Download india entry strategy

Weaving Ideas Integrating Business………
WORLD’S LOOKING AT INDIA
• “Congrats to @Narendra Modi and BJP,” “Look forward to working w/you/growing shared prosperity/security w/world’s
largest democracy.”
- John F. Kerry, Secretary of State , US
• “Congratulations Modi on achieving a great victory. expressed hope that India and Sri Lanka will work closely and further
strengthen their strong ties.”
- Mahinda Rajapaksa , President , Sri Lanka
• “Hope that Australia and India will work closely to further strengthen the bilateral relationship during Modi's stewardship of
the Indian Government. Looking forward to meeting Mr. Modi during the upcoming G-20 summit to be held in Australia.”
- Tony Abbot, Prime Minister, Australia
• “Congratulations Mr. Modi on emphatic electoral victory. Extended an invitation to Modi to visit UK on his way to the
BRICS summit to be held in August, 2014 in Brazil.”
- David Cameron, Prime Minister, Britain
Weaving Ideas Integrating Business………
INDIAN
INDIAN ECONOMY
ECONOMY
•FDI equity Inflows (April, 2013 to March, 2014): US$ 24,299 million
• World Bank sees 6.7 per cent GDP growth for India by 2015.
•Top Investing Countries FDI Equity Inflows: Mauritius, Singapore, UK, Japan, USA,
Netherlands and Cyprus (as on March 2013)
• India is the third biggest economy in the world in terms of purchasing power parity
(PPP)
Weaving Ideas Integrating Business………
WHY INDIA
INDIA
WHY
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World's largest democracy with 1.2 billion people.
Stable political environment and responsive administrative set up.
Land of abundant natural resources and diverse climatic conditions.
Investor friendly policies and incentive based schemes.
Total labour force of nearly 530 million.
Large pool of skilled manpower; strong knowledge base with significant English speaking
population.
Huge untapped market potential.
The urban population of India will double from the 2001 census figure of 290 m to
approximately 590 m by 2030
Progressive simplification and rationalization of direct and indirect tax structures.
Reduction in import tariffs.
Full current account convertibility.
Robust banking and financial institutions.
Weaving Ideas Integrating Business………
INCENTIVES
Comprehensive incentives are provided by State & Central government.
Indicative list of incentives:
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Rebate on cost of land
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Rebate on stamp duty on sale/ lease of land
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Power tariff incentives
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Concessional rate of interest on loans
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Investments subsidies/ Tax incentives
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Backward areas subsidies
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Special incentive packages for mega projects
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Duty free imports for SEZ units
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Service tax and income tax exemption for SEZ units
SEZ centric offering- Attractive fiscal concessions, Single window clearance, continuous
supply of power at competitive rates, world class industrial and social infrastructure
Weaving Ideas Integrating Business………
INTERNATIONAL ARRANGEMENTS
Regional trade
agreements :
Double taxation avoidance
agreements :
 India has a Tax Treaty network
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with over 70 countries, which
include
USA,
UK,
Cyprus,
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European Union nations, Japan,
Singapore, Australia, Turkey etc
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 In general, provisions of the
domestic income-tax law or Tax
Treaty,
to
the
extent
more
beneficial may be applied by nonresidents

 Treaty shopping being heavily
India has entered into many agreements
with Regional Countries, to facilitate
greater trade between Countries
The Agreements principally provide for
lower duties on imports upon satisfying
the test of origin of goods
Significant among the Agreements are
the SAFTA [between Pakistan, Sri Lanka,
Maldives,
Nepal,
Bhutan
and
Bangladesh in operation since 1995]
and India Singapore (Comprehensive
Economic Cooperation Agreement –
CECA) implemented and effective from
August 2005
Free Trade Agreements also exist with
Sri-Lanka, Nepal and Thailand
debated
Weaving Ideas Integrating Business………
FOREIGN INVESTMENT IN INDIA
Foreign Investment in
India
Permitted Sector
Automatic Route
Approval Route
Investment up to the %
allowed in respective
sector
Approval of
prescribed Regulatory
Authority
Weaving Ideas Integrating Business………
Prohibited Sector
No investment is
allowed
COMPETENT AUTHORITIES
Competent
Authorities
RBI
FIPB
►
Reserve Bank of India
(RBI) - Central bank of
India
►
Regulates the exchange
control provisions
►
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DIPP
Controls the monetary
policy and the Indian
Banking system
Maintains cash reserves
and controls credit
operations in the
economy
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Foreign Investment
Promotion Board
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Government body that
offers a single window
clearance for proposals
on FDI under the
Government Route
Weaving Ideas Integrating Business………
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Department of Industrial
Policy and Promotion
(DIPP)
►
Government body that
formulates FDI Policy
and facilitates FDI,
formulates industrial
policy and strategies for
industrial development
►
Monitors industrial
growth and
performance of
industries
INDIA ENTRY STRATEGY
Entry Strategy
ENTRY
STRATEGY
Review the present group structure to determine
Based on the nature of activities, determine
►
Form of business presence
►
Applicable FDI regulations
►
Need for approval from the FIPB in respect of the FDI
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Need for structuring the Indian investment through an
intermediate jurisdiction
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Selection of an appropriate holding company which
can make the investments into India
►
Review of intermediate holding company jurisdictions
such as Mauritius, Netherlands and Singapore that
would provide tax efficiency
Evaluate structures from a commercial perspective to arrive at the preferred
structure for implementation
Weaving Ideas Integrating Business………
PROHIBITED SECTORS FOR FOREIGN INVESTMENTS
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Lottery Business including Government/ private lottery, online lotteries, etc.
Gambling and Betting including casinos etc.
Business of Chit funds
Nidhi company
Agricultural or plantation activities
Real estate business, or construction of farm houses
Except for Construction, Development Sector and Industrial parks
Trading in Transferable Development Rights
Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes
Sectors not open to private sector investment e.g. Atomic Energy and Railway
Transport (other than Mass Rapid Transport Systems).
Weaving Ideas Integrating Business………
MULTINATIONALS – DOING BUSINESS IN INDIA
Foreign Company
Operates as a foreign
company
Liaison
Office
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Project Office
Establishes an Limited
Liability Partnership
Branch
Office
Establishes an Indian
company
Joint Ventures
Wholly Owned
Subsidiary
Other forms of business
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Franchisee and distributor arrangements (no direct presence)
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Foreign technology collaborations (no direct presence)
Limited liability partnerships introduced in India, however, Foreign Investment Promotion Board approval
required for both greenfield as well as conversion
Weaving Ideas Integrating Business………
REGISTRATIONS / APPROVALS REQUIRED
Registration for
Incorporation
- Name Approval
- Certificate of
Incorporation
Factory License
- Approval of
Factories Act, 1948
- Other approvals
Import/Export
Registration
- IEC
- ICM
- RECMC
- EPCG
- SVB
Direct Tax
- PAN
- TAN
Weaving Ideas Integrating Business………
HR Registration
- PF Registration
- ESI Registration
- Min. Wages Act
- Registration under
Gratuity Act
Indirect Tax
- Service Tax
- CST
- VAT
- Excise Duty
TIMELINE FOR SETTING UP COMPANY
Process Flowchart – Incorporation of Company
Obtain Director
Identification Number for
proposed directors of
New Co
File particulars of
directors/ manager/
secretary in Form 32
with ROC
Pay Registration Fees to
ROC
Obtain Digital Signature
Certificate in name of
atleast one director of
New Co
File notice of situation of
registered office in Form
18
Obtain Certificate of
Incorporation of New Co
from ROC
Obtain Approval of name
for New Co
(Form 1A) from (ROC)
File online application for
incorporation of New Co
with ROC
(Form 1)
Arrange for drafting of
Memorandum and Article
of Association
Arrange for stamping of
Memorandum and Article
of Association and pay
necessary stamp duty
Time involved in formation
of a private limited
company is generally 4-6
weeks
Weaving Ideas Integrating Business………
PROCESS FOR SETTING UP LLP
Decide the Partners & Designated Partners for forming LLP
Obtain the Designated Partner Identification number and Digital Signature Certificate
Check Name availability for LLP and apply for name approval to ROC
Draft LLP Agreement
File incorporation documents with ROC
Obtain Certificate of Registration from ROC within 14 days of application
Time involved in formation of an LLP is around 2-3 weeks, however it may take additional 2-3 months where
FIPB approval is required to be obtained for FDI into LLP
Weaving Ideas Integrating Business………
WIDE
GAMUT
(ILLUSTRATIVE)
WIDE
GAMUTOF
OFTAXES
TAXES (ILLUSTRATIVE)
Gamut of Taxes in India
Direct tax
Indirect tax
Income tax
Customs duty
Corporate
Advisory
Wealth tax
Services
Dividend
Levies on
transactions
Securities
transaction tax
Sales tax/ Value
added tax
Distribution tax
Service tax
Minimum Alternate
Tax
Excise duty
Gift Tax
Octroi / Entry tax
R&D Cess
Weaving Ideas Integrating Business………
Stamp duty
RECENT FDI AMENDMENTS
Sector
Petroleum & Natural Gas
(Refining)
Commodity Exchanges
Power Exchanges
Asset Reconstruction
Company
Credit Information Companies
Existing Sectoral
Cap & Route
Revised Sectoral Cap & Route
49% - Approval Route
49% - Automatic Route
49% (FDI + FII) - Approval
Route
49% (FDI + FII) - Approval
Route
74% of paid-up capital of
ARC
(FDI+FII) (Approval
Route)
49% (FDI + FII) - Approval
Route
49% (FDI + FII) - Automatic Route
49% (FDI + FII) - Automatic Route
100% of paid-up capital of ARC
(FDI+FII)
Up to 49% Automatic Route
Beyond 49% - Approval Route
74 % (FDI + FII) - Automatic Route
Stock Exchanges and Clearing 49% (FDI + FII) - Approval 49% (FDI + FII) - Automatic Route
Route
corporations
74% - Approval Route
100%;
Telecom
Up to 49% - Automatic Route Beyond 49% - Approval Route
(Basic and Cellular Services
etc)
Courier Services
100% - Approval Route
26% - Approval Route
Defense
[Foreign Investment in State of
the Art Technology
Manufacturing]
100% - Automatic Route
Cabinet Committee on Security may approve proposals on
case to case basis beyond 26% which are likely to result in
access to modern and state of the art technology in the
country.
Weaving Ideas Integrating Business………