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Weaving Ideas Integrating Business………. “Congrats Modi and BJP,” “Look forward to working w/you/growing shared prosperity/security w/world’s.

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Presentation on theme: "Weaving Ideas Integrating Business………. “Congrats Modi and BJP,” “Look forward to working w/you/growing shared prosperity/security w/world’s."— Presentation transcript:

1 Weaving Ideas Integrating Business………

2 “Congrats 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………

3 INDIAN 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 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………

4  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. WHY INDIA Weaving Ideas Integrating Business………

5 INCENTIVES Comprehensive incentives are provided by State & Central government. Indicative list of incentives:  Rebate on cost of land  Rebate on stamp duty on sale/ lease of land  Power tariff incentives  Concessional rate of interest on loans  Investments subsidies/ Tax incentives  Backward areas subsidies  Special incentive packages for mega projects  Duty free imports for SEZ units  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………

6 INTERNATIONAL ARRANGEMENTS  India has a Tax Treaty network with over 70 countries, which include USA, UK, Cyprus, European Union nations, Japan, Singapore, Australia, Turkey etc  In general, provisions of the domestic income-tax law or Tax Treaty, to the extent more beneficial may be applied by non- residents  Treaty shopping being heavily debated  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 Double taxation avoidance agreements : Regional trade agreements : Weaving Ideas Integrating Business………

7 FOREIGN INVESTMENT IN INDIA Foreign Investment in India Permitted Sector Prohibited Sector Automatic Route Approval Route Investment up to the % allowed in respective sector Approval of prescribed Regulatory Authority No investment is allowed Weaving Ideas Integrating Business………

8 ► 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 ► Foreign Investment Promotion Board ► Government body that offers a single window clearance for proposals on FDI under the Government Route ► Reserve Bank of India (RBI) - Central bank of India ► Regulates the exchange control provisions ► Controls the monetary policy and the Indian Banking system ► Maintains cash reserves and controls credit operations in the economy COMPETENT AUTHORITIES Competent Authorities RBI FIPB DIPP Weaving Ideas Integrating Business………

9 Entry Strategy INDIA ENTRY STRATEGY Weaving Ideas Integrating Business……… ENTRY STRATEGY 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 Review the present group structure to determine ►Need for structuring the Indian investment through an intermediate jurisdiction ►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

10 PROHIBITED SECTORS FOR FOREIGN INVESTMENTS 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………

11 MULTINATIONALS – DOING BUSINESS IN INDIA Foreign Company Operates as a foreign company Establishes an Indian company Branch Office Branch Office Project Office Liaison Office Liaison Office Wholly Owned Subsidiary Wholly Owned Subsidiary Joint Ventures  Other forms of business  Franchisee and distributor arrangements (no direct presence)  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 Establishes an Limited Liability Partnership Weaving Ideas Integrating Business………

12 REGISTRATIONS / APPROVALS REQUIRED Registration for Incorporation Import/Export Registration HR Registration - Name Approval - Certificate of Incorporation - IEC - ICM - RECMC - EPCG - SVB - PF Registration - ESI Registration - Min. Wages Act - Registration under Gratuity Act Direct Tax Indirect Tax - PAN - TAN - Service Tax - CST - VAT - Excise Duty Factory License - Approval of Factories Act, Other approvals Weaving Ideas Integrating Business………

13 TIMELINE FOR SETTING UP COMPANY Process Flowchart – Incorporation of Company Obtain Director Identification Number for proposed directors of New Co Obtain Digital Signature Certificate in name of atleast one director of New Co Obtain Approval of name for New Co (Form 1A) from (ROC) Arrange for drafting of Memorandum and Article of Association Arrange for stamping of Memorandum and Article of Association and pay necessary stamp duty File online application for incorporation of New Co with ROC (Form 1) File notice of situation of registered office in Form 18 File particulars of directors/ manager/ secretary in Form 32 with ROC Pay Registration Fees to ROC Obtain Certificate of Incorporation of New Co from ROC Time involved in formation of a private limited company is generally 4-6 weeks

14 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………

15 Corporate Advisory Services WIDE GAMUT OF TAXES (ILLUSTRATIVE) Dividend Distribution tax Customs duty Sales tax/ Value added tax Service tax Excise duty Gamut of Taxes in India Octroi / Entry tax R&D Cess Indirect tax Gift Tax Minimum Alternate Tax Income tax Wealth tax Direct tax Securities transaction tax Stamp duty Levies on transactions Weaving Ideas Integrating Business……… WIDE GAMUT OF TAXES (ILLUSTRATIVE)

16 RECENT FDI AMENDMENTS Sector Existing Sectoral Cap & Route Revised Sectoral Cap & Route Petroleum & Natural Gas (Refining) 49% - Approval Route49% - Automatic Route Commodity Exchanges 49% (FDI + FII) - Approval Route 49% (FDI + FII) - Automatic Route Power Exchanges 49% (FDI + FII) - Approval Route 49% (FDI + FII) - Automatic Route Asset Reconstruction Company 74% of paid-up capital of ARC (FDI+FII) (Approval Route) 100% of paid-up capital of ARC (FDI+FII) Up to 49% Automatic Route Beyond 49% - Approval Route Credit Information Companies 49% (FDI + FII) - Approval Route 74 % (FDI + FII) - Automatic Route Stock Exchanges and Clearing corporations 49% (FDI + FII) - Approval Route 49% (FDI + FII) - Automatic Route Telecom (Basic and Cellular Services etc) 74% - Approval Route 100%; Up to 49% - Automatic Route Beyond 49% - Approval Route Courier Services 100% - Approval Route 100% - Automatic Route Defense [Foreign Investment in State of the Art Technology Manufacturing] 26% - Approval RouteCabinet 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………


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