May 17 – In India, nine renowned investment entities have joined forces in order to launch the Indian Impact Investor Council (IIC), which is to act as a self-regulatory body for the practice of “impact investment” in India.
Impact investment is the practice of investing in areas and industries with the direct intent of generating a social return along with a financial return, or “impacting” the target investment location in a positive fashion. The topic of impact investment is set to be one of the key themes at this year’s G8 Summit, and is also a growing trend in funds all around the world.
In India’s case, the initiative for a self-regulatory body to deal with impact investing has roots in its previous experience with microfinance, an equally revolutionary form of social investment that began with Bangladeshi businessman and Nobel Laureate Mohammed Yunus. Microfinance, although a highly lauded industry, is widely believed to have resulted in reckless lending in some cases, and investors are determined not to let this happen to impact investing. Continue reading
May 14 – Looking to further break into the Indian market, Hilton Hotels has committed to expand its mid-market and luxury brands in the country.
Hilton, which already has established various hotels in India, recently acquired an additional number of properties on which it looks to open up and develop hotels for its luxury brand, Conrad, and its mid-market brands Doubletree and Hilton Garden Inn. Hilton is also looking to introduce its world-renowned Waldorf Astoria brand to India in the near future.
“We are on equal footing with our competitors both from the perspective of the number of hotels trading and the number of hotels that are actually going to come up in the next one or two years. By the end of this year, we expect 17 hotels to be trading, and we have the second largest pipeline of hotels in the Asia Pacific region with 21 hotels in various stages of construction,” said Guy Hutchinson, Hilton Worldwide’s Vice-President of India Operations. Continue reading
By Gunjan Sinha, Dezan Shira & Associates, Delhi Office
May 13 – India was one of the first countries in Asia to recognize the effectiveness of the export processing zone model in promoting exports, establishing Asia’s first processing zone in Kandla in 1965. More recently, the Indian government moved to increase India’s attractiveness as a foreign direct investment destination by announcing its Special Economic Zones (SEZs) Policy in April 2000, and then followed that up with the SEZ Act 2005 and SEZ Rules, which jointly came into effect on February 10, 2006. The new rules further simplified and streamlined the utilization of SEZs, paving the way for the popularity these zones now enjoy. Today, the SEZ is the predominant development zone type throughout India, and its goals include:
- Generating additional economic activity;
- Promoting exports of goods and services;
- Promoting investment from domestic and foreign sources;
- Creating employment opportunities; and
- Developing infrastructure facilities. Continue reading
May 10 – The new issue of Asia Briefing Magazine, titled An Introduction to Development Zones Across Asia, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the months of May and June.
The use of development zones in their different guises has been an effective model essentially brought to prominence by China over the past 25 years to help both foreign investors and domestic companies meet in a relationship that provides tax advantages to both. Development zones typically permit the foreign investor to bring component parts into a country for assembly without having to pay import duties. Investors may then add in locally-sourced components, assemble the final product, and warehouse it all duty free before then having the option of exporting the finished product (collecting some VAT rebates on the locally sourced portion) or entering the domestic market with a product assembled at local labor costs. Continue reading
May 7 – Kolkata, once India’s capital under the Raj and one of its most enigmatic cities, is getting a makeover of its most historic areas from Asian practices familiar with preserving ancient buildings. Formerly known as Calcutta, the city was once one of the world’s largest ports and a flagship of the British Empire. It saw its fortunes wane, however, after trade from what became Bangladesh dried up and the Chinese occupation of Tibet ceased to connect the city with Lhasa. Up until that time Kolkata had been the import and export hub for Tibetan products – neither Lhasa or Kolkata have ever recovered their previous trade and historical ties.
As a result, Kolkata’s once thriving China town, home to the largest number of Tibetans outside of Lhasa, is now a pale imitation of what it once was. Meanwhile, iconic areas such as College Street, which inspired poets such as Allen Ginsburg, have been left to decay over the past five decades. The area is also home to the famous Indian Coffee House, which now serves coffee for just Rs 8 to students and tourists, yet in the 1970’s was a meeting point for Maoist insurgents and Indian communists. This building will be receiving a makeover as well, reminiscent of the Café Leopold in Mumbai. Continue reading
May 6 – The proposal by United States (U.S.) President Barack Obama to make Michael Fromen the new U.S. Trade Representative indicates a policy shift in American thinking, both in terms of trade and politics. Fromen, a Harvard graduate and former classmate of Obama, is also the U.S. Government’s chair of the U.S.-India CEO Forum, and is considered an India expert. Although the appointment is yet to be confirmed, Fromen’s nomination suggests U.S. economic policy is shifting away from China as it seeks to boost trade and ties with India.
“India is about 15 years behind China in terms of development,” says Chris Devonshire-Ellis, Founding Partner of Dezan Shira & Associates. “It is sometimes perceived as being hampered by its slow pace of reform. Yet it should be remembered that this is partly due to it being democratic, and with an independent judiciary and rule of law. India can and does offer many routes into the huge Indian market in ways that China cannot.” Continue reading
By Sondre Ulvund Solstad
May. 3 – India will cut the tax rate on income earned by non-residents from investments in corporate and government debt. The cut is part of India’s Finance Bill which was passed by the lower house of the Indian parliament on Tuesday. Several other key changes were also announced during the session, including changes to tax on income from infrastructure bonds and loan agreements, tax residency procedures, and a clarification regarding the applicability of the wealth tax on agricultural land.
The tax cut will lower the withholding tax rate on interest earned by foreign investors on government securities and rupee-denominated corporate bonds from 20 percent to 5 percent. Taking effect from June 1, the cut will be in effect for two years. It is seen as part of Finance Minister Chidambaram’s efforts to reduce the current Indian account deficit in the short term and spur growth in the long term by increasing foreign investment. Continue reading
Madame Nurupama Rao, Indian Ambassador to the United States
May. 3 – Nirupama Rao, the Indian Ambassador to the United States, has said that while cooperation on bilateral issues between India and the United States (U.S.) remains on track, aspects such as technology and energy have become a focal point of the ties between the two countries.
“Technology is very much a driver in this relationship, especially high technology. I’m talking of strategic trade, trade concerning such areas as civil aviation, biotechnology, space sciences, nanotechnology,” Madame Rao said. “And all this I would argue should, if I have a wish list for the future, become infused with much greater dynamism than they have been in past. So we have to focus our efforts and intensify the work we need to do in these areas.” Continue reading