Investing in India

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Investing in India, Practical Law Country Q&A 7-596-0585
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Investing in India
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by\u160\'3fShardul S Shroff, Rudra Kumar Pandey and Vishal Nijhawan,
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Shardul Amarchand Mangaldas & Co
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Country Q&A |
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Law stated as at 01-Jul-2020
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| India
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A Q&A guide to investing in India.
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This Q&A gives an overview of the key factors affecting inward investment,
including information on the jurisdiction\rquote s legal system; key laws and
regulatory authorities; investment restrictions; and details of international
treaties, customs and monetary unions. The guide also provides information on
investor individuals; visa permits; restrictions on foreign ownership; transfer
pricing and thin capitalisation rules; imports and import duties; safety
regulations and standards for commercial goods and services; structuring and tax
incentives; investment guarantees; recent developments and proposals for reform.
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To compare answers across multiple jurisdictions, visit the Investing in...
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This Q&A is part of the Investing in\u8230\'3fGlobal Guide. For a full list of
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The market
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Investor individuals
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Investment restrictions
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Imports
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Structuring and tax
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Incentives
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Investment guarantees
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Recent developments and proposals for reform
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Shardul S Shroff, Executive Chairman
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Rudra Kumar Pandey, Partner
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Vishal Nijhawan, Senior Associate
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The market
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1.
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How does your jurisdiction compare internationally as a destination for inward
investment?
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India is one of the top global destinations for foreign investment. The
International Monetary Fund (IMF) has acknowledged that the Indian economy
continues to be one of the fastest-growing economies in the world, despite the
global economic slowdown. According to the IMF\rquote s World Economic Outlook
Report in January 2020, India\rquote s growth is estimated to improve to 5.8% in
2020 (as compared to 4.8% in 2019) and is further expected to improve to 6.5% in
2021.
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There are various factors that have made India an attractive destination for
foreign investment, such as the market size, rapid market growth, investment
incentives, low labour cost, low raw material cost, physical infrastructure,
privatisation policy, trade policy, technology and transport cost and so on. The
\ldblquote Ease of Doing Business\rdblquote initiatives by the Government of India
(GoI) have also been instrumental in smoothing the pathways for obtaining the
required regulatory approvals and thereby facilitating the attraction of foreign
investors to India.
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There has been a steady inflow of foreign investment into India in the past few
years. According to statistics published by the Department for Promotion of
Industry and Internal Trade, Ministry of Commerce and Industry (DPIIT), foreign
direct investment (FDI) worth USD284 billion was received between the financial
years of 2014/15 to 2018/19. Furthermore, the total FDI inflow into India for the
2018/19 financial year was about USD62 billion (against USD60.97 billion for the
2017/18 financial year), which is the highest ever FDI inflow into India.
Statistics published by the DPIIT also show a total FDI inflow of USD21.31 billion
in the first quarter of the 2019/20 financial year (against USD16.86 billion for
the first quarter of the 2018/19 financial year).
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What types of companies are attracting foreign investment into your jurisdiction
and what are the most active sectors?
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India receives substantial foreign investment in various sectors and companies.
Highlights of the key sectors are provided below.
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Services sector
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The services sector (which includes financial, banking, insurance, non-financial or
business, outsourcing, research and development and so on) is presently the most
attractive space for foreign investment, comprising about 18% of the total foreign
investment inflow for the period from April 2000 to December 2019.
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FDI in this sector worth USD6.5 billion was received from April 2019 to December
2019 and FDI worth USD80.67 billion was received from April 2000 to December 2019.
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E-commerce sector
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The e-commerce sector has emerged as an exciting sector for foreign investors and
is projected to be worth about USD200 billion by 2026. The Indian e-retail market
is projected to keep growing strongly, registering a compound annual growth rate
(CAGR) of over 35% and reaching an estimated USD25.75 billion by the 2019/20
financial year.
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Foreign investment of up to 100% is permitted in business-to-business (B2B) e-
commerce activities and the marketplace model of e-commerce. In this sector, India
has received majority foreign investment in the marketplace model of e-commerce.
The GoI is also looking to introduce a comprehensive e-commerce policy to better
govern e-commerce.
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In February 2019, the DPIIT issued the draft National E-commerce Policy (E-commerce
Policy), seeking comments from the stakeholders.
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The DPIIT has now finalised the draft E-commerce Policy is expected to issue it
soon.
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Infrastructure sector
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The infrastructure sector is also one of the most attractive sectors for foreign
investment. This includes dams, bridges, power, roads and urban infrastructure
development. FDI worth USD326 million was received in the construction development
sector (which includes townships, housing, built-up infrastructure and construction
development projects) from April 2019 to December 2019 and a total FDI of USD25.37
billion was received in this sector from April 2000 to December 2019.
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India requires an investment of about INR50 trillion (USD777.73 billion) in the
infrastructure sector by 2022 to have sustainable development in the country.
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Automobile sector
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The automobile sector is yet another sector which offers investment opportunities
to foreign investors. India became the fourth-largest automobile market in 2018.
India received FDI worth USD2.5 billion in the automobile sector from April 2019 to
December 2019 and total FDI worth USD23.89 billion from April 2000 to December
2019.
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It is expected that India will become a leader in shared mobility by 2030 and
provide opportunities for electric and autonomous vehicles. This sector is expected
to grow at a CAGR of 3.05% between 2016 and 2026 and is expected to reach a value
of between USD251.4 billion and USD282.8 billion by 2026.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, many foreign investors have either already commenced their operations
or have announced their plans to manufacture electric vehicles in India.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The GoI is also supporting the growth of this sector and has taken various
initiatives in this regard, such as:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0 {\fi-360 \li {\*\pn \pnlvlblt \ilvl0 \ls1
\pnindent0 \pnf1 {\f2 \pntxtb \u8226\'3f}}{\listtext \b0 \cf1 \f2 \ri0 \i0 \qj
\fs20 \li480 \u8226\'3f\tab }\ls1 {\pntext }
{\pard }\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Tax reductions on electric vehicles.
\par {\pntext }
}
}
}
}{\fi-360 \li {\*\pn \pnlvlblt \ilvl0 \ls2 \pnindent0 \pnf1 {\f2 \pntxtb
\u8226\'3f}}{\listtext \b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480 \u8226\'3f\tab }\ls2
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Implementation of a Scheme for Faster Adoption and Manufacturing of Electric
Vehicles in India Phase II (FAME II) with effect from 1 April 2019 for a period of
three years. FAME II has made an allocation of INR100 billion to be disbursed in
the next three financial years.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Shortlisting 11 cities for introducing electric vehicles to their public transport
system.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Plans to set up incubation centres for start-ups working in the automobile sector.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Renewable energy
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Renewable energy is also one of the most attractive sectors for foreign investment.
Foreign investment worth USD9.10 billion has been received in the non-conventional
energy sector between April 2000 and December 2019. It is expected that investments
worth USD500 billion will be received in this sector by 2028.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Other sectors
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Other sectors, such as computer software and hardware, telecommunications,
construction development, trading, drugs and pharmaceuticals and chemicals (other
than fertilisers) also saw substantial foreign investment from April 2000 to
December 2019.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
3.
}
}
What will be the main factors affecting the market and how do you expect the market
to develop?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Various factors are expected to affect the Indian market. Specifically, the 2019
novel coronavirus disease (COVID-19) pandemic has impacted business adversely both
in India and across the globe. COVID-19 has led to the shutting down of many
businesses, loss of revenue, loss of employment and so on.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
However, the GoI and various state governments have taken steps to minimise the
impact of COVID-19 on the Indian economy, such as:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Providing a six-month moratorium on all term loans outstanding on 1 March 2020 and
on working capital facilities.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Providing relaxed implementation of the various compliance requirements for
companies under various laws.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Providing time limit extensions under various tax laws.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
It is expected that these steps will provide some relief to companies and others
impacted by the pandemic.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, according to forecasts from the IMF, while the global economy is
expected to see the worst financial crisis on record, India is one of the few
countries expected to show a positive growth rate (the highest growth rate among
the G20 economies).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The GoI has sought to address the issues faced by foreign investors in India
relating to starting a new business, obtaining the requisite licences, approvals
and permits, the permissible limits of foreign investment and the relevant
conditions attached (among other things).
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
World Bank Doing Business ranking
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
One of the main factors expected to affect foreign investment in India is the World
Bank\rquote s Doing Business ranking. In its
}
{\b0 \cf1 \f2 \i1 \fs20
Doing Business Report 2020
}
}
, India ranked 63 out of 190 economies, which is an improvement of 14 ranks over
its performance last year (where India ranked 77). In this report, the World Bank
highlighted improvements made by India in various areas over the past year. Key
improvements include:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Making it easier to start a business, by abolishing the filing fee for the company
incorporation form, electronic memorandum of association and articles of
association (articles).
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Improved infrastructure permitting for key Indian cities. For example, Delhi has
streamlined the process, reduced the time and cost of obtaining construction
permits, and improved quality control for buildings by strengthening professional
certification requirements. Mumbai has streamlined the process of obtaining a
building permit and made it faster and less expensive to get a construction permit.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Making it easier to trade across borders, by enabling post-clearance audits,
integrating trade stakeholders in a single electronic platform, upgrading port
infrastructures, and enhancing the electronic submission of documents.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Helping to resolve insolvencies by promoting reorganisation proceedings in
practice.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Implementation of the Insolvency and Bankruptcy Code 2016 (Insolvency Code)
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Insolvency Code provides an effective legal framework for timely resolution of
insolvency and bankruptcy matters, with several foreign acquirers and bidders
participating in the insolvency resolution process. The GoI is also considering
amending the Insolvency Code to address the issue of cross-border insolvency. Such
amendments are expected to increase the predictability and certainty of the
insolvency process, which will be useful for foreign investors.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Recently, the Union Cabinet approved a proposal from the Ministry of Corporate
Affairs (MCA) to give relief to companies from insolvency for a period of six
months from 25 March 2020 by amending the Insolvency Code. Such period may be
further extended by another six months. During such time period, the creditors or
lenders will not be permitted to file a fresh case for insolvency. This decision
has been taken to ensure that fresh insolvency cases are not filed by creditors or
lenders against companies which are already facing hardship due to COVID-19.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Liberalisation of FDI Policy
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The liberalisation of India\rquote s FDI policy includes the following recent
initiatives.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Relaxation of local sourcing requirements for single brand retail trading.
}
}
The local sourcing requirements for single brand retail trading (SBRT) were
recently relaxed under the Consolidated FDI Policy 2017 (FDI Policy). For proposals
involving foreign investment beyond 51%, sourcing of 30% of the value of goods
procured, should be done from India. In terms of the relaxations:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480 {\fi-360 \li {\*\pn \pnlvlblt \ilvl0
\ls13 \pnindent480 \pnf1 {\f2 \pntxtb \u8226\'3f}}{\listtext \b0 \cf1 \f2 \ri0
\i0 \qj \fs20 \li960 \u8226\'3f\tab }\ls13 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
all procurements made from India by the SBRT entity for that single brand can be
counted towards local sourcing, irrespective of whether the goods procured are sold
in India or exported, this will apply even beyond the initial five years;
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
the SBRT entity is now permitted to set-off sourcing of goods from India for global
operations against the mandatory sourcing requirement of 30%;
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
the SBRT entity is now permitted to undertake retail trading through e-commerce
prior to the opening of brick and mortar stores, subject to specified conditions;
and
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
the SBRT entity is now permitted to undertake sourcing of goods from India for
global operations, either by itself or through its group companies (resident or
non-resident), or indirectly by them through a third party under a legally tenable
agreement.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Foreign investment in digital media.
}
}
Foreign investment of up to 26% under the government route is now permitted for
uploading or streaming of news and current affairs through digital media.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Foreign investment in contract manufacturing.
}
}
The FDI Policy permits 100% foreign investment in the manufacturing sector under
the automatic route. It has now been clarified that manufacturing activities can be
either self-manufacturing by the investee entity or contract manufacturing in India
through a legally tenable contract, whether on a principal to principal or
principal to agent basis.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Single window clearance for foreign investors.
}
}
A single window system has been proposed to assist foreign investors in obtaining
all necessary regulatory approvals and clearances in India.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Relationship manager for foreign investors.
}
}
A designated relationship manager has been proposed for foreign investors
investing at least USD500 million in India. The relationship manager will
facilitate the foreign investor in obtaining all relevant approvals and clearances.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Simplified process for incorporating a company.
}
}
The MCA recently simplified the process for incorporating a new company in India.
Under the new incorporation process, an applicant will be able to apply for
multiple services through one application only. Services would include (among other
things):
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
the incorporation of the new company;
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
specified taxation related registrations for the new company;
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
specified labour and employment-related registrations for the new company; and
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
opening a bank account for the new company.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
This new process is expected to reduce the time and cost of incorporating a new
company and obtaining the necessary registrations.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
}
\u160\'3f
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs28 \li0
Legal system
\par
}
}
\u160\'3f
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
4.
}
}
What are the constitutional arrangements and legal system.
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Government system
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Constitution of India (Constitution) provides for a Parliamentary form of
government which is federal in structure (the Constitution declares India as a
\ldblquote Union of States\rdblquote ) with certain unitary features and specifies
the distribution of powers between the GoI and the Government of the States.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The constitutional head of the executive of the Union of India is the President.
The Constitution provides that there must be a Council of Ministers (headed by the
Prime Minister) to aid and advise the President, who will exercise his or her
functions in accordance with such advice.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Parliament is the supreme legislative body of India. It comprises of the Rajya
Sabha (Council of States) and the Lok Sabha (House of the People).
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Legal system
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Indian judiciary is partly a continuation of the British legal system
established by the British in the mid-19th century, based on a typical hybrid legal
system known as the \ldblquote common law system\rdblquote . This system comprises
of, and relies on, components of law, such as legislation, customs and precedents
in the judicial determination of matters.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Constitution is the supreme legal document of the country.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The judicial structure is as follows:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The Supreme Court of India is the highest court of the Indian judicial system.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
This is followed by the High Courts (currently there are 25 High Courts at the
state level) with certain states and union territories sharing a High Court with
others.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
This is followed by the district courts which are established by the State
Governments in India for every district, or for more than one district, taking into
account the number of cases, and the population distribution in that district.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
This is followed by Magistrates of Second Class and Civil Judges (Junior Division)
at the bottom.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In addition, village courts, called Lok Adalat (people\rquote s court) or Nyaya
Panchayat (justice of the five; a system of local self-governance wherein the
members of a village elect five persons from among themselves to dispense justice)
comprise a system of alternative dispute resolution.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, a number of judicial tribunals have been set up in specialised areas,
which function under the supervisory jurisdiction of the High Court (depending on
their location).
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
5.
}
}
What are the key laws and regulatory authorities governing foreign investment in
your jurisdiction?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Key laws governing foreign investment
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The key laws that govern foreign investment in India are the:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
FDI Policy, issued by the DPIIT.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Foreign Exchange Management Act 1999 (FEMA) and the rules and regulations issued
thereunder, specifically, the Foreign Exchange Management (Non-debt Instruments)
Rules 2019 (NDI Rules).
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Ministry of Finance (MOF) issued new NDI Rules on 17 October 2019. The new NDI
Rules replace the Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident outside India) Regulations 2017 and the Foreign Exchange Management
(Acquisition and Transfer of Immovable Property in India) Regulations 2018
(Immovable Property Regulations). While the Immovable Property Regulations have
been included in the NDI Rules, they remain unchanged in substance.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The NDI Rules govern investments in India by non-residents investors, non-resident
Indians (NRI) and overseas citizens of India. The NDI rules prescribe (among other
things):
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The conditions attached to foreign investments in India.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The pricing guidelines for foreign investments, acquisitions and transfers of
immovable property in India, downstream investments, the repatriation of sale
proceeds and so on.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, the Reserve Bank of India (RBI) issued the Foreign Exchange Management
(Mode of Payment and Reporting of Non-Debt Instruments) Regulations 2019, which
sets out the mode of payment and attendant conditions for investment in India by a
person resident outside India.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Key regulatory authorities governing foreign investment
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The key regulatory authorities governing foreign investment in India are as
follows:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
DPIIT.
}
}
This formulates India\rquote s FDI Policy and issues press notes to amend the FDI
Policy.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
RBI.
}
}
This issues circulars, notifications and regulations under FEMA.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
MOF.
}
}
This issued the NDI Rules and is now the notifying authority for any changes to
the FDI Policy.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
6.
}
}
Is your jurisdiction a member of any international treaty organisations and/or
economic, customs or monetary unions or free-trade areas?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India is a member of, or has been involved in negotiations with, the following
international treaty organisations and/or economic, customs or monetary unions or
free-trade areas:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
India-World Trade Organization (WTO).
}
}
India is party to multiple agreements with WTO member countries, such as the
General Agreement on Trade in Services and the Agreement on Trade Related Aspects
of Intellectual Property Rights.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
ASEAN-India Free Trade Area (AFTA).
}
}
India signed a free-trade agreement (FTA) in services and investments with the
Association of Southeast Asian Nations (ASEAN) in November 2014. ASEAN countries
comprise Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,
Singapore, Thailand and Vietnam. These FTAs are intended to allow for the freer
movement of professionals and to encourage investment. India signed an FTA in goods
with the ASEAN in 2009.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Regional Comprehensive Economic Partnership (RCEP) negotiations between ASEAN and
six partner countries.
}
}
RCEP is a 16-member grouping of ten ASEAN countries (Brunei Darussalam, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and
Vietnam) and six ASEAN FTA partners (Australia, China, India, Japan, South Korea
and New Zealand) that have FTAs with it. The 16 RCEP participating countries
account for almost one-half of the world\rquote s population. They contribute about
30% of global GDP and more than 25% of world exports.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
India-SAFTA.
}
}
The South Asian FTA agreement was entered into by the countries of Afghanistan,
Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. The SAFTA
provides for trade liberalisation on a preferential basis in trade in goods.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
India-SAARC agreement on Trade in Services (SATIS).
}
}
India entered into the SATIS with other South Asian countries namely, Afghanistan,
Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. The SATIS provides for
liberalising and promoting trade in services.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
India-Mercosur Preferential Trade Agreement (India Mercosur PTA).
}
}
This agreement was entered into between Argentina, Brazil, Paraguay and Uruguay
(collectively, states parties to the MERCOSUR) and India.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Asia Pacific Trade Agreement (APTA).
}
}
This is a preferential trade agreement entered into between India, Bangladesh,
China, South Korea and Sri Lanka.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Framework agreement with the Gulf Co-operation Council (GCC) states.
}
}
This is a framework agreement for economic co-operation entered into between India
and members of the GCC (consisting of the governments of the United Arab Emirates,
the Kingdom of Bahrain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the
State of Qatar and the State of Kuwait).
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In addition, India has FTAs, comprehensive economic co-operation agreements and
comprehensive economic partnership agreements with several countries such as:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Singapore.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Malaysia.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Japan.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
South Korea.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
7.
}
}
What other international agreements apply to foreign investment?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
To encourage capital inflow and provide a safe business environment for all
investments abroad, many countries have entered into bilateral investment treaties
(BITs) or agreements with India. These BITs contain reciprocal protections for the
purposes of encouraging, promoting and protecting investments in each other\rquote
s territories by the companies based in either country (or state). Recently, India
terminated some of its BITs and is trying to renegotiate them in light of its new
Model BIT. In 2016, the first BIT based on the provisions of the model text was
signed between India and Cambodia. The GoI recently approved the signing and
ratification of a BIT between India and Belarus on 27 September 2017.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India also has a vast network of double taxation avoidance agreements (DTAAs)
signed with more than 95 countries. Additionally, India has entered into bilateral
investment protection agreements to promote and protect the interests of investors
of either country in the territory of the other country. To facilitate the
effective exchange of information, India has also been signing tax information
exchange agreements with several countries. In 2017, India also entered into the
Organisation for Economic Co-operation and Development (OECD) Multilateral
Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and
Profit Sharing 2017 (MLI).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India has concluded multiple BITs with various countries. These BITs contain
reciprocal protections for the purposes of encouraging, promoting and protecting
investments in each other\rquote s territories by the companies based in either
country (or state). In 2016-17, India terminated several of these BITs, and has
been engaged in re-negotiating them in light of its new Model BIT. Recently, the
Department of Economic Affairs (DEA) notified that BITs with Jordan, Brunei,
Myanmar and Mozambique have also been terminated effective 21 March 2020. (As per
the website of the UN Conference on Trade and Development, it appears that the BIT
with Bahrain was also terminated as of 4 December 2017. However, the DEA website
still says it is in force).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Among the older BITs, India\rquote s BITs with only the following countries remain
in force:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Libya.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Serbia.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Sudan.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Syria.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Senegal.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Latvia.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Bangladesh.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Lithuania.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Recently, India has signed investment protection treaties with the following
countries:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
India-Brazil Investment Corporation Facilitation Treaty (signed January 2020).
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Indian-Kyrgyz Republic BIT (signed 14 June 2019).
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
India-Belarus BIT (signed September 2018).
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
These, however, are not yet in force and in some cases the text of the BIT is not
available on the public domain.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Based on information available in the public domain, we understand that India is
currently negotiating BITs (based on the 2015 Model BIT) with Iran, Switzerland,
Morocco, Kuwait, Ukraine, UAE, San Merino, Hong Kong, Israel, Mauritius and Oman.
\par
}
}
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
}
\u160\'3f
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs28 \li0
Investor individuals
\par
}
}
\u160\'3f
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
8.
}
}
Are there any visas, permits or other requirements for foreign individuals entering
your jurisdiction for business purposes?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Visa requirements
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \i0 \fs20
Foreign nationals.
}
}
Under Indian law, the legal rights and the restrictions imposed on foreign
nationals depend on whether they are categorised as residents or non-residents.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Entry into India generally requires a valid visa granted by an Indian Mission (that
is, consulate of the Indian embassy) abroad. Furthermore, foreign nationals who
enter India must register themselves with the Foreign Regional Registration Office
(FRRO) within 14 days of arrival if they intend to reside in India for a
consecutive period of more than 180 days.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The entry, stay and exit of foreign nationals into India are primarily governed by
the following laws (among others):
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Passport (Entry into India) Act 1920, read with the Passport (Entry into India)
Rules 1950.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Foreigners Act 1946.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Registration of Foreigners Act 1939, read with the Registration of Foreigners Rules
1992.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \i0 \fs20
Business visa.
}
}
Foreign nationals who intend to undertake the following activities (among others)
will need to apply for a business visa:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Establish an industrial or business venture, or explore the possibilities for
setting up an industrial or business venture, other than proprietorship firms and
partnership firms.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Purchase or sell industrial products, commercial products or consumer durables.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Attend technical meetings or discussions, board meetings or general meetings for
the purpose of providing business services support.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Make a visit of a short duration in connection with an ongoing project with the
objective of monitoring the progress of the work, conducting meetings with Indian
customers and/or to provide technical guidance.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
When applying for a business visa, the applicant will need to provide proof of
financial standing and expertise in the field of the intended business.
Furthermore, foreign nationals should not be visiting India for the business of
money lending or for running a petty business or petty trade or for full time
employment in India.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
A business visa with multiple entry facilities allows a visitor to enter India more
than once during the validity period of the visa. It can be granted for a period of
five years for nationals of most countries. For citizens of the US, Canada, Japan,
UK or South Africa, a business visa may be granted for a period of ten years.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \i0 \fs20
E-visa.
}
}
The GoI permits foreign nationals visiting India from 169 countries to apply for
an e-visa specified in this regard. An e-visa for business purposes (that is, for
all activities permitted under normal business visa) is valid for a period up to
one year with multiple entries.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \i0 \fs20
Overseas Citizen of India (OCI) cardholder.
}
}
Indian law recognises a distinct category of persons called \ldblquote OCI
cardholders\rdblquote . A foreign national is eligible to register as an OCI
cardholder if any of the following factors apply to such person:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
He or she was a citizen of India on or at any time after 26 January 1950.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
He or she was eligible to become a citizen of India on 26 January 1950.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
He or she belonged to a territory that became part of India after 15 August 1947.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
He or she is a child, grandchild or a great-grandchild of any such citizen referred
to above.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
He or she is a minor child of any of the persons referred to above.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
He or she is a minor child, either or both of whose parents are citizens of India.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
He or she is a spouse of foreign origin of a citizen of India or spouse of foreign
origin of an OCI cardholder (subject to specified conditions).
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Under the NDI Rules, an OCI is permitted to invest in India. If the OCI cardholder
intends to visit India in relation to his or her business activities, the OCI
cardholder may apply for a visa. An OCI cardholder is entitled to a multiple entry,
multi-purpose lifelong visa to visit India.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \i0 \fs20
Project visa.
}
}
This visa is granted to foreign nationals coming to India for execution of
projects in the power and steel sectors, subject to certain specified conditions.
This visa is granted initially for a period of one year or for the actual duration
of the project or contract (whichever is shorter), with multiple-entry facility.
Project visas are issued only to skilled or highly skilled persons. A foreign
national who has been granted a project visa will not be allowed to be engaged in
another project whether with the same company or a different company.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Permanent Account Number (PAN) for foreign residents
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Any person (whether resident in India or abroad), who is taxable in India, must
obtain a PAN from the Indian income tax authority. Furthermore, all directors,
chief executive officers, principal officers, partners and so on of any Indian tax
resident (that is, any Indian company, partnership, trust and so on), including any
person competent to act on behalf of such Indian tax resident must obtain a PAN. A
PAN is also required for opening a bank account in India and for investing in
securities, shares and mutual funds in India.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
9.
}
}
Are there any visa waivers or fast-track procedures available for foreign
individuals entering your jurisdiction as investors?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
As of 16 March 2020, India has entered into bilateral agreements with more than 107
countries to waive visa requirements (some of which are yet to be enforced). Most
of these agreements exempt only diplomatic, official or service passport holders
from the requirement to obtain a visa.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Nationals of Nepal and Bhutan do not require a visa to enter India. However,
citizens of these two countries require a visa when entering India from China.
Citizens of the Maldives visiting India for a short period of up to 90 days are
exempt from the requirement to obtain a visa (as a special case), provided such
citizens hold valid passports issued by or on behalf of the government of Maldives.
Such visa-free entry is allowed for tourism purposes only.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
International travellers from 169 countries can take advantage of the e-visa
facility if the sole purpose of their visit is:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Recreation.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Sight-seeing.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Casual visit to meet friends or relatives.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Attending a short-term yoga programme.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Attending short-term courses on local languages, music, dance, arts and crafts,
cooking, medicine and so on.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Voluntary work of a short duration (for a maximum period of one month, which does
not involve any monetary payment or consideration of any kind in return).
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Medical treatment including treatment under the Indian system of medicine.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Business visit.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Attendant to e-Medical visa holder.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Attending a conference, seminar or workshop organised by a Ministry or Department
of the Government of India, State Governments or Union Territory Administrations
and so on, and their subordinate or related organisations and Public Sector
Undertakings and private conferences organised by private persons, companies or
organisations.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
A Japanese and a South Korean national is eligible for visa-on-arrival if he or she
is visiting India for business, tourism, conference or medical purposes. This
facility is available for double-entry for a period of 60 days from the date of
arrival. However, this facility will not be available to a Japanese and South
Korean citizen if such person or either of his or her parents or grandparents
(paternal or maternal) was born in or was permanently resident in Pakistan. This
facility is also not available to holders of diplomatic or official passports and
UN Passport holders with Japanese or South Korean nationality.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
10.
}
}
What are the circumstances under which an individual becomes liable to pay tax in
your jurisdiction? Can individuals be liable for tax on foreign-source income?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
An individual qualifies as a tax resident of India if the person meets the physical
presence test, which means they must either (subject to further exceptions or
amplifications in certain circumstances):
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Have been present in India during the relevant tax year, for a period of 182 days
or more.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Have been present in India during the four years preceding the relevant tax year,
in aggregate, for a period of 365 days or more, and be present in India for a
period of 60 days or more in the relevant tax year.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Resident individuals are liable to income tax in India on their global income. Non-
resident individuals are subject to income tax in India only on income, which is
received or is deemed to be received in India, or accrues or is deemed to accrue in
India.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
}
\u160\'3f
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs28 \li0
Investment restrictions
\par
}
}
\u160\'3f
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
11.
}
}
Are there any restrictions on foreign ownership and investment in specific industry
sectors? Do any formalities, permit or notification requirements apply?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Foreign investment can be routed into India in one of the following two ways:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Automatic route.
}
}
Under this route, foreign investment is allowed without prior approval from the
RBI or the GOI in relation to all activities or sectors up to thresholds specified
in the NDI Rules.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Government route.
}
}
Under this route, prior GOI approval is required for investment by a person
resident outside India. Foreign investment received under this route should be in
accordance with the conditions stipulated by the government in its approval. For
example, foreign investment:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
beyond 49% in the defence sector wherever it is likely to result in access to
modern technology or for other reasons to be recorded. Such foreign investment is
also subject to security clearance and guidelines of the Ministry of Defence;
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
of up to 26% in print media sector (publishing of newspaper and periodicals dealing
with news and current affairs, publication of Indian editions of foreign magazines
dealing with news and current affairs);
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
of up to 49% in private security agencies;
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
beyond 49% in telecom services sector (other than foreign investment in \ldblquote
other service providers\rdblquote , where foreign investment up to 100% under the
automatic route). Such foreign investment is subject to the licensing and security
conditions as specified from time to time by the Department of Telecom, Ministry of
Communications;
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
of up to 51% in the multi-brand retail trading sector. Such foreign investment is
subject to certain restrictions and conditions as specified in the NDI Rules,
including minimum foreign investment required to be brought in; and
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
beyond 74% in brownfield pharmaceuticals sector. Such foreign investment is subject
to certain restrictions and conditions as specified in the NDI Rules, including
restrictions on the incorporation of non-compete clauses in the relevant investment
agreements.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Foreign investment into certain sectors in India is also subject to certain
prescribed performance conditions (such as in the case of multi-brand retail,
construction development and so on).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Foreign investment in India is prohibited for the following sectors or activities:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Lottery businesses, including government or private lotteries and online lotteries.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Gambling and betting, including casinos.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Chit funds.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Nidhi companies.
\par {\pntext }
}
}
}
{\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Trading in transferable development rights.
\par {\pntext }
}
}
}
\u8226\'3f}}{\listtext \b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
\u8226\'3f\tab }\ls100 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Real estate business or the construction of farm houses.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls101 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of
tobacco substitutes.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls102 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Activities or sectors that are not open to private sector investment, such as
atomic energy and railway operations.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls103 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Foreign technology collaboration in any form, including licensing for franchises,
trade marks and brand names. Management contracts are also prohibited for lottery
businesses and gambling and betting activities.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
12.
}
}
Does the government retain and exercise control over certain industry sectors? If
so how?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The GoI retains and exercises control over certain industry sectors. Control is
retained and exercised through sector-specific restrictions on foreign investments
in sensitive sectors (such as defence and media). Furthermore, specific sectoral
regulators, including the RBI, SEBI, Insurance Regulatory Authority of India
(IRDA), and so on are also empowered to issue guidelines and notifications
governing the relevant sector.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In certain sectors, prior government approval is required for making foreign
investment in India. In certain sectors, foreign investment can be made only up to
the prescribed threshold(s) (either under automatic or government route) (
}
{\b0 \cf1 \f2 \i1 \fs20
see
}
Question 11
}}}
}
). Certain sectors are not open to private investment (such as in relation to
atomic energy and railway operations).
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
13.
}
}
Are there restrictions on foreign ownership or occupation of real estate? Do any
formalities, permit or notification requirements apply?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
There are certain restrictions on foreign ownership or occupation of real estate in
India (according to the provisions of FEMA, read with the NDI Rules):
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
NRIs or OCIs can acquire immovable property in India (other than an agricultural
land or farm houses or plantation property), subject to specified conditions.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls105 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Non-residents (who are neither an NRI or an OCI), who are spouses of NRIs or OCIs,
can acquire one immovable property (provided this is not agricultural land or farm
house or plantation property), jointly with their NRI or OCI spouse, subject to
specified conditions.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls106 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Non-residents who have established a branch, office or other place of business in
India for the purpose of any activity carrying on in India, excluding a liaison
office, can acquire any immovable property in India necessary to perform such
activity, subject to specified conditions.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls107 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
No person from Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Hong
Kong, Macau, Nepal, Bhutan or North Korea can acquire immovable property, other
than on lease for up to five years, without the prior approval of the RBI.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls108 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
A foreign embassy or diplomat or consulate general can purchase or sell immovable
property in India (other than agricultural land, plantation property or farmland),
subject to specified conditions.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls109 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Citizens of Afghanistan, Bangladesh or Pakistan who belong to minority communities
in those countries (namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians)
who reside in India and have been granted a long-term visa by the GoI can purchase
only one residential immovable property in India as a dwelling unit for self-
occupation and only one immovable property for the purpose of carrying out self-
employment, subject to specified conditions.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls110 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal,
Bhutan, Hong Kong or Macau or North Korea require prior permission from the RBI in
order to acquire or transfer immovable property in India, other than a lease not
exceeding five years. However, this prohibition does not apply to OCIs.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, foreign investment is not permitted for entities engaged in, or
proposing to engage in, real estate business (that is, dealing in land and
immovable property with a view to earning profit from them), the construction of
farm houses and trading in transferable development rights in India.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
However, foreign investment of up to 100% under the automatic route, subject to
certain conditions, is permitted in relation to construction or development
projects, which includes development of townships, construction of residential or
commercial premises, roads or bridges, hotels, resorts, hospitals, educational
institutions, recreational facilities, city and regional level infrastructure and
townships.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
14.
}
}
Are there any minimum capital requirements for foreign investment?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India prescribes minimum capital requirements for foreign investment in sectors
such as multi-brand retail and \ldblquote other financial services\rdblquote (that
is, financial service activities regulated by India\rquote s financial sector
regulators as notified by the GoI, such as the RBI, SEBI, IRDA and so on, including
non-banking financial companies or unregulated financial services).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In relation to entities engaged in multi-brand retail trading activities, a minimum
of USD100 million must be brought in as foreign investment.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In relation to \ldblquote other financial services\rdblquote , the MOF issued a
press release on 16 April 2018, which prescribes a minimum FDI capitalisation of
USD20 million for fund-based activities (for example, merchant banking,
underwriting, portfolio management services, stock broking, asset management,
venture capital, custodian services, factoring, leasing and finance, housing
finance, credit card business, micro credit, and rural credit).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, a minimum FDI capitalisation of USD2 million is required for non-fund
based activities (for example, investment advisory services, financial consultancy,
forex broking, money changing business and credit rating agencies). For companies
engaged in such activities that are regulated by any financial sector regulator
(such as SEBI, IRDA, RBI, and so on), the FDI Policy permits 100% foreign
investment under the automatic route.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The relevant regulator or government agency (regulating the relevant financial
service) can also prescribe conditions for foreign investment, including any norms
for minimum capital requirements.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Companies Act no longer requires companies incorporated in India to have any
minimum paid-up share capital before commencing their business.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
15.
}
}
Are there any exchange control or currency regulations? Are there any restrictions
on the remittance of profits abroad?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In India, all transactions subject to foreign exchange are regulated by FEMA.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
FEMA regulates two types of foreign exchange transactions:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Capital account transactions.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls112 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Current account transactions.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The GoI, MOF and the RBI administer various provisions of FEMA.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
For remittance of profits abroad, the following rules apply:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Dividends on foreign investments (net of applicable taxes) can be remitted freely.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls114 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Branch offices can remit profits from a branch, net of applicable Indian taxes,
outside India.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls115 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Project offices can remit intermittent remittances pending winding-up or completion
of the project.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls116 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Foreign entities have general permission to remit the surplus on winding up or
completion of projects.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The NDI Rules define the phrase \ldblquote investment on repatriation
basis\rdblquote to mean an investment, the sale or maturity proceeds of which are,
net of taxes, eligible to be repatriated out of India. Remittance of profits (from
investments in India) is generally permitted in the case of investment under the
FDI route, as such investment is made on a repatriable basis. However, in certain
sectors where securities held by a foreign investor are subject to lock-in
restrictions, such as with \ldblquote construction development\rdblquote , the NDI
Rules permit the investor to transfer its stake to another person that is resident
outside India, within the lock-in period without repatriation of foreign
investment. Furthermore, NRIs and OCIs are permitted to purchase capital
instruments of an Indian company or limited liability partnerships (LLPs) or a firm
or proprietary concern, subject to certain conditions, on a non-repatriation basis.
Furthermore, where a non-resident person exercises an employee stock option issued
to him or her when he or she was previously resident in India, such person must
hold the shares on a non-repatriation basis.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, under the Liberalised Remittance Scheme (LRS), a resident individual
can remit funds abroad for permitted current and capital account transactions or a
combination of both. However, the LRS is not available to any corporates,
partnership firms, trusts and so on.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The limit of remittance is subject to change, depending on the foreign exchange
position. The present limit is USD250,000 per financial year. In addition, the LRS
can be used by resident individuals to set up joint ventures or wholly owned
subsidiaries outside India for bona fide business activities up to a limit of
USD250,000 (subject to the requirements set out in FEMA).
\par
}
}
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
}
\u160\'3f
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs28 \li0
Imports
\par
}
}
\u160\'3f
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
16.
}
}
Are there any restrictions on the importation of commercial goods?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Import of goods in India is currently governed by the:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Foreign Trade Policy (2015-2020) of India (FTP).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls118 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Foreign Trade (Development and Regulation) Act 1992.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls119 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Customs Act 1962 (Customs Act).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls120 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Customs Tariff Act 1975 (Customs Tariff Act).
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Import trade is regulated by the:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Directorate General of Foreign Trade (DGFT) (part of the Ministry of Commerce and
Industry).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls122 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Department of Commerce.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls123 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Customs authorities (part of the Department of Revenue).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls124 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
MOF.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Every person proposing to engage in the import of goods must obtain an Importer-
Exporter Code (IEC) from the DGFT before engaging in such import. Although most
goods are freely importable, some goods are either completely prohibited from being
imported into India or are restricted which can only be imported after obtaining a
specific import licence.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
An exact Harmonised System Nomenclature (HSN) classification (which is based on the
harmonised classification of goods created by the World Customs Organization (WCO)
of the product is required to determine whether the goods can be imported freely,
or whether they are restricted or prohibited under the FTP.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
17.
}
}
What import duties apply to commercial goods?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Import of most non-agricultural goods or products in India currently attracts
customs duty at an effective rate ranging from 16.55% to 42.08% depending upon the
classification of products and the same is payable by the importer. Certain
exemptions are available on a case-by-case basis which may further reduce the
effective rate of duty. Customs duty is a type of indirect or transaction tax
levied on goods imported into and exported out of India (the taxable event being
the import into or export from India). The exact rate of customs duty on a product
depends on the HSN classification of the product.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Customs Act provides the basic rules for levy and collection of customs duties
and provides details of India\rquote s:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Levy and collection of duty on imports and exports.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls126 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Import and export procedures.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls127 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Prohibitions on importation and exportation of goods.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls128 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Penalties, offences and so on.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, the Customs Tariff Act makes provisions for duty rates, additional
duty, preferential duty, anti-dumping duty, protective duties and so on.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Effective customs duties include the following components:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Basic customs duty.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls130 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Additional customs duty in lieu of excise and sales tax for goods that are outside
the purview of the GST like alcohol for human consumption and various petroleum
products.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls131 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Integrated Goods and Services Tax (IGST).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls132 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
GST compensation cess on certain sin or demerit goods like tobacco, motor vehicles,
aerated drinks and so on.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls133 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Social welfare surcharge.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls134 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Health cess on import of specified medical equipment.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The GoI has provided certain exemptions on whole or part of the customs duty on
various products.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The duties can be levied either on a specific or on an ad valorem basis (there are
circumstances in which a hybrid of a specific and ad valorem duty may be collected
on imported items).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Central Board of Indirect Taxes and Customs (CBIC) is the central regulating
body for customs and other indirect taxes like GST. The CBIC is a part of the
Department of Revenue under the MOF.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
18.
}
}
Are the safety regulations and standards applicable to commercial goods in your
jurisdiction compatible with other standards that are recognised internationally?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Indian regulations that address safety and standards for commercial goods and
services are usually sector specific. For example, the Food Safety and Standards
Act 2006 regulates the safety standards for all food products in India (whether
manufactured domestically or imported into India).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
If bound by an international treaty, the GoI strives to ensure that the
domestically created requirements are aligned with international treaty
obligations. There are also well-established institutions that focus on aligning
international obligations with domestic regulations, to ensure compatibility is
maintained.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
19.
}
}
Are there any similar or equivalent restrictions on providing services into another
jurisdiction?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
There are no restrictions on the importation of commercial services under the FTP
or customs laws in India. However, import of nuclear, defence, national security
and other such services may be restricted. Tax on services is levied under the GST
laws.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The importation of services in India attracts GST if the place of supply of the
service falls within India\rquote s GST legal regime. According to India\rquote s
GST laws, GST is:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Levied generally at a rate ranging from 5% to 28% depending upon the nature and
classification of services.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls136 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Paid by the service importer (that is, the service recipient under the reverse
charge mechanism).
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
}
\u160\'3f
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs28 \li0
Structuring and tax
\par
}
}
\u160\'3f
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
20.
}
}
How is foreign investment into your jurisdiction typically structured? What forms
of legal vehicle are attractive to foreign investors?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Forms of foreign investment in India
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
An Indian company can receive foreign investment from a non-resident in the
following forms:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
FDI.
}
}
This is investment through equity instruments by a person resident outside India,
where the investment is either:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
in an unlisted Indian company; or
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls139 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
in 10% or more of the post issue paid-up equity capital on a fully diluted basis of
a listed Indian company.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
}
\u8226\'3f\tab }\ls140 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Foreign portfolio investment (FPI).
}
}
An FPI is any investment made by a person resident outside India in equity
instruments, where the investment is either:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
less than 10% of the post issue paid-up share capital on a fully diluted basis of a
listed Indian company; or
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls142 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
less than 10% of the paid-up value of each series of equity instruments of a listed
Indian company.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
}
\u8226\'3f\tab }\ls143 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Investment by Foreign Venture Capital Investor (FVCI).
}
}
An FVCI is an investor incorporated and established outside India and registered
with the Securities and Exchange Board of India (SEBI) under the SEBI (Foreign
Venture Capital Investors) Regulations 2000.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls144 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Investments in investment vehicles and depository receipts.
}
}
The following rules apply in relation to these:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
An \ldblquote investment vehicle\rdblquote means an entity registered and
regulated under relevant regulations framed by SEBI or any other designated
authority and includes real estate investment trusts (REITs), infrastructure
investment trusts (InvIts) and alternative investment funds (AIFs). A non-resident
(other than a citizen of Bangladesh or Pakistan, or an entity incorporated in
Bangladesh or Pakistan) is permitted to invest in units of an investment vehicle,
subject to the provisions of the NDI Rules.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls146 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
A \ldblquote depository receipt\rdblquote (DR) is a foreign currency denominated
instrument, whether listed on an international exchange or not, issued by a foreign
depository in a permissible jurisdiction on the back of eligible securities issued
or transferred to that foreign depository and deposited with a domestic custodian
and includes \ldblquote global depository receipt\rdblquote as defined in the
Companies Act 2013 (Companies Act). A non-resident may invest in the DRs issued by
foreign depositories against eligible securities in accordance with the provisions
of the NDI Rules.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Legal vehicles for foreign investment
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The legal vehicles used to attract foreign investors and structuring foreign
investment are as follows:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Indian company.
}
}
Foreign investment into an Indian company by way of a share subscription or share
acquisition is a common structure for foreign investment into India. A foreign
company or investor can commence operations in India by incorporating a company in
India under the Companies Act, as a wholly-owned subsidiary or as a joint venture
with the joint venture partner.
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Foreign investment is permitted up to 100% under the automatic route in sectors or
activities other than those where foreign investment is restricted up to the limits
indicated against certain sectors or activities under the FDI Policy or the NDI
Rules (
}
{\b0 \cf1 \f2 \i1 \fs20
see
}
Question 11
}}}
}
). Details of the FDI Policy can be obtained from the website of DPIIT (
}
{\b0 \cf1 \f2 \i1 \fs20
"https://dipp.gov.in/sites/default/files/CFPC_2017_FINAL_RELEASED_28.8.17.pdf" }
{\fldrslt
https://dipp.gov.in/sites/default/files/CFPC_2017_FINAL_RELEASED_28.8.17.pdf
}}}
}
). Details of the NDI Rules can be obtained from the central government\rquote s e-
gazette website (
}
{\b0 \cf1 \f2 \i1 \fs20
"http://egazette.nic.in/WriteReadData/2019/213332.pdf" }{\fldrslt
http://egazette.nic.in/WriteReadData/2019/213332.pdf
}}}
}
).
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Indian companies are subject to entity-level taxation and distribution taxes.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls148 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Foreign company.
}
}
Foreign companies can set up their operations in India through any of the
following offices, which can undertake any of the permitted activities. Such
companies must register themselves with the concerned Registrar of Companies within
30 days of setting up a place of business in India:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
{\b0 \cf1 \f2 \i0 \fs20
liaison office (LO).
}
}
LOs are set up as a representative office in India, which are used primarily to
explore and understand the business and investment climate of India. LOs cannot
undertake any commercial, trading or industrial activity, directly or indirectly.
An LO set up in India in accordance with the RBI\rquote s regulations will not
attract any tax liability in India (on the face of it), unless it constitutes a
\ldblquote business connection\rdblquote with India as stipulated under the Income
Tax Act 1961 (IT Act), or a permanent establishment in India under the applicable
DTAA.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls150 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
{\b0 \cf1 \f2 \i0 \fs20
project office (PO).
}
}
Foreign companies planning to execute specific projects in India can set up
temporary project or site offices in India. RBI has granted general permission to
foreign entities to establish POs subject to specified conditions (for example,
such offices cannot undertake or carry on any activity other than the activity
relating and incidental to the execution of the project). POs can remit the surplus
of the project outside of India on its completion, although general permission for
this must be granted by the RBI. Typically, a PO qualifies as a \ldblquote
permanent establishment\rdblquote of the foreign enterprise. Therefore, all
profits attributable to such a project office are taxed in India (
}
{\b0 \cf1 \f2 \i1 \fs20
see
}
Question 21
}}}
}
).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls151 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
{\b0 \cf1 \f2 \i0 \fs20
branch office.
}
}
A branch can be set up in India for undertaking business operations in India. A
branch typically qualifies as a \ldblquote permanent establishment\rdblquote of
the foreign enterprise. Therefore, all profits attributable to such branch are
taxed in India (
}
{\b0 \cf1 \f2 \i1 \fs20
see
}
Question 21
}}}
}
). Presently, India does not impose any branch profits tax on foreign companies.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
}
\u8226\'3f\tab }\ls152 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Limited Liability Partnership.
}
}
Foreign investment can also be structured in the form of LLPs, which are not
subject to distribution taxes.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
21.
}
}
What are the circumstances under which a business becomes liable to pay tax in your
jurisdiction?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Foreign enterprises are taxable in India on income which is either:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Received or deemed to be received in India.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls154 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Accrued or deemed to accrue in India.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The following income is deemed to accrue in India:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Income which accrues directly or indirectly, through or from any business
connection in India.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls156 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Income which accrues through or from any property, asset or source of income in
India.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls157 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Income which accrues through the transfer of capital assets situated in India.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
If a tax treaty exists between India and the country of residence of the foreign
enterprise, one of the following will apply (whichever is more beneficial):
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The provisions of domestic law.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls159 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The provisions of the tax treaty.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Accordingly, the taxability of the foreign enterprise may be restricted or
modified, and/or lower tax rates may apply.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In general, India\rquote s tax treaties provide that foreign enterprises will only
be taxable for business profits in India if the business profits are attributable
to the foreign enterprise\rquote s \ldblquote permanent establishment\rdblquote in
India.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India\rquote s tax treaties typically embrace the following types of permanent
establishment:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Fixed-place permanent establishment.
}
}
This can arise if a foreign enterprise has a fixed place of business in India,
through which it partly or wholly carries on its business.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls161 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Agency permanent establishment.
}
}
A dependent agent\rquote s permanent establishment can arise if a foreign
enterprise has a dependent agent in India, who undertakes certain specified
activities in India.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls162 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Service permanent establishment.
}
}
This can arise if a foreign enterprise has employees in India, who are rendering
services for the foreign enterprise for a specified duration.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Further, depending on the nature of the business transactions, such business may
also be liable to pay indirect or transactional taxes, such as excise duty, goods
and services tax, value added tax (VAT) and so on.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
From financial year 2016/17 onwards, a foreign company can qualify as a tax
resident of India if its place of effective management is situated in India during
such year and may therefore be subject to Indian income taxes on its global income.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
22.
}
}
What are the main business tax rates?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Income tax
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \i0 \fs20
Domestic companies.
}
}
For the financial year 2020/21, domestic companies are taxed at a rate of 25% if
they had a turnover of up to INR4 billion during the 2018/19 financial year and at
30% if the turnover exceeded this threshold (plus an applicable surcharge of 7% or
12%, depending on the taxable income of the company (
}
{\b0 \cf1 \f2 \i1 \fs20
see below
}
}
) and a health and education cess of 4%). The surcharge is imposed on the taxes
payable by domestic companies at the following rates:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
If the income of the company is up to INR10 million: a 0% surcharge is payable.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls164 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
If the income of the company is more than INR10 million: a 7% surcharge is payable.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls165 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
If the income of the company is above INR100 million: a 12% surcharge is payable.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Domestic companies also have the option of paying a flat tax rate of 22% (plus
applicable surcharge and cess) provided they forego substantially all exemptions
and incentives under the IT Act.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
New manufacturing companies (incorporated on or after 1 October 2019) similarly
have the option of paying a flat rate of 15% (plus applicable surcharge and cess)
on the business income from the manufacturing activities, provided they forego
substantially all exemptions and incentives under the IT Act.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Short-term capital gains are taxed at 30% (25.17% if the 22%/15% rate is opted for)
(plus an applicable surcharge of 7% or 12%, and health and education cess of 4%) in
the hands of domestic companies. Long-term capital gains may be taxed at 10% or 20%
(plus an applicable surcharge of 7% or 12% and health and education cess of 4%)
depending on the nature of the capital asset transferred.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In the case of transfer of listed securities on the market, where securities
transaction tax (STT) is payable, long-term capital gains in excess of INR100,000
are taxable at the concessional rate of 10% (plus applicable surcharge and cess)
(without giving effect to the benefits of indexation and neutralisation of foreign
exchange fluctuation). Similarly, short-term capital gains for such listed
securities is taxable at 15% (plus applicable surcharge and cess). For these
concessional rates to apply:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The sale of the shares must have been on the stock exchange.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls167 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The shares must have been acquired pursuant to a transaction which was subject to
STT or such transaction must be a notified transaction.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Domestic companies (other than companies opting for the beneficial tax rates of 22%
or 15%, as discussed above) are also subject to a minimum alternate tax (MAT),
which is a presumptive tax on book profits (that is, profits shown in their
financial statements), which applies if the tax payable under the regular
provisions is less than 15% of the company\rquote s book profits. MAT is payable at
15% plus:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
A surcharge of 7% or 12%.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls169 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
A health and education cess of 4%.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Credit for MAT paid can be carried forward for the next 15 years and set-off
against tax payable under regular tax provisions.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Domestic companies are subject to a tax of 23.3% (inclusive of surcharge and cess)
at the time of buying back their shares from its shareholders (buy back tax). This
tax is payable on the difference between the buy-back price and the issue price of
shares. Income in respect of such buy back by the company is tax exempt in the
hands of shareholders.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Dividend payments are now subject to withholding by the domestic company and are
taxable in the hands of the shareholders. The erstwhile dividend distribution tax
regime has been substituted with withholding tax. The withholding rate for
dividends paid to non-residents is 20% (plus applicable surcharge and cess) subject
to a lower rate provided under the respective DTAA, as applicable.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \i0 \fs20
Foreign companies.
}
}
Foreign companies are taxed at 40% (plus an applicable surcharge of 2% or 5% (
}
{\b0 \cf1 \f2 \i1 \fs20
see below
}
}
), and health and education cess of 4%) (the 40% rate is subject to rates provided
under the relevant tax treaty, if the tax treaty is more beneficial).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The surcharge is imposed on the taxes payable by domestic companies at the
following rates:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
If the income of the company is up to INR10 million: a 0% surcharge is payable.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls171 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
If the income of the company is more than INR10 million: a 2% surcharge is payable.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls172 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
If the income of the company is above INR100 million: a 5% surcharge is payable.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Short-term capital gains are taxed at 40% (plus an applicable surcharge of 2% or
5%, and health and education cess of 4%) in the hands of foreign companies. Long-
term capital gains may be taxed at the rate of 10% or 20% (plus an applicable
surcharge of 2% or 5%, and a health and education cess of 4%) depending on the
nature of the capital asset transferred.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Foreign companies are not subject to buy back tax. However, they are subject to MAT
if they have a permanent establishment or tax presence in India.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Further, receipt of interest, royalties and fees for technical services (FTS)
sourced from India by foreign companies are subject to withholding tax at
applicable rates on a gross basis. However, if the royalties and FTS are
attributable to the foreign company\rquote s permanent establishment in India, such
royalties and FTS are taxed as business profits at 40% (plus an applicable
surcharge of 2% or 5%, and a health and education cess of 4% on a net basis).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
For withholding tax rates, see
}
{\b0 \cf1 \f2 \i1 \fs20
Question 23
}}}
.
\par
}
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Indirect tax
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In addition to income tax, various indirect taxes are levied either at the federal
or state level, depending on the nature of the business transaction/taxable event
in India.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The GoI levies the following major indirect taxes in India:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Customs duty.
}
}
This is imposed on the import of goods into India and export of goods outside
India. Currently, the effective rate of customs duty on the import of most non-
agricultural products in India ranges from 16.55% to 42.08% depending upon the
classification of the product. Customs duty on exports is mostly at 0%, except for
specified goods.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls174 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Central excise duty.
}
}
This is a tax levied on the manufacture of certain petroleum products.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls175 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Central sales tax (CST).
}
}
This is levied on the intra-state or inter-state sale of goods respectively, which
are outside the purview of GST like alcohol for human consumption and certain
petroleum products in India.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls176 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
GST.
}
}
This is levied on the supply of goods or services within India. All intra-state
supply of goods and services attract two taxes:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
central GST (CGST); and
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls178 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
state GST (SGST).
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Similarly, all inter-state supply of goods attracts a tax known as IGST. IGST is a
total of the CGST and SGST (which would have been applicable to the intra-state
supply of such goods or services). The GoI collects the IGST, retains the tax equal
to the CGST levied on such supplies and distributes the balance (SGST component) to
the state where the supply takes place.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls179 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
GST compensation cess.
}
}
This is levied over and above GST on supplies of certain restricted goods such as
tobacco, motor vehicles, aerated drinks and so on.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The respective states of India levy the following taxes (the rates of which varies
from to state to state):
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
State excise duty.
}
}
This tax is levied on the manufacture of alcohol (meant for human consumption).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls181 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
VAT.
}
}
This is levied on a sale which takes place within a particular state of India on
goods which are outside the purview of GST such as alcohol for human consumption
and certain petroleum products.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls182 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Professional tax.
}
}
In certain states such as Gujarat, Karnataka, Maharashtra and Andhra Pradesh, a
professional tax is levied on every person engaged in any profession, trade,
calling or employment. The bands of professional tax vary from state to state
subject to the maximum of INR2,500 per year.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
23.
}
}
What is the tax treatment in your jurisdiction of profits from an investee company
remitted outside your jurisdiction by an investor?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The former dividend distribution tax (DDT), levied on companies distributing a
dividend, has been substituted with withholding tax on dividend distributions with
effect 1 April 2020. Domestic companies are now required to withhold tax at the
applicable rates on the dividend distributed to the respective shareholders. The
dividend income is taxable in the hands of the shareholder at the rates applicable
to them.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Similarly, domestic companies are subject to a buyback tax at the time of buying
back their shares (not being listed company shares) from their shareholders.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Additionally, repatriation of funds as interest, royalties or FTS may also be
subject to withholding tax in India on a gross basis.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Foreign enterprises are subject to withholding tax of 10% (plus an applicable
surcharge of 2% or 5%, and a health and education cess of 4%) on royalties and FTS
on a gross basis. For the surcharge rates, see
}
{\b0 \cf1 \f2 \i1 \fs20
Question 22,
}
Income tax
}}}
}
.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Foreign enterprises are subject to income tax on interest income at the rate of 40%
(plus an applicable surcharge of 2% or 5%, and a health and education cess of 4%).
However, foreign enterprises may avail themselves of concessional rates on interest
income under different circumstances ranging from 5% to 20% (plus an applicable
surcharge of 2% or 5%).
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
24.
}
}
What transfer pricing and/or thin capitalisation restrictions may apply to
investments into your jurisdiction from elsewhere?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Transfer pricing
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Under India\rquote s transfer pricing regulations, any international transaction
and/or a specified domestic transaction between two or more associated enterprises
(including permanent establishments) must be at an arm\rquote s-length price.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The transfer pricing regulations require the application of the most appropriate
method among the following:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Comparable uncontrolled price method.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls184 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Resale price method.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls185 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Cost plus method.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls186 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Profit split method.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls187 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Transactional and net margin method.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Taxpayers entering into international transactions and/or specified domestic
transactions must maintain prescribed documents and furnish an accountant\rquote s
report, which includes prescribed details. Indian transfer pricing regulations also
allow for secondary adjustments subject to certain conditions.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India\rquote s income tax law empowers the Central Board of Direct Taxes (CBDT) to
enter into an Advance Pricing Arrangement (APA) to determine the arm\rquote s-
length price (or the manner of determining the arm\rquote s length price) in
relation to the international transactions to be entered into by a person for a
period specified in such APA, not exceeding five consecutive years. The CBDT can
also enter into APAs which apply retrospectively for a period of the last four
years.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In addition to APAs, India\rquote s domestic tax law also provides for safe harbour
rules.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Thin capitalisation rules
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Thin capitalisation rules were introduced in India with effect from the 2018/19
financial year, in line with the recommendation of the OECD Base Erosion and Profit
Shifting (BEPS) Action Plan 4. These provide that where an Indian company, or a
permanent establishment (PE) of a foreign company in India, pays interest in
respect of any debt issued by a non-resident associated enterprise (AE) that
exceeds INR10 million, which is otherwise a deductible business expenditure, the
deductible interest expense will be limited to 30% of its earnings before interest,
taxes, depreciation and amortisation (EBITDA) or actual interest (whichever is
less).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, debt provided by a lender (other than an AE) will also be de facto
considered as debt provided by an AE if the debt is implicitly or explicitly
guaranteed by the AE or the AE deposits corresponding and matching amount of funds
with the lender. However, a carry-forward of the disallowed interest expense is
permitted for up to eight assessment years immediately succeeding the assessment
year in which the disallowance was first made, and is allowed as a deduction
against the profits and gains (if any) of any business or profession that is
carried on by the taxpayer (to the extent of maximum allowable interest
expenditure).
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The thin capitalisation rules do not apply to an Indian company or a PE of a
foreign company in India that is engaged in the business of banking or insurance.
\par
}
}
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
}
\u160\'3f
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs28 \li0
Incentives
\par
}
}
\u160\'3f
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
25.
}
}
What tax incentive or other schemes exist to encourage foreign investment?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
To stimulate India\rquote s economy, India\rquote s tax law provides tax incentives
such as tax holidays, deductions and rebates to the industry. These are intended to
encourage:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Exports and manufacturing activities.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls189 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The setting up of new industrial undertakings.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls190 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The development of facilities related to infrastructure.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls191 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The software industry, research activities and development of backward areas.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Furthermore, there are certain sector-specific incentive schemes for handicraft,
agriculture, oil and gas, renewable resources, research and development, power
generation and specified service sectors, subject to the exact nature of business
and goods involved (
}
{\b0 \cf1 \f2 \i1 \fs20
see below
}
}
).
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Special economic zones
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Entrepreneurs with business units located in special economic zones (SEZs) are
eligible for an income tax holiday for ten years (100% exemption for the first five
years and 50% exemption for the next five years) on the profits derived from
exports from the year in which such a business unit begins manufacturing or
commences its business activities. A deduction of 50% of profits is also available
for another five consecutive years on the fulfilment of certain conditions.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
This tax holiday is enjoyed by units set up in an SEZ provided that the
manufacturing operation commences on or before 31 March 2021.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
SEZ units and developers must pay a MAT on book profits and DDT on income
distributed as dividends.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Offshore banking units and international financial services centres located in SEZ
are allowed:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
100% deduction on income for five consecutive years.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls193 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
50% deduction for the next five consecutive years.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In addition, the following indirect tax benefits are available to a unit registered
as an SEZ, subject to the fulfilment of specified procedural conditions:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Exemption from the payment of duties of customs on imported goods.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls195 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Exemption from the payment of GST on domestically procured goods or services.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls196 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Exemption from GST if goods manufactured by an SEZ are exported outside India.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls197 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Exemption from excise, CST or VAT on the purchase of goods which are outside the
purview of GST such as petroleum products, if such goods are meant to carry on the
authorised operations of SEZ unit.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In addition, under the FTP of India, units undertaking to export their entire
production of goods and services can be set up under the following schemes:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Export Oriented Units (EOU) Scheme.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls199 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Electronics Hardware Technology Park (EHTP) Scheme.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls200 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Software Technology Park (STP) Scheme.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls201 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Bio-technology Park (BTP) Scheme for the manufacture of goods and rendering of
services.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Investment-linked incentives for research and development
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The IT Act allows a deduction of capital expenditure incurred by the taxpayer on
scientific research related to the business carried on by the taxpayer, subject to
the fulfilment of certain prescribed conditions.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Investment-linked tax incentives for research and development are provided by way
of allowing deductions, ranging between 100% and 150%, in respect of the
expenditure of capital nature incurred wholly and exclusively, for the purposes of
certain research and development (R&D) during the financial year in which such
expenditure is incurred. Such investment-linked tax incentives are also available
if the payment is made to either:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
A research association or university, college or other institution for scientific
research.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls203 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
An Indian company to be used for scientific research and development that fulfils
certain conditions.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Indian tax incentives to IFSCs
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
With a view to incentivise the growth of International Financial Services Centres
(IFSCs), the IT Act contains the following tax incentives:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Concessional rate of 10% (plus applicable surcharge and cess) from long-term
capital gains tax arising from transactions undertaken in foreign currency on a
recognised stock exchange located in an IFSC, irrespective of payment of STT on the
same.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls205 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
A concessional short-term capital gains tax rate of 15% will be available to the
transactions undertaken in foreign currency through a recognised stock exchange
located in an IFSC, even where no STT is payable. The Finance Act 2018 has exempted
transactions in foreign currency in the following assets by a non-resident on a
recognised stock exchange located in any IFSC from capital gains tax:
\par {\pntext }
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
bond or global depository receipt;
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls207 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
rupee denominated bond of an Indian company; or
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls208 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li960
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li960
derivative.
\par {\pntext }
}
}
}
}{\pntext }
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li580
}
}
\u8226\'3f\tab }\ls209 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Units located in IFSC and which derive income solely in convertible foreign
exchange are chargeable to MAT at the rate of 9%. Even existing units can benefit
from a lower MAT rate of 9% (subject to the fulfilment of other conditions). The
Finance Act 2018 has also extended the lower MAT rate to non-corporate taxpayers.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls210 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Tax on distributed profits is not charged in respect of the total income of a
company being a unit located in an IFSC, deriving income solely in convertible
foreign exchange, either in the hands of the company or the person receiving the
dividend.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls211 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Interest paid by an offshore banking unit on deposits or borrowing made on or after
1 April 2005 by non-residents is tax exempt.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls212 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
IFSC units can benefit from a 100% exemption from income tax for its approved
business for the first ten consecutive assessment years commencing from the year in
which the permission from the RBI, SEBI or IRDAI (as applicable) is obtained, out
of a block of 15 assessment years.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Investment guarantees
\par
}
}
\u160\'3f
\par
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
26.
}
}
What legal guarantees exist against expropriation and/or provide for appropriate
compensation? What is your government\rquote s track record in this regard?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The best guarantor for investment protection is a stable and democratic political
structure, a belief in the rule of law, along with a transparent and independent
legal system.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India has concluded multiple BITs with various countries. These BITs contain
reciprocal protections for the purpose of encouraging, promoting and protecting
investments in each other\rquote s territory by the companies based in either
country (or state). These agreements typically provide that if the host state
expropriates the investor\rquote s investment, the host state must pay prompt,
adequate and effective compensation to the investor. These BITs also:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Provide a legal basis for enforcing the rights of the investors though
international arbitration.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls214 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Give assurance to the investors that their foreign investments will be guaranteed
fair and equitable treatment, as well as full and constant legal security.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Recently, India has terminated some of its BITs and is trying to renegotiate them.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India has been a respondent in 30 investment arbitration claims. Of these claims,
17 are still pending, and ten have been amicably settled between the investor and
the Government of India. To date, in two BIT cases, the investors (White Industries
and Devas) have prevailed in the arbitration against India. In September 2018, the
GoI has had its first win in a BIT arbitration. The GoI was successful in defending
the claims brought by a French investor (Louis Dreyfus Armateurs SAS) under the
India-France BIT.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
For details of bilateral investment treaties with India, see
}
{\b0 \cf1 \f2 \i1 \fs20
Question 7
}}}
.
\par
}
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
27.
}
}
Are there any issues in relation to the enforcement of intellectual property
rights?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India ratified the agreement establishing the WTO. This contains (among other
things) India being signatory to the Agreement on Trade Related Aspects of
Intellectual Property Rights (TRIPS), which came into force from 1 January 1995.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
TRIPS sets out minimum standards for protection and enforcement of intellectual
property rights (IPRs) in WTO member countries, which are required to promote the
effective and adequate protection of IPRs (including legal systems and practices)
with a view to reducing distortions and impediments to international trade. TRIPS
provides for norms and standards in relation to the inter alia, the following:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Patents.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls216 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Trade marks.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls217 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Copyrights.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls218 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Industrial designs.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls219 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Geographical Indication.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls220 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Integrated Circuit Layout.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Indian judicial system provides for effective enforcement of the various forms
of IPRs and has played a proactive role in recognising the changing phases of
intellectual property.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Courts have been effectively and progressively protecting and enforcing patent
rights. This is demonstrated by the upward trend of lawsuits and the interim
injunctive relief granted by various courts. In respect of patents, the courts have
been especially proactive in affording protection to Standard Essential Patents
(SEPs). In respect of telecommunication technologies, the courts have taken a
balanced approach in terms of enforcement of pharmaceutical patents, with interim
injunctions being granted for alleged infringements. A major issue in this regard
concerns the principles relating to the enforcement of SEPs. Since it is impossible
to practise a technological standard without implementing a patent that is
essential to that standard (an SEP), those implementing SEPs (for example,
manufacturers, traders or vendors of products adopting a standard) must first
obtain a licence from the respective SEP holder or face an injunction. An absence
of any guidelines for the negotiations between SEP holders and those implementing
the SEP has resulted in SEP holders demanding excessive royalties.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The courts in India have also supported anti-counterfeiting and piracy measures to
both:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Safeguard the property of rights holders.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls222 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Protect the public interest.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In cases of infringement of trade marks, the courts have recognised cross-border
reputation of trade marks in safeguarding the interest of rights holders.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The courts have granted injunctions against infringers and have issued directions
in specific cases to customs officials to prevent, control and prohibit the import
of goods that violate a party\rquote s registered IPRs. However, a recent amendment
to the relevant rules has excluded patents from the scope of the border control
measures.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
When dealing with intellectual property litigation, the Indian courts have been
open to adopting new methodologies for recording evidence which can be more
efficient than traditional methods. One such example is the courts adopting the
mechanism of \ldblquote hot tubbing\rdblquote experts for leading evidence in SEP
matters. To this end, the Delhi High Court Rules have been amended to incorporate
this mechanism.
\par
}
}
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
28.
}
}
Are there any issues in relation to the gaining and enforcement of judgments and/or
arbitral awards?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
In India, arbitration is a medium which provides an effective and quick dispute
resolution framework, unlike court proceedings which take a number of years to
resolve disputes.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Arbitration and Conciliation Act 1996 (Arbitration Act) is divided in the
following two parts:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Part I.
}
}
This deals with arbitration conducted in India and its enforcement.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls224 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
{\b0 \cf1 \f2 \i0 \fs20
Part II.
}
}
This provides for arbitration conducted in foreign jurisdictions and the
enforcement of foreign awards.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The Arbitration Act was amended in 2019, which brought some significant changes.
Some of the key amendments include the setting-up of the Arbitration Council of
India, which now has the power to grade arbitrators and arbitral institutions. The
2019 amendments are in line with the objective of building India as a robust and
arbitration-friendly jurisdiction for foreign investors.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
To facilitate expeditious arbitral proceedings, the 2019 amendments have included
provisions which now require pleadings (that is, statements of claim and statements
of defence) to be completed within six months from the date on which the arbitrator
(or all arbitrators if applicable) receives notice of his or her appointment.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The 2019 amendments also relaxed the stringent time-period for an arbitral tribunal
to render its award. Previously, under the unamended Arbitration Act, the tribunal
had to pass its award within 12 months from the date the arbitrators entered
reference (that is, the date on which the arbitrator or all the arbitrators (as
applicable) received written notice of their appointment). With the 2019
amendments, the 12-month period commences from the date of completion of pleadings,
effectively extending the time limit for the arbitral tribunal to pass an award by
an extra six months.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
As already remedied by the earlier 2015 amendments, under the Arbitration Act,
foreign investors can effectively realise a potential award in their favour by
securing assets in India and can take recourse to Indian courts for assistance in
taking evidence and appeals against interim orders.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Once proceedings are concluded, the parties can file applications to set aside the
award in court under section 34 of the Arbitration Act (which must be disposed of
within a period of 12 months by the court). Any order of the court (whether setting
aside or refusing to set aside the award) can be appealed before the court of
competent jurisdiction under section 37 of the Arbitration Act. Once the objections
to the award are dismissed, the court enforces the award in the same manner as a
decree of a court.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The 2015 amendments clarified the scope of the term \ldblquote public
policy\rdblquote , which was frequently used by the Indian courts as a ground for
the setting aside of arbitral awards. The 2019 amendments further narrowed the
provision. While the earlier unamended provision in the original Arbitration Act
required a party to furnish proof of the grounds that would justify interference
with an award, the 2019 amendment clarifies that any such grounds only need to be
established according to the record which was before the arbitral tribunal. In
simpler terms, in order to set aside an arbitral award, a party cannot rely on a
ground, which was not placed before the arbitral tribunal.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
With 2019 amendments, the Indian legislature has shown considerable and much needed
action in establishing India as an (international) arbitration-friendly judicial
system.
\par
}
}
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
}
\u160\'3f
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs28 \li0
Recent developments and proposals for reform
\par
}
}
\u160\'3f
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
29.
}
}
Have there been any significant recent or proposed legal developments affecting
investors?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
There have been a number of recent legal developments which affect foreign
investors. Some of the key recent developments are set out below.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Recent amendments to FDI Policy
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The FDI Policy has recently been amended so that the entity of a country that
shares a land border with India (adjoining nation) or where the beneficial owner of
an investment into India is situated in or is a citizen of any adjoining nation,
can only invest under the government route. Furthermore, approval from the GoI is
also required where subsequent changes in beneficial ownership (by way of direct or
indirect transfers) of any existing or future FDI would result in any such
beneficial ownership falling within the purview of the first restriction. These
amendments are expected to affect investment from such countries into India.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
E-commerce Policy
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The E-commerce Policy is expected to have a significant impact on foreign investors
investing on Indian E-commerce platforms as it requires such investors to (among
other things) set up a domestic data centre for the collection and storage of data
in India and not exercise ownership or control over the inventory sold on their
platforms.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Data privacy law
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The draft Personal Data Protection Bill (PDP Bill) was introduced in the Indian
Parliament in December 2019. The draft PDP Bill aims to create a regulatory
framework to protect individuals\rquote privacy relating to their personal data
and set down organisational and technical standards in relation to the processing
of data similar to the EU General Data Protection Regulation (
}
{\b0 \cf1 \f2 \i1 \fs20
(EU) 2016/679
}
}
) (GDPR). The PDP Bill is currently under deliberation by a Joint Committee of the
Indian Parliament and may undergo further changes before it is presented before the
Parliament.
\par
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b1 \cf20 \f2 \ri0 \i0 \qj \fs24 \li0
Consumer Protection Act 2019 (CP Act)
\par
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The CP Act replaces the former Consumer Protection Act 1986. The CP Act establishes
new rules and procedures relating to:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The emerging delivery systems of goods and services in India such as e-commerce,
direct selling, tele-shopping, multi-level marketing and global supply chains.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls226 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
New forms of unfair trading and unethical business practices (including misleading
advertising and unfair contracts).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls227 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The establishment of a regulator with extensive powers to regulate and penalise
violations of the CP Act and product liability action for defective products or
deficient services.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls228 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
Terms such as product liability, unfair contracts, spurious goods, consumer rights,
express warranties, injury, harm, misleading advertisement, endorsement, which are
now specifically defined.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls229 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
E-filing of consumer complaints.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}{
\intbl
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf23 \f2 \i0 \fs20
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \ri620 \i0 \qj \fs20 \li620
{\b0 \cf1 \f2 \i0 \fs20
30.
}
}
Are there any planned or on-going treaty negotiations or political developments
that could have an impact on your jurisdiction\rquote s bilateral relationships
with other nations and/or other economic, customs or monetary unions, free-trade
areas or markets?
\par
}
}
}
}}\par
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
The MLI entered into force on 1 October 2019 and applies to various DTAAs from 1
April 2020. The MLI is a unique instrument developed by the OECD to prevent base
erosion and profit sharing (BEPS) (
}
{\b0 \cf1 \f2 \i1 \fs20
see
}
Question 7
}}}
}
). The MLI will enable the signatories to implement BEPS principles swiftly, as it
covers a large number of tax treaties.
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
India has listed 93 of its BITs in the final MLI position. The MLI will come into
effect for any treaty from 1 April 2020 (financial year 2020-21) if:
\par
}
}
}
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
India has listed that tax treaty in its final MLI position as a covered tax
agreement (CTA).
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls231 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The tax treaty partner is a signatory to MLI.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls232 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The tax treaty partner has also deposited its instrument of ratification on or
before 30 June 2019.
\par {\pntext }
}
}
}
\u8226\'3f\tab }\ls233 {\pntext }
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf1 \f2 \ri0 \i0 \ql \fs20 \li480
The tax treaty partner has also listed India in its final MLI position as a CTA.
\par {\pntext }
}
}
}
}
}
{\b0 \cf1 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
Some of the key Indian tax treaties for which MLI will enter into force from 1
April 2020 are Australia, Finland, France, Ireland, Japan, Netherlands, Singapore,
the UK and the UAE.
\par
}
}
}
}
}
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\*\bkmkstart co_anchor_a336685_1}{\*\bkmkend co_anchor_a336685_1}{
\intbl
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
\par
}
{\b1 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
Contributor profiles
\par
}
}
\u160\'3f
\par
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
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{\b0 \cf23 \f2 \i0 \fs20
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Shardul S Shroff, Executive Chairman
\par
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\u160\'3f
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+91 114 161 4094
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+91 112 692 4900
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{\field {\*\fldinst HYPERLINK "http://www.amsshardul.com" }{\fldrslt
www.amsshardul.com
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First Law International Member Firm (Chambers Global Elite Network)
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Professional qualifications.
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B. Com (Hons), Sydenham College Mumbai; LLB, Government Law College, Mumbai
\par
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Areas of practice/experience.
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More than 38 years of experience in general corporate, M&A, insolvency and
bankruptcy, securities law, disinvestment and capital markets; head of the
insolvency and bankruptcy practice; leading authority on matters related to
corporate governance, M&A; government regulation and bankruptcy and insolvency law.
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Recent transactions
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Represented State Bank of India for initiation of the insolvency proceedings before
the National Law Company Tribunal against Bhushan Steel (representing and advising
Committee of Creditors in the corporate insolvency process initiated against
Bhushan Steel Limited and representing and advising the resolution professional in
a corporate insolvency resolution process for Bhushan Power and Steel).
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Advised in Oil and Natural Gas Corporation\rquote s acquisition of a 37.5% stake in
MRPL from Aditya Birla Group and then increasing its stake to about 71% in the debt
restructuring process.
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Advised the Indian Oil Corporation in relation to the merger of IOBL, a 100%
subsidiary of IOC and a thinly capitalised company into its holding company.
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}
}
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Advised Videocon Hydrocarbon Holdings in relation to the sale by Videocon Mauritius
Energy Limited of its 100% stake in Videocon Mozambique Rovuma 1.
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}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised PVR on its acquisition of the entire promoter stake (69.27%) in Cinemax
India.
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}
}
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Advised Vodafone India on the consolidation of its operating telecommunications
licensee subsidiaries with a single Indian flagship entity.
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Languages.
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English, Hindi, Gujarati, Marathi
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Professional associations/memberships
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\u160\'3f
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\u8226\'3f\tab }\ls240 {\pntext }
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Member of the Insolvency Law Committee, constituted by GOI to review the
implementation of the Insolvency and Bankruptcy Code under the Chairmanship of Mr
Injeti Srinivas.
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}
}
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Member of the Injeti Srinivas Committee constituted for decriminalisation of
offences under the Companies Act and the Committee on cross-border insolvency.
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}
}
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Chairman of the CII National Committee on Legal Services and Arbitration.
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}
}
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Member of the CII National Council on Services.
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}
}
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Member of the CII Task Force on the Ease of Doing Business, 2017-2018.
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}
}
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Independent director on significant boards of Indian companies.
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}
}
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Member of the US-India Business Council.
\par {\pntext }
}
}
}
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Vice Chair of the Corporate Counsel Committee of the IPBA Council, the Union
Internationale Des Advocats, and the Indo-German Chamber of Commerce.
\par {\pntext }
}
}
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Senior Vice President on the Society of Indian Law Firms (SILF).
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}
}
}
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Chairman of the FICCI Committee on Stressed Assets and a member of the Capital
Markets Committee.
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\u160\'3f
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{\b0 \cf23 \f2 \i0 \fs20
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Rudra Kumar Pandey, Partner
\par
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\u160\'3f
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+91 114 985 9932
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+91 112 692 4900
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{\b0 \cf19 \f0 \i0 \fs20
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{\b0 \cf19 \f0 \i1 \fs20
www.amsshardul.com
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}
\u160\'3f
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B. Com (Hons); CS, ICSI; LLB, Delhi University
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Areas of practice/experience.
}
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More than 16 years of experience in corporate commercial transactions, general
corporate advisory and advising on corporate governance matters; areas of expertise
include corporate structuring, mergers & acquisitions, takeovers, delisting\rquote
s, private equity investments, joint ventures, real estate, banking and finance,
project finance, establishment and management of funds (onshore and offshore).
\par
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\u160\'3f
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Recent transactions
\par
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\u160\'3f
\par
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\u8226\'3f\tab }\ls250 {\pntext }
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised Mitsui Fudosan Co, Japan (through its investing entity, Mitsui Fudosan
(Asia) Pte, Singapore), on the acquisition of a 50% equity stake in Akarshak
Infrastructure Private (which will be developing a commercial real estate project
in Bengaluru, Karnataka).
\par {\pntext }
}
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised Kubota Corporation, Japan, in relation to entering into a joint venture
with Escorts Limited to manufacture tractors in India.
\par {\pntext }
}
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised Kubota Corporation Japan on its acquisition of a minority stake in Escorts.
\par {\pntext }
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised Hakuhodo Japan (through its investing entity, Hakuhodo Investment Singapore
Pte Singapore) on its acquisition of an equity stake of more than 75% (directly
plus indirectly) in Adglobal360 India Private, India, through acquisition of equity
shares of Adglobal360 Singapore Pte, Singapore (which is the holding company of
Adglobal India), from its existing shareholders and acquisition of equity shares of
Adglobal, India, from its other existing shareholders.
\par {\pntext }
}
}
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Languages.
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English, Hindi
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Professional associations/memberships
\par
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\u160\'3f
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\u8226\'3f\tab }\ls254 {\pntext }
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Bar Council of Delhi; Institute of Company Secretaries of India.
\par {\pntext }
}
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Involved with the Ministry of Commerce and Industry, GoI in discussing and actively
taking up trade issues under the Comprehensive Economic Partnership Agreement
(CEPA) and other bilateral arrangements with Asian countries including Japan.
\par {\pntext }
}
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Interacted with the committee constituted on ease of doing business in India and to
review the existing regime on labour laws, licenses and approvals and related law
reforms, by the DPIIT, under chairmanship of Mr Ajay Shankar.
\par {\pntext }
}
}
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Member of the Legal Services Committee of National Council and the Corporate and
Tax Committee of Northern Regional Council of the Confederation of Indian Industry
(CII).
\par {\pntext }
}
}
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Member of part of CII\rquote s committee on Ease of Doing business in India.
\par {\pntext }
}
}
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Part of working group constituted by DPIIT, in relation to new Industrial Policy
(2017) of the Government of India.
\par {\pntext }
}
}
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Worked with Sub-committee on Improvement of Business Environment under India-Japan
CEPA representing Indian industries and also understanding issues raised by
Ministry of Economy, Trade and Industry (METI), Japan.
\par {\pntext }
}
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Japan Chamber of Commerce and Industry in India (JCCII) and KEIDANREN.
\par {\pntext }
}
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Worked with the Expert Committee constituted by the MCA on the cost audit scenario
in India.
\par {\pntext }
}
}
}
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{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Part of the working group in the Injeti Srinivas Committee constituted for
decriminalisation of offences under the Companies Act 2013.
\par {\pntext }
}
}
}
}
{\b0 \cf19 \f2 \ri100 \i0 \qj \fs20 \li100
}
}
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
\u160\'3f
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{\b0 \cf23 \f2 \i0 \fs20
\par
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Vishal Nijhawan, Senior Associate
\par
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}
\u160\'3f
\par
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\u160\'3f
}
{\b0 \cf23 \f2 \i0 \fs20
\par
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{\b1 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
\par
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{\b0 \cf19 \f0 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f0 \i0 \fs20
T
}
}
+91 114 159 0700
\par
}
{\b0 \cf19 \f0 \ri0 \i0 \qj \fs20 \li0
}
{\b0 \cf19 \f0 \i0 \fs20
F
}
}
+91 112 692 4900
\par
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}
{\b0 \cf19 \f0 \i0 \fs20
E
}
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vishal.nijhawan@amsshardul.com
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}
{\b0 \cf19 \f0 \i0 \fs20
W
}
}
{\b0 \cf19 \f0 \i1 \fs20
www.amsshardul.com
\par
}
}
}
}
\u160\'3f
\par
}
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{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f2 \i0 \fs20
\par
}
}
}
}
\u160\'3f
\par
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{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f2 \i0 \fs20
}
}
LLB, University of Delhi
\par
}
}
}
\u160\'3f
\par
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{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f2 \i0 \fs20
Areas of practice.
}
}
More than six years of experience in the field of M&A, banking and finance, joint
ventures, other general corporate advisory and public policy and regulatory affairs
matters.
\par
}
}
}
\u160\'3f
\par
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{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f2 \i0 \fs20
Recent transactions
\par
}
}
}
}
\u160\'3f
\par
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\u8226\'3f\tab }\ls264 {\pntext }
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised Mitsui Fudosan Co, Japan (through its investing entity, Mitsui Fudosan
(Asia) Pte, Singapore), on the acquisition of a 50% equity stake in Akarshak
Infrastructure Private (which will be developing a commercial real estate project
in Bengaluru, Karnataka).
\par {\pntext }
}
}
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised the Kubota Corporation in relation to entering into a joint venture with
Escorts to manufacture tractors in India.
\par {\pntext }
}
}
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li480
{\b0 \cf19 \f2 \ri0 \i0 \ql \fs20 \li480
Advised Hakuhodo, Japan (through its investing entity, Hakuhodo Investment
Singapore Pte, Singapore), on the acquisition of an equity stake of more than 75%
(directly plus indirectly) in Adglobal360 India Private India, through acquisition
of equity shares of Adglobal360 Singapore Pte, Singapore (which is the holding
company of Adglobal, India), from its existing shareholders and acquisition of
equity shares of Adglobal India from its other existing shareholders.
\par {\pntext }
}
}
}
}
{\b0 \cf19 \f2 \ri100 \i0 \qj \fs20 \li100
}
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf19 \f2 \i0 \fs20
Languages.
}
}
English, Hindi
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}
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}
\u160\'3f
\par
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Professional associations/memberships.
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Bar Council of Delhi.
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Part of the working group in various committees constituted by the MCA to amend the
Companies Act 2013:
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expert committee on the Companies (Cost Records and Audit) Rules 2014;
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Company Law Committee (2018) to review offences under the 2013 Act; and
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Company Law Committee (2019) to review offences under the 2013 Act.
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Assisted FICCI in providing inputs to the Ajay Shankar Committee for its report on
ease of doing business in India.
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Cross-border - Company Law and Corporate Governance
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Tax incentive schemes for foreign investors
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Published on 01-Apr-2019
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Country Q&A
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Doing business in India: overview
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Law stated as at 01-May-2017
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Establishing a business in India
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