(Part 3)
Business Surviving for 300 Years.
For three hundred years, business in India operated on cash supported by bribes. Corruption was well documented under Mughal and British rule. Nothing changed in 1947. Indira Gandhi imposed 97% income tax, which was confiscatory. The judiciary stood by. The response was an entire parallel economy.
Then demonetization forced formalization overnight. Everything became digital in five years. Every transaction tracked through AIS. GST automated. Bank transfers monitored in real time. Total surveillance.
But bureaucracy is old school. Still operating with 1970s discretionary powers. Can freeze accounts on suspicion. Can demand explanations without process. Can create problems that take years in court to resolve. Zero protection.
This creates the worst possible combination. You have complete visibility with unchanged arbitrary enforcement. The transition happened too quickly and bureaucracy has too many powers. That is the problem.
Yet people do not revolt. Why? Because the direction is finally correct.
Taxation History in India
Under Indira Gandhi’s 97% rate of Income Tax, there was no hope. The system was designed to confiscate. The only rational response was total parallel economy. Cash, bribes, complete opacity was the rule of the day. Tax rates dropped from 97% confiscatory to 30% reasonable. GST keeps getting lowered. Income tax is free up to 1.2 million. The government is actually reducing burden instead of increasing it. People have hope for the first time in 75 years.
Now the formal system is becoming viable. 30% is painful but not confiscatory. You can actually operate legitimately and survive. So businesses tolerate the transition pain.
Yes, bureaucracy still has arbitrary powers. Yes, accounts get frozen on suspicion. Yes, courts take several years. But the trajectory is correct. People believe this is temporary. Eventually either bureaucratic powers get reformed or mature algorithms will replace discretion entirely.
The fragmented model is defensive architecture for this transition moment.
The Fragmented Model
Business goodwill is something bureaucracy does not value, but for a company it is a matter of life and death. Once goodwill is lost, the business faces civil death. For this reason many companies maintain several parallel companies doing identical businesses. Interruption in Operation of one company does not mean end of business.
The phrase “several parallel companies doing identical businesses” describes pure redundancy for risk distribution. This is an established, widely-accepted business practice rather than an experimental or questionable approach.
The face and voice remain the same. The same person handles the client. Perhaps you are not aware that in client handling and social networking, different persons are distributed among partners and family members. This is done on the basis of personal taste and personality. Like smoker will get smoker.
The partners don’t randomly distribute clients. They assign based on personality compatibility and lifestyle alignment. Smokers handle smokers. Vegetarians handle vegetarians. Cricket enthusiasts handle cricket fans. Night owls handle clients in different time zones. Formal personalities handle corporate clients. Casual types handle startup founders.
The relationship feels genuine because it is genuine. The client isn’t being managed by a random account executive. They’re talking to someone who actually shares their worldview. When a client feels understood at the personal level, they don’t shop around for cheaper alternatives. The relationship transcends price competition.
By distributing social networking and client handling among family members, the business taps into natural social circles. A partner’s spouse who is active in a particular professional community becomes a business development channel. From the client’s perspective, they’re working with “their guy” who happens to work for a company. They don’t realize there are four other parallel entities handling other clients. Each client thinks they have a special relationship.
Even if the legal entity changes, perhaps for tax optimization or risk distribution, the same human being continues the relationship. The client never experiences disruption. The paperwork might say “ABC Tech Solutions Pvt Ltd” one year and “DEF Digital Services LLP” the next, but the voice on the phone is the same person who remembers their family details and business challenges.
This is profoundly different from Western client management where account executives rotate, creating relationship discontinuity.
Working on Doomsday
Here’s how this works in practice: When Entity A’s account got frozen over a disputed GST claim, the developer working on Client X’s project simply invoiced through Entity B the next month. Same developer, same work, same client relationship. The client never knew there was an issue. The business continued while lawyers handled the freeze. This is what goodwill protection means in practice.
A shopkeeper navigating chaotic regulations develops skills no textbook teaches. The same survival intelligence works everywhere.
If you can drive in Indian traffic, you can drive anywhere. If you can run a profitable business navigating Indian regulatory chaos, you can adapt to any market. The business model is just this adaptive capability applied to knowledge work instead of physical assets.
The few Westerners who succeed in India are the ones who unlearn their business school training and apprentice themselves to local operators. They’re humble enough to recognize that the shopkeeper on street of India knows something they don’t.
The model solves problems that business theory doesn’t even acknowledge exist: how to protect intellectual property when courts take seven years, how to maintain goodwill when bureaucrats can freeze accounts arbitrarily, how to scale without triggering regulatory cliffs, how to compete globally while navigating local dysfunction.
The Transferable Pattern
It’s cultural business DNA that has proven successful across continents and industries. When Western observers call it “jugaad,” they’re revealing their own lack of sophistication. Without any MBAs, Patels run hotel chains in USA. Singhs run gas station chains. These are just two examples.
The ability to find solutions excels everywhere. Indian diaspora earnings prove this. The same operational intelligence that navigates Delhi’s regulatory chaos builds hotel chains in America and gas station networks across continents.
What appears as improvisation to outsiders is actually sophisticated problem solving developed in the world’s most challenging business environment. Growing up navigating Indian bureaucracy, infrastructure gaps, and resource scarcity creates adaptive intelligence that transfers everywhere. When you’ve operated in an environment where rules change arbitrarily, Western business volatility feels manageable.
The fragmented model is the Patel hotel chain structure applied to software services. Multiple properties, family management, distributed operations, personal relationships. Just applied to knowledge work instead of physical assets.
The Doomsday Habit
Indians save everywhere in the world. Not because they’re naturally frugal. Because 300 years taught them institutions provide no protection. When disaster strikes, you survive on accumulated reserves.
The fragmented model extends this logic to business. Multiple entities are corporate savings accounts. When one gets frozen, you operate from another. The relationship capital built through personality matching is goodwill savings. When legal entities fail, relationships continue generating revenue.
Western businesses optimize for efficiency because they assume institutional stability. Indian businesses build redundancy because they assume institutional failure. Both are rational responses to their environments.
Conclusion
This model isn’t elegant. It’s messy, requires coordination, and adds compliance overhead. But it works because it treats regulatory chaos as the baseline condition, not the exception. When your business environment can destroy you arbitrarily, defensive architecture isn’t optional.
The fragmented model with personality-based client assignment protects what matters most: the relationship that generates revenue. Everything else is replaceable paperwork.
The craft of running a business in India means building structures that survive institutional non-hospitality.
This is a documentation of a transferable business philosophy that works anywhere.
References:
- Corruption in India: (History, Law & Politics)” by Sandeep Bhalla, published in 2020. https://play.google.com/store/books/details/Corruption_in_India_History_Law_Politics?id=SR3JDwAAQBAJ&hl=en_AU