Legal & Regulatory

GST Impact on the Flexi-Staffing Industry in India

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By Srinivas Raman

The introduction of the Goods and Services Tax (GST) regime has increased the demand for temporary jobs and organized flexi-staffing firms in India. The flexi-staffing industry in India is worth approximately US$280 billion (Rs 27,000 crores), and is expected to develop in a positive way due to the impact of GST.

How does the flexi-staffing model work in India?

Flexi-staffing or contract labor refers to an employment model where employees are hired by a staffing agency (contractor), and lent out to work at and under the supervision of a user company (principal employer). In such a model, the principal employer does not have any direct employment relationship with the flexi-employees, although they may be liable to fulfill certain limited legal obligations.

In India, the flexi-staffing industry employs more than two million workers in the organized sector – the majority of whom are aged 21-30 years. Most flexi-employees are employed in jobs such as data operations, accounts, sales, back end operations, administration, and marketing.

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Cryptocurrency in India: Usage and Regulation

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By Bradley Dunseith

Bitcoin India

 

Bitcoin trading in India peaked to over US$3.5 million this September, following a steady rise in domestic usage. While a monthly trading volume of US$3.5 million may seem insignificant in juxtaposition to global trends – the U.S. bitcoin trading volume for the same month exceeded US$36 million – the figure demonstrates India’s growing interest in cryptocurrency.

India’s financial institutions are digitizing at a time when nearly 40 percent of the country’s 1.3 billion population own smartphones. Indians, furthermore, are becoming skeptical of keeping the entirety of their savings in banks – a sentiment exacerbated by the recent demonetization of 86 percent of the country’s paper currency.

These trends all make India ripe for a spur in cryptocurrency usage, and trading. Looming government regulations, however, may turn this boom into bust.

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Shutting Down India’s Shell Companies – Government Continues Anti-Corruption Drive

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By Ramya Bodupalli

india against black money

 

Over the past two years, Prime Minister Modi’s government has introduced a slew of measures to prevent money laundering, counterfeiting, hoarding, and tax evasion – all popular modes of operating in the black economy. Ending these practices was, at least partly, responsible for two of the government’s flagship initiatives – GST and demonetization.

Relatedly, making the Aadhaar biometric identification number mandatory for banking transactions and filing returns, also aims to bring transparency in the Indian economy.

As part of this crusade, the government is now actively targeting shell companies.

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FCRA Compliance in India: How 24,000 NGOs Lost Their License

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By Melissa Cyrill & Adam Pitman

Earlier this month, the Ministry of Home Affairs (MHA) cancelled licenses for 4,800 non-governmental organizations (NGOs) in India. The NGOs had not filed annual returns between 2011 and 2015 in accordance with the Foreign Contribution Regulation Act, 2010 (FCRA).

The MHA said some cancellations occurred because the NGO was not required to report foreign contributions, as is the case for some higher education institutions. The majority, however, had simply failed to complete their returns.

Many businesspeople in India will find it difficult to sympathize with affected NGOs. The MHA warned the NGOs, granted a one-time exemption, and recently announced a one-month extension.

According to an MHA public notice in May 2017, NGOs that had not filed their annual returns between 2011 and 2015 could make good by reporting their financials between May and June 2017. After more than 4,800 NGOs lost their licenses for failure to comply in September, the MHA gave them another month until October 18, 2017 to comply.

In this context, the NGO sector’s ambivalence to financial reporting appears shocking. What is perhaps more shocking, however, is the sheer number of NGOs that have lost their license since Narendra Modi took office – over 24,000 and counting.

Many in the sector defend themselves as victims of compliance creep; the Modi government has culled nearly two-thirds of the 33,000 NGOs it inherited from its books.

Foreign observers struggle to interpret the situation. Does the NGO sector suffer from a culture of non-compliance? Are NGO regulations broken? Does the government have dubious interests?

In India, one might call this a khichdi, or mixture, of all of the above.

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India’s Bankruptcy Law Reinforced by Supreme Court Judgment

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By Srinivas Raman

India’s Supreme Court (SC) recently delivered its first detailed judgment pertaining to the interpretation of the Insolvency and Bankruptcy Code, 2016.

The most important takeaway from the SC judgment was its implications for the implementation of bankruptcy regulation in the country.

The Court clarified that the Insolvency and Bankruptcy Code (henceforth, Code) will supersede all other insolvency related laws in existence.

Additionally, the judgment highlights the importance of compliance with key provisions of the Code.

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Joint Ventures in India: Learning from McDonald’s Experience

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By Bradley Dunseith

Joint Venture India

A troubled relationship between McDonald’s and one of their Indian partners is spoiling the American corporation’s once impressive position in India’s food and beverage industry.

McDonald’s is set to close nearly 170 outlets in northern and eastern India; 43 outlets have already shut down in Delhi. Since September 2013, McDonald’s has engaged in drawn out legal battles with their partner for north and east India: Connaught Plaza Restaurants Private Limited (CPRL).

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Industrial Licensing: Norms and Policy

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By Vasundhara Rastogi

Industries India Regulation

 

The Industrial Development and Regulation Act (IDRA), 1951 provides a basic framework for the growth and development of industries in India.

The Act mandates every existing or new industrial undertaking to register itself with the federal government.

According to the law, an ‘industrial undertaking’ is a planned industry that is carried on in one or more factories owned by an individual or authority, including government.

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India’s FDI Policy for 2017: Startups and Single Brand Retail among Beneficiaries

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By Dezan Shira & Associates
 

India’s federal government released an updated and consolidated policy for foreign investors on August 28, relaxing old barriers and providing more regulatory clarity – with immediate effect.

Startups and single brand retail companies are among key beneficiaries of the changes in this year’s foreign direct investment (FDI) policy.

The new FDI policy also outlines procedures for foreign investors looking at sectors that were previously regulated by the now defunct Foreign Investment Promotion Board (FIPB).

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