WORLD’s LOOKing at INDIA

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2. WORLD’s LOOKing at INDIA • “Congrats to @Narendra Modi and BJP,” “Look forward to working w/you/growing shared prosperity/security w/world’s largest democracy.” • - John F. Kerry, Secretary of State , US • “Congratulations Modi on achieving a great victory. expressed hope that India and Sri Lanka will work closely and further strengthen their strong ties.” • - Mahinda Rajapaksa , President , Sri Lanka • “Hope that Australia and India will work closely to further strengthen the bilateral relationship during Modi's stewardship of the Indian Government. Looking forward to meeting Mr. Modi during the upcoming G-20 summit to be held in Australia.” • - Tony Abbot, Prime Minister, Australia • “Congratulations Mr. Modi on emphatic electoral victory. Extended an invitation to Modi to visit UK on his way to the BRICS summit to be held in August, 2014 in Brazil.” • - David Cameron, Prime Minister, Britain Weaving Ideas Integrating Business………

3. INDIAN ECONOMY INDIAN ECONOMY • FDI equity Inflows (April, 2013 to March, 2014): US$ 24,299 million • World Bank sees 6.7 per cent GDP growth for India by 2015. • Top Investing Countries FDI Equity Inflows: Mauritius, Singapore, UK, Japan, USA, Netherlands and Cyprus (as on March 2013) • India is the third biggest economy in the world in terms of purchasing power parity (PPP) Weaving Ideas Integrating Business………

4. WHY INDIA WHY INDIA • World's largest democracy with 1.2 billion people. • Stable political environment and responsive administrative set up. • Land of abundant natural resources and diverse climatic conditions. • Investor friendly policies and incentive based schemes. • Total labour force of nearly 530 million. • Large pool of skilled manpower; strong knowledge base with significant English speaking population. • Huge untapped market potential. • The urban population of India will double from the 2001 census figure of 290 m to approximately 590 m by 2030 • Progressive simplification and rationalization of direct and indirect tax structures. • Reduction in import tariffs. • Full current account convertibility. • Robust banking and financial institutions. Weaving Ideas Integrating Business………

5. INCENTIVES Comprehensive incentives are provided by State & Central government. Indicative list of incentives: • Rebate on cost of land • Rebate on stamp duty on sale/ lease of land • Power tariff incentives • Concessional rate of interest on loans • Investments subsidies/ Tax incentives • Backward areas subsidies • Special incentive packages for mega projects • Duty free imports for SEZ units • Service tax and income tax exemption for SEZ units SEZ centric offering- Attractive fiscal concessions, Single window clearance, continuous supply of power at competitive rates, world class industrial and social infrastructure Weaving Ideas Integrating Business………

6. INTERNATIONAL ARRANGEMENTS Regional trade agreements : Double taxation avoidance agreements : • India has a Tax Treaty network with over 70 countries, which include USA, UK, Cyprus, European Union nations, Japan, Singapore, Australia, Turkey etc • In general, provisions of the domestic income-tax law or Tax Treaty, to the extent more beneficial may be applied by non-residents • Treaty shopping being heavily debated • India has entered into many agreements with Regional Countries, to facilitate greater trade between Countries • The Agreements principally provide for lower duties on imports upon satisfying the test of origin of goods • Significant among the Agreements are the SAFTA [between Pakistan, Sri Lanka, Maldives, Nepal, Bhutan and Bangladesh in operation since 1995] and India Singapore (Comprehensive Economic Cooperation Agreement – CECA) implemented and effective from August 2005 • Free Trade Agreements also exist with Sri-Lanka, Nepal and Thailand Weaving Ideas Integrating Business………

7. FOREIGN INVESTMENT IN INDIA Foreign Investment in India Prohibited Sector Permitted Sector Approval Route No investment is allowed Automatic Route Approval of prescribed Regulatory Authority Investment up to the % allowed in respective sector Weaving Ideas Integrating Business………

8. COMPETENT AUTHORITIES • Reserve Bank of India (RBI) - Central bank of India • Regulates the exchange control provisions • Controls the monetary policy and the Indian Banking system • Maintains cash reserves and controls credit operations in the economy • Department of Industrial Policy and Promotion (DIPP) • Government body that formulates FDI Policy and facilitates FDI, formulates industrial policy and strategies for industrial development • Monitors industrial growth and performance of industries • Foreign Investment Promotion Board • Government body that offers a single window clearance for proposals on FDI under the Government Route Weaving Ideas Integrating Business………

9. INDIA ENTRY STRATEGY ENTRY STRATEGY Entry Strategy • Review the present group structure to determine • Need for structuring the Indian investment through an intermediate jurisdiction • Selection of an appropriate holding company which can make the investments into India • Review of intermediate holding company jurisdictions such as Mauritius, Netherlands and Singapore that would provide tax efficiency • Based on the nature of activities, determine • Form of business presence • Applicable FDI regulations • Need for approval from the FIPB in respect of the FDI Evaluate structures from a commercial perspective to arrive at the preferred structure for implementation Weaving Ideas Integrating Business………

10. PROHIBITED SECTORS FOR FOREIGN INVESTMENTS • Lottery Business including Government/ private lottery, online lotteries, etc. • Gambling and Betting including casinos etc. • Business of Chit funds • Nidhi company • Agricultural or plantation activities • Real estate business, or construction of farm houses • Except for Construction, Development Sector and Industrial parks • Trading in Transferable Development Rights • Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes • Sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems). Weaving Ideas Integrating Business………

11. MULTINATIONALS – DOING BUSINESS IN INDIA Foreign Company Operates as a foreign company Establishes an Indian company Establishes an Limited Liability Partnership Wholly Owned Subsidiary Joint Ventures Liaison Office Branch Office Project Office • Other forms of business • Franchisee and distributor arrangements (no direct presence) • Foreign technology collaborations (no direct presence) • Limited liability partnerships introduced in India, however, Foreign Investment Promotion Board approval required for both greenfield as well as conversion Weaving Ideas Integrating Business………

12. REGISTRATIONS / APPROVALS REQUIRED HR Registration Import/Export Registration Registration for Incorporation • - Name Approval • Certificate of Incorporation • - PF Registration • ESI Registration • Min. Wages Act • Registration under Gratuity Act • IEC • ICM • RECMC • EPCG • SVB Factory License Indirect Tax Direct Tax • Service Tax • CST • VAT • Excise Duty • - PAN • TAN • - Approval of Factories Act, 1948 • Other approvals Weaving Ideas Integrating Business………

13. TIMELINE FOR SETTING UP COMPANY Process Flowchart – Incorporation of Company Obtain Director Identification Number for proposed directors of New Co File particulars of directors/ manager/ secretary in Form 32 with ROC Pay Registration Fees to ROC Obtain Digital Signature Certificate in name of atleast one director of New Co File notice of situation of registered office in Form 18 Obtain Certificate of Incorporation of New Co from ROC Obtain Approval of name for New Co (Form 1A) from (ROC) File online application for incorporation of New Co with ROC (Form 1) • Time involved in formation of a private limited company is generally 4-6 weeks Arrange for stamping of Memorandum and Article of Association and pay necessary stamp duty Arrange for drafting of Memorandum and Article of Association Weaving Ideas Integrating Business………

14. PROCESS FOR SETTING UP LLP Decide the Partners & Designated Partners for forming LLP Obtain the Designated Partner Identification number and Digital Signature Certificate Check Name availability for LLP and apply for name approval to ROC Draft LLP Agreement File incorporation documents with ROC Obtain Certificate of Registration from ROC within 14 days of application Time involved in formation of an LLP is around 2-3 weeks, however it may take additional 2-3 months where FIPB approval is required to be obtained for FDI into LLP Weaving Ideas Integrating Business………

15. WIDE GAMUT OF TAXES (ILLUSTRATIVE) WIDE GAMUT OF TAXES (ILLUSTRATIVE) Gamut of Taxes in India Direct tax Indirect tax Levies on transactions Income tax Customs duty Securities transaction tax Corporate Advisory Services Wealth tax Sales tax/ Value added tax Stamp duty Dividend Distribution tax Service tax Minimum Alternate Tax Excise duty Octroi / Entry tax Gift Tax R&D Cess Weaving Ideas Integrating Business………

16. RECENT FDI AMENDMENTS Weaving Ideas Integrating Business………