India Regulatory Brief: Easier Process for Company Incorporation in India and Anti-Dumping Duty Extended on Specific Products

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Government Eases Incorporation Services for Companies in India

The Ministry of Corporate Affairs (MCA) recently announced new rules that will simplify and speed up the process for incorporating companies in India. Currently, the incorporation process takes about four weeks.

The move is part of the Indian government’s ongoing efforts to improve the ease of doing business in the country through the automation and digitization of regulatory processes. The MCA thus launched the Simplified Proforma for Incorporating Company Electronically (SPICe) as part of the Companies (Incorporation) Fourth Amendment Rules, 2016. The new proforma (SPICE) has a standard format of e-Memorandum of Association and e-Articles of Association, both of which can now be filed as linked e-forms, except in the case of not-for-profit associations. Firms also now have the provision for incorporation with a pre-approved name.

The new rules for incorporation and related services came into effect on October 3, 2016. Further, the existing forms INC 29 and INC 7 are to get phased-out as SPICe becomes the sole format for incorporating a company in India. The INC 29 form is used to convert a public firm into a private one or vice-versa and the INC 7 form enables the submission of affidavits by directors concerned.

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India Extends Anti-Dumping Duty on Specific Products

On October 6, the Department of Revenue notified that the existing anti-dumping duty on ‘narrow woven fabrics hook’ and ‘loop velcro tapes’ will continue for another five years. The duty will be charged by the Central Board of Excise and Customs (CBEC) at the rate of US$ 1.87 per kilogram.

In the market, these products are variously called “hook and loop tape fasteners”, “Velcro tapes”, “fastening tapes”, and “fasteners”. They are used across an array of industrial segments, which include the manufacturing of garment, footwear, luggage and bags, toys, surgical and orthopedic apparatus, and automobile upholstery.

The final decision to extend imposition of the duty was based on the recommendations by the Directorate General of Anti-Dumping & Allied Duties (DGAD) after it conducted a second sunset review of the anti-dumping duty in place. The evaluation of the need to continue charging the duty was requested by Ishi Industries last year. Subsequently, the DGAD conducted its investigation to assess the impact of the imports on the domestic industry.

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Government Working on a Multi-Transhipment Law

A multi-transhipment law is currently in the works in coordination with the customs department (CBEC), the finance ministry, and the shipping ministry. If approved, the legal change will simplify logistics for importers and exporters alike by allowing for the free movement of goods by sea. It is another measure to create a business-friendly environment in India.

The initiative under deliberation seeks to permit the reloading of cargo on the same vessel, transfer of cargo from a larger to a smaller or different vessel, and subsequently, movement of the vessel through foreign territory. For instance, a cargo container from Dubai (UAE) could be reloaded in a port in Mumbai (India), which could then be shipped to Colombo (Sri Lanka). The proposed legal changes also make sense as India’s coast is shaped in such a manner that coastal goods pass through Sri Lankan territory. Furthermore, the changes in current shipping norms could boost exports from India. For instance, a foreign ship could see the addition of Indian goods when cargo is reloaded during a stopover at an Indian port before the ship eventually sets out to another country.

Finally, the proposed changes could ensure logistics by sea cargo are more cost-effective by removing the need to transfer cargo through railways or by road between different ports. All of these initiatives will necessarily require a comprehensive shipment tracking system to replace manual clearance. The respective ministries involved have acknowledged this requirement and state that the final draft law will incorporate a system of tracking shipment at each stage.

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