Legal & Regulatory

India’s Import Policy: Procedures and Duties

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The following is an excerpt from the July 2014  edition of India Briefing Magazine, titled “Passage to India: Selling to India’s Consumer Market.

IB 2014 03 issue_illustration artIn India, the import and export of goods is governed by the Foreign Trade (Development & Regulation) Act, 1992 and India’s Export Import (EXIM) Policy. India’s Directorate General of Foreign Trade (DGFT) is the principal governing body responsible for all matters related to EXIM Policy, and new guidelines on Foreign Trade Policy (FTP) are expected to be released soon to replace previous FTP guidelines that expired in March 2014.

Importers are required to register with the DGFT to obtain an Importer Exporter Code Number (IEC) issued against their Permanent Account Number (PAN), before engaging in EXIM activities. After an IEC has been obtained, the source of items for import must be identified and declared. The Indian Trade Classification – Harmonized System (ITC-HS) allows for the free import of most goods without a special import license. Certain goods that fall under the following categories require special permission or licensing

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New Foreign Investment Proposal Checklist Released in India

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DELHI – India’s Department of Industrial Policy and Promotion (DIPP) has released a new document checklist for submitting proposals to the Foreign Investment Promotion Board (FIPB).

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Investors Push for Changes to India’s Companies Act 2013

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DELHI – As Narendra Modi takes charge as Prime Minister, Indian businesses and foreign investors are pushing for a review of several provisions in the Companies Act 2013.

Last year, the Companies Act 2013 replaced the Companies Act 1956, stipulating updated regulations for incorporation, responsibilities within a company and the dissolution process. The new 2013 version of the Companies Act (effective April 1, 2014) incorporates a number of changes including the introduction of new definitions, raising the number of members in a private company from 50 to 200 and modifications to the roles and standards that independent directors must maintain, among others.

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MoF Releases New Foreign Exchange Rate for Imported and Exported Goods

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India’s Ministry of Finance (MoF) has released new guidelines regarding the rate of foreign exchange for calculating customs duties on goods being imported and exported from the country.

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India Extends Excise Duty Cuts on Vehicles and Capital Goods

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DELHI – India’s Ministry of Finance (MoF) has officially extended existing duty concessions on several items including vehicles, capital goods and consumer durables to December 31, 2014.

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Key Aspects of India’s Corporate Social Responsibility Mandate Clarified

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DELHI – The Ministry of Corporate Affairs (MCA) released a new circular last Wednesday that clarifies certain aspects of India’s corporate social responsibility (CSR) mandate.

General Circular No. 21/2014 (dated June 18, 2014) clarifies a number of aspects of the CSR mandate, including specifying items that can be included under Schedule VII of the Companies Act and what can and cannot be considered a CSR expenditure.

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Liaison Office Applications Facing Stricter Application Rules

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DELHI – Foreign companies seeking to register liaison offices (LOs) in India have begun encountering difficulties in having LO applications approved.

Establishing a liaison office in India is often an attractive option for foreign companies seeking to establish a local business presence at low financial and legal risk. LOs are permitted to facilitate and promote a parent company’s business activities, and act as a communications channel between the foreign parent company and Indian companies. Unable to engage in commercial, trading, or industrial activities, liaison offices must be sustained by private, inward remittances received from their foreign parent company and are not subject to profits tax rates.

Recently, however, authorities have begun applying a stricter interpretation of the LO application rules which specifically prohibit LOs from engaging in any ‘commercial activities’ and possessing a ‘direct trading connection between the LO and the parent.’

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PAN Requirements for Foreign Nationals during Company Incorporation

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India’s Ministry of Corporate Affairs (MCA) has issued General Circular No. 16/2014 (dated June 10, 2014) to clarify the applicability of Permanent Account Number (PAN) requirements for foreign nationals when submitting an application for company incorporation. This follows the release of a similar circular, General Circular No. 12/2014, last month.

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