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

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

Jan. 10 – The Indian government has resolved to double the force of the Finance Ministry’s crucial foreign tax division which handles classified tax-related information between India, tax haven nations, and other countries.

The Ministry recently gave sanction for developing a new unit in the Foreign Tax and Tax Research (FTTR) division under the Central Board of Direct Taxes – which will be headed by a senior Income Tax Department officer and two under-secretary ranking officers. Continue Reading

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

Jan. 5 – The new issue of India Briefing Magazine – titled FDI and Manufacturing Electronics in India – is now available for complimentary download on the Asia Briefing Bookstore.

Two years ago, a conference of the State Industry Ministers put forth the goal to increase the contribution of the manufacturing sector to GDP from 16 percent to 25 percent.

The manufacturing sector’s contribution to India’s GDP is considered low when compared to other Asian economies (where manufacturing contributes closer to between 25 percent and 34 percent of GDP) and is seen as not fulfilling its potential. To remedy this, the recently released National Manufacturing Policy has set clear objectives to harness the sector for economic growth, including an emphasis on FDI and foreign technologies. Continue Reading

Jan. 5 – India has permitted overseas individual investors, pension funds, and trusts to directly invest in equities, in an effort to shore up investor confidence and attract money from overseas to bridge the widening current account deficit.

Procedures that enhance capital inflows are high on the government’s agenda as the international downturn led by the Euro Zone Crisis has led to investors pulling money out of Indian equities. For India, the problem has been compounded by a bend in investor confidence because of policy inaction leading to a sharp fall in new projects. Continue Reading

Dec. 22 – Asia Briefing takes a closer look at India’s top six cities (by GDP) in the newly released Indian city guides for Mumbai, New Delhi, Kolkata, Bangalore, Chennai and Hyderabad. These city guides are available for free download on the Asia Briefing bookstore.

1. Mumbai
GDP: US$209 billion

Mumbai is the most populous city in India and in the top five in the world. While the 2011 census estimated population at 12.4 million, external estimates suggest double that. Continue Reading

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