Transacting trade and creating collaboration across the continents is challenging to begin with. Add to that, the complexity of local cultural currents.
This blog provides insights to reduce risks and speed progress in your explorations and expansions in collaborations with India. (India – 5th largest economy in 2024. 65% population below 35 years of age).
The last blog described the elegance of the Varna System. Here, you will learn the current state of a country in the middle of a moral, ethical, and trade transformation.
The Shift from Fluidity to Rigidity
Societies evolve, but not always for the better. The Varna system in ancient India started as a fluid, skills-based social structure. It aligned individuals with roles and occupations suited to their abilities. Over time, it hardened into the caste system, trapping people in rigid social divisions and limiting upward mobility.
The Varna system had mobility based on achievement. The caste system offered no social mobility and locked people in caste silos by birth.
What went wrong?
The Original Varna System, a Functional Order calcified into a rigid caste system. The Varna system disintegrated due to power consolidation, economic control, and social manipulation.
Power Grab by the Upper Varnas –
- Brahmins (priests, scholars, knowledge keepers). The Brahmins were the spiritual and administrative guides to the rulers. They leveraged religion to manipulate the classes to secure a dominant voice. They lost their moral authority and came to be seen as transactional money grabbers.
- Kshatriyas (warriors, rulers, protectors). The Kshatriyas became authoritarian rulers. Originally the safekeepers of the tribe, they became abusive of rights and dignity of their own people.
- Vaishyas (traders, merchants, economic drivers). The Vaishyas, the tribe’s wealth creators through trade, accumulated but did not share wealth with the tribe. They became predatory in their own communities, reducing opportunities for others.
Shudras (farmers, laborers, artisans, service providers). Shudras lost the most. Once seen as strong and key contributors of the tribe, they were locked into menial, low-status labor. They were denied access to education or upward social and economic mobility.
Religious Codification –
Indian texts like the Manusmriti (200 BCE – 200 CE) formalized caste hierarchies, restricting social mobility. They justified the caste system and separation of communities on a variety of lifestyle considerations.
Foreign Rule Reinforced Caste –
Occupiers institutionalized caste in government records, worsening social divisions. It helped keep the country divided and weak.
The Consequences
- Social Division – Castes became isolated, with restrictions on intermarriage, social, and business interactions. Lower castes did not enter upper class people’s homes. They did not participate in each other’s festivals or rituals. And mixed castes did not eat together. Each caste developed its own insular culture and they all lived in their respective silos.
- Religious Conversions – Many marginalized people turned to Islam, Christianity, and Buddhism for escape from caste oppression. These faiths gave them a new identity, respectability, and a progress path.
- Educational and Economic Barriers – Even with access to modern education and economic reforms, lower castes faced discrimination in employment, housing, and social settings.
The Road to Change
- Legal Reforms – The Indian Constitution (1950) outlawed caste-based discrimination.
- Reservation Policies – Affirmative action in education, employment, and politics aims to correct historic injustices.
- Social Movements – Leaders and activists identified all peoples of India and assigned new labels: Dalits (low castes). Harijans (beyond even the Shudras) were the people beyond the reach of even low castes. Girijans were the tribals of the mountain regions.
Where are we now?
Through affirmative action programs and social progress, progress looks promising. Among the educated youth who meet in workplaces, friendships and marriage are possible and accepted. Youth from lower castes are making their mark in excellence. A young Dalit woman, Tina Dabi topped the Indian Civil Services exam in 2016. She is a member of India’s prestigious Indian Administrative Services elite. Examples of high performing youth are visible across all professions. The stigma of low caste or the ostracization for inter-caste marriage have declined.
Still, India has a long way to go to achieve the kind of fluidity that the Varna system aspired to. Communities remain comfortable to transact business and marriage alliances within their own castes.
Why This Matters for Global Business and Trade with India
For businesses and investors working in India today, caste is more than just history—it shapes hiring practices, workplace culture, and economic access. By understanding caste dynamics, global companies can reduce risks, improve local engagement, and build sustainable partnerships that thrive in India’s evolving economy.
Here’s how it impacts trade and collaboration:
1. Workplace Hierarchy and Team Dynamics
- Why It Matters:
- Caste influences workplace structure, leadership dynamics, and hiring biases.
- How to Navigate:
- Promote merit-based collaboration through the use of performance criteria and checklists. Inspect that the hiring policies are standards based to ensure equal opportunities.
2. Supplier and Business Relationships
- Why It Matters:
- Specific caste groups dominate some industries affecting supply chain choices.
- How to Navigate:
- Create checklists that identify risks and opportunities.Qualify multiple suppliers for critical needs.
- Role model inclusive sourcing, and supplier diversity initiatives.
3. Consumer Behavior and Market Reach
- Why It Matters:
- Buying habits and brand loyalty are influenced by caste identities and social structures.
- How to Navigate:
- Develop marketing strategies that focus on differentiating on the basis on value.
- Practice cultural inclusivity and ethical branding.
4. Integrate Cross-Cultural Values with Ethical Business Practices
- Why It Matters:
- Companies that engage in social equity and caste-sensitive policies gain credibility and consumer trust.
- How to Navigate:
- Invest in cross-cultural education, skill-building, and workplace diversity.
- Prioritize performance and excellence in compensation plans.
5. Legal Compliance and Political Reputation Management
- Why It Matters:
- India enforces affirmative action laws to address caste disparities, impacting hiring and procurement.
- How to Navigate:
- Build the business on solid values and value add for the local and global communities.
Ensure legal compliance with anti-discrimination policies and align with global diversity and inclusion standards. Maintain transparency and promote performance above other distractions.
- Be aware of political priorities maintaining high ethics and operational excellence.
- Build the business on solid values and value add for the local and global communities.
The Future of Caste in India’s Economy
While caste discrimination still exists, urbanization, globalization, and merit-based transformations are challenging outdated norms. Indian politicians and industrialists know that future prosperity depends on fostering an inclusive economy where success is determined by talent, not birth.
By understanding and addressing caste-based challenges, global businesses can create inclusive partnerships, drive ethical business practices, and unlock India’s full economic potential.
Follow these recommendations, and you will reduce risk, bridge to opportunities, and do it faster and with less expense.