Indian Prime Minister Manmohan Singh flanked by Asian Development Bank President Takehiko Nakao and Finance Minister P. Chidambaram during the ADB 46th Annual Meeting of the Board of Governors at India Expo Centre and Mart, Greater Noida, Delhi

May 8 – During its Board of Governors meeting in Delhi last week, the Asian Development Bank (ADB) announced that it will provide a US$6 billion loan to India over the next three years. Furthermore, it will maintain its annual lending of US$10 billion over the next three years to its member states despite currently facing resource challenges and generating only low returns from its investments.

“Our idea is ADB will maintain its lending level to India, approximately $2 billion over next three years. We are now working on the country partnership strategy and we are planning to maintain the level of lending to India,” said ADB President Takehiko Nakao during the concluding day of the 46th annual meeting.

The ADB extended a US$2.4 billion loan to India last year across numerous sectors of the national economy, including the transport, energy, commerce, industry, trade and finance sectors. India is currently the largest borrower from the Manila-based multilateral lender. Continue Reading

By Manoj Kumar & Chris Devonshire-Ellis, Dezan Shira & Associates

May 7 – India is often perceived as an investment destination full of red tape and bureaucracy, yet in fact with some attention to detail, the legal and financial operational procedures can be relatively easily expressed – if you know what you are doing. As always, forearmed is forewarned, and any successful business should have its operational procedures laid down and working efficiently. Annual audit procedures help assess companies for purposes of taxable income, but they can also provide a working blueprint of the company which can help management evaluate company efficiencies and deficiencies.

In this article, we explain the procedures that a foreign-invested enterprise (FIEs) in India can expect to go through during the audit process, and outline some of the guidelines to prepare yourselves for the inevitable questions your auditors will have. Continue Reading

May 7 – Kolkata, once India’s capital under the Raj and one of its most enigmatic cities, is getting a makeover of its most historic areas from Asian practices familiar with preserving ancient buildings. Formerly known as Calcutta, the city was once one of the world’s largest ports and a flagship of the British Empire. It saw its fortunes wane, however, after trade from what became Bangladesh dried up and the Chinese occupation of Tibet ceased to connect the city with Lhasa. Up until that time Kolkata had been the import and export hub for Tibetan products – neither Lhasa or Kolkata have ever recovered their previous trade and historical ties.

As a result, Kolkata’s once thriving China town, home to the largest number of Tibetans outside of Lhasa, is now a pale imitation of what it once was. Meanwhile, iconic areas such as College Street, which inspired poets such as Allen Ginsburg, have been left to decay over the past five decades. The area is also home to the famous Indian Coffee House, which now serves coffee for just Rs 8 to students and tourists, yet in the 1970’s was a meeting point for Maoist insurgents and Indian communists. This building will be receiving a makeover as well, reminiscent of the Café Leopold in Mumbai. Continue Reading

May 6 – Delhi took the top spot this year in the recently released annual report from Martin Prosperity Institute measuring Global Creativity Index, called “Understanding the Creative Economy in India”.

Chandigarh, Punjab, Kerala, Goa, Mizoram, Andaman & Nicobar Islands, Puducherry and Maharashtra round out the top 9, while Haryana and Manipur tied for 10th.

The report measures India’s creativity levels throughout various regions with regard to Technology, Talent, and Tolerance (the “3Ts”).The 3Ts function as a leading indicator to measure regional potential for the 28 Indian states and 7 union territories. The report also presents both the component sub-indices of the Creativity Index and other related measures related to regional technology, talent, and tolerance. Continue Reading

May 6 – The proposal by United States (U.S.) President Barack Obama to make Michael Fromen the new U.S. Trade Representative indicates a policy shift in American thinking, both in terms of trade and politics. Fromen, a Harvard graduate and former classmate of Obama, is also the U.S. Government’s chair of the U.S.-India CEO Forum, and is considered an India expert. Although the appointment is yet to be confirmed, Fromen’s nomination suggests U.S. economic policy is shifting away from China as it seeks to boost trade and ties with India.

“India is about 15 years behind China in terms of development,” says Chris Devonshire-Ellis, Founding Partner of Dezan Shira & Associates. “It is sometimes perceived as being hampered by its slow pace of reform. Yet it should be remembered that this is partly due to it being democratic, and with an independent judiciary and rule of law. India can and does offer many routes into the huge Indian market in ways that China cannot.” Continue Reading

By Sondre Ulvund Solstad

May. 3 – India will cut the tax rate on income earned by non-residents from investments in corporate and government debt. The cut is part of India’s Finance Bill which was passed by the lower house of the Indian parliament on Tuesday. Several other key changes were also announced during the session, including changes to tax on income from infrastructure bonds and loan agreements, tax residency procedures, and a clarification regarding the applicability of the wealth tax on agricultural land.

The tax cut will lower the withholding tax rate on interest earned by foreign investors on government securities and rupee-denominated corporate bonds from 20 percent to 5 percent. Taking effect from June 1, the cut will be in effect for two years. It is seen as part of Finance Minister Chidambaram’s efforts to reduce the current Indian account deficit in the short term and spur growth in the long term by increasing foreign investment. Continue Reading

Madame Nurupama Rao, Indian Ambassador to the United States

May. 3 – Nirupama Rao, the Indian Ambassador to the United States, has said that while cooperation on bilateral issues between India and the United States (U.S.) remains on track, aspects such as technology and energy have become a focal point of the ties between the two countries.

“Technology is very much a driver in this relationship, especially high technology. I’m talking of strategic trade, trade concerning such areas as civil aviation, biotechnology, space sciences, nanotechnology,” Madame Rao said. “And all this I would argue should, if I have a wish list for the future, become infused with much greater dynamism than they have been in past. So we have to focus our efforts and intensify the work we need to do in these areas.” Continue Reading

May. 3 – Ikea has become the latest multinational corporation (MNC) retailer to plant its feet in the fast reforming Indian market. India’s Cabinet Committee on Economic Affairs cleared a 1.5 billion euro (US$2.4 billion) investment plan by Ikea on Thursday this week which formally paved the way for the Swedish retail giant to set up shop in Asia’s third-largest economy.

“Yes, [the Ikea investment] is cleared,” Information and Broadcasting Minister Manish Tewari said.

India’s Foreign Investment Promotion Board (FIPB), which clears foreign investment proposals in the country, gave its approval to Ikea’s investment proposal last February. However, given the significant investment amount, the proposal still needed the final approval of the federal government. Continue Reading