May 31 –Representatives from leading Indian and Chinese businesses and establishments signed several progressive memorandums of understanding today on the sidelines of Indian President Pratibha Patil’s visit to Shanghai.
Chinese and Indian delegates from top companies and institutions like Aargus, GMR Energy, Infosys, SEPCO, Wipro, and Shanghai’s Fudan University were in attendance, among many others.
India’s Wipro Technologies, one of the largest IT related companies in the country, was able to sign an MoU with Chinese officials from the city of Changzhou, in Jiangsu Province. The Indian company will establish a hydraulic cylinder manufacturing center and an accompanying research and development facility in the east China city. Continue reading
May 28 – India’s largest real estate developer, Delhi Land and Finance (DLF), has reportedly reentered discussions with India’s commerce ministry regarding the possibility of restarting its plan for a special economic zone in Kolkata.
DLF scrapped four SEZ projects last June, including the one in Kolkata, when it was determined that there wasn’t sufficient demand for commercial space in the proposed areas. It seems like recent improvements in some sectors of the Indian economy have caused the company to reconsider its plans. The proposed 10.48 hectare tax-free area in Kolkata will target the IT and IT enabled-services sector. Continue reading
May 28 – A verdict recently passed by the Income Tax Appellate Tribunal (ITAT) in Mumbai stated that payments made to foreign entities for services rendered abroad can still be taxed in India if the deal can be linked back to the country.
“It is no longer necessary that, in order to attract taxability in India, the services be rendered in India,” the ITAT ruled. “As the law stands now, utilization of these services in India is enough to attract taxability in India.”
This ruling stems from the ITAT’s decision to tax US$1 million paid by India-based Ashapura Minechem to China Aluminum International Engineering Corp. (CAIEC) for the testing of bauxite – an aluminum ore. The services provided by CAIEC were rendered in China, but the ITAT decided that, since the deal had business ties to India and would be utilized by an Indian company, it should be taxable in India as well. Continue reading
May 27 – The Reserve Bank of India raised the rate under which banks can borrow from the central institution on Wednesday to 0.5 percent of deposits as it looks to create more liquidity in the market. This comes in anticipation of mid-June advance taxes and the more than US$20 billion in payments by telecom companies following the recent 3G spectrum auction.
The measures, which will be available from May 28 to July 2, were released via an emailed statement from the central bank on Wednesday and also confirmed that banks could seek to waive penalties accrued for not maintaining the minimum amount of securities under the Statutory Liquidity Ratio. Continue reading
May 26 – The Indian government will consider reversing changes made last year regarding the establishment of subsidiaries by 100% foreign owned non-banking finance companies (NBFCs).
Before the revisions made last year, wholly foreign owned NBFCs that brought in US$50 million in capital could launch subsidiaries at will for specific activities without having to bring in additional funds.
These regulations changed last year when the Indian government changed its FDI guidelines, taking away the subsidiary privileges given to these foreign owned NBFCs and requiring that established subsidiaries comply with new sector regulations, including a minimum capitalization. Continue reading
May 25 – India’s Commerce and Industry Ministry is likely to support a move to allow 100 percent foreign direct investment in multi-brand retail that could open the market further for multinational companies like Tesco and Wal-Mart.
The proposed paper will recommend strict domestic sourcing requirements and require investments in backward linkages with the official ruling on FDI caps to be finalized after more deliberation by authorities. “We are preparing the paper that will be placed for public debate in some time,” a senior official of the department of industrial policy and promotion told the Economic Times. Continue reading
May 24 – India’s trade pact with seven member countries of the Association of Southeast Asian Nations (ASEAN) will begin to take effect in August.
The India-ASEAN trade pact was signed last year but was initially only adopted by ASEAN members Singapore, Thailand and Malaysia in January. The other seven members of the group will apply the FTA in August to cut duties on relevant goods like machinery and steel. Continue reading
May 21 – The Indian government has announced plans to revamp its labor law to make it easier for both employees and employers to settle disputes.
This may mean that the new law will provide more avenues for resolving labor grievances out of court. Companies with a minimum of 20 employees may be required to have an in-house grievance redressal scheme that should settle disputes within 30 days that adds an extra management burden for small companies. Continue reading