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India Continues Tax Dispute With Cyprus and Mauritius

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Op-Ed Commentary: Samuel Wrest

India has seemingly reached an impasse with both Cyprus and Mauritius over the re-negotiation of their respective double taxation avoidance agreements (DTAA). For the former, the disagreement relates to Cyprus’s status as a notified jurisdictional area (NJA) in India, whilst for the latter, it pertains to the update of their existing tax treaty.

India and Cyprus signed their DTAA in 1994, and the island nation has regularly been one of India’s greatest sources of FDI, ranking seventh overall in the world. However, India last year blacklisted Cyprus as a NJA; a power the Indian government reserves for territories who do not sufficiently share tax-related information. Consequently, transactions between Indian taxpayers and Cyprian residents are now subject to the transfer pricing provisions of the Indian Tax Law (ITL), which increases the withholding tax rate by 30% and greatly complicates the administrative process involved.

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Japan Infrastructure Deal to Unlock Further Opportunities in India

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Op-Ed Commentary: Samuel Wrest

Over the weekend, Narendra Modi made his first major state visit to Japan’s former imperial city of Kyoto for summit talks with Prime Minister Shinzo Abe. The subject of the two leaders’ meeting was multifarious and included discussion on the strengthening of security ties, nuclear energy cooperation and the easing of restrictions on exports. Perhaps most important, however, was Tokyo’s pledge to help directly fund projects to improve India’s infrastructure.

Over the next five years, Japan has promised it will invest approximately US$35 billion into several next-generation infrastructure projects in India, including public transportation and smart cities. India’s poor infrastructure is commonly identified as a factor hindering greater foreign direct investment (FDI). This has allowed other Asian countries with existing infrastructure, such as Singapore and Malaysia, to become the preferred destinations for certain types of FDI. Japan’s funding will certainly go some way towards ending this disadvantage, and will help steer India in the right direction to maximize its vast investment potential.

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Expert Commentary: Joint Ventures for Market Entry in India

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By Chris Devonshire-Ellis, Founding Partner, Dezan Shira & Associates

While many foreign companies choose to access the Indian market through direct and indirect export rather than by establishing a local business presence, developing a joint venture (JV) with an Indian partner can sometimes be both the most strategic and affordable option for market entry. Although entering into a JV with a domestic partner is required for foreign companies seeking to operate in sectors that do not permit 100 percent FDI, a growing number of JVs with Indian firms are being established for strategic market advantage rather than legal necessity.

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Reaching the Consumer Market in India

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DELHI – Determining the best route for market entry or expansion into India requires careful consideration of a wide variety of factors, including the intended scope of investment, nature of business activities, tax implications, and legal liability. Foreign companies should carefully weigh the advantages and drawbacks of each route to market, which can range from direct and indirect export to establishing a local business presence or acquiring an existing company in India.

While many foreign companies choose to rely on direct export and third-party distributors to sell their products and services, establishing a local business presence is oftentimes a prerequisite to long-term profitability and success.

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Securities and Exchange Board of India Granted More Powers to Protect Investors

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DELHI – On Tuesday, the Securities Laws (Amendment) Bill 2014 was passed by the Rajya Sabha, India’s upper house, after being passed by the Lok Sabha, the lower house, last week.

The bill is intended to give the country’s capital market regulator, the Securities and Exchange Board of India (SEBI), the power needed to crack down on fraudulent investment schemes and insider trading.

The Asian giant has recently been seeing a growing number of multi-level market schemes (effectively Ponzi schemes) disguised as Collective Investment Schemes (CIS).

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India’s Whiskey Brands Report Good Times Ahead for Industry

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DELHI – India’s thirst for whiskey continues to grow as its local firms charted some of the largest growths worldwide in 2013, according to a recent report.

Seven out of 10 of the fastest growing whisky brands in the world are Indian, Drinks International found in its annual Millionaire’s Club report, which looks at companies with at least one million in 9-liter case sales.

At the top, Radico Khaitan’s Crown whisky recorded a 75 percent growth in the last year, the highest in the world. It’s followed by Pernod Ricard’s Imperial Blue (40 percent), Allied Blenders & Distillers’ Officer’s Choice (31 percent) and United Spirits Ltd’s Haywards Fine (30 percent).

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India Forges Closer Regional Ties Amidst Growing Influence of China

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By Benedict Lynn

DELHI – On Sunday, during the first bilateral visit of an Indian Prime Minister to Nepal in 17 years, Navendra Modi also became the first foreign head of government to address the Himalayan nation’s parliament since 1990. In his 50-minute speech, the Indian Premier urged Nepal’s lawmakers to finish the country’s long delayed Constitution, and offered the impoverished nation a US$1 billion line of credit.

Since the signing of the 1950 Indo-Nepal Peace and Friendship treaty, both countries have shared an open border alongside special trade and security relations. Over time, however, leftist groups in Nepal grew uncomfortable with India’s involvement in the economy, culminating in a 10 year long Maoist insurgency that only ended in 2006.

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India Promotes Port Development as Cargo Traffic Increases

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Source: www.porttechnology.orgDELHI – India’s 12 major ports are expected to double their annual cargo handling capacity to 1,600 million tonnes (MT) within the next five years, according to Union Shipping Minister Nitin Gadkari. Initial projects to increase capacity by 350 MT will commence during this financial year.

India’s 12 major ports – Chennai, Cochin, Ennore, JNPT, Kandla, Kolkata (including Haldia), Marmugao, Mumbai, New Mangalore, Paradip, V O Chidamnarmar and Visakhapatnam – handled a combined cargo of 555.50 MT during the 2013-14 fiscal year, a slight increase of 1.78 percent from the 545.79 MT handled in 2012-13. This figure represents approximately two-thirds of the country’s total cargo traffic.

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