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India Market Watch: India to Get New National Design Policy and Clarification on Impact of New FDI Norms in Aviation

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New National Policy to Promote India as a Global Design Hub

The Department of Industrial Policy and Promotion (DIPP) will be drafting a new national design policy that will replace the current one from 2007. Complementing the Make in India program, the new policy will target the defense and electronics sectors. Financial incentives will be offered to convert new and innovative designs into mass market products.

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India’s New Twilight Law: 24/7 Operations for Retailers

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By Siddhartha Thyagarajan

India’s Union cabinet recently approved a bill that will allow several commercial establishments to operate for 24 hours a day. The Model Shops and Establishments (Regulation of Employment and Conditions of Service) Act 2016 will permit malls, shops, restaurants, banks, and cinema halls to operate on a 24/7 basis. The bill is to have a significant impact on India’s business climate, market dynamics, and employment rate.

The proposed Act will cover all premises and shops, with the exception of those covered under the Factories Act 1948. However,it should be noted that the Act is only advisory in nature. State governments can choose to accept or reject the Act and implement it accordingly. Thus, the impact on businesses will be determined by the respective state in which the business operates.

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City Spotlight: Investing in India’s Coimbatore

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By Dezan Shira & Associates
Editor: Kabir Narang

Coimbatore is a city located in the southern Indian state of Tamil Nadu. The highest revenue-yielding district after the state’s capital city, Chennai, its massive productive potential makes it one of India’s fastest growing metros. Coimbatore also enjoys the nickname ‘Manchester of South India’ as it is surrounded by cotton fields that feed into a flourishing textile industry. Yet, the city has a diversified economy, catering to the IT industry through a skilled labor pool and special economic zones (SEZs) that have attracted leading IT companies and technology service providers.

Additionally, Coimbatore is an important and renowned manufacturing center, producing specialized products intrinsic to the region, such as wet grinders. The city also produces auto components and manufactured the first diesel engine in the country. At least half of India’s motors and pumps come from the region lending it the name, the ‘Pump City’. Apart from being a major exporter of its manufactures, Coimbatore also exports jewelry, poultry, and software. Important trade associations such as the Coimbatore District Small Scale Industries Association (CODISSIA), Coimbatore Industrial Infrastructure Association (COINDIA), South India Textile Research Association (SITRA), and Coimbatore Jewelry Manufacturers’ Association (COJEWEL) regularly organize trade fairs and ensure their representative industries comply with the established standards.

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India Regulatory Brief: E-Commerce Sector Reacts to Draft GST Bill and Union Cabinet Approves New Mining Policy

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E-Commerce Sector Reacts to Draft GST Bill

The government released Draft Model Goods and Services Tax (GST) Laws on June 14 in an attempt to ensure clarity and gauge stakeholder supporter. Following this, new confusion has emerged with regards to the proposed bill’s impact on the e-commerce sector.

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The United Kingdom Chooses ‘Brexit’, Will it Hurt India?

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By Melissa Cyrill

The U.K.’s decision to withdraw from the European Union (EU) on June 23 caused heavy turmoil for financial markets worldwide and a currency freefall for the Pound Sterling. It also opened up a period of great uncertainty for those doing business with the UK and Europe. While global markets have since bounced back from the immediate panic reaction, questions linger about the exact impact Brexit will have on global investors and respective economies, including India.

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India Institutes More FDI Changes, Opening Most Sectors to Automatic Route

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By Dezan Shira & Associates
Editor: Tracie Frost

The Indian Government announced further liberalization of the foreign direct investment (FDI) regime, hoping to increase employment. The changes are the second round of reforms after significant modifications to the regime in November 2015. 

The reforms make FDI in most sectors available under the automatic approval route and continue the path to fully opening all sectors to foreign direct investment. Since 2014, India has made FDI reforms in defense, construction, single brand retail, manufacturing, aviation, communications, select agricultural segments, and the financial sector. The new amendments in FDI policy include increases in sectoral caps, bringing more activities under the automatic approval route, and easing the conditions for foreign investment.

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India Market Watch: 100 Percent FDI in Broadcast Services, Banking Support for Startups, and Stalemate in RCEP Negotiations

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100% FDI Now Allowed in Broadcast Carriage Services

New foreign direct investment (FDI) rules, as announced on June 20, will allow 100 percent foreign investment in the broadcast carriage services, benefiting direct-to-home (DTH) operators, cable networks, headend-in-the-sky (HITS) platforms, and mobile TV operators. More importantly, 100 percent FDI in this sector can now be secured via the automatic route – without seeking approval from the Foreign Investment Promotion Board (FIPB). Previously, the government had raised the FDI limit from 74 percent to 100 percent, but only 49 percent FDI was allowed through the automatic approval route.

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India-Australia Deal to Avoid Double Social Security Contribution

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By Siddhartha Thyagarajan

India and Australia recently signed a pact to avoid double social contribution, aimed to help businesses in both countries. Social security payments are a critical component of a company’s expenses. An employer often has to structure social contribution payments in a manner that ensures regulatory compliance, while also taking care of the company’s bottom line. The exercise of social contribution becomes more complex when employers have a presence in numerous countries and often depute employees from one country to another.

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