavors also vary depending on the ingredients of the dish. Western
culture is mainly known for its popular fast foods such as burgers, tacos,
hot dogs, pretzels, etc.

Western cultures mainly believe in nuclear families, where once the child
reaches a certain age, they move out of their parents’ house into their
own home. A child receives independence at the age of 18 and is
considered as an adult at that point of age. Depending on the household,
a child can either continue living there until marriage or move out at the
age of 18. A child is also expected to start working at that age, at least
part time along with college.

In this culture, a person also has the freedom to choose who they want to
get married to, if they want to get married at all. All of the marriages are
consented and love marriages. A person is not forced into a marriage
under the consent of the parents. However, in the olden days, mainly for
women, fathers used to choose an appropriate suitor.

 A number of different festivals are also celebrated in the Western culture.

These religions mostly have religions backgrounds such as Christmas
(when Jesus Christ was born), Easter (when Christ was resurrected), All
Saints’ Day, Valentine’s Day and Thanksgiving Day. Many festivals in
Western cultures have lost the true meaning and have only become a
commercial holiday, such as Valentine’s Day and Halloween.

In Western cultures, there is no differentiation between men and women

as both are considered equal in today’s society. Though prior to this,
women were considered lesser to men, it has not been so since the 1970s.
Women also have the freedom to choose what they wish to wear; they are
not limited to certain boundaries of dressing style. They are also free to
wear revealing clothes, though not allowed to be fully nude in public.

Each culture has a set of negative and positive points. They are similar to
the two sides of the same coin. No one culture ever surpasses the other
culture, as it all depends on perception; to each person either culture
could be better than the other one. Many people these days opt to take
positive points from both the cultures and live as it suits them.

 
Indian Culture Western Culture

Definition Indian culture is the Western culture started

traditional mindset of from the Ancient Greece

people that reside in
India. It is the customs,
traditions, ceremonies,
festivals, religions of India
Indian culture is one of
the oldest cultures in the
Origin
world. The traditions are
several millennia old
Hinduism, Buddhism,
Religions
Jainism and Sikhism
Indian food is heavily
spiced and is rich in
Cuisine
flavor. Major emphasis is
put on having lunch
Traditional people usually
prefer joint-families, while
Family modern people are now
living in nuclear-like
families
Festivals Holi, Diwali, Navratri, etc.
There a whole lot of
festivals that are based
and Rome, which then
spread all over the world
under Roman rule. It was
then encouraged by the
European civilization and
now refers to modern way
of thinking
Though according to
historical records
,western culture began
with Ancient Greece and
Ancient Rome, it is
considered as a modern
culture to many people
Christianity, Judaism
Basis of food is meat; it is
an essential part of every
meal. More emphasis is
placed on have dinner
Most people believe in
nuclear families
Christmas, Labor Day,
Easter, Halloween etc.
Also due to it being a
 on different events in the
melting pot a whole of
history; modern festivals
other festivals are also
are being accepted such
celebrated
as Christmas     

Arranged Marriages are

Love marriages are more
Marriages more common, compared
common
to love marriages

Society plays an active

Society does not take an
part in a person’s life.
active part. People take
Every decision that a
Society decisions depending on
person takes , reflects
what they want, not what
what the society thinks
the society thinks
about it

Women are still

considered unequal to
Women are equal to men
Gender Equality men though acceptance
in society
of westernization is
changing this idea

Still have various castes,

No such thing as castes,
Castes where one caste is lesser
all people are equal
than the other caste

A person can wear

Clothing should not be
Clothing clothing according to
revealing or tight
what they desire

Music Religious, classical, folk, Is a melting pot and mix

popular, bollywood and of all kinds of music from
 all over the world;
includes rap, hip hop,
pop music
pop, metal, rock, soft
rock, alternate, etc

The social hierarchy

Hierarchy can be
cannot be challenged.
Hierarchy challenged at any point
(ex: Boss has final
by anyone
decision)

One of the most debated topics in competitions and group discussions is

Indian Culture Vs Western Culture. They are diametrically opposite to each
other. As a coin has two sides, both cultures all have some merits and
demerits. Indian culture is a mix of diversities in customs, rituals,
traditions, language, etc., that varies from region to region within the country.
It is one of the oldest and a combination of various cultures.

On the other hand, Western culture, it is quite advanced and open. The
norms, beliefs, values, traditions, customs and practices are greatly inspired by
European culture. Moreover, Western Culture includes British culture, French
culture, Spanish culture

In this article, you will find the most important differences between Indian
Culture and Western Culture.

Content: Indian Culture Vs Western Culture

1. Comparison Chart
2. About
3. Key Differences
4. Conclusion
Comparison Chart
BASIS FOR
INDIAN CULTURE
COMPARISON
Meaning The culture which is followed in
India, is Indian culture.
Religion Hinduism, Islam, Christianity,
Sikhism, Buddhism, Jainism.
Family Joint family
Music Folk, Classical, Sufi, Bollywood
music is liked in Indian culture.
Equality Woman are considered inferior
than man, however the thinking
is changing with the effect of
westernization.
Languages Hindi is the highly spoken
language, but there are many
other languages which are
spoken in different areas like
Telegu, Tamil, Marathi, Punjabi,
WESTERN CULTURE
The culture which is
followed in most western
countries like USA,
Spain, Canada, Europe
etc. is known as Western
culture.
Christianity, Judaism.
Nuclear family
Hip-hop, Jazz, Blues,
Rap, Heavy metal, Rock
music is appreciated in
western culture.
Both man and woman
are considered equal.
English is widely spoken
in western countries,
followed by French and
Spanish.
 BASIS FOR
INDIAN CULTURE WESTERN CULTURE
COMPARISON

Bengali, Bihari, Urdu etc.

Relation with Every individual is closely Individual is not much

family attached to their family, they attached to their family,
respect and care about family they leave their parent's
more than themselves. home by the age of 18.

Society In India, people kill their own They are open minded
needs and desires because they and gives priority to
assume in advance, what the making themselves
society will think? happy.

Marriages Arranged marriages are Love marriages are

preferred. common.

Clothing Traditional clothing depends A person can wear

upon region and religion. whatever he / she likes.

About Indian Culture

Indian Culture is the ancient and one of the most popular cultures in the
world. India is very well known for its rich cultural heritage which is a
combination of customs, traditions, lifestyle, religion, languages, rituals,
cuisine, etc. depending upon area. Here you can see unity in diversity like
people belonging to different religions live happily. Guests are considered God
here, people welcomed them with joined hands and a smile on their face. Not
only the guests but here people worship animals, statues, rivers, stones, trees,
kids, etc.
Indian Culture is now divided into two categories which are traditional and the
modern one. In traditional culture, people give more importance to their
society. Community comes first according to them, but this scenario is
changing slowly with the impact of westernization. About 3-4 decades ago,
only arranged marriages are common, where the parents of the bride and
groom choose the spouse for their child and then decides about the marriage
but now love marriages are also equally respected.

There are so many festivals celebrated in the country like Holi, Diwali,
Dusshera, Eid-UL-Fitr, Christmas, Baisakhi, Navratri, Muharram, etc. Here
you can see the variety of clothing depending on the region. The Indian
woman prefers Saree or Salwar Kameez with dupatta whereas Dhoti Kurta,
and Kurta Payjama is the traditional outfit of men in India.

Here, transparent, revealing and tight fit dresses are not likened. Hindi is the
most popular language of the country, but there are 122 major languages
which are spoken in India. In India, there are is a wide variety of cuisines like
northern, southern, eastern, western, etc. which differ in spices and ways of
making them. Indian sculpture, architecture is also world famous.

About Western Culture

Western Culture is referred as the modern and advanced culture in the world.
The main pillars of the western culture are capitalism, individualism, rights,
ethical values, etc. You can see western culture in America, Germany, Spain,
Europe, etc. Here most people belong to Christianity and Judaism. People give
more importance to their wants, needs, desires and happiness. Nobody here
has time to think what other people thinks about them because they are busy
in doing their own business.

If we talk about marriages, love marriages and consented marriages are very
popular in western countries. Here people are allowed to have
multiple partners. They are very frank and open in this regard. People do not
have a strong bond with their family; they leave home after reaching the age of
18 to become self-dependent. Youngsters learn and earn at the same time.

Western architecture, paintings, and music are highly admired across the
world. Ballet dance and ballroom dance are the popular dance forms here. In
western countries, people are more concerned about their health, and that is
why they prefer heavy lunch and a light dinner. Their food contains less oil
and spices.
When its about clothing, people like to wear what the desire, there is no
restriction on wearing anything. English, French, American, Spanish, etc. are
the most common languages spoken in the Western countries.

Key Differences Between Indian Culture and

Western Culture
The following are the major differences between Indian Culture and Western
Culture

1. The culture which is prevalent in India is known as Indian Culture. The

culture, widespread in the western countries is known as Western
Culture.
2. Indian Culture has a variety of religions like Hinduism, Islam, Sikhism,
Christianity, etc. while in Western Culture the people mostly belong
to Christianity.
3. In Indian Culture, joint families are common. Conversely, In Western
Culture, small families are there.
4. The traditional Indian outfit is worn in Indian Culture. In contrast to
Western culture, there is no such traditional outfit.
5. A variety of Folk, Classical, Bollywood songs is preferred in Indian
Culture. On the other hand, Western Culture promotes Hip-Hop, Jazz,
Blues, Rap, Heavy Metal and Rock music.
6. Hindi is mainly spoken in Indian Culture but in the case of Western
Culture, English is spoken in a high ratio.
7. Indian Culture is not that more open as compared to Western Culture.
8. Indian Culture gives more importance to society as compared to an
individual, however in Western Culture, society does not take part in the
life of an Individual.

Conclusion
Both Indian Culture and Western Culture are right at their places. There is a
lot to learn from both the cultures. For last few decades, Indian culture has
been influenced by the western culture, and they are adopting the merits of the
western culture like cleanliness, equal rights for both men and women,
frankness, etc. which helped in removing the shortcomings of Indian culture.
Similarly, western culture is also getting an Indian touch regarding Indian
cuisine and yoga.
 U US and India differences in business culture

Unlike leaders in the US, Indian executives practice their values and assimilate them into
all spheres of their lives. They integrate religious teachings and perspectives into their
business mission. There exists a psychological reciprocity with life itself: a genuine
desire to give back because of how much they have received.

Authenticity is speaking from one’s heart without fear. As a nation, India has spiritual
courage. It is not uncommon or uncomfortable to discuss a spiritual dimension in a
business meeting. The discussion provides a framework to weigh decisions. Indian
executives know who they are at their core. They easily speak from the heart and are
committed to developing themselves and others. Education in both business and
spiritual matters is ongoing.

People strive to realize their full potential. Authentic leadership is a legitimate academic
topic, heavily discussed and written about over the past decade. There is general
agreement that leaders become more authentic and in the moment as they increase
self-awareness. Due to a culture steeped in religion, Indian executives are more
naturally introspective.

Authenticity has long been an interpersonal building block in Indian business culture.
Often we are asked about our observations of India. Our first answer is that “India’s
culture is their greatest export”. India’s executives display a mature attitude towards
dealing with the full spectrum of life. Developing trust takes longer in India, but once
developed, it is deep and real.

We have also observed that a common business challenge for India is their hierarchical
organizational structures. This cultural phenomenon results in a high individual
achievement drive and a lack of emphasis on performing well in teams. The issue of
hierarchy presents itself when everybody strives for individual performance over
collaboration and team-based performance.

The goal is not for team success but in seeking individual recognition. In hierarchical
organizations, levels of power, authority and prestige are sometimes subtle but very real.
As one CEO shared “It exists and you cannot wish it away”.

Over the past twenty years, the US has evolved to where team-based performance is
taken for granted. High performance teams are what drive the US work experience. The
belief is that collective intelligence and collaboration are superior to individual
performance.
Organizations define a common purpose and identify shared goals with mutual
accountability and rewards. Compensation and incentives are typically tied to the
achievements of the team. Recently, an Indian executive went through our coaching and
training program. He spent his entire life in India but was transferred to the US and is
now working in a global US-based IT consulting firm. He stated that his biggest
challenge was to appreciate how team-based the US is. He commented that in India,
performance appraisals are all about individual goals.

In the US, performance appraisals are all about your contribution to the success of the
team. It follows that people operating in a system built upon hierarchies tend to make
decisions that benefit their own interests rather

than the organization as a whole. Hierarchies also negatively impact innovation, which is
essential to India’s competitiveness and ambitions.

Innovation is driven by corporate cultures that promote open communication and

thinking out of the box. Engaged employees feel a sense of influence… bottom up
thinking is encouraged. India is a remarkable country, abundantly

filled with highly intelligent people. Our impression of the business leaders is uniformly
positive. We are constantly impressed with the deep thoughtfulness, wisdom and
spiritual qualities of the people we have been so fortunate to meet.

We appreciate India’s history, the system of societal status and how this impacts and
influences business structure and style. But we do believe that flattening hierarchal
organizational structures and migrating from individual to

team-based performance are areas where India can grow. Our goal as trainers and
leadership coaches is to encourage new ways of thinking.

India has incredible wisdom and the world, particularly the US, needs more of the
spiritual authenticity that India possesses. Indian business could benefit from a greater
spirit of collaboration and teamwork, a mindset that drives most successful companies.
As our relationships deepen and our cultures have greater interaction, we hope that both
countries will be open to learning and growing from each other.
Cross-cultural studies are studies in which researchers try to figure out whether a certain
behavior, belief, practice, etc. transcends cultural boundaries or differs from culture to
culture. The disadvantages of these studies include: ... Researchers may display such
beliefs, and this may cause bias.

Two approaches to the interpretation of and theorizing about cross-

cultural differences are identified. In the individual-level approach, cultural
differences are assumed to be consistent with individual differences within
each of the cultures included in the cross-cultural comparison. The use of
antecedent variables to eliminate alternative explanations based on
biases is reviewed and some problems noted. It is suggested that explicit
theories be used to guide the selection of antecedent variables to
minimize the impact of cultural biases. In the second approach, the
culture-level approach, culture is the unit of analysis and there is no
assumption regarding the correspondence between culture- and
individual-level relationships. Two examples are given to illustrate the
potential usefulness of this approach to developing concepts and theories
that are very different from those derived from the individual-level
approach. The problems of bias in this level of analysis are also discussed.
Finally, it is argued that in cross-cultural psychology the individual-level
approach dominates, but we should pay more attention to culture-level
research. This approach may lead to the development of concepts and
theories that arc not likely to be produced by mono-cultural works.
First, the role of culture in intercultural communication is examined. We offer a
concise presentation of the history of cross-cultural and intercultural communication
as a research field, and then continue by offering an outline of the basic idea of
culture as it is applied in studies of intercultural communication. We introduce to
some approaches which are currently used in studying culture. Then we outline how
cultural research and qualitative research intersect conceptually. [2]

The next section, which is dedicated to the analysis of empirical reality in qualitative
research, is mainly focused on the role played by culture in the information gathering
process. In particular, and using a very generic approach, some theoretical
contributions are presented which illustrate the role that culture plays in determining
the content of the information which is assembled, the interpersonal climate which is
established, and the language through which the world of facts is approached. The
section does not examine specific techniques or strategies but rather it identifies
some elements which may influence the way culture enters and influences the
research process. The section also includes the relation between culture and the
processes of analyzing and interpreting reality, and offers a brief summary of some
of the principal theoretical approaches applied for analyzing culture and their
backflow on the research practice in an intercultural context. [3]

At this point we would like to emphasize the necessarily generic character of the
present work, since the complexity and the theoretical richness which underlie the
concepts "culture" and "qualitative research" would really justify the writing of a
separate article for each of the sections we present here. Thus, accepting the risk of
offering, at times, what some might consider a rather superficial account, we have
tried to outline a more general framework from which the conceptualization of culture
and its relations with the process of qualitative research in the context of intercultural
communication may be addressed. [4]
 2. The Role of Culture in Researching Intercultural
Communication

2.1 A brief history of the field of intercultural communication research

Intercultural communication is a scientific field whose object of interest is the

interaction between individuals and groups from different cultures, and which
examines the influence of culture on who people are, how they act, feel, think and,
evidently, speak and listen (DODD, 1991). As described by VILA (2005), intercultural
communication may be defined as a communicative process involving individuals
from reference cultures which are sufficiently different to be perceived as such, with
certain personal and/or contextual barriers having to be overcome in order to
achieve effective communication. Even if the origins of the study of intercultural
communication can be situated in the years following the end of World War II, and
coincide with the creation of the United Nations (1945), it is generally accepted that
Edward T. HALL (1959) was the first to use the term itself. Most of the work which
1)

was carried out in the 1960s and 1970s was very much under HALL's influence,
together with that of KLUCKHOHN and STRODTBECK (1961). During the 1970s the
field flourished, and the most notable works were possibly that of CONDON and
YOUSEF (1977), as well as SAMOVAR, PORTER and JAIN (1981) who were the
first researchers to systematize the area of investigation. During the 1980s and
1990s publications were focused on deepening the outreach of theory and on
refining the applied methodology (CHEN & STAROSTA, 1998). [5]

LOMAS, OSORIO and TUSÓN (1993) divided the various areas of study (together
with the pertinent theoretical contributions) into four blocks:

1. the analysis of the communicative process—among the most significant

contributions here are the work of GUDYKUNST (1989, 1992, 1993,1994), KIM
(1977, 1988, 1992) and CASMIR (1991,1993, 1999);

2. the role of language in intercultural communication—here the work of

WITTGENSTEIN (1953) and DODD (1991) are seminal;
3. the cognitive organization of the communication process—stimulated by
CHOMSKY (1957,1968), FODOR (1986) and VYGOTSKY (1977, 1979); and

4. the development of interpersonal relations, which includes contributions from

authors like ALTMAN and TAYLOR (1973) and TING-TOOMEY (1984, 1999). [6]

The influence of quantitative methodologies on studies about intercultural

communication was hegemonic until the 1990s, when the publication of the journal
"International and Intercultural Communication Annual" began to promote
methodological pluralism, opening the doors to the use of qualitative methodology.
[7]

2.2 Culture as applied to cross-cultural and intercultural

communication

There have been numerous attempts to define the meaning of the term culture
following the classic proposal of TAYLOR in 1871. But, as GUDYKUNST and TING-
TOOMEY (1988, p.27) point out, "no consensus has been achieved when it comes
to formulating an interdisciplinary definition which can be accepted across the
diverse fields of study." The sociologist PEDERSEN (1997, p.159) also illustrated the
difficulty in defining culture when, following an extensive literature survey he states
"[p]eople use culture in the same way as scientists use paradigms (...) to organize
and normalize their activity (...), the elements of culture are used, modified or
discarded depending on their utility in organizing reality." [8]

KEESING (1974), using an anthropological approach, was able to distinguish

between two main currents: one which considers culture as an adaptive system, and
a second one, which treats culture as a symbolic system. Given that both
approaches, when taken separately, present serious limitations when it comes to
capturing the complex situations which can be found in the context of cross-cultural
and intercultural communication, authors like ADLER (1975), KIM (1988) or
PEDERSEN (1994) have proposed the use of an interactive approach wherein they
define culture as the universe of information that configures the patterns of life in any
given society. [9]
 FRENCH and BELL (1979) in their classic "Iceberg Model" identify the behavioral,
cognitive and emotional components of culture, and these include values, conceptual
systems, behavior and both material and symbolic artifacts. On this base, ANEAS
(2003, p.120) synthesized as a definition of culture "the set of knowledge, values,
emotional heritage, behavior and artifacts which a social group share, and which
enable them to functionally adapt to their surroundings." Thus culture affects us in
the way we interact with our environment, influencing both how we construct it, and
how we understand it. [10]

Clearly the construct "culture" is one which is under continuous modification in the
different disciplines in which it is deployed, and especially when it is applied in the
context of the processes of globalization and diversity which characterize modern
societies. We can, however, identify two main approaches to the use of the term:

1. a traditional conception, which embodies a more popular and static approach

and identifies culture with a group of "products" (knowledge, skills, ...) that a
community has generated historically, (the "expressive" culture), and

2. an extensive and instrumental conception (the way of being of a community,

the conceptual model in which the world is interpreted and the culture is situated)
which incorporates a more dynamic use of the term. [11]

The first conception leads back to a series of concepts which have a more
"quantitative" interpretation, in that they serve as a synonym for acquired knowledge.
Tacitly this leads us back to the idea of culture as something that people "possess,"
and to considering it as a static "given" whose development is seen as linear and
progressive, with outputs which can be expressed in terms of accumulation. Such
conceptualization can lead to a process of stereotyping of cultural traits where the
"other" is characterized in terms of the most trivial and superficial elements. From
this cumulative and static perspective a hierarchic conception of the relation between
cultures (based, for example, on social prestige and/or power) is sometimes
deduced. [12]

The second conception could be described as being more complex given that it
incorporates more dimensions. It understands the term culture as the instrument by
means of which we relate to the world and interpret it. According to this view, culture
is not something which we "possess"; rather cultures form an inherent part of the
person, and it is culture which bestows individual and collective identity: a complex
identity which is articulated across multiple social belongings. It is, then, a
mechanism for understanding and interpreting the world which acquires
instrumental, adaptive and regulatory meaning. [13]

As a consequence we need to recognize that the classes of social interaction which

are examined in studies of cross-cultural and intercultural communication are the
result of a socially constructed process, and form part of an individual-collective
dialectic, possessing inherently multiple meanings. The meanings produced are
constantly being modified and reformulated, and are the emergent product of the
perpetual interaction of many cultural perspectives and social situations. It is to these
systems, processes and schemas that large parts of the qualitative research efforts
in intercultural communication have been directed in an attempt to understand and
interpret the diverse cultural practices and representations which can be identified.
Finally, we should never forget the social, political and economic context that
determines how differences are valued. Interpreting such interaction processes
should also be considered as a priority activity in studies of cross-cultural and
intercultural communication. Thus, even if it is accepted that culture gives meaning
to reality and to the existence of differences in attitudinal, affective and behavioral
patterns between different cultural groups, as has been systematically documented
in works which are now classics like Man and Culture of Ruth BENEDICT (1967), it
is nonetheless true that belonging to a group does not mean, always and
necessarily, the automatic presence of one or another form of behavior or pattern of
communicative interaction. We need to bear in mind, then, that another of the
characteristics of "culture" is that it is differentially distributed, and that not all the
members of a given cultural group adopt, live or reflect their common culture in an
identical way in every moment and life circumstance, nor do all members of the
same group demonstrate the same feeling of identification. Viewing cultures in this
way would rapidly lead us to adopt the most simplistic of cultural stereotypes, or fall
into what STANFIELD (1993, p.21) calls "the fallacy of the monolithic identity" which
consists in failing to recognize that differential identities exist among the members of
any group. [14]
 2.3 Conceptual approaches to the study of culture

According to TRIANDIS (2000), research that studies culture and, more specifically,
cross-cultural and intercultural communication in its various forms and social
contexts, can approach the theoretical foundations and methodological design of
their work from three different perspectives: the indigenous one, the cultural one and
the cross-cultural one.

1. The "indigenous" approach focuses on the meaning of concepts in a culture

and how such meaning may change across demographics within a given culture
context. The focus of such studies is the development of knowledge tailored to a
specific culture without any special claims to generality beyond the confines of that
particular cultural context. The main challenge with the indigenous approach is the
difficulty involved in trying to avoid the influence of pre-given concepts, theories and
methodologies and therefore the difficulty of determining what the term indigenous
(ADAMOPOLOUS & LONNER, 2001) really means in any given culture.

2. The "cultural" approach is used to describe those studies which make special
use of ethnographic methods. More traditional experimental methods can also be
used in conjunction within this approach. Here again the meanings of constructs in a
culture are the main focus of attention and there is little of direct comparison of
constructs across cultures. The aim is to advance the understanding of the individual
in a sociocultural context and to emphasize the importance of culture in
understanding his or her behavior. The challenge with this approach is a lack of a
widely accepted research methodology (ADAMOPOLOUS & LONNER, 2001).

3. TRIANDIS (2000) states that, when using "cross-cultural" approaches, studies

obtain data in two or more cultures making the assumption that the constructs under
investigation are universals which exist in all of the cultures studied. One positive
point about this approach is that it purports to offer an increased understanding of
the cross-cultural validity and generalizability of the theories and constructs under
investigation. The main challenge, however, comes from the need to demonstrate
the equivalence of the constructs and measures used, and to minimize the evident
biases that may threaten valid cross-cultural comparisons (ADAMOPOLOUS &
LONNER, 2001). Thus not only does the researcher conceptualize and
operationalize, but also, and in addition, the differential factor is taken into account,
that is to say, the way in which one and the same construct functions in a variety of
different cultures. [15]

Indigenous and cultural approaches focus on emics, or the things which are unique
to a given culture (ÆGISDÓTTIR, GERSTEIN & CANEL, 2008, p.190). These
approaches are relativistic in that their aim is the in-depth study of the local context
and the meaning of constructs without imposing a priori definitions on the constructs
themselves (TANAKA-MATSUMI, 2001). [16]

Scholars working within these approaches usually reject claims that the theories they
work with are universal. On the other hand, in the cross-cultural approach the focus
is on etics, or factors that are universal across cultures (BRISLIN, LONNER &
THORNDIKE, 1973). Here the goal is to understand similarities and differences
across cultures, and the comparability of cross-cultural categories or dimensions is
emphasized (TANAKA-MATSUMI, 2001). Summing up, emics focus on "the native's
point of view"; etics focus on the "comparative cross-cultural point of view." Emics
and etics are perhaps the two most crucial constructs in the study of culture
(BHAWUK & TRIANDIS, 1996, p.23). TRIANDIS' classification, and the references
2)

to "emic" and "etic" questions remind us that "MALINOWSKI's dilemma" is still as

valid today as it ever was, and that the tensions between "cultural specificities" and
"universal-general" continue to remain a challenge for the qualitative approach, and
an even greater one, if that is possible, in the area of cross-cultural communication.
[17]

Having presented the conceptualization of culture in studies of cross-cultural

communication, and examined how the issue of culture is handled in these studies
we will now pass on to another key aspect of the relationship between culture and
qualitative research into cross cultural communication, and that is how culture makes
its presence felt in the process of qualitative research. [18]

2.4 Culture and qualitative research

There is more to qualitative research than simply applying a given method to the
assembly and analysis of information. Behind any decision to apply a given
methodology lies a series of epistemological and theoretical presuppositions which
sustain and orient the whole research process. Such presuppositions range from the
underlying conception of reality, to the nature of knowledge itself, to the questions to
be studied and to the various methods to be applied. For this reason GUBA and
LINCOLN (1994) describe qualitative research as being not only a set of
interpretative research techniques but also a discursive space, or meta-theoretical
discourse. [19]

Despite the difficulty involved in formulating a consensually grounded set of general

characteristics to define qualitative research, the contributions of SILVERMAN
(1997) and LINCOLN and DENZIN (2000) offer a good starting point for examining
the interests which impregnate the qualitative research approaches and help to see
the influence of the culture within qualitative research process. [20]

According to SILVERMAN (1997, p.1) "[i]t is necessary to expand our conception of

qualitative investigation beyond questions related with subjective meaning and
broaden research towards dimensions related to language, representation and social
organization." And LINCOLN and DENZIN argue (2000, p.1048):

"At the present time, research is though of as being a moral act, or a moral discourse,
which leads us towards a dialogue about ethics, vulnerability and truth. The human and
social sciences have been converted into a space where it is possible to converse in a
critical fashion about democracy, race, gender, class, nation, liberty and community." [21]

These characterizations of qualitative research move us towards the methodological

terrain in which research into cross-cultural and intercultural communication can
develop, and there we find a number of key elements to consider. [22]

The attention that qualitative research devotes to context reminds us that human
experience takes place in very clearly delineated social spaces, in such a way that
events and phenomena cannot be adequately understood if they are separated from
those spaces. This is why the qualitative researcher focuses his or her attention on
natural contexts, trying to remain as faithful as possible to those contexts. The
"contexts" in which qualitative research develops should not be considered,
however, as "acultural" space. Culture, explicitly or implicitly impregnates the events,
experiences, and attitudes that form the object of the research. [23]
Experience is approached in an overall and holistic way, and the person is not seen
as simply the sum of a collection of discrete and separate parts. [24]

The researcher play a fundamental role of the in the process of information gathering
and data analysis. That is, in qualitative studies the investigator is constituted as the
principal instrument in the process of information gathering, in interaction with reality.

"Researchers need to observe what they have before them, forming a reference structure
and a set of intentions. The I is the instrument which unifies the situation and bestows
meaning on it (...). Knowing what to exclude involves having a sense of what is, and what
isn't, significant, and having a structure which makes the search for significance efficient"
(EISNER, 1998, p.50). [25]

This question implies a special competence on the part of the researcher for
addressing questions of sensitivity and perception and is also closely related with the
researcher's own culture, which determines what she or he sees, and serves as a
filter for interpretation. [26]

Another characteristic of qualitative studies is their interpretative character. EISNER

(1998) highlights the fact that interpretation has two meanings. On the one hand the
qualitative researcher tries to justify, elaborate or integrate the research results
within a given theoretical framework. On the other, the researcher wants the
participants in the study to speak for themselves, and to approach their singular
experience through the meanings and the vision of the world they possess by
offering what GEERTZ (1987) calls "dense description," and this is, in its turn,
impregnated with their culture. [27]

In addition to the above characteristics, interest has grown in questions related to

power, control, and the construction, interpretation and representation of reality, the
legitimacy of texts and the role of class, race, gender and ethnicity in research
processes. As a consequence of this, another fundamental characteristic feature of
qualitative research has emerged: reflexivity. Reflexivity implies paying attention to
the diverse linguistic, social, cultural, political and technical elements which influence
in an overall fashion the process of knowledge development (interpretation) in the
language and narrative (forms and presentation) and impregnate the production of
texts (authority and legitimacy). This also involves paying attention to the individual
being studied, recognizing the theoretical and personal assumptions which enter into
his or her actions, as well as the relation with the other participants and the
community in which the study is carried out (SANDÍN, 2003). That is what is involved
is making visible and explicit, among other factors, the role of culture, and its
influence in the process and outcome of the study. Thus the close relationship which
exists between culture and qualitative research should be clear, both from the
perspective of the researcher and from the reality being studied (subjects,
institutions, contexts, etc.). [28]

3. Methodical Challenges in Researching Cross-Cultural and

Intercultural Communication

Citing the view of BHAWUK and TRIANDIS (1996, p.31), the appropriate
methodology to apply in any given study into cross-cultural and intercultural
communication depends on the actual problem which is being investigated, on the
knowledge available to the researchers, on the degree of acceptance by those being
studied of the techniques used in the study, among many other factors. These
authors recommend emic approaches such as ethnographic techniques, systematic
observations, content analysis, and in-depth interviews when commencing a study in
culturally unknown scenarios with the objective of coming to know this reality either
in depth or from a holistic but unique perspective. When there is an interest in
generalizing the results or in facilitating possible comparisons between the works in
hand and other similar research, it is desirable, according to BHAWUK and
TRIANDIS (1996), to use etic approaches in which mixed or exclusively quantitative
methods are employed. That is, it would seem to be the case that in carrying out
qualitative research the use of emic type approaches is more appropriate. But this
should not be taken to mean that such research may not include recourse to an
objective instrument or the incorporation of a component more typically associated
with etic type approaches. [29]

In terms of the information gathering process it should be pointed out that the
researcher needs to keep constantly in mind the diversity of the elements in which
culture can manifest itself. In this sense the question of the extent to which culture
influences the approach, development and outcome of the information gathering
process needs to be asked. In order to offer a concise response to this question we
would refer to contemporary epistemological arguments. In general it is not accepted
that scientific knowledge reflects and describes the reality of an object in and of
itself, and that the object can be identified and grasped in a value free way
(CHALMERS, 1982). That is, an interpretative epistemology assumes the presence
of culture, among other factors, in the activities and processes which form part of the
approach to empirical reality. Today it is widely accepted that it is an error to imagine
that observational evidence enters our field of perception in a way which is totally
independent of the theoretical interpretation which is applied to it. Theories about
culture offer us important indications about the potential influence of culture in the
design and application of the differing techniques and strategies used in qualitative
research in order to proceed with information gathering. The contributions are
diverse both in terms of sources and in indications, so we will try to structure them
around four principal axes: the content of the information being gathered, the nature
of the interpersonal intercultural relations generated in applying a technique or
strategy, and the language in use in the research process. [30]

3.1 Content of the information being gathered

BHAWUK and TRIANDIS (1996, p.29) offer an interesting collection of insights and
recommendations when it comes to the content of interviews. Interviewing is one of
the fundamental techniques used in qualitative research on cross-cultural and
intercultural communication. One of the principal concerns when conducting an
interview is whether an emic or an etic approach is more appropriate—that is,
whether to ask different, tailor-made and culture-specific questions or ask the same
questions in all the cultural contexts being studied. If the same questions are to be
used, researches should avoid emic concepts. It is often useful to use random
probes. One should also examine what ideas the respondents have about the
interviewer, about the questions themselves, and whether the questions appear to
the respondents to be in some way biased are issues are discussed in detail by
PAREEK and RAO (1980). [31]

The interviewer's perspective can bias both what is observed and how it is observed.
In this sense BHAWUK and TRIANDIS (1996, p.28) argue that the most frequent
errors to be found in cross-cultural research are the result of the reactions of those
being observed to the observer, to the encoding system used and to the fact that the
definitions of boundaries for behavior were culture-specific. They also recommend
the use of multiple observers, encoding systems that have been pre-tested in a
variety of cultures and extensive observer training as being likely to reduce such
problems. [32]

3.2 The interpersonal intercultural relation climate

In referring to the interpersonal relations which inevitably develop during processes

of qualitative research into cross-cultural and intercultural communication there is an
extensive body of literature which has examined both the presence and the
manifestations of culture. [33]

Psychological factors associated with anxiety and its effects on intercultural relations
have been studied by numerous researchers. According to STEPHAN, STEPHAN
and GUDYKUNST (1999, p. 613):

"When individuals who come from different groups interact, they experience in one way or
another a certain preoccupation. This preoccupation can be due to the possibility of not
being sufficiently able to remain detached, fear of being negatively affected by the
encounter, apprehension about being the victim of misunderstanding, confrontation, etc.
The anxiety generated by all these possibilities can in and of itself create difficulties for the
interview and generate effects which negatively affect the relationship between interviewer
and interviewee." [34]

One of the most widely disseminated theories in the context of intercultural

processes when viewed from the psychological perspective is the theory of Anxiety
Uncertainty Management (AUM) developed by GUDYKUNST (1989, 1992, 1993).
AUM takes the view that managing the anxiety which is generated by uncertainty is a
process which exerts a fundamental influence on the efficacy of communication and
intercultural competence. This theory was initially developed by BERGER and
CALABRESE (1975) in their Uncertainty Reduction Theory (URT). The most
important axiom in this theory holds that:

"Uncertainty anxiety management has a direct influence on the efficacy of communication

in interpersonal and intergroup encounters. Individuals can communicate effectively to the
extent that they are able to manage their anxiety and that they feel themselves able to
 predict the attitudes, feelings and behaviour of the interlocutor (or interlocutors) with a
certain degree of success" (STEPHAN, STEPHAN & GUDYKUNST, 1999, p.614) [35]

What this means is, that when it comes to setting up a qualitative research process
involving study participants from different cultures it is important to be aware of the
anxiety which, even if unconsciously, can affect all those involved. Such anxiety can
place limits on the communicative relations which are produced and influence the
other intellectual and relational processes which are developed in the research. 3)

Thus it is essential to be aware of such potential anxiety, to anticipate its influence,

and to incorporate strategies for reducing its impact, thus facilitating mutual
confidence and making the communication process more effective. [36]

Symbolic interactionism places considerable emphasis on the importance of

structuring intercultural interaction. It stresses the need for compromise in initiating
the interaction, the role of negotiation throughout the encounter, the significance of
the positions which each of the participants occupies, and the frameworks or action
guidelines they use, and which configure interaction as a ritual (VILA, 2005, p.55).
These contributions are especially necessary in the development of strategies for
contexts where (inter-)cultural interaction is especially intense and free, as, for
example, in the case of ethnographic studies. [37]

DODD (1991) outlined a theory of rhetoric which argues that the first studies in
intercultural communication had their origins in anthropology and rhetoric. This
theory facilitates the analysis not only of individual differences but also of the
properties of the context in which the interaction takes place. This makes it easier for
the researcher to identify those cultural traits and norms that need to be understood
to produce a better intercultural relation. [38]

There are examples of qualitative research where the existence of a good relation is
fundamental. This is the case, for example, in action research. If such action
research is realized in an intercultural context the key role of the relations between
the researcher and the participants of the study is fundamental. The importance of
negotiation, construction, mutual confidence between the various participants in such
transformative processes should constantly be borne in mind. In order to understand
the way in which this kind of relation may develop ATMAN and TAYLOR (1973)
present their theory of Social Penetration. It has been an important reference point
for analyzing the interpersonal relations dimension within the context of relations
between different cultures too. This theory holds that any interpersonal intercultural
relation between two or more interlocutors passes through five distinct development
stages: orientation, exploratory exchanges, affective exchanges, stable exchange
and mutual awareness. [39]

3.3 Language in the research process

The role of language is fundamental in cross-cultural and intercultural qualitative

research. We would like to give special attention to the mediating role of language in
the process. Language is the main medium in which information circulates and it
assembles itself as the message transmitter. [40]

In order to understand and interpret utterances or gestures in a given language, a

minimum degree of language equivalence between the language of those being
studied and that of the researcher is needed (LUSTIG & KOESTER, 1996;
SAMOVAR, PORTER & STEFANI, 1998). Clearly situations may easily arise in
which the lack of such equivalence is a real barrier to communication and
understanding for the research. These barriers extend from simple lexical non-
equivalence to an experiential non-equivalence, passing through various other
degrees of difficulty. [41]

The references to the role of language which are to be found in DODD's (1991)
theory of the coordinated management of meaning and rules are interesting and
relevant. DODD's theory holds that all human communication is by its very nature
imperfect. For him the objective of communication, in our case the communication
which is developed during the research process, is coordination, understood here as
a model of interaction between participants. [42]

The theory of cross-cultural communication offers a great heritage of knowledge and

resources to identify and understand communicative differences. For example,
GUDYKUNST and TING-TOOMEY (1988) or BENNETT (1998) proposed models of
communicative cultural styles. As VILA (2005, p.78) points out, differences between
verbal styles as well as affecting communication between people of different
reference cultures, may also, if ignored, lead to differences in interpretation. LUSTIG
and KOESTER (1996) have analyzed non-linear communication. For example, an
individual with a circular style may interpret another, who has a more lineal style of
discourse, as being simplistic or arrogant, while the latter may view the person with a
circular style as illogical or evasive. [43]

Some authors as EKMAN and FRIESEN (1969) or DODD (1991) have analyzed
problems of non-verbal gesture in intercultural interaction. In an interview or in a
focus group, a look or a gesture, even a smile, may signify something different from
one culture to another. In addition to influencing the effectiveness of the process of
attributing meaning to such gestures, these differences may also alter the
communication climate or influence the development of the research process, given
the possibility of reducing confidence, producing doubts, etc. [44]

3.4 Culture, analysis and interpretation in qualitative research

In this section we consider the presence of culture in the cognitive processes of

research. These processes include a wide spectrum of intellectual activities:
knowing, understanding, comparison, analysis, synthesis, evaluation. To what
extend does culture influence such processes? As ANDERSEN (1993, p.51)
suggests discussions of race, class, and gender need to be thoroughly integrated
into debates about research process and data analysis. This requires an
acknowledgment of the complex, multiple, and contradictory identities and realities
that shape our collective experience. [45]

First we will look at some theories and conceptual contributions which can provide
orientation. [46]

Contributions from theories that focus on the role of language in cross-cultural

communication have been significant in clarifying the part played by culture in the
processes of information interpretation (RODRIGO, 1999). The role of
WITTGENSTEIN (1953) has been fundamental here, since he was the first who
made the decisive break with the traditional separation between language and
thought, justifying this move with the argument that language is organized through
rules which are based on cultural use. It is precisely this structural organization
4)

which gives meaning to gestures and utterances. In this same sense, according
ERICKSON (1989), the base for theoretical constructions is the immediate and local
meanings of action as defined from the point of view of the social actors involved. In
other words, we interpret a reality, a given piece of information according to the
parameters of our experience in which our culture occupies a fundamental position.
Culture is the reason why a given phenomenon, a specific form of behavior can be
given a very different meaning according to the origin culture of the person analyzing
and interpreting the process. [47]

With respect to the relation between culture and theories of cognitive organization,
the contribution of constructionism to the processes of analysis, interpretation and
intellectual creation is worthy of special attention. Among the many contributions of
constructionism with special relevance to the relationship with culture we would
highlight the construction of mental schemas (COLL, MARCHESI & PALACIOS,
1990). Mental schemas constitute a cognitive system which enables us to interpret
the gestures, utterances and actions of others. Culture influences the organization of
the schemas developed by individuals with the justification that different visions and
interpretations of reality are culturally variable. In the same sense constructionism
stresses the importance of socio-cultural background in the higher order
psychological processes (VYGOTSKY, 1979) as an argument with which to
demonstrate the union of culture with cognitive processes and the relation between
learning, development and the contexts of personal relations. [48]

Another contribution to our understanding of the relation between culture and

cognitive processes comes from the tradition which studies the influence of roles and
stereotypes in the creation of mental schemas and social categorization (CASMIR,
1991). In this sense the process of social categorization favors positive biases for
"own-culture" groups and negative biases for groups belonging to other cultures
(GUDYKUNST, 1989). Summing up, theories of categorization and social attribution
facilitate the development of explanations concerning the perception and
interpretation of the behavior of others in intercultural contexts. [49]

Ethnomethodology, which focuses on the analysis of spontaneous conversation

seen as a social activity, considers language as a privileged instrument which gives
meaning to a situation. From this point of view reality is not discovered but rather
interpreted, constructed, negotiated and maintained through social interaction. This
focus suggests analyzing intercultural communicative situations from a constructivist
and interpretative perspective. [50]

The work of BHAWUK and TRIANDIS (1996, p.24) focuses on the level of analysis,
and suggests that, depending on the objectives being pursued in research into cross
cultural communication, it is possible to distinguish two levels of analysis: the
individual and the ecological. The etic-individual studies might include attempts to
show the universality of a phenomenon (LONNER, 1980); this might well be the
approach which is closest to the positivist methodologies often associated with
quantitative methodologies. The emic-individual studies might include studies of
subjective culture, such as the ones that established the meaning of the word
philotimo (VASSILIOU & VASSILIOU, 1973). Etic-ecological studies are holegeistic
(whole-world) studies described by NAROLL, MICHIK and NAROLL (1980). The
emic-ecological are attempts to show that certain cultures are high and other
cultures low on some variable; HOFSTEDE's (1991) study, for example, would fall
into this category. [51]

There is thus an extensive literature that attempts to demonstrate the influence of

culture in cognitive processes, and extrapolating, in qualitative research. The
researcher thinks, interprets and reasons on the basis of her or his cultural points of
reference. When faced with one and the same phenomenon two researchers can
arrive at opposing conclusions, and culture may be one of the factors which help to
explain this kind of situation. Language and mental maps are cultural elements with
which the researcher operates in the analysis and the construction of results. [52]

4. Conclusions

In this article we have attempted, from a general perspective, to address the issue of
how culture is conceptualized/manifests itself in the application of qualitative
research methodology to cross-cultural and intercultural communication. Despite the
numerous definitions of culture it can be asserted that the conceptualization applied
in cross-cultural and intercultural communication studies is characterized by its
complexity, dynamism and intersubjective character, and that in this
conceptualization it is possible to identify a multiplicity of components of which the
individual is not always aware. It has become clear throughout this article that culture
constantly makes its presence felt in the research process, and especially in the
context of qualitative research, starting with the theoretical-epistemological
foundations of such research, as well as in the process of approaching and
generating empirical data and in its analysis and interpretation. In the same way
cross-cultural theory has contributed elements which make such influences more
visible, with the result that it has become easier to accept, live with and manage this
influence. [53]

The current thematic issue of FQS seems to us to constitute an opportunity for the
research community to re-examine the way we look at alterity and at the same time
to develop research processes which broaden the opportunities for coexistence and
social justice in a multicultural world. In the course of this article we have constantly
drawn attention to the cultural relevance of social practices, as well as to intercultural
communication and its symbolic dimension. Our short review of the theoretical
questions which arise in connection with qualitative research as it interacts with the
construct "culture" attempts to stress the need to address the substantive areas of
intercultural communication and epistemology together. [54]

The fallacy of the monolithic view of identity alerts us to the need for prudence and
the importance of avoiding categorizing cultural studies of communication in
stereotypical terms, as built on folklore beliefs and essentialist in terms of culture. On
the other hand, it is already widely accepted in qualitative research that the
researcher becomes the "principal information gathering instrument," and thus some
of the objectives which have been identified for studies of cross-cultural and
intercultural communication are associated with the reflexivity of the researcher over
her or his own cultural biases together with the associated theoretical, and even
social and political standpoints. [55]

This also applies to the possibility of learning the meanings of cultural interaction on
the basis of transactions between different cultural worlds, symbolic systems,
individual and collective cultures. Perhaps the process of renewal of qualitative
research methods in the context of cross-cultural and intercultural communication
really needs to start with a reflection over the life history of the researcher given that
the researcher is also immersed in the norms, values and beliefs of the institutions,
communities and movements in which she or he functions, and which give
ideological form to the whole process. [56]

For the outlook of researching cross-cultural and intercultural communication we

would stress that culture is a "system" and not the sum of a collection of fortuitous
traits. It is an integrated whole which cannot be understood by examining its
components individually and in isolation. It is a dynamic whole which is in flux, and
constantly changing, and which reveals itself as being in interaction with the world in
a multiplicity of complex and diverse situations and contexts. Some authors, being
conscious of this, have gone so far as to propose the possibility of approaching the
study of human communication from the perspective of contemporary chaos theory
or from that of the complexity paradigm, a proposal which could well be a task which
could be explored in the future

Organisational culture assessment and comparison between the desired situation and the existing
one is a useful and efficient tool that can support the development of an organisation and the
achievement of sustainable performance.

THE FOCUS MODEL (THE MODEL OF COMPETING VALUES) The Model of Competing Values is called
this way because it is based on certain dimensions that have opposite values. Organisations need to
be adaptable and flexible, but, at the same time they also require stability and control. There is the
need for development, for attracting resources and for external support, but also for proper
management of internal information and formal communication. The model emphasises the value of
human resources in the organisation, but it also emphasises the need to establish the objectives and
an appropriate planning. The model was the creation of the American researchers R. E. Quinn and J.
Rohrbaugh (1983), but later it was adapted by K. Cameron and R. E. Quinn (1999) emphasising the
complex nature of organisational culture according to the following dimensions: internal/external
focus and stable/flexible structure. It is also known as the Focus model. The two dimensions create
four quadrants representing four sets of values that guide the organisational objectives in
accordance with the external environment and with the internal integration.7 Figure 1 provides a
conceptual representation of organisational culture with the help of the Competing Values Model.
Each quadrant is highlighted by some key feature.

The upper left quadrant, called the human relations model is characterised by flexibility and internal
control. The emphasis is placed on the idea of cohesion and morals. The members are part of a
common social system or of a clan and they are united by the development of a sense of affiliation
and belonging to the organisation.

The upper right quadrant, also called the open system model is characterised by flexibility and
external focus. This adaptive adhocracy emphasises innovation, creativity, adaptation, development,
external support and acquisition of external resources. The members are united by inspiration and
challenge.

The lower right quadrant, also called the model of rational targets is characterised by predictability
and external focus. These organisations adapted to the market focus on competitiveness,
productivity, clear objectives, efficiency and achieving the goal. The members are united by
competition and orientation towards achieving goals.

The lower left quadrant, also called the internal process model or the hierarchical culture is
characterised by predictability and internal focus. The emphasis is placed on information
management, documentation, stability, routine, centralisation, continuity and control. In such a
culture, the members are united through internal controls that maintain the rules, policies and
procedures.

Each quadrant has some features that a company can choose and use to function effectively. In
other words, these quadrants are the basic assumptions, beliefs, values, and elements that make up
the culture. None of these quadrants - Collaboration (clan), Creativity (adhocracy), Control
(Hierarchy), Competition (Market) - is inherently better than the other, just as no culture is
necessarily better than the other. But some cultures may be more appropriate in some contexts than
others. The secret in using culture to improve company performance is to adapt it, or certain
component elements, to achieve organisational objectives.

Organisations are rarely characterised by a single type of culture. They tend to develop a dominant
organisational culture as they adapt and respond to the environmental challenges and changes.
Those companies that meet all four quadrants presented above are considered to be “balanced,”
able to achieve performance. The leaders of these organisations are able to balance the conflicting
requirements, suggesting that the high performance requires the simultaneous mastery of certain
seemingly contradictory and paradoxical capacities.

THE HUMAN SYNERGISTICS MODEL The Human Synergistics Model is a graphical representation in
an integrated conceptual model known as the Circumplex. Based on several acknowledged
psychological and management theories (including McClelland’s theory), this model was created by
the American Professor Robert A. Cook and the psychology specialist, J. Clayton Lafferty (1971),
known as the Circumplex model.

The model measures 12 styles and attitudes of leaders, as well as the organisation as a whole. These
are:

• humanist – encouraging – he/she is interested in the others and their development;

• affiliation – he/she shows interest in establishing relationships and in communicating with the
others;

• results – he/she likes to get good results and prefers challenges; he/she always asks itself “how can
excellence be achieved?”

• self-development – he/she is happy and self-confident, ready to try new things and he/she knows
his/her limitations and strengths well.
• approving – he/she is interested in the others’ opinions, he/she shows a “you get what you want
or give up” attitude;

• conventional – he/she obeys the rules and procedures and uses them to integrate into the
organisation;

• subordination – he/she needs the others’ support to make decisions and he/she doubts
himself/herself;

• avoidance – he/she avoids risks and prefers not to act in complex situations;

• opposition – there is criticism in the organisation that influences him/her and makes him/her feel
alienated;

• power – the leader’s attitude is guided by the motto: “I will the others what to do, because I do not
trust them”;

• competitive – he/she is subject to a lot of pressure because of the question: “what do the others
think about me?”

• perfectionist – the leader’s attitude is guided by the motto: “I can be better if I do everything
perfectly.”

The Circumplex Model is not a personality test. It is an instrument used to measure attitudes and
behaviours, styles adopted in the organisation. It works on the premise that you can choose a
particular behaviour in a given situation, actually renouncing what is inadequate, inappropriate in
your attitude. The styles presented are divided into three categories, within the circumplex:

Constructive styles (blue) - oriented towards staff satisfaction

Passive-Defensive styles (green) - promote people/security

Aggressive-Defensive styles (red) - show task achievement/safety

In constructive cultures, the achievement of the set tasks can lead to achieving personal satisfaction.

A balance is created between independent thinking, initiative taken and consensus and teamwork.
Individuals appreciate interhuman relationships; they are constructive and open in the relationships
between them.

In the passive-defensive cultures, the individuals’ behaviour is characterised by the need for security
and minimum predisposition towards risk. Individuals act in such a manner as not to injure the
others’ behaviour, avoiding any type of interpersonal conflict. The rules, procedures and orders are
fulfilled without question. In such a controlled environment the positions are well defined and the
supervision is intense. Managers do not emphasise the very good results, but they do not miss the
opportunity to show at any time any negative aspect of the employees’ activity within the
organisation.

Aggressive-defensive cultures emphasise the individuals’ defensive behaviour that reflects the need
to maintain the hierarchical position in the organisation and to reach the need of security through an
aggressive approach of the assigned tasks. 11 According to Gerry Clarke’s opinion, the President of
Human Synergistics International, a specialist in organisational culture, in Eastern Europe the
aggressive-defensive culture is stronger than in North America, the same with the oppositional style,
information drawn from comparative studies conducted in over 40 countries in Eastern Europe,
Western Asia, Latin America and the USA.12 All types of cultures measured by this instrument have a
direct impact on the employees’ activity and on the company’s operation – they and also linked to
the staff satisfaction, motivation, teamwork, quality of products/services as well as other
organisational efficiency criteria.

THE DENISON MODEL Developed based on 20 years of studies and research, the Denison Model of
organisational culture describes a theory of organisational behaviour that emphasises the strong link
between culture and performance. The American Professor Denison, the creator of this model, has
emphasised the following cultural dimensions: Involvement, Consistency, Adaptability and
Mission.13 Each of these dimensions includes three other features.

Involvement – effective organisations empower employees, they count on teamwork, they develop
human skills at all organisational levels. Top managers, the executives and the employees are
actively involved in the work they perform and they feel they are part of the organisation. The
members of the organisation can influence, to a certain extent, the decisions that have an impact on
their work and they feel that the tasks performed lead to the fulfilment of the set objectives.

Specific features:

• empowerment: employees have authority, initiative and ability to manage their own work;

• orientation towards teamwork: the organisation counts on the team’s efforts;

• skills development: the organisation invests in the employees’ skills development.

Consistency – defines values and elements that form the basis of a strong organisational culture.

Organisations tend to be effective because they have strong cultures and they are coherent, well-
coordinated and integrated. The employees’ behaviour is based on a well-defined set of values and
the leaders have the skills necessary to reach an agreement even when there are very different
views. Consistency creates a strong culture that is based on beliefs, values, symbols that are
understood and supported by the staff. Consistency is a powerful source of stability and internal
integration resulting from a mind-set common to all members of the organisation and from a high
degree of compliance.

Distinctive features:

• core values: the existence of a common set of values;

• consensus: both general consensus and the ability to reconcile differences that occur;

• coordination and integration: although different, the members of the organisation work together
to achieve organisational objectives. If the first two dimensions refer to the internal integration
process supported by Edgar Schein, the following two points emphasise the organisation’s need to
external adaptation.

Adaptability – transforms the requirements of the external business environment into action.
Ironically, organisations that are well integrated are often the most difficult to change. Adaptable
organisations are those that take risks, learn from their own mistakes and have the ability and
experience necessary to create change. They are based on a continuous change of the system
leading to improved group skills in order to provide value to customers. Three features characteristic
to adaptability have an impact on organisational effectiveness:

• creating change: the ability to perceive and meet the requirements of the external environment
through change;

• customer orientation: the organisation understands and responds to the customer’s needs,
anticipating their future needs; this feature reflects the degree to which the organisation is
concerned with customer satisfaction;

organisational learning: the organisation receives, decodes and interprets the signals from the
external environment, turning them into opportunities to encourage innovation, information
collection and skills development.

Mission – defines a significant long-term direction for the organisation. Successful organisations
have a well-defined purpose and a direction defining the organisational and strategic objectives
which express the company’s vision for the future. The mission reflects a clear, concrete direction
both for the company and for its members. This dimension is characterised by three features:

• strategic direction: there is a clear strategy in the organisation that gives meaning and direction to
the employees;

• aims and objectives: the management sets ambitious, but realistic goals that are understood and
measurable.

• vision: there is a long-term vision that creates excitement and motivation among employees and
which is not affected by short-term objectives. As many other contemporary models of management
and organisational effectiveness, the Denison circumplex focuses on the contradictions that arise as
organisations achieve the internal integration processes and the external adaptation. For example,
the market-oriented organisations, towards the external environment, often have internal
integration problems.

On the other hand, those that focus on internal integration and on intensive control, have difficulties
in adapting to the external environment. Effective organisations are those that are able to resolve
these contradictions without resorting to compromises. As it can be seen from Figure 9, the Denison
model has two axes, a vertical and a horizontal one, which have divided the model into four
quadrants. The vertical axis represents the degree and type of centralisation of organisational
culture. The horizontal axis refers to the organisation’s degree of flexibility. Denison’s research
shows that the highest performances are achieved by the companies that have strengths in all four
quadrants. These are those that know very well “why they exist” and which is the direction towards
they go (Mission). The employees share and support the company’s vision, they use their skills and
abilities to achieve organisational goals (Involvement). The model is often used as a diagnostic
method in profiling organisations to highlight strengths and weaknesses and to suggest ways in
which organisational culture can influence their effectiveness.
CONCLUSIONS The three models can represent a starting point in assessing organisational culture at
enterprise level. The Focus Model is a general model intended to promote successful management,
improvement of organisational efficiency and creation of value for the organisation. The Human
Synergistics Model and the Denison Model can be considered as complementary. The first catches
the organisation’s members’ attitude in relation to the need of satisfaction and security, and, on this
basis, classification in a particular type of organisational culture. But the model does not refer to the
external environment and to the organisation’s ability to be flexible and adaptable, to cope with
rapid changes.

The Denison Model highlights both the need of the employees’ internal integration and the
importance of the external adaptation process, providing an opportunity to shape a certain cultural
profile of the organisation. Undoubtedly, the analysis and evaluation of the organisational culture
represents a complex process that must also take into account the cultural dimensions identified at
company level.

How Will Demonetization

Affect Business in India in
2017?
http://knowledge.wharton.upenn.edu/article/will-demonetization-affect-
business-india-2017/
It’s work in progress. Three events dominated India’s economic landscape
last year, but whether they can be described as “progress” is debatable.
One definitely isn’t: the unseemly brawl that broke out over control of the
Tata group with Ratan Tata returning as interim chairman after ousting
incumbent Cyrus Mistry. A lot of dirty linen is being washed in public,
putting partly in the shade the political charges being traded elsewhere.

The second is the goods and services tax (GST), whose objective is to
replace all taxes levied by the federal government and the states with one
central tax. The GST is scheduled to come into effect by April or — at the
latest — by September. Although both houses of Parliament have
approved the bill and the President has signed off on it, a GST Council is
now squabbling over the details, which could delay implementation.

“The timing is not right for implementation,” says West Bengal finance
minister Amit Mitra, who is also chairman of the empowered committee of
state finance ministers. He lays the blame squarely on the center’s move
to demonetize Rs500 ($7.4) and Rs1,000 notes. “We all supported the
GST under the premise that this would be the only destabilization factor,”
Mitra told a TV channel. “We did not know that there would be a much
bigger destabilization in the form of demonetization that would be let
loose on the country.”

According to Wharton emeritus professor of management Jitendra Singh,

while it is too early to assess the impact of demonetization, the move
raises long-term questions.. He notes that rival political parties that have
protested against demonetization could “broaden their tactical agenda to
harm or even derail the GST implementation.”

“What will have been gained from

[demonetization], and at what cost, and
mostly borne by whom?” –Jitendra Singh
Demonetization represents much more than destabilization; critics argue
that it has struck a body blow on economic activity in India. The decision –
which was entirely unsuspected – was announced on 8 November 2016.
 While the pros and cons of the measure still continue to be debated, the
consensus of opinion appears to be that while the proponents of
demonetization may have had good intentions, the suffering it has caused
to millions of Indians is unwarranted. Since Rs500 and Rs1000 notes make
up some 86% of the total currency in circulation in India, especially in the
vast rural areas, one economist compared the pain to what individuals
might experience if 86% of their blood was removed from their bodies.

To be sure, demonetization has its supporters. While industrialists and

corporate chiefs (Ratan Tata, Mukesh Ambani, K.V. Kamath and Deepak
Parekh, to mention a few) favor the move, economists (including Nobel
laureates Amaryta Sen and Paul Krugman, among others) are critical.
“The clan of economists has spoiled the party [with] their estimates of
how output will be affected as spending has stopped, manufacturing hit
and several workers laid off. The net result can be a fall of between 0.5%
and 2% in GDP,”

According to Singh, Modi took “a bold, even visionary, step” with

demonetization in attempting to combat the black economy and
counterfeiting, and cutting financial support to terrorism. “What was
always key, however, was how well the implementation process would
unfold,” he notes. “Even supporters of the decision would say that the
implementation was far from perfect.”

Kartik Hosanagar, a professor in Wharton’s department of operations,

information and decisions, views demonetization against the backdrop of
other economic gains. The year 2016 has overall been “a good year” for
India, he notes, listing the highlights:

 The GDP growth rate has held up at more than 7%.

 Foreign direct investment went up significantly during the year. (It rose
30% on a year-on-year basis to $21.6 billion between April and September 2016,
according to public data published by the India Brand Equity Foundation, a
government-sponsored trust.)
 Initiatives such as the ‘Make in India’ program “have borne early fruits.”
Many MNCs including Panasonic and Pepsi set up manufacturing facilities in India
during the year.

 “The startup world has seen a drop in investment activity, but I see that as
a return to sanity rather than a worrisome contraction,” Hosanagar adds.

“The biggest wild card in all of this, of course, is demonetization,” notes

Hosanagar. “It’s unclear how it will all play out.” He hopes that “any
impact on economic activity and GDP will be temporary, and the long-
term benefits such as an increase in cashless activity will be more
permanent.” He adds that “this is the India optimist in me speaking.”

“The biggest wild card in all of this, of

course, is demonetization.” –Kartik Hosanagar
Part of the problem with demonetization was that it came as a bolt from
the blue; the government claimed giving advance notice would have the
defeated its purpose. But not everyone agrees with that view. “There was
no need for secrecy,” counters Jayati Ghosh, a professor of social sciences
at Jawaharlal Nehru University. “All demonetizations through history have
been done with some advance warning. This reduces the damage to
innocent people. The government could monitor suspicious transactions
after the announcement, just as it is doing now. In any case, I would not
have demonetized Rs500 notes. If high-value notes like Rs1,000 are the
problem, why replace them with even higher value notes?” (A Rs2,000
note has been introduced as part of the package.)

Moving Goalposts
The government, meanwhile, seems to have moved the goalposts: The
claimed objective of the exercise has apparently changed from rooting out
black money to promoting cashless transactions. Several measures have
been introduced, among them a 0.75% discount on digital payments
made for buying petrol and diesel and a 0.5% cut in the price of railway
season tickets bought using digital technology.

KNOWLEDGE@WHARTON HIGH SCHOOL

In another twist, the government appears to be no longer pushing
demonetization as a “cashless” plan. It has now become a “less-cash”
strategy. That is as it should be; the world doesn’t have a cashless
economy so far. In India, Bloomberg data shows the share of cash in the
volume of consumer transactions is 98% (against 55% in the U.S. and 48%
in the U.K.). It is 90% in China and 86% in Japan. Much of the cash
transactions are in rural India. So, expectedly, life came to a near
standstill and much misery ensued when people found themselves unable
to use their own money. Even when the money was in a bank account,
limits on ATM withdrawals compounded the problem further.

But India is also a country where finding novel, workable solutions to

problems – commonly known as jugaad — is par for the course. While long
lines multiplied in front of banks and ATMs (several people claimed to
have had heart attacks while standing in them), ways were found to deal
with the situation. By December 31, the visible impact was a Parliament at
near paralysis as politicians took potshots at each other, a plethora of
banking riches coming back into the system (some 90% of the Rs500 and
Rs1,000 notes were returned), and a host of new scams to convert black
money into white with the connivance of bankers and politicians.

Nobody is denying a short-term setback. The Reserve Bank of India (RBI)

has reduced the GDP growth rate forecast for 2016-17 from 7.6% to 7.1%,
the Asian Development Bank from 7.4% to 7%, Fitch from 7.4% to 6.9%
and Bank of America-Merrill Lynch from 7.7% to 7.4% (for calendar 2016).
All believe, however, that growth will recover the next year.

Modinomics to the Defense

Modi defended the demonetization exercise in a televised speech on New
Year’s Eve, arguing that it had to be done. “It seemed at times that the
evils and corruptions of society, knowingly or unknowingly, intentionally or
unintentionally, had become a part of our daily lives,” he said. “Crores of
Indians were looking for an escape from this suffocation.”

Modi said in his speech that after demonetization, only 24 lakh (2.4
million) Indians acknowledge an annual income of Rs. 10 lakh each (Rs. 1
million). “Can we digest this? Look at the big bungalows and big cars
around you,” he said. “If we look at any big city, it would have lakhs of
people with annual income of more than [Rs.] 10 lakh. Do you not feel,
that for the good of the country, this movement for honesty needs to be
further strengthened?” The upshot of that is his government would now
try to bring hundreds of thousands of tax evaders into the net.

But Modi will find it tough to strengthen the tax machinery sufficiently to
force those people to start paying taxes, according to critics. “If he
doesn’t, then what was the point of subjecting the whole country to so
much disruption and pain?” writes Siddharth Varadarajan, former editor of
The Hindu newspaper, in The Wire, a nonprofit publication.

Modi also said in his speech that over the last 10-12 years, the
demonetized currency was being used in the black economy, and that
excess cash in the system caused inflation to spike and fueled corruption.
“Lack of cash causes difficulty, but excess of cash is even more
troublesome,” he said. Critics have attacked those remarks as being
unsound in economic theory.

Demonetization could have potentially derailed the GST, which was

practically a done deal, according to experts. The impact of
demonetization will pass in a couple of quarters, but the GST delay will
have more far-reaching effects. “Undoubtedly, the GST is a bigger reform.
It would be the most fundamental reform initiated since 1991,” says
Dharmakirti Joshi, chief economist at Crisil, a global S&P company.

“There was no need for secrecy. All

demonetizations through history have
been done with some advance warning.”
–Jayati Ghosh
Commenting on demonetization, Joshi says: “Any disruption in the flow of
money, verily the economy’s lifeblood, impacts business cycles quickly.
There is no precedent to the scale of demonetization that has taken place
in India. That is why quantifying its impact is so difficult. A few countries
that replaced their old currency with new did it in a gradual manner — the
introduction of the euro in the Eurozone, or in Zimbabwe where the old
currency was gradually phased out.”

The GST Impasse

The government has only itself to blame for the GST impasse. The
proposal has been around for a dozen years. Its origins lie even further in
the past: In 2000, the BJP-led government of A.B. Vajpayee started a
discussion on the GST. Prime Minister Narendra Modi had opposed it when
he was chief minister of Gujarat; now, it is the pivot of his reforms.
Experts agree that the GST could increase India’s GDP by 1.5% to 2%. It
has received, in its time, the backing of former finance ministers Pranab
Mukherjee (now president of the country) and P. Chidambaram. Yet it still
gets held up.

One reason is that implementing the GST requires a constitutional

amendment. The GST Constitutional Act has already been passed by the
Lok Sabha and the Rajya Sabha (the two houses of Parliament) and, on 8
September, the President of India signed off on it. The states – in the form
of the GST Council – are reading from the same book. But it may take
some time to get to the same page.

According to Singh, while the GST has the potential to boost GDP growth
and foreign investment flows, the opposition to it could cost the country
dearly. “There is the very real possibility that some actors will take the
low road, and try to delay or even derail the GST implementation,” he
notes. “If that were to occur, it will not be the first time in post-1947
Indian history when key leaders would snatch defeat from the jaws of
victory.”

Singh hopes that the political parties involved, including state level
parties, “put the collective long-term interests of India and all Indians
above apparently enticing short-term partisan gains, and get the GST bill
implemented at the earliest.”
Viewed in isolation, demonetization and GST could be promising for India,
according to Singh. “Absent some of these spillovers, the long-term
impact of the demonetization could be quite positive for the Indian
economy,” he says. “If the GST gets implemented soon, and if there is
further rationalization of the tax structure, and if opposition parties
cooperate, there may be a couple of quarters of somewhat lower growth,
and then the economy would return to its positive trajectory. But there are
several ‘ifs’ in between.”

Ta ta, Cyrus Mistry

The end of the year also saw a high-profile family split. The 149-year-old
Tata group, the largest in the country and the most respected, with a
global turnover of more than $100 billion, sent shockwaves through
corporate India with the ouster of chairman Cyrus Mistry.

Mistry took charge four years ago after a search panel was appointed to
find a replacement for Ratan Tata, who was turning 75. The 50-year-old
Mistry was a surprise choice. And problems were apparently building for a
long time under the surface.

“Any disruption in the flow of money,

verily the economy’s lifeblood, impacts
business cycles quickly. There is no
precedent to the scale of
demonetization that has taken place in
India.” –Dharmakirti Joshi
Mistry is now being ousted from all the Tata group companies. Says a
letter to shareholders by Ratan Tata: “Since Mistry was appointed as a
director of various Tata group companies only as a corollary to his being
the chairman of Tata Sons, the right step would have been for him to
resign as director. Unfortunately, he has not yet done so, and his
continued presence as a director is a serious disruptive influence on these
company boards, which can make the company dysfunctional, particularly
given his open hostility towards the primary promoter, Tata Sons.”
Responded Mistry: “I have to say that the board of directors [of Tata Sons]
has not covered itself with glory. To ‘replace’ your chairman without so
much as a word of explanation and without affording him an opportunity
of defending himself in a summary manner must be unique in the annals
of corporate history. The suddenness of the action and the lack of
explanation have led to all manner of speculation and has done my
reputation and the reputation of the Tata group immeasurable harm.”

Most of the Tata group is owned by the Tata trusts, of which Ratan Tata is
chairman. So there are no two ways about how the ouster move will go.
But Mistry has his supporters. His family has a stake of some 20% in Tata
Sons; the trusts hold about 66%. Besides, he is not without friends, who
include some independent directors. Nusli Wadia, a board member of Tata
Motors, has entered the fray (with yet another letter). “[JRD Tata, Tata
Group chairman before Ratan Tata] never expected anyone to toe his or
the Tata line,” he told the board of Tata Motors (where he has been an
independent director). “It is both sad and unfortunate that Tata Sons and
its interim chairman Ratan Tata are not only not practicing this great
tradition but effectively destroying it.” Wadia has sued Tata Sons for
defamation.

Singh suggests that the problems at the Tata Group run beyond those
related to Mistry’s ouster. He describes the group as “a structurally
complex entity, with multiple interests at play, all of which may not
always be naturally aligned.” As Mistry’s family owns a significant minority
shareholding in Tata Sons, “it is natural to think that interpersonal issues
are paramount here,” he noted. “This is a mistake. There are difficult
structural issues embedded in the context, some of which will not go away
with Mistry’s departure as chairman of Tata Sons.”

According to Singh, the Tata-Mistry controversy could have wider,

deleterious effects if it is not resolved soon. “At a minimum, it is a
distraction from the effective governance and operations of the group; it
could damage the Tata brand; and it also has the potential to raise
questions in the international community about the attractiveness of India
as an investment destination.”
As matters stand, Mistry has resigned from the boards of the major Tata
companies (except for Tata Sons). “The fight goes onto another platform,”
he told the Business Standard newspaper after he quit. “I will pursue it
further. This move gives me an opportunity to concentrate my efforts…. I
will be moving legally.” Won’t the battle be long and arduous? “I have a
lifetime ahead of me,” he replied.

In a statement to the shareholders announcing his resignation, Mistry

states: “Bringing to the fore these ethical issues can have a short-term
adverse impact… I feel strongly that such short-term pain is necessary for
long-term interests.”
THE 2016 UNITED STATES GENERAL ELECTION: A PERIOD OF TRANSITION

The victory by Republican presidential candidate Donald Trump in the 2016

general election marked the beginning of a transitional period for the United
States. Hot button issues such as civil rights, economics, foreign affairs and
judicial appointments took center stage during the fiercely contested election.
Although Trump’s stances on each of these topics played a role in persuading
citizens to either vote for or against him, his stated commitment to domestic
economic improvement garnered vast support among the electorate. 1)

Trump’s commitment to improving the U.S. economy is largely based on

fundamentally changing the manner in which the government conducts
business. His stated ideals—ranging from the restructuring of U.S. debt abroad
to the renegotiation of trade agreements—sent shock waves throughout the
financial community.

As a rule of thumb, financial markets are not big fans of uncertainty. The
changes proposed by Trump throughout the election cycle of 2016 created an
abundance of such uncertainty, and the markets reacted accordingly. Listed
below are a few of the more dramatic global market reactions from Election Day,
November 8, 2016:

 DJIA Futures experienced a massive decline of 900 points before posting a loss of
300 points or 1.5% on the session’s close.2)
 Japan’s Nikkei 225 index plunged 5.4%3)
 Hong Kong’s main index the Hang Seng fell 2.2%.4)
  Russia’s primary equities index rose 2.2%5)

The Election Day trading of DJIA futures gave a dismal impression of a pending
Trump presidency. However, in the days following his win, U.S. equities
experienced heavy buying. For the week of November 7-11, 2016, the DJIA
posted a gain of 5.4%—the largest one week rally since 2011.6) For the same
period, markets in Asia, Europe and Australia posted substantial gains that
served to mitigate losses sustained on November 8.

Much of the chaos and tumult in global markets surrounding the U.S. general
election was based on either fear or optimism towards the pending shift in the
nation’s policy. The dramatic sell off of global equities and subsequent recovery
is a prime illustration of the impact an unexpected change in U.S. economic
policy can have on the entire world.

TRUMP’S POLICY: DECLARING AMERICAN ECONOMIC INDEPENDENCE

While on the campaign trail, Donald Trump outlined several key areas of the
economy that will be targeted for improvement that will lead to declaring
American economic independence. Throughout his run for the presidency, he
cited high unemployment rates, out-of-control government spending and the
negative US trade balance as unacceptable realities.

In response to these challenges, Trump promotes a policy of “American

economic independence.”8) Extensive reform of US business practices both
domestically and abroad have been key elements of hos plans to achieve
economic independence.
As of public record, Trump outlines seven steps that he will immediately take
upon election in order to foster prosperity and economic growth within the
United States:

1. U.S. withdrawal from the Trans-Pacific Partnership (TPP)

2. Appoint tough trade negotiators
3. Direct the Secretary of Commerce to identify violations of trade agreements, and use
American and international law to end any abuses
4. Renegotiate, and possibly withdraw from, the North American Free Trade Agreement
(NAFTA)
5. Impose tariffs and taxes on countries actively manipulating their currencies to take
advantage of the U.S., and label China a currency manipulator
6. Instruct the U.S. Trade Representative to bring trade cases against China addressing
violations of the World Trade Organisation (WTO) rules and restrictions
7. Employ aggressive tariffs against countries promoting illegal activities, such as the
theft of U.S. trade secrets9)
The overriding theme of these stated policies is to limit the impact of
globalisation on the nation’s economy. Through taking an aggressive stance
towards rolling back previous trade deals such as NAFTA, KORUS (South
Korea/US) and avoiding entry into TPP, President Trump aims to achieve U.S.
economic independence through reducing the trade deficit.

TRUMP’S POLICY: TRADE AND ECONOMIC IMPACT

As observed by the world’s financial markets in the election’s immediate

aftermath, the potential impact of Trump’s policies towards global commerce
are largely debatable. Depending on one’s perspective, proposals to restructure
international trade deals, impose aggressive tariff structures and enforce WTO
regulation can be seen as either positive or negative.

While Trump’s proposed actions can be perceived to add value to the American
manufacturing sector, the trading regions of Asia and Latin America may equate
them to economic decline. If imposed, strict tariff structures could bring into
question the viability of exporting goods to the U.S. from developing countries.
In the event that tariffs are placed on imports from countries actively devaluing
their currency, the value created by producing goods in these countries is
mitigated. As a result, many multinational corporations may choose to relocate
production facilities.

China is poised to experience substantial economic change if Trump’s policies

come to fruition. The U.S. is the largest destination of goods made in China,
accounting for 18% of all Chinese exports. To maintain trade relations with the
U.S., the Chinese government will likely have to make concessions. Although the
final compromise may be elementary, even a short-term contraction in China’s
GDP could result in widespread corrections in global markets.

From the perspective of the U.S., reforms of NAFTA and KORUS in addition to
non-entry into the TPP can be seen as positive developments related to
improving the trade balance. Often being seen as a result of NAFTA, the U.S. has
experienced a trade deficit with Mexico for 22 straight years. As of the year-end
2015, it measured US$60.7 billion.11)
Since the inception of KORUS, the U.S. trade deficit with South Korea has
increased 114.6% and, as of the year-end 2015, has measured US$28.3 billion. 12)
The renegotiation of trade deals with Mexico and South Korea under the Trump
administration will serve as templates by which future agreements are crafted.

Attempts to reduce the US trade deficit under Trump’s policies will likely benefit
U.S. workers and bolster GDP growth, at least in the short term. The long term
ramifications resulting from a dramatic policy shift to economic independence
from one of globalisation are debatable.

SUMMARY

Time will tell if Trump’s policies are implemented, successful, and contribute to
U.S. economic growth and prosperity. While a large portion of his supporters cite
the need for fundamental economic change as their primary reason for backing
him, it remains to be seen if the policies outlined in his seven-point plan will
have the desired impact upon the U.S. trade balance.

The process of renegotiating existing trade agreements, in addition to the

enforcement of international law upon economic superpowers such as China,
will present many unique challenges. Although the application of Trump’s
policies may improve the U.S. economy, the ability to physically enact its tenants
upon trade partners may prove to be a monumental task.

Any opinions, news, research, analyses, prices, other information, or links to

third-party sites are provided as general market commentary and do not
constitute investment advice. FXCM will not accept liability for any loss or
damage including, without limitation, to any loss of profit which may arise
directly or indirectly from use of or reliance on such information.

n a world where trade success will be built not on rules but

on relationships, India has distinct advantages
Last Published: Fri, Apr 06 2018. 08 59 AM IST
Nelson W. Cunningham

A broadside against trade was central to Donald Trump’s presidential

campaign. Photo: Bloomberg
At Davos in January, Prime Minister Narendra Modi delivered a message to
US President Donald Trump: “Trade protectionism is worrisome.” Modi
was prescient. The second year of the American presidency has begun with
a series of trade bangs.

In January, the Trump administration declared tariffs on washing

machines and solar panels—including those from India. Last month, the
president invoked a little-used national security exception to justify 25%
tariffs on steel and 10% on aluminium imports. India was included.

Two weeks back, Washington filed a complaint at the World Trade

Organization (WTO)—the first WTO action of this administration—over
several export subsidy programmes in India. These include the
Merchandise Exports from India Scheme, the Export Oriented Units
Scheme, the Electronics Hardware Technology Parks Scheme, Special
Economic Zones, and the Export Promotion Capital Goods Scheme. Given
these actions and an apparent trade war between the US and China, Indians
are now asking themselves “what’s next for India?”

Lessons from Washington

Trump is deadly serious about upending the post-war international
consensus on free trade. He also thinks rules get in his way. He seeks to
replace the rules-based trade order with an “America First” framework.

A broadside against trade was central to the Trump presidential campaign.

In office, his rhetoric has escalated. The North American Free Trade
Agreement (Nafta) is “the worst trade deal in the history of the world”,
along with the Trans-Pacific Partnership, “another disaster done and
pushed by special interests who want to rape our country”. Germany’s trade
policy is “bad, very bad”, and so are South Korea’s and China’s. India hasn’t
been spared. The president complained that Harley-Davidson motorcycles
were met with a 100% tax. He reprised a call with Modi: “He said, ‘We are
lowering it to 50%’ and I said, ‘Ok, but so far we’re getting nothing.’ So we
get nothing, he gets 50% and they think they’re doing us a favour. That’s
not a favour.”

Trump has held anti-trade views for decades. In 1987, he spent almost
$100,000 to run full-page ads in The New York Times, The Washington
Post and The Boston Globe attacking America’s allies and the way they took
advantage of the US, including “huge deficits”. These ideas would fit
comfortably into a Trump speech. His long-held trade and immigration
views are part and parcel of his “America First” policy. He sees the world as
a competition for advantage, to which America will bring its “unmatched
military, political, economic, cultural and moral strength”, as former
national security adviser H.R. McMaster and former national economic
council chair Gary Cohn wrote last year. As Trump pushes for “America
First”, he seeks to replace the rules-based trading order with one where he
is able to act without restraint and with maximum discretion.

Tariffs and negotiations show his preferred approach

The past one month has given a preview into Trump’s preferred approach.
He imposed the steel and aluminium tariffs on vague “national security”
terms, while noting that he would “(show) great flexibility and cooperation
toward those that really are friends of ours, both on a trade basis and a
military basis”. In the final order, Trump did temporarily exempt Canada,
Mexico, the European Union countries, Argentina, Brazil, Australia and
South Korea—but only after most of those countries’ leaders telephoned
him to make their case.

The president used the tariffs to reset the bargaining balance. Having
created a new negotiating objective—tariff exemption—he invited the
leaders of the world to ask for a favour, which he linked to other
negotiations (like Nafta) and granted, or not, based on his personal
relationships. India was not exempted. Modi chose to play this one quietly.
He did not telephone the president. The government of India instead filed a
formal exemption request.

Where does this leave India? In a world where trade success will be built
not on rules, but, rather, on relationships, India has distinct advantages.
Modi has devoted the past year to building a personal relationship with
President Trump. His visit to Washington last year was a success, measured
in hugs. There appears to be good chemistry between them, and Trump
readily accepted an invitation to visit India.

Modi investing in personal relationships is a great strength for India.

Indeed, the politics of the personal has been Modi’s style from the
beginning. In the years to come, Modi and Trump will work to set the stage
for the next step in our nations’ developing partnership. The test will come
when President Trump asks Modi how he plans to reduce the $30 billion
trade imbalance between the countries.

The world has benefited for 70 years from an international trading system
based on rules and broad multilateral agreements. So have India and other
developing countries, where hundreds of millions have been lifted out of
poverty.

But if the world is moving to a Trump-based system, and if charm,

relationships, and astute bargaining are the keys to success in that system—
I would never bet against India.

A mutual fund is a professionally managed investment fund that pools money from many investors to
purchase securities. These investors may be retail or institutional in nature. Mutual funds have
advantages and disadvantages compared to direct investing in individual securities. The primary
advantages of mutual funds are that they provide economies of scale, a higher level of diversification,
they provide liquidity, and they are managed by professional investors. On the negative side,
investors in a mutual fund must pay various fees and expenses.

Equity/ Growth – Equities are a popular mutual fund category amongst retail investors. Although it
could be a high-risk investment in the short term, investors can expect capital appreciation in the long
run. If you are at your prime earning stage and looking for long-term benefits, growth schemes could
be an ideal investment.

3.i. Index Scheme – Index schemes is a widely popular concept in the west. These follow a passive
investment strategy where your investments replicate the movements of benchmark indices like Nifty,
Sensex, etc.
3.ii. Sectoral Scheme – Sectoral funds are invested in a specific sector like infrastructure, IT,
pharmaceuticals, etc. or segments of the capital market like large caps, mid caps, etc. This scheme
provides a relatively high risk-high return opportunity within the equity space.

3.iii. Tax Saving – As the name suggests, this scheme offers tax benefits to its investors. The funds
are invested in equities thereby offering long-term growth opportunities. Tax saving mutual funds
(called Equity Linked Savings Schemes) has a 3-year lock-in period.

What are Technology Funds?

Technology funds usually invest in equities of technology companies. They
usually try to bet on new emerging technologies which are likely to disrupt
the tech world with new innovations. ICICI Prudential Technology Fund,
SBI IT Funds and Aditya Birla Sun Life New Millennium Fund are examples
of some prominent Indian technology funds. Their portfolio consists of
tech companies like Infosys, HCL Technologies, Tech Mahindra, Mind Tree
etc. Most of the companies in these funds operate in the domain of solving
complex business challenges with breakthrough technical innovations.
These include IT, digital transformation, data analytics, Artificial
Intelligence and Machine Learning.

2. The Popularity of Technology

Funds
Since the last few years, technology funds become quite popular in terms
of investment opportunities. This is owing to a constant increase in IT
sector in the GDP share and continuously increasing exports of IT products
and services. As per NASSCOM report the domestic revenue of the IT was
pegged at US$ 38 billion while the revenue from export was estimated at
US$ 117 billion in FY17.

3. Suitability
Technology funds in India have consistently provided an annualized return
of 14% to 19% over a five year period. With such a decent return, these
can serve as a good diversification option for investors looking to cash in
on the ever-growing technology sector in the country.

4.Taxation
Just like any other fund, the taxation of technology funds also depends
upon the quantum of the portfolio invested in debt or equity.
If at least 65% of their portfolio is invested in equities, they are treated as
equity funds for taxation. So short-term capital gains meaning the gains
booked with one year of the equity-oriented hybrid funds are taxed at
15%. If these funds are held for a period more than 12 months, their long
term capital gains are taxed at 10% if the gains booked exceed Rs. 1 lakh
(as per the latest budget of 2018).
In case they are debt oriented, that is if their portfolio consists of at least
65% debt securities, they are treated as debt funds. This means the long-
term capital gains tax is applicable if the fund is held for 36 months or
more. However, most technology funds are equity-oriented.

As an investor, it helps if one has a basic understanding of the

technological space in which the tech companies operate. If one has the
ability to foresee how these new technologies can disrupt existing
businesses, then one can make enviable capital gains by selecting the
right technology funds.

5. The Future of Technology Funds

In June of 2017, the S&P 500 Index (Standard & Poor’s 500) was up by 8%,
while the FANG stocks (Facebook, Amazon, Netflix, Google) were up 25-
30%. Technology is the way forward and the trends are very promising.
The growth in the PC and smartphone market is expected to be slow since
the market has already been saturated. However, newly evolving sectors
like cloud computing and AI (Artificial Intelligence) which are disrupting
traditional technologies are taking over and will be the golden geese of
the future.
The growth of the tech sector was predicted in 1965 by Intel co-founder
Gordon E. Moore. His ‘Moore’s Law’ states that every two years we would
have the means necessary to double the number of transistors on a single
chip. And while a single chip may not look like much, when you apply this
‘law’ to the technology sector as a whole the prospect for growth and
disruption is mind-boggling! And as every good investor knows, disruption
creates new opportunities for investments which is why technology
mutual funds are in such demand right now.

6. Conclusion
The technology sector is continuously growing, so its true that some of
your investments may face some near-term headwinds. However, experts
project that in the coming days, technology mutual funds will have the
capacity to outperform global equity funds. Hence, if there is one sector
you need to keep your eyes peeled for, then this is it!

The mutual fund industry of India is continuously evolving. Along the way, several industry bodies are
also investing towards investor education. Yet, according to a report by Boston Analytics, less than
10% of our households consider mutual funds as an investment avenue. It is still considered as a
high-risk option.
In fact, a basic inquiry about the types of mutual funds reveals that these are perhaps one of the most
flexible, comprehensive and hassle free modes of investments that can accommodate various types
of investor needs.
Various types of mutual funds categories are designed to allow investors to choose a scheme based
on the risk they are willing to take, the investable amount, their goals, the investment term, etc.

I. Open-Ended – This scheme allows investors to buy or sell units at any point in time. This
does not have a fixed maturity date.

1. Debt/ Income - In a debt/income scheme, a major part of the investable fund are
channelized towards debentures, government securities, and other debt instruments.
Although capital appreciation is low (compared to the equity mutual funds), this is a
relatively low risk-low return investment avenue which is ideal for investors seeing a
steady income.

2. Money Market/ Liquid – This is ideal for investors looking to utilize their surplus funds
in short term instruments while awaiting better options. These schemes invest in short-
term debt instruments and seek to provide reasonable returns for the investors.

4. Balanced – This scheme allows investors to enjoy growth and income at regular intervals.
Funds are invested in both equities and fixed income securities; the proportion is pre-
determined and disclosed in the scheme related offer document. These are ideal for the
cautiously aggressive investors.

II. Closed-Ended – In India, this type of scheme has a stipulated maturity period and
investors can invest only during the initial launch period known as the NFO (New Fund Offer)
period.

1. Capital Protection – The primary objective of this scheme is to safeguard the principal
amount while trying to deliver reasonable returns. These invest in high-quality fixed income
securities with marginal exposure to equities and mature along with the maturity period of the
scheme.

2. Fixed Maturity Plans (FMPs) – FMPs, as the name suggests, are mutual fund schemes
with a defined maturity period. These schemes normally comprise of debt instruments which
mature in line with the maturity of the scheme, thereby earning through the interest
component (also called coupons) of the securities in the portfolio. FMPs are normally
passively managed, i.e. there is no active trading of debt instruments in the portfolio. The
expenses which are charged to the scheme, are hence, generally lower than actively
managed schemes.

III. Interval – Operating as a combination of open and closed ended schemes, it allows
investors to trade units at pre-defined intervals.
Code Of Ethics
 All members are required to give an undertaking to the effect that they
would abide by the CSI Code of Ethics. The Code of Ethics will also specify
the procedure for the action to be taken against concerned members for any
breach of this Code. Following is the Code of Ethics prepared by the
Executive Committee and adopted after approval by balloting by the Voting
Members of CSI.
Code of ethics for CSI members (all categories)

A member of the Computer Society of India (CSI) shall :

 Organise the resources available to him and optimise these in attaining
the objectives of his organisation
 Not misuse his authority or office for personal gains.
 Comply with the Indian laws relating to the management of his
organisation and operate within the spirit of these laws.
 Conduct his affairs so as to uphold, project and further the image and
reputation of the CSI.
 Maintain integrity in research and publications.

As regards his ORGANISATION CSI member should :

 Act with integrity in carrying out the lawful policy and instructions of
his organisation and uphold its image and reputation. Plan, establish and
review objectives and tasks for himself and his subordinates which are
compatible with the Codes of practice of other professionals in the
enterprise, and direct all available effort towards the success of the
enterprise rather than of himself.
 Fully respect the confidentiality of information which comes to him in
the course of his duties, and not use confidential information for personal
gain or in a manner which may be detrimental to this organisation or his
clients.
 Not snoop around in other people’s computer files.
 In his contacts and dealings with other people, demonstrate his
personal integrity and humanity and when called to give an opinion in his
professional capacity, shall, to the best of his ability, give an opinion that is
objective and reliable.

As regards the EMPLOYEES, CSI member should :

 Set an example to his subordinates through his own work and
performance, through his leadership and by taking
 Account of the needs and problems of his subordinates.
 Develop people under him to become qualified for higher duties.
 Pay proper regard to the safety and well being of the personnel for
whom he is responsible.
 Share his experience with fellow professionals.

As regards the CLIENTS, CSI member should :

 Ensure that the terms of all contracts and terms of business be stated
clearly and unambiguously.
 Not use the computer to harm other people or to bear false witness.
 Be objective and impartial when giving independent advice.

As regards the COMMUNITY, CSI member should :

 Make the most effective use of all natural resources employed.
 Be ready to give professional assistance in community affairs.
 Not appropriate other people’s intellectual output.
 Always use a computer in ways that ensure consideration and respect
for fellow humans.

What is GST in India? Goods & Services

Tax Law Explained
Updated on Sep 05, 2018 - 06:20:34 PM

In this article, we take a closer look at what is GST and the reason why it is
making business and taxes simpler and easier.

Contents

1. What is GST?
2. Journey of GST in India
3. Advantages Of GST
4. Components of GST?
5. Tax Laws before GST
6. What changes does GST bring in?

1. What is GST?
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The
Goods and Service Tax Act was passed in the Parliament on 29th March
2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law
in India is a comprehensive, multi-stage, destination-based tax that is levied
on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the
supply of goods and services. This law has replaced many indirect tax laws
that previously existed in India.

GST is one indirect tax for the entire country.

So, before Goods and Service Tax, the pattern of tax levy was as follows:
Under the GST regime, the tax will be levied at every point of sale. In case of
intra-state sales, Central GST and State GST will be charged. Inter-state sales
will be chargeable to Integrated GST.

Now let us try to understand the definition of Goods and Service Tax –
“GST is a comprehensive, multi-stage, destination-based tax that will be
levied on every value addition.”

Multi-stage

There are multiple change-of-hands an item goes through along its supply
chain: from manufacture to final sale to the consumer.

Let us consider the following case:

 Purchase of raw materials

 Production or manufacture
 Warehousing of finished goods
 Sale to wholesaler
 Sale of the product to the retailer
 Sale to the end consumer

 
Goods and Services Tax will be levied on each of these stages which makes it
a multi-stage tax.

Value Addition

The manufacturer who makes biscuits buys flour, sugar and other material.
The value of the inputs increases when the sugar and flour are mixed and
baked into biscuits.

The manufacturer then sells the biscuits to the warehousing agent who packs
large quantities of biscuits and labels it. That is another addition of value
after which the warehouse sells it to the retailer.

The retailer packages the biscuits in smaller quantities and invests in the
marketing of the biscuits thus increasing its value.

GST will be levied on these value additions i.e. the monetary worth added at
each stage to achieve the final sale to the end customer.

Destination-Based

Consider goods manufactured in Maharashtra and are sold to the final

consumer in Karnataka. Since Goods & Service Tax is levied at the point of
consumption, in this case, Karnataka, the entire tax revenue will go to
Karnataka and not Maharashtra.

2. Journey of GST in India

The GST journey began in the year 2000 when a committee was set up to
draft law. It took 17 years from then for the Law to evolve. In 2017 the GST
Bill was passed in the Lok Sabha and Rajya Sabha. On 1st July 2017 the GST
Law came into force.
3. Advantages Of GST
GST will mainly remove the Cascading effect on the sale of goods and
services. Removal of cascading effect will directly impact the cost of goods.
Since tax on tax is eliminated in this regime, the cost of goods decreases.

GST is also mainly technologically driven. All activities like registration,

return filing, application for refund and response to notice needs to be done
online on the GST Portal. This will speed up the processes.

4. What are the components of GST?

There are 3 taxes applicable under this system: CGST, SGST & IGST.

 CGST: Collected by the Central Government on an intra-state sale (Eg:

transaction happening within Maharashtra)
 SGST: Collected by the State Government on an intra-state sale (Eg:
transaction happening within Maharashtra)
 IGST: Collected by the Central Government for inter-state sale (Eg:
Maharashtra to Tamil Nadu)

In most cases, the tax structure under the new regime will be as follows:
 New
Transaction Old Regime
Regime

VAT + Central
Sale within CGST + Revenue will be shared equally between
Excise/Service
the State SGST the Centre and the State
tax

There will only be one type of tax

Central Sales
Sale to (central) in case of inter-state sales.
Tax +
another IGST The Center will then share the IGST
Excise/Service
State revenue based on the destination of
Tax
goods.

Illustration: 

 Let us assume that a dealer in Gujarat had sold the goods to a dealer
in Punjab worth Rs. 50,000. The tax rate is 18% comprising of only
IGST.

In such case, the dealer has to charge Rs. 9,000 as IGST. This revenue will
go to the Central Government.

 The same dealer sells goods to a consumer in Gujarat worth Rs.

50,000. The GST rate on the good is 12%. This rate comprises of 
CGST at 6% and SGST at 6%.

The dealer has to collect Rs. 6,000 as Goods and Service Tax. Rs. 3,000 will
go to the Central Government and Rs. 3,000 will go to the Gujarat government
as the sale is within the state.

5. Tax Laws before GST

In the earlier indirect tax regime, there were many indirect taxes levied by
both state and center. States mainly collected taxes in the form of Value
Added Tax (VAT). Every state had a different set of rules and regulations.

Interstate sale of goods was taxed by the Center. CST (Central State Tax)
was applicable in case of interstate sale of goods.  Other than above there
were many indirect taxes like entertainment tax, octroi and local tax that was
levied by state and center.

This lead to a lot of overlapping of taxes levied by both state and center.

For example, when goods were manufactured and sold Excise Duty charged
by the center was charged by the center. Over and above Excise Duty, VAT
was also charged by the State. This lead to a tax on tax also known as
cascading effect of taxes.
The following is the list of indirect taxes in the pre-GST regime:

 Central Excise Duty

 Duties of Excise
 Additional Duties of Excise
 Additional Duties of Customs
 Special Additional Duty of Customs
 Cess
 State VAT
 Central Sales Tax
 Purchase Tax
 Luxury Tax
 Entertainment Tax
 Entry Tax
 Taxes on advertisements
 Taxes on lotteries, betting, and gambling

CGST, SGST, and IGST has replaced all the above taxes.

However, the chargeability of CST for Inter-state purchase at a concessional

rate of 2%, by issue and utilisation of c-Form is still prevalent for certain Non-
GST goods such as:

(i) Petroleum crude;

(ii) High-speed diesel;

(iii) Motor spirit (commonly known as petrol);

(iv) Natural gas;

(v) Aviation turbine fuel; and

(vi) Alcoholic liquor for human consumption.

in respect of following transactions only:

 Resale
 Use in manufacturing or processing
 Use in the telecommunication network or in mining or in the generation
or distribution of electricity or any other power

6. What changes has GST brought in?

In the pre-GST regime, every purchaser including the final consumer paid tax
on tax. This tax on tax is called Cascading Effect of Taxes.
GST avoids this cascading effect as the tax is calculated only on the value-
add at each stage of transfer of ownership. Understand what the cascading
effect is and how GST helps by watching this simple video:

This indirect tax system under GST improve the collection of taxes as well as
boost the development of Indian economy by removing the indirect tax
barriers between states and integrating the country through a uniform tax
rate.

Illustration:

Based on the above example of biscuit manufacturer along with some

numbers, let’s see what happens to the cost of goods and the taxes in
the earlier and GST regimes.

Tax calculations in earlier regime:

Action Cost 10% Tax Total

Manufacturer 1,000 100 1,100

Warehouse adds label and repacks @ 300 1,400 140 1,540

Retailer advertises @ 500 2,040 204 2,244

Total 1,800 444 2,244

Along the way, the tax liability was passed on at every stage of the
transaction and the final liability comes to rest with the customer. This is
called the Cascading Effect of Taxes where a tax is paid on tax and the
value of the item keeps increasing every time this happens.

Tax calculations in current regime: 

Actual
Action Cost 10% Tax Total
Liability

Manufacturer 1,000 100 100 1,100

Warehouse adds label and repacks @ 300 1,300 130 30 1,430

 Retailer advertises @ 500 1,800 180 50 1,980

Total 1,800 180 1,980

In the case of Goods and Services Tax, there is a way to claim credit for tax
paid in acquiring input. What happens in this case is, the individual who has
paid a tax already can claim credit for this tax when he submits his taxes.

In the end, every time an individual is able to claim input tax credit, the sale
price is reduced and the cost price for the buyer is reduced because of a
lower tax liability. The final value of the biscuits is therefore reduced from Rs.
2,244 to Rs. 1,980, thus reducing the tax burden on the final customer.

GST also brought with it a single nation-wide system of waybills by

the introduction of “E-way bills”. This system started on 1st April 2018 for
Inter-state movement of goods and 15th April 2018 for intra-state movement
of goods in a staggered manner. By this system, manufacturers, traders &
transporters are benefitted by a common portal where e-way bills can be
generated and presence of its visibility to all stakeholders in the process of
moving goods from the place of its origin to its destination. Tax authorities
are also in vantage as this reduces the time at check -posts and help reduce
tax evasion.

Dumping:

Exporting goods at prices lower than the home-market prices. In price-to-price

dumping, the exporter uses higher home-prices to supplement the reduced
revenue from lower export prices. In price-cost dumping, the exporter is
subsidized by the local government with duty drawbacks, cash incentives, etc.
Dumping is legal under GATT (now WTO) rules unless its injurious effect on the
importing country's producers can be established. If injury is established, GATT
rules allow imposition of anti-dumping duty equal to the difference between the
exporter's home-market price and the importer's FOB price.
Dumping, in economics, is a kind of injuring pricing, especially in the context of international
trade. It occurs when manufacturers export a product to another country at a price below the
normal price with an injuring effect. The objective of dumping is to increase market share in a
foreign market by driving out competition and thereby create a monopoly situation where the
exporter will be able to unilaterally dictate price and quality of the product.

Overview[edit]
A standard technical definition of dumping is the act of charging a lower price for the like product
in a foreign market than the normal value of the product, for example the price of the same
product in a domestic market of the exporter or in a third country market. This is often referred to
as selling at less than "normal value" on the same level of trade in the ordinary course of trade.
Under the World Trade Organization (WTO) Antidumping Agreement, dumping is not prohibited
unless it causes or threatens to cause material injury to a domestic industry in the importing
country. Dumping is also prohibited when it causes "material retardation" in the establishment of
[1]

an industry in the domestic market.

The term has a negative connotation, as advocates of competitive markets see "dumping" as a
form of unfair competition. Furthermore, advocates for workers and laborers believe that
safeguarding businesses against such practices, such as dumping, help alleviate some of the
harsher consequences of such practices between economies at different stages of development
(see protectionism). The Bolkestein directive, for example, was accused in Europe of being a
form of "social dumping," as it favored competition between workers, as exemplified by the Polish
Plumber stereotype. While there are few examples of a national scale dumping that succeeded in
producing a national-level monopoly, there are several examples of local 'dumping' that produced
a monopoly in regional markets for certain industries. Ron Chernow points to the example of
regional oil monopolies in Titan : The Life of John D. Rockefeller, Sr. where lining an approved
strategy where oil in one market, Cincinnati, would be sold at or below cost to drive competition's
profits down and force them to exit the market. In another area where other independent
businesses were already driven out, namely in Chicago, prices would be increased by a quarter. [2]

Anti-dumping actions[edit]
Legal issues[edit]
If a company exports a product at a price that is lower than the price it normally charges in its
own home market, or sells at a price that does not meet its full cost of production, it is said to be
"dumping" the product. It is a sub part of the various forms of price discrimination and is
classified as third-degree price discrimination. Opinions differ as to whether or not such practice
constitutes unfair competition, but many governments take action against dumping to protect
domestic industry. The WTO agreement does not pass judgment. Its focus is on how
[3]

governments can or cannot react to dumping—it disciplines anti-dumping actions, and it is often
called the "anti-dumping agreement". (This focus only on the reaction to dumping contrasts with
the approach of the subsidies and countervailing measures agreement.)
The legal definitions are more precise, but broadly speaking, the WTO agreement allows
governments to act against dumping where there is genuine ("material") injury to the competing
domestic industry. To do so, the government has to show that dumping is taking place, calculate
the extent of dumping (how much lower the export price is compared to the exporter’s home
market price), and show that the dumping is causing injury or threatening to cause injury.

Definitions and extent[edit]

While permitted by the WTO, General Agreement on Tariffs and Trade (GATT) (Article VI) allows
countries the option of taking action against dumping. The Anti-Dumping Agreement clarifies and
expands Article VI, and the two operate together. They allow countries to act in a way that would
normally break the GATT principles of binding a tariff and not discriminating between trading
partners—typically anti-dumping action means charging extra import duty on the particular
product from the particular exporting country in order to bring its price closer to the “normal
value” or to remove the injury to domestic industry in the importing country.

There are many different ways of calculating whether a particular product is being dumped
heavily or only lightly. The agreement narrows down the range of possible options. It provides
three methods to calculate a product’s “normal value”. The main one is based on the price in the
exporter’s domestic market. When this cannot be used, two alternatives are available—the price
charged by the exporter in another country, or a calculation based on the combination of the
exporter’s production costs, other expenses and normal profit margins. And the agreement also
specifies how a fair comparison can be made between the export price and what would be a
normal price.

Five-percent rule[edit]
According to footnote 2 of the Anti-Dumping Agreement, domestic sales of the like product are
sufficient to base normal value on if they account for 5 percent or more of the sales of the
product under consideration to the importing country market. This is often called the five-percent
or home-market-viability test. This test is applied globally by comparing the quantity sold of a like
product on the domestic market with the quantity sold to the importing market.

Normal value cannot be based on the price in the exporter’s domestic market when there are no
domestic sales. For example, if the products are only sold on the foreign market, the normal
value will have to be determined on another basis. Additionally, some products may be sold on
both markets but the quantity sold on the domestic market may be small compared to quantity
sold on foreign market. This situation happens often in countries with small domestic markets like
Hong Kong and Singapore, though similar circumstances may also happen in larger markets.
This is because of differences in factors like consumer taste and maintenance.

Calculating the extent of dumping on a product is not enough. Anti-dumping measures can only
be applied if the act of dumping is hurting the industry in the importing country. Therefore, a
detailed investigation must first be conducted according to specified rules. The investigation must
evaluate all relevant economic factors that have a bearing on the state of the industry in
question; if it is revealed that dumping is taking place and hurting domestic industry, the
exporting company can raise its price to an agreed level in order to avoid anti-dumping import
duties. [4]

Procedures in investigation and litigation[edit]

Detailed procedures are set out on how anti-dumping cases are to be initiated, how the
investigations are to be conducted, and the conditions for ensuring that all interested parties are
given an opportunity to present evidence. Anti-dumping measures must expire five years after
the date of imposition, unless a review shows that ending the measure would lead to injury.

Generally speaking, an anti-dumping investigation usually develops along the following steps:
domestic producer(s) make(s) a request to the relevant authority to initiate an anti-dumping
investigation. Then investigation to the foreign producer is conducted to determine if the
allegation is valid. It uses questionnaires completed by the interested parties to compare the
foreign producer's (or producers') export price to the normal value (the price in the exporter’s
domestic market, the price charged by the exporter in another country, or a calculation based on
the combination of the exporter’s production costs, other expenses and normal profit margins). If
the foreign producer's export price is lower than the normal price and the investigating body
proves a causal link between the alleged dumping and the injury suffered by the domestic
industry, it comes to a conclusion that the foreign producer is dumping its products. According to
Article VI of GATT, dumping investigations shall, except in special circumstances, be concluded
within one year, and in no case more than 18 months after initiation. Anti-dumping measures
must expire five years after the date of imposition, unless a review shows that ending the
measure would lead to injury.

Anti-dumping investigations are to end immediately in cases where the authorities determine that
the margin of dumping is, de minimis, or insignificantly small (defined as less than 2% of the
export price of the product). Other conditions are also set. For example, the investigations also
have to end if the volume of dumped imports is negligible (i.e., if the volume from one country is
less than 3% of total imports of that product—although investigations can proceed if several
countries, each supplying less than 3% of the imports, together account for 7% or more of total
imports).

The agreement says member countries must inform the Committee on Anti-Dumping Practices
about all preliminary and final anti-dumping actions, promptly and in detail. They must also report
on all investigations twice a year. When differences arise, members are encouraged to consult
each other. They can also use the WTO’s dispute settlement procedure.

Actions in India[edit]
The current set of anti-dumping laws in India is defined by Section 9A and 9B of Customs and
Tariffs Act, 1975 (Amended 1995) and The Anti-dumping rules such as (Identification,
Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of
Injury) Rules of 1995, Section 9A of customs and tariffs Act 1975 states that “If any article is
[11]
exported from any country or territory to India at less than its normal value, then, upon the
importation of such article into India, the central government may by notification in the official
gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such
article.” As of November 28, 2016, 353 anti-dumping cases has been initiated by Directorate
General of Anti-Dumping and Allied Duties (DGAD) out of which in one hundred and thirty cases,
anti-dumping measures are in force. In January 2017, the Indian government imposed anti-
dumping duty on colour coated steel products imported from the European Union and China for 6
months. [12]

Though, the move was applauded by Essar Steel India Commercial Director, H Shivram
Krishnan but, importers expressed their concern regarding protective measures like minimum
import price and ant-dumping duty especially when domestic is narrowing and imports are falling.
[13]

On July, 2015, the government imposed anti-dumping duty on fibreboard imported from
Indonesia and Vietnam. This came after CEO and joint-Managing Director of Greenply
[14]

Industries, Shobhan Mittal filed an application for anti-dumping probe initiation. The primary
[15]

reason behind the probe was that the price differential between domestic and imported MDF
stood at 5-6 percent and net MDF imports was at around 30-35 percent, majority of which came
from Indonesia and Vietnam. [16]

On 8 March 2017, government of India imposed anti-dumping duty ranging from USD 6.30 to
USD 351.72 per tonne on imports of jute and its products from Bangladesh and Nepal. Later [17]

the government of India withdrew the anti-dumping duty in case of Nepal.

On 26 October 2017, India imposes anti-dumping duty on stainless steel from US, EU and China

India has imposed anti-dumping duty on certain stainless steel products from the European
Union and other nations including China and Korea, in order to protect the domestic industry
from cheap imports.

The duty was imposed by the Revenue department following the recommendation by the
Directorate General of Anti-Dumping and Allied Duties (DGAD).

• The levied duty will range between 4.58 per cent and 57.39 per cent of the landed value of
cold-rolled flat products of stainless steel.

• The anti-dumping duty will be in effect until 10 December 2020.

• The direction however, exempts certain grades of stainless steel from the duty.

• The duty will be levied on the imports of stainless steel products from China, Taiwan, South
Korea, South Africa, Thailand, the United States and the European Union.

Abuse of Antidumping Measures

Although antidumping measure has been provided as a vital rule in preventing protectionism and
promote free trade, many instances of antidumping practices suggest that antidumping measures
have been used as a tool of protectionism. India and China have been alleged to have used
Antidumping Duty as a form of “safety valves” – to ease competitive pressure in domestic
market. Antidumping measures have also been used as a form of “retaliation” against products of
countries that impose ADDs against the products of the host country. The USA has been
consistently alleged to have abused antidumping measures with its practice of Zeroing. Similarly,
in only around 2% cases the EU has been found to have imposed ADDs to offset dumping. In the
remaining 98% cases of antidumping have been used for purposes other than offsetting
dumping. [18]

Common Agricultural Policy[edit]

The Common Agricultural Policy of the European Union has often been accused of dumping
despite significant reforms, as part of the Agreement on Agriculture at the Uruguay round of
GATT negotiations in 1992 and in subsequent incremental reforms, notably the Luxembourg
Agreement in 2003. Initially, the CAP sought to increase European agricultural production and
provide support to European farmers through a process of market intervention whereby a special
fund, the European Agricultural Guidance and Guarantee Fund, would buy up surplus
agricultural produce if the price fell below the centrally-determined intervention level.

European farmers were given a "guaranteed" price for their produce when it was sold in the
European Community, and a system of export reimbursements ensured that European exports
would sell at or below world prices, at no detriment to the European producer. The policy was
heavily criticised as distorting world trade, and since 1992, the policy has moved away from
market intervention and towards direct payments to farmers regardless of production, called
"decoupling". Furthermore, the payments are generally dependent on farmers fulfilling certain
environmental or animal welfare requirements to encourage responsible, sustainable farming in
what is termed "multifunctional" agricultural subsidies. Social, environmental and other benefits
of subsidies would no longer not include a simple increase in production.
.