India Regulatory Brief: New Bilateral Investment Treaty, Government Moves to Shorten Environmental Clearance Process
New Bilateral Investment Treaty to Prevent Arbitration in Certain Disputes
The Indian Finance Ministry has drafted a new bilateral investment protection treaty that will keep tax issues and the issuance of compulsory licenses for intellectual property rights. The new Bilateral Investment Treaty (BIT) is designed to protect foreign investments from unfair treatment and expropriation. However, preventing arbitration calls into doubt just how much additional investor protection will actually be provided.
Cairn Energy Plc. and Vodafone have recently sought arbitration on their tax disputes, so the new treaty changes may be a way for the government to gain leverage in tax disputes by handling them in local courts.
US Federal Aviation Authority (FAA) Upgrades Indian Aviation Safety Rating
Indian airlines like Air India and Jet Airways could increase the number of flights to the U.S. and other parts of the world after the FAA increased India’s aviation safety rating to Category 1 – the highest rating. In January 2014, the FAA downgraded India’s rating to Category 2 due to lack of safety oversight, but the Indian industry has since made improvements by recruiting more flight operation inspectors and streamlining some safety procedures.
Air travel in India has grown rapidly to both domestic and international destinations, but the biggest beneficiaries will be Air India and Jet Airways because they run the majority of international routes and can now form codeshare agreements with airlines in the U.S.
New Municipal Bond Rules to Make Infrastructure Funding Easier
The government has approved new rules that will make it easier for local governments to obtain funding for infrastructure projects. Under the new rules issued by the Securities and Exchange Board of India (SEBI), a corporation or municipality can now issue revenue bonds that can be publicly traded. Previously, municipal bonds were not tradable and available only to institutional investors.
SEBI has also announced new disclosure standards to improve the transparency of these investments. In order to issue municipal bonds, a corporation or municipality will need to have an investment grade credit rating and must contribute at least 20 percent of the project cost. In addition, municipal bond issuers must not have defaulted on a security or a loan in the previous year. These two measures should help prevent municipal bodies with weak corporate governance from spoiling the initiative.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Establishing Your Sourcing Platform in India
In this issue of India Briefing, we highlight the advantages India possesses as a sourcing option and explore the choices available to foreign companies seeking to create a sourcing presence here. In addition, we examine the relevant procurement, procedural and tax duty concerns involved in sourcing from India, and conclude by investigating the importance of supplier due diligence – a process that, if not conducted correctly, can often prove the undoing of a sourcing venture.
Taking Advantage of India’s FDI Reforms
In this edition of India Briefing Magazine, we explore important amendments to India’s foreign investment policy and outline various options for business establishment, including the creation of wholly owned subsidiaries in sectors that permit 100 percent foreign direct investment. We additionally explore several taxes that apply to wholly owned subsidiary companies, and provide an outlook for what investors can expect to see in India this year.
Passage to India: Selling to India’s Consumer Market
In this issue of India Briefing Magazine, we outline the fundamentals of India’s import policies and procedures, as well as provide an introduction to the essentials of engaging in direct and indirect export, acquiring an Indian company, selling to the government and establishing a local presence in the form of a liaison office, branch office, or wholly owned subsidiary. We conclude by taking a closer look at the strategic potential of joint ventures.