Legal and Regulatory

Foreign Direct Investment in India’s Single and Multi-Brand Retail

New opportunities and developments lie in store for foreign retailers

By Chris Devonshire-Ellis and Ankit Shrivastava, Dezan Shira & Associates

Feb. 2 – As India has liberalized its single brand retail industry to permit 100 percent foreign investment, we take a look at the regulatory issues and legal structures pertinent to establishing operations in this new dynamic market. That India should be well on the radar for foreign retailers was recently supported by A.T. Kearney, whose 2011 Global Retail Development Index ranks the nation as fourth globally.

India’s retail industry is estimated to be worth approximately US$411.28 billion and is still growing, expected to reach US$804.06 billion in 2015. As part of the economic liberalization process set in place by the Industrial Policy of 1991, the Indian government has opened the retail sector to FDI slowly through a series of steps: Continue reading →

Posted in Business, FDI and Foreign Trade, Featured, Legal and Regulatory, Markets, Retail | Tagged Adidas, Carrefour, India Cold Storage, India Consumers, India FDI, India Multi-brand Retail, India Retail, India Single-brand Retail, India Supply Chains, Nike, Walmart | Leave a comment

Vodafone Wins Landmark US$2.5 Billion India Tax Case

New ruling will encourage India FDI and increase M&A activity

Jan. 31 – India’s Supreme Court has ruled that the British telecom giant Vodafone does not have to pay taxes and penalties for the transaction in 2007 that saw the company acquire a 67 percent stake in Indian mobile phone operator Hutchison Essar. The deal was for US$11.5 billion, and absolves Vodafone from a potential tax liability of US$2.5 billion.

The Supreme Court said that Indian tax officials do not have jurisdiction over a deal between two global companies, even if the assets involved in that deal are located in India. The ruling is expected to boost foreign investor confidence in India, and the M&A sector in particular. Continue reading →

Posted in Business, FDI and Foreign Trade, Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update | Tagged Hutchison Essar, India Legal, India M&A, India Tax, Vodafone | Leave a comment

India Further Liberalizes FDI Policy, Drops Mandatory Lock-In Period

Jan. 26 – The Indian government is loosening its foreign direct investment regulations and is now allowing foreign investors the opportunity to repatriate their original investment before the expiration of a three-year lock-in period from the day it completes its minimum capitalization norm for the sector.

While the Department of Industrial Policy and Promotion has expressed misgivings about the policy change, the government has contended that this restriction can be done away with if the investor offers an acceptable reason for not making the investment. Continue reading →

Posted in Business, FDI and Foreign Trade, Legal and Regulatory, Regulatory Update | Tagged FDI, India FDI Liberalization, India FDI Policy, India Regulatory | Leave a comment

Wholly Owned Subsidiaries in India

Jan. 13 – Foreign companies can set up wholly owned subsidiaries in sectors where 100 percent foreign direct investment is permitted under India’s national FDI policy. For registration and incorporation, a set of applications have to be filed with Registrar of Companies (ROC). Once a company has been duly registered and incorporated as an Indian company, it is subject to Indian laws and regulations as applicable to other domestic Indian companies. Continue reading →

Posted in Business, Legal and Regulatory | Leave a comment

India Allows 100% FDI in Single Brand Retail

Jan. 11 – The Indian government on Tuesday agreed to allow 100 percent foreign ownership in single brand retail stores, paving the way for international businesses such as Starbucks, Ikea and Adidas to operate independently in the country without having to involve local partners. Foreign single brand retailers were previously limited to 51 percent ownership.

Besides the entrance of new companies into the Indian market, the decision is also likely to result in several existing foreign players operating under tie-ups with Indian companies to convert their existing ventures into wholly-owned subsidiaries. Continue reading →

Posted in Business, FDI and Foreign Trade, Featured, Legal and Regulatory, Regulatory Update, Retail | Tagged India Multi-brand Retail, India Retail, India Single-brand Retail | Leave a comment

India and Macau Sign Double Taxation Avoidance Agreement

Jan. 6 – To aid tax and banking-related information exchange and prevent tax evasion, India signed a double taxation avoidance agreement (DTAA) with Macau on January 1. The agreement will also help to generate a better investment climate for Indian businesses in Macau – a special administrative region of the People’s Republic of China and well-known offshore financial center and tax haven.

Double taxation has been dubbed “one of the most visible obstacles to cross border investment,” leaving room for a significant amount of money to be saved under the almost 3,000 double taxation agreements across the globe. Continue reading →

Posted in FDI and Foreign Trade, Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update | Tagged India Double Taxation Avoidance Agreement, India DTA, India Macau, India Tax | Leave a comment

India to Loosen Restrictions on FDI into Broadcasting Services

Dec. 22 – The Government of India is planning to propose a hike in the maximum foreign direct investment (FDI) capital allowed in broadcasting services - such as direct-to-home (DTH) and cable TV – to a uniform portion of 74 percent.

The Finance Ministry has given its consent to a draft cabinet note which outlines the changes circulated by the Industry Ministry. In addition to DTH and cable TV, the initiative also aims to set FDI capital limit at 74 percent for mobile TV, an area of future growth. Continue reading →

Posted in FDI and Foreign Trade, IT & Telecom, Legal and Regulatory, Regulatory Update | Tagged India Broadcastng Services, India Cable TV, India Direct-to-home, India Foreign Direct Investment, India Head-end in the Sky, India Mobile TV | Leave a comment

Amended Rules for Unlisted Public Companies

Dec. 20 – The Central Government of India has recently made amendments to the list of rules for Unlisted Public Companies (known as the “Unlisted Public Companies Preferential Allotment [2011]”). These rules will come into effect on the date of their publication in the Official Gazette.

The previous list of rules [2003] (hereafter referred to as “said rules”) will have the following changes made. Continue reading →