India Regulatory Brief: 9,000 NGO Licenses Revoked, Maharashtra to Make Starting a Business Easier
Government Crackdown on Foreign Funded NGOs
The Ministry of Home Affairs (MHA) recently revoked the licenses of nearly 9,000 non-governmental organizations (NGOs). The MHA revoked the licenses for non-compliance with Section 18 of the Foreign Contributions Regulation Act (FCRA), which stipulates that NGOs must declare financial contributions from abroad to the central government.
Prime Minister Indira Gandhi’s government implemented the FCRA in 1976 during the so-called ‘Emergency’ – which was associated with the suspension of democratic exercises and curbs on civil liberties – to limit the political influence of foreign funded organizations. In 2011, the Congress-led government overhauled the FCRA, increasing the MHA’s discretionary powers and the number of compliances for NGOs. The overhaul followed several high-profile protest campaigns supported by foreign funded NGOs against large-scale infrastructure projects.
The recent license revocations followed an October 2014 warning issued by the MHA to NGOs – only 229 of the 10,343 notified organizations eventually complied with the warning. US Ambassador to India Richard Verma has criticized the Indian government for its crackdown on foreign funded NGOs, while local observers have noted that the government’s regulations for NGOs are simply too complicated for many organizations. Prime Minister Narendra Modi’s government is administering laws enacted by previous governments; however, critics allege that Modi’s government has been more proactive in investigating and enforcing FCRA compliance.
Maharashtra to Make Starting a Business Easier
The Maharashtra state Industry Department announced that it will reduce the number of procedures needed to set up a business in the state. There are currently over 75 permissions required, but Minister of Industries Subhash Desai said that the state government plans to remove close to half of the approvals. In addition, the state government plans to reduce the number of departments involved in granting approvals, and the time required to grant approvals.
The Doing Business 2015 report by the World Bank Group ranked India at 142 out of 189 economies in terms of ease of doing business. The same study found that Mumbai fell behind South Asian averages for the number of procedures needed to start a business, and the amount of time these procedures take to complete. If the state government enacts the proposed reforms as promised, it will significantly improve Mumbai’s ease of doing business ranking.
Maharashtra Regulators Investigate Snapdeal
The Maharashtra Food and Drug Administration (FDA) is investigating the sale of emergency contraceptives, erectile dysfunction treatments, and other prescription drugs on Snapdeal, a major Indian online retailer. Snapdeal has over 25 million users and is valued at around US$ 1 billion.
The investigation began after the Maharashtra FDA filed a police complaint against Snapdeal’s CEO, directors and distributors. Maharashtra FDA commissioner Harshadeep Kamble said the company’s actions contravened the Drugs and Cosmetics Act, 1940, which can carry a jail term of up to five years and minimum fine of Rs. 100,000 (US$ 1,562.73).
In response to the police complaint, Snapdeal maintained that it isn’t responsible for what merchants sell on their website. There are more than 100,000 merchants on its platform, contributing to an online retail industry worth an estimated $23 billion. The Maharashtra FDA is also investigating other online retailers like Amazon and Flipkart, but hasn’t begun formal legal proceedings.
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 firstname.lastname@example.org 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.
An Introduction to Doing Business in India 2015 (Second Edition)
Doing Business in India 2015 is designed to introduce the fundamentals of investing in India. As such, this comprehensive guide is ideal not only for businesses looking to enter the Indian market, but also for companies who already have a presence here and want to keep up-to-date with the most recent and relevant policy changes. We discuss a range of pertinent issues for foreign businesses, including India’s most recent FDI caps and restrictions, the key taxes applicable to foreign companies, how to conduct a successful audit, and the procedures for obtaining an employment visa.
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 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 and the advantages they can provide companies at all stages of market entry and expansion.
An Introduction to India’s Audit Process In this issue of India Briefing Magazine, we provide readers with an overview of India’s annual audit process and offer important tips for the smooth navigation of the country’s audit regulations and accounting standards. We begin by first explaining the two most common types of audit in India, statutory and internal audits, and then outline the standard steps and procedures an Indian auditor will follow in each.
- Previous Article State by State: India and Minnesota Trade
- Next Article India Regulatory Brief: FDI Reform for B2C E-commerce Unlikely, New VNO License Proposed