By Shawn Greene
Nov. 21 – Navigating foreign investment in India can be daunting. The World Bank’s Doing Business 2014 report ranks India among the most difficult countries in which to start a business – 179th out of 189 countries analyzed. As such, foreign firms are highly recommended to hire a professional services firm to assist with setup and investment in the country.
For foreign institutional investors (FII) and firms considering foreign direct investment (FDI), a familiarity with India’s recent changes in FDI policy is critical. Below, important amendments made to India’s foreign investment policy in 2013 are summarized, and changes currently under discussion for 2014 explored.
Amendments made this year in Indian FDI policy impact a number of key business sectors, and in many instances eliminate the need for foreign investors to obtain approval from the Indian Government before investing. Additionally, policy changes in 2013 alter the legal definition of ‘control’ and regulations for single and multi-brand retail trading.
Sept. 30 – When applying for a long-term visa in India, there are a number of procedures and legal frameworks that must be understood. In this article, we discuss the documents necessary for a foreigner to work in India.
India provides two kinds of work-related visas: a business visa, also called a B visa, and an employment visa, also called an E visa. A multiple entry business visa can be granted for a period of up to five years, with the maximum allowable stay period per visit to be determined by the issuing Indian mission.
By Dezan Shira & Associates, Delhi Office
Sept. 17 – India is fast emerging as a global trade dynamo with its vast natural resources and huge supply of skilled labor. Undertaking considerable industrial deregulation and other structural reforms, regulators in India recognizes that strong exports are critical for overall economic growth and poverty reduction. As such, export-led growth has become a key driver of trade in India – one of the most important trailblazers in the recent enormous expansion of international trade.
Indian trade has grown exponentially over the past few years, with exports rising at a rate well above the pace of growth of worldwide exports. In this atmosphere, opportunities have never been greater, and starting a trading business in India has never been easier.
Sept. 16 – The new issue of Asia Briefing Magazine, titled Work Visa and Permit Procedures Across Asia, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the months of September and October.
Demand for skilled foreign nationals remains high across Asia, but when conducting business as a foreign national in a foreign country, it is important to be aware of the regulations governing foreign executives’ stay abroad. Employers with a physical presence in these markets must also understand the proper procedures for sponsoring a foreign worker.
The necessary documents required for a foreign national working in Asia vary country to country, but typically include a specific work visa, a work permit, and/or a residence permit. However, short-term visits for purposes of due diligence, quality control, or trade fairs, for example, may be covered through the issuance of business visas.
Aug. 28 – India’s Ministry of Finance has released a draft proposal with new rules governing the safe harbor policy for transfer pricing calculations. The draft proposal aims to simplify and codify the country’s transfer pricing scheme following a record increase in tax and audit disputes last year.
Transfer pricing is used when two affiliated companies exchange goods. It should be calculated using the arms-length principal, which states that the price charged should be equivalent to the price that would be charged by a third-party. Tax authorities pay special attention to transfer pricing as companies may undervalue the exchange of their products in order to avoid a larger tax bill, resulting in burdensome compliance procedures and tax disputes.
Under the safe harbor policy, income tax authorities will accept the transfer prices declared by associated entities operating in different tax jurisdictions.
Aug. 12 – India’s import and export system is governed by the Foreign Trade (Development & Regulation) Act of 1992 and India’s Export Import (EXIM) Policy. Imports and exports of all goods are free, except for the items regulated by the EXIM policy or any other law currently in force. Registration with regional licensing authority is a prerequisite for the import and export of goods. The customs will not allow for clearance of goods unless the importer has obtained an Import Export Code (IEC) from the regional authority.
The Indian Trade Classification (ITC)-Harmonized System (HS) classifies goods into three categories:
Includes holiday schedules for the rest of 2013
By Dezan Shira & Associates
Aug. 6 – India is a land of cultural diversity. It is one of the oldest civilizations in the world and is a complicated mixture of old and new traditions from the West and East. The vivacity of the large cities, the variety of people, the mêlée of sounds, the richness of colors and smells and the unpredictable nature of day-to-day life all defines India. If you are planning to do business with or in India, it is important to try and understand the astonishing richness of this vibrant culture.
Given how complex a country India is, it is important to not impart generic conclusions on how to do business there. Regionalism, industry, and people are all factors that need to be taken into account when doing business in India. Behavior, etiquette and approach may need to be modified depending on whom you are working with.
[Editor's note: this article was originally published on Aug. 5, 2013, but has been since updated to reflect recently passed amendments]
Aug. 15 – Foreign investors wishing to take advantage of development zones for export-related manufacturing and assembly, and obtaining tax incentives when doing so, may consider establishing a presence in one of India’s special economic zones (SEZs).
India first allowed SEZs after its passage of the Special Economic Zones Act, 2005 on 23 June 2005. The Act provides for the establishment, development and management of SEZs for the promotion of exports and related activities.
Basically, a SEZ is a geographical region designed to export goods and provide employment opportunities that is exempt from certain federal laws regarding taxes, quotas, FDI-bans and labor laws in order to competitively price goods made there. SEZs also include free trade zones, export processing zones, free zones, industrial parks or industrial estates, free economic zones and urban enterprise zones
Indian SEZs closely follow the successful Chinese SEZ model and, like China, foreign-invested businesses may be established in SEZs for the manufacturing of goods, the provisioning of services, and other activities including processing, assembling, trading, repairing and reconditioning.
India’s SEZ sectors are classified into four types:
- Special Economic Zones for Multiple Sectors
- Special Economic Zones for Specific Sectors
- Special Economic Zones for Free Trade and Warehousing
- Special Economic Zones for IT/ITES/Handicraft and Other Industries