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Outsourcing BPO Services to India’s Lower-Tier Cities

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By Dezan Shira & Associates
Editor: Nishant Maddineni

With fierce competition for business process outsourcing (BPO) services from other Asian countries, state governments in India are increasingly looking to encourage companies to invest in rural BPO centers.

Outsourcing business processing services initially became popular for foreign businesses as a strategy to cut costs and improve organizational efficiency. With real estate prices and labor costs increasing in major Indian cities, numerous companies have taken up government initiatives to open BPO centers in rural areas.

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India’s FY 2015-16 Budget: Meaning and Implications for Foreign Investment

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By Chris Devonshire-EllisTarun Manik and Nishant Dixit
Dezan Shira & Associates

Although lacking the “big bang” that was speculated before its release, India’s budget for FY 2015-16 creates important opportunities for foreign investors through small but meaningful reforms. The budget was announced on 28th February, 2015, by India’s Finance Minister Arun Jaitley. It proposes a number of foreign investment and tax reforms with important consequences for investors including lower compliance costs, increased certainty in the tax regime, and an improved business environment.

The budget proposals seek to improve India’s business and investment environments by improving ease of doing business in the country. In February, the government launched an e-biz portal which integrates 14 regulatory permissions at one source. The finance minister said in the budget speech that he intends to appoint an expert committee to prepare a draft legislation which will expedite regulatory permissions.

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Setting up a Wholly Foreign-Owned Subsidiary Company in India

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By Dezan Shira & Associates

Under Indian law, foreign investors are able to establish wholly owned subsidiary companies (WOS) in the form of private limited companies if they operate in sectors that permit 100 percent foreign direct investment (FDI). With India’s recent loosening of FDI caps, companies are now also able to establish WOS in the telecom services and asset reconstruction sectors. Establishing a private limited company can be a lengthy and complicated process involving multiple steps.

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Using India’s Double Tax Agreements

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By Chris Devonshire-Ellis and Shilpa Goel
Dezan Shira & Associates 

India has taken a positive view when it comes to entering into Double Tax Agreements (DTA) with other nations – it now has over 90 such treaties, many of them recent.

DTAs are useful as they enshrine within a bilateral agreement the treatment of many forms of tax – including corporate income tax, individual income tax, withholding tax and dividends tax, amongst others. They are useful not just for companies that have a presence in both nations, but also for trading companies that do not have a permanent presence in India but services to an India-based entity. Such services are typically subject to withholding tax, but effective use of the applicable DTA can halve this burden.

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Navigating India’s Goods & Services Tax

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By Dezan Shira & Associates
Editor: Nishant Dixit

India has introduced a constitutional amendment bill to enable implementation of a national Goods and Services Tax (GST). The bill was tabled by Finance Minister Arun Jaitely in the Lok Sabha – the Lower House of India’s Parliament – on December 19, 2014, and the GST launch is now expected by April 2016.

The idea of replacing India’s current system of complex indirect taxes with a GST was initially mooted in 2000 by the government of Atal Bihari Vajpayee and then formally introduced by former Finance Minsiter P. Chidambaram in his 2007-08 budget speech. In this article, we analyze how the tax will be structured and implemented.

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State Spotlight: Investing in Telangana

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By Dezan Shira & Associates
Editor: Nishant Maddineni

Telangana_montage2Following its separation from Andhra Pradesh in June 2014, foreign firms have been closely examining Telangana’s suitability as a destination for foreign direct investment (FDI). With a population of 35,286,757 and a GDP of $53.9 billion, there is ample room in India’s newest state for exceptional growth.

Many foreign investors were apprehensive about the creation of Telangana. These observers worried whether the state’s government would be able to provide the political stability necessary for a favorable business environment. However,  a number of encouraging initiatives and policies have been implemented to increase business activity and foreign interest in Telangana.

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Using India’s Free Trade & Double Tax Agreements – New Issue of India Briefing Magazine

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Cover 250 x 350The newest issue of India Briefing magazine, titled “Using India’s Free Trade & Double Tax Agreements“, is out now and available as a complimentary download in the Asia Briefing Bookstore.

Contents
  • Navigating India’s Bilateral & Multilateral Free Trade Agreements
  • Using India’s Double Tax Agreements
  • Accessing India and ASEAN Through Singapore

With a reform minded, majority government in place for the first time in 25 years, resurgent trade flows, and improved bilateral relations, India is now perfectly positioned to start making waves in international investment. For too long now in the shadow of China, India’s young and affordable workforce are part of the underlying fundamentals that should project the nation forward over the next decade.

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Expect Labor Reforms at the State Level in 2015

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 By Adam Pitman, International Business Advisory Manager, Dezan Shira & Associates 

Foreign companies should begin preparing for labor reforms at the state level in the coming year. Following national labor reforms in November 2014, public and private interest groups have renewed calls for labor reforms in 2015.

Local media reports claim the federal government (known locally as “the center”) is interested in streamlining the country’s vast body of labor law into simplified categories. However, companies shouldn’t hold their breath.

The ruling Bharatiya Janata Party (BJP) has an expansive reform agenda; it is unlikely to expend any more political capital on contentious labor reforms. Instead, businesses should expect labor reforms at the state level. In most cases this will entail business-friendly policies for key industries, but foreign companies, especially those in labor-intensive industries, need to begin preparing for change.

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