Professional Documents
Culture Documents
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Paras Kuhad & Associates
Doing Business in India
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Introduction
The geopolitical changes that have taken place around the
world in the last few years and the gradual changes in
India’s economic policies have led to a transformation in
the bilateral relationship between India and the US which
is best reflected in the vastly increased co-operation of the
two countries in political, strategic and economic spheres.
Indo-US co-operation in battling terrorism around the
world is well established, as is India’s commitment to
promote globalization and democracy, to alleviate poverty
both at home and abroad and to work closely with the US
to contain regionally focused armed tension and promote
global peace. Strategic co-operation between the two
countries is probably at an all time high with the much
debated Indo-US nuclear deal.
In the economic sphere, waves of economic reform that
swept through the Indian economy from 1991 onwards
brought a sea change in the economy as well as the
global perception of it. India started being perceived as
an attractive destination for investments. The India story
comes for an interesting telling and at this point the
world is witnessing a strong, fast-growing and vibrant
Indian economy, which is rapidly integrating with the
global economy.
Reasons that make India an
attractive investment destination
• India is the world’s largest democracy with a stable
political environment.
• India has an abundant English speaking, educated,
skilled human resource base which offers its services at
far cheaper rates than that may be found in any other
developing or developed country.
• India is world’s leader in global outsourcing with more
than 80% of the market.
• India has at this time a young population with roughly
80% of its population below 45 years of age.
• The India market is made more attractive by the fast
growing consumer-class that is markedly western in its
orientation
• With favourable foreign investment policies, tax
incentives and strong economic fundamentals, India
offers attractive returns to prospective investors.
India’s Industrial Policy
The Indian government has removed bureaucratic
controls on industry, under its liberalization policy.
However, licensing and restrictions still exist in the
following sectors:
• Two sectors reserved for public sector viz., Atomic Energy
and Railways
• Five Industries in which licensing is compulsory –
Distillation and brewing of alcoholic drinks
Industrial explosives
Hazardous chemicals
• Manufacture of items reserved for Small Scale Sector.
• Proposals attracting locational restrictions
Nanotechnology
• 100% FDI permitted without prior approval.
• 100% pass through tax incentive to VCFs and FVCIs
Manufacturing
• What is needed? Globalization in Indian manufacturing
capabilities by creation of dynamic manufacturing hubs in
India.
• India is also being seen as the global destination for R&D,
engineering design and prototype development and a
manufacturing hub for high technology products.
• expansion in core sectors in India such as –
– Steel
– Chemicals and petrochemicals
– Consumer durables
– IT hardware and telecom
– Transportation
Retail Trading
Outbound Tourism
• With the rise in living standards, India has become an
impressive source for outbound tourist traffic.
• Thomas Cook, Cox & Kings India Limited, Star Luxury
Cruises, Queen Mary II Cruise Liners etc have launched
full fledged operation in India
• The introduction of package tours to all five continents
by various travel agencies/companies has become very
popular over the past few years.
Other growth sectors
• Energy
• Infrastructure
• Non- Banking Financial Services
• Banking
• Real Estate
• Media/Broadcasting
• Telecommunication
Forms of enterprises in India
• Branch Office
• Customs Duty
• CENVAT (Excise Duty)
• Sales Tax
• Value Added Tax
• Service Tax
• Octroi Duty/Entry Tax
• Stamp Duty
• R&D Cess
• Works Contract Tax
Indirect Tax Contd…
• Turnover Tax
• Purchase Tax
• Secondary and Higher Education Cess