1. April 14, 2010 New Delhi Doing Business with India Policy Framework & Opportunities Department of Industrial Policy & Promotion Ministry of Commerce and Industry Government of India

2. Indian Economy – GDP Growth

3. Indian Economy- Forecast

4. FDI Inflows – Recent Trends

5. India: Entry Options  By incorporating a company under Company’s Act 1956, in a joint venture or a Wholly Owned Subsidiary. Foreign equity in such a company will be as per choice of the investor, subject to FDI policy. (Concerned Authority: Registrar of Companies)  As an unincorporated entity as a foreign company through a Representative/Liason office, a Branch office or a Project office. (Approving Authority: Reserve Bank of India)

6. Industrial Policy NO LICENCE required for most activities Industrial Licensing limited to only 5 sectors (security, public health & safety considerations listed below) Cigars and cigarettes of tobacco Defence manufacturing Industrial explosives Hazardous chemicals Alcohol Large unit proposing to make items reserved (only 21 items) for small scale sector* will require Industrial licence. *Investment in plant and machinery upto Rupees 50 million (US$ 1.123 million)

7. FDI Policy & Procedure Automatic Route– No prior approval route. RBI, India’s Central Bank, is to be informed within 30 days of receiving remittances and also within 30 days issue of shares to non-residents. FIPB Route– Activities under restricted category require prior Government approval by Foreign Investment Promotion Board (FIPB). Activities requiring Government approval are indicated in a small negative list. Those activities not listed are treated under automatic route. FIPB generally conveys decision within 4 to 6 weeks. Activities Prohibited under FDI Policy – cigarette manufacturing, Multi- brand Retail Trade (single brand allowed upto 51%), Atomic Energy, Lottery, Gambling & betting, sectors reserved for public sector, agriculture (except specified activities), plantations (except tea plantation)

8. Extant FDI Policy – A Summary SECTORS UNDER AUTOMATIC ROUTE UPTO 100% FDI Most manufacturing activities Non-banking financial services Drugs and pharmaceuticals Food processing Electronic hardware Software development Film industry Advertising Hospitals Private oil refineries Pollution control and management Exploration and mining of minerals other than diamonds and precious stones Management consultancy Setting up/development of industrial parks/SEZ Petroleum Products Pipeline Wholesale Trading Mining of diamonds and precious stones Exploration and mining of coal and lignite for captive consumption INFRASTRUCTURE SECTORS UNDER AUTOMATIC ROUTE UPTO 100% FDI Electricity Generation (except Atomic energy) Electricity Transmission Electricity Distribution Mass Rapid Transport System Roads & Highways Toll Roads Vehicular Bridges Ports & Harbours Hotel & Tourism Townships, Housing, Built-up Infrastructure and Construction Development Project Greenfield Airports

9. Main Sectors with FDI Equity/ Route Limit FDI equity limit-Automatic route Insurance – 26% Domestic airlines – 49% Telecom services- Foreign equity 74% Private sector banks- 74% FDI requiring prior approval Defence production – 26% FM Broadcasting - foreign equity 20% News and current affairs- 26% Broadcasting- cable, DTH, up- linking – foreign equity 49% Tea plantation – 100% Development of airports- 100% Single brand retail – 51%

10. Technology Transfer Policy Royalty and Lump sum payments permitted Payments to foreign collaborator do not require Government approval No limit on the duration of payments A Wholly Owned Subsidiary or a JV of a foreign company can make payments to its parent company abroad for technology transfer Relevant regulation: Current Account Transaction under Foreign Exchange Management Act (FEMA)

11. India: Investment Outlook Second most attractive destination – (A.T. Kearney’s 2007, Foreign Direct Investment Confidence Index). Third most attractive investment destination among Transnational Corporations for FDI for 2009-11 (UNCTAD’s ‘World Investment Report, 2009).

12. Investment opportunities in Major Sectors

13. Investment Opportunities - Infrastructure India needs to invest heavily in infrastructure Investment requirement estimated at US$ 514 billion during 11 th Plan period ( 2007-12) Share of investment in infrastructure to increase from 5% of GDP to 9% by 2012 Major sectors are Power, Highways & Roads, Ports, Air transport / Airports

14. Investment Opportunities – Power FDI Policy – 100% foreign investment permitted under automatic route in Power Generation, Transmission & Distribution (other than atomic power) No limit on the project cost and quantum of FDI Tariff regulation through independent regulator at the central & state Government level Incentive - Income tax holiday for a block of 10 years in the first 15 years of operation Waiver of capital goods import duties on mega power projects (above 1000 MW) Investment Opportunity - Target to increase generation capacity up to 200,000 MW by 2012 from current level of 1,47,000 MW Estimated investment requirement is US$ 166 billion

15. Investment Opportunities – Roads & Highways Policy – 100% FDI is permitted under automatic route in all road development projects Incentive - 100% income tax exemption for a period of 10 years Government provides viability gap funding for road projects and developers are permitted to recover investment by way of collection of tolls Opportunity – Private Sector participation via both construction contracts and Build – Operate – Transfer (BOT) based on either toll or annuity basis Investment requirement is projected at US$ 78 billion till 2012 and one third of this requirement is expected to come from private sector

16. Investment Opportunities – Telecom Policy – 100% FDI permitted in the manufacture of telecom equipments Basic & Cellular mobile services have a foreign equity cap of 74% subject to licensing and security requirements Incentive – Exemption from basic custom duty is allowed on the import of specified infrastructure equipments to service provider Opportunities – India is adding almost 12- 14 million new cellular phone connections every month The total telecom subscriber base is expected to exceed 700 million by 2012 Rural areas in India offer big market for both land line as well as cellular phones as present penetration level is low

17. Investment Opportunities – Auto Sector Policy – 100% FDI permitted under automatic route in automobile and auto components manufacturing No licensing approval required for production of automobiles and import of component for assembly is freely permitted Incentive – No specific incentive for this sector, however central incentives are available for units set up in certain states and in backward areas as well as in Special Economic Zone Reduced basic custom duty available for new projects for import of capital equipments Opportunities - India’s automobile sector growing at double digit rate and India expected to emerge as small car manufacturing hub World’s largest two wheeler manufacturer is in India Indian auto component industry is well established and supplied to major OEMs in Europe & USA

18. Investment Opportunities – Food Processing Policy – 100% FDI under automatic route permitted in this sector No licensing approval required for setting up food processing unit Opportunities – An investment opportunity of US$ 22 billion exist in India for next 10 years India is the largest producer of milk and dairy products. It is also the second largest producer of rice, wheat, sugar, cotton, fruits and vegetables. Currently, only 5% of total production is processed The food processing industry is presently growing at 14 per cent against 6-7 per cent growth in 2003-04. The retail food sector in India is likely to grow from around US$ 70 billion in 2008 to US$ 150 billion by 2025

19. Other Important Sectors Ports and ship building sector Air ports and Air transport services Drugs & pharmaceuticals Real estate – Construction and development projects Investment Requirements of US$ 50 billion in 5 years Housing 20 million new units in 5 years Organized retail space 200 million sq ft by 2010 Hotels & Hospitality : 50,000 new rooms in 5 years Consumer durables and Fast Moving Consumer Goods

20. Welcome to India