Cultural, Political, Legal, and Economical analysis of

India for Carbon Engineering company

“I certify that all the work done below is mine”

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Contents
Executive Summary.....................................................................................................................................3

Introduction.................................................................................................................................................4

Cultural Factors...........................................................................................................................................4

Political Factors...........................................................................................................................................6

Legal Factors..............................................................................................................................................11

Economic Factors......................................................................................................................................11

Recommendations.....................................................................................................................................17

References.................................................................................................................................................19

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Executive Summary

Extreme weather events including severe cyclones, bushfires, droughts, and rising

temperatures are being brought on by climate change, which is also lowering food production

and harming wildlife habitat. The most significant environmental hazard to the current energy

system is climate change, which is brought on by CO2 emissions from fossil fuels. A company

called Carbon Engineering is committed to reducing carbon dioxide emissions on a global scale

and solving the issue of large-scale CO2 emissions into the atmosphere. The following services

are used:

1. Removal of Carbon Permanently

2. Fuels with Low Carbon Intensity

3. Low-Carbon-Intensity Products

They are aiming to remove 1 million tonnes of CO2 from the atmosphere annually, which is nearly the

same as 40 million trees doing their job. To help Carbon Engineering decide whether they can enter the

Indian market and whether there are any risks involved, I will study the cultural, political, legal, and

economic aspects of India in the report.

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Introduction

When it comes to addressing climate change, developed nations have a poor track record. The

recently announced reinforced climate action promises, which include commitments to achieve

net-zero emissions by 2050, continue this trend and, like previous announcements, fall well

short of what is required to secure the survival of the world. Pressure on developing countries

to "do more" and commit to similar net-zero goals just transfers responsibility for climate

action on the world's poorest citizens. India has also said that as part of a five-function plan that

calls for a 50% decrease in emissions by 2030, it will achieve decarbonization by 2070. The

verdict must be examined in light of India's developmental requirements.  (Kanitkar, 2022)

Direct Air Capture (DAC) technology is also being developed by an Indian business by the name

of Carbon Clean Solutions, which has obtained funding from the UK's Department of Energy and

Climate Change. In addition to helping power plants and other large emitters tackle climate

change, the company also gives them the opportunity to sell carbon dioxide they have captured

as a raw material for making commercial chemicals, fire extinguishers, dry ice, and carbonated

drinks. (Abrar, 2022)

Due to the fact that most of India's oil is produced in a small number of locations, including

Mumbai, Assam, Gujarat, and Kakinada, there are certain restrictions on the use of air to fuel

technology in India (Andhra Pradesh). We will examine the various cultural, political, legal, and

economic factors that carbon engineering should take into consideration before entering the

Indian market, as well as opportunities and threats for the company. The companies known for

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producing oil, such as IOCL, HPCL, ONGC, and Gujarat Petroleum, are controlled by Central or

State governments.

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Cultural Factors

Values, attitudes, beliefs, behaviours, and conventions make up a society's culture. The cultural

differences that exist between the countries in which international businesses operate and

their leaders must be understood. The north and south of India, a bilingual, multiethnic nation,

have major cultural differences. For a firm to succeed, long-term partnerships must be built.

Businesses looking to expand will discover a sizable, young population, a thriving export

economy, as well as a potential consumer base that far outpaces that of most other nations in

the world. In the United States, handshakes are frequently exchanged. The "namaste" greeting,

which is made by pressing your palms together and extending your fingers skyward, is also

widely used among Indians. The relationship between managers and employees in India is

hierarchical. The management level makes the decisions and communicates them to the staff;

startups are now more open to employee input, but there is still a long way to go. When

entering a meeting, you must always introduce yourself to the person with the most seniority.

You should take the card with your right hand and gently set it aside while exchanging business

cards. Before a meeting starts, there is frequently small talk. It's acceptable to inquire about

your personal life and to make recommendations regarding issues that may be plaguing the

families of your company colleagues. This is an excellent way to build trust. Even though

punctuality is expected, plan on interruptions and meetings that start and end later than

scheduled. Bear in mind that discussions might drag out in India. (Hofstede Insights, India,

2022)

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The majority of locals are fluent in English, which is the preferred language for conducting

business. Indians generally find it challenging to say "no" because they worry that it will be

perceived as disrespectful. Instead, they might give evasive responses like "we'll try" or "yes,

but." You need to listen carefully to what is being said. It is better to work together to find the

best answer than to use force. (Cultural factors to take into account when conducting business

in India, 2022)

In the 2019 Global Competitive Index, India's skill and labour characteristics placed it at 107th

and 103rd, respectively. According to The Global Competitiveness Report 2019, 2022, India's

current workforce has a trend toward declining skills; however, the current administration is

working to address this. The DESH STACK e-portal, a digital ecosystem for skilling and livelihood

that will support skilling, up-skilling, and reskilling, will launch on February 1, 2022, according to

Finance Minister Nirmala Sitharaman. This will play a vital role in digitally empowering

residents. In addition, the portal will have trustworthy skill credential, payment, and discovery
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layers built on APIs, all of which are essential for helping job candidates locate suitable

employment and business opportunities. (NSQF Budget Update | Budget 2022-23: Govt to

renovate National Skill Qualification Framework, launch digital ecosystem for skilling - The

Economic Times, 2022)

According to the most recent Cox & Kings survey, 65 percent of Indians are under the age of 35.

Young Indian travellers select sustainable vacations and leave a smaller carbon imprint when

they travel. 87 percent of respondents in the Cox & Kings poll expressed a strong passion for

environmental protection. Millennials in India said they intended to make up for it by choosing

the finest regional solutions.

To choose restaurants, people conduct internet or local research. A restaurant selling food

made with locally produced ingredients, drinks without straws, and a reduced or complete ban

on single-use plastics were at the top of the list for about 67% of young Indians. Millennials and

members of Generation Z make excellent investors in a purpose-driven business like Carbon

Engineering.

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Political Factors

The constitution of India governs the nation's political system. In India, a parliamentary

democratic republic, the president serves as the head of state and the prime minister as the

head of government. The phrase is based on the federal government structure even though it is

not part of the Constitution. India has a federal political system that is composed of a central

government and outlying states. The Constitution defines the organisational structure, scope,

and limits of both the federal and state governments. It is well-known, flexible (although the

Preamble is rigid and forbids further amendments to the Constitution), and acknowledged as

supreme, meaning that the country's laws must be upheld. (Government and politics in India,

n.d.)

The state does not assist any of the numerous religious or social organisations because it is

officially secular. Elections for the national and state legislatures have been held in India for

many years, and democracy there is well-established. The Indian National Congress (INC), which

has served in more governments than the Bharatiya Janata Party (BJP) since independence,

frequently in coalition with smaller regional parties, and the Bharatiya Janata Party (BJP), which

is the main constituent of the current National Democratic Alliance (NDA). Regional parties

have a substantial presence in a number of state legislatures, giving them a sizable voice in

Rajya Sabha politics. (Solutions, 2022)

The only route out of India's extreme poverty was upward. We reasoned that there was no

threat of returning to the condemned "Hindu rate of growth." The bulk of industries are

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currently struggling to survive. Also hurting the market is the GST the government imposed on

first-time buyers. One of the many errors that the GST Council will need to fix in the coming

months appears to be that there is no GST on resale. In an effort to escape the economic

quicksand, the government is bumbling around. However, it is simpler to say than to actually

execute. The government's odd demonetization, which had a disastrous impact on financial

flow, particularly in small and medium-sized firms, is now generally acknowledged to have been

a mistake. The administration then exacerbated the issue by hastily enacting an extremely

convoluted GST with an excessive number of tax brackets, which is slowing growth. (Is India a

stable place to do business in?, 2022)

With a 75% approval rating, Narendra Modi is the most well-liked political figure in the world

(and a net approval rating of 55 percent). In contrast, more than 46% of respondents to an

IANS-CVoter Budget Tracker survey conducted in the second half of January disapproved of the

way Modi and Finance Minister Nirmala Sitharaman were managing the economy. The latter

number is the lowest since 2013, the year before the BJP-led National Democratic Alliance

toppled Manmohan Singh's Indian National Congress (INC) cabinet in a federal election (NDA).

(The PRS Group, 2021)

India has committed to reducing its emissions to zero by the year 2070, falling short of the

important goal set by the COP26 summit for nations to make this commitment by the year

2050. (COP26: India PM Narendra Modi pledges net zero by 2070, 2022)

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Legal Factors

The government founded the separation of powers between the legislative, executive, and

judicial branches through a written Constitution. Both federated and unitary components can

be found in the Constitution. It establishes a solitary judiciary and allocates legislative authority

to the federal and state governments. India's legal system is also pyramidal, with the Supreme

Court at the top and a High Court serving as the top appellate court for each province. All High

Courts and other inferior courts or tribunals must follow the Supreme Court's rulings. The

Indian government has made a number of efforts in this direction since it is committed to make

doing business in India as easy as feasible. According to the World Bank's "Doing Business 2020"

report, the nation is placed 63rd in the world for "ease of doing business." India, on the other

hand, consistently placed among the top ten improvers in each of the last three assessments.

(Requirements for doing business in India, 2022)

Creating a corporation and incorporating it in India is a challenging process due to the country's

complex and multi-layered requirements. The participation of a local director, the validity of

foreign paperwork (in the event that a foreign firm wishes to incorporate in India), and prior

government clearance are a few examples. A foreign investor may create a representative

office, a branch office, a liaison office, a private limited company, a limited liability partnership,

etc. in India depending on the type of business. The business can reopen bank accounts for

international entities entering India after incorporation. The TMF Group's Global Business

Complexity Index 2021, which ranks 77 jurisdictions according to how complicated their

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business environments are, demonstrates the improvement. In the most recent survey, India is

now ranked 20th, down from 18th in 2020. (Requirements for doing business in India, 2022)

In response to Covid, the Indian government altered its stance on foreign direct investment to

stop opportunistic takeovers and acquisitions of Indian businesses. Therefore, regardless of the

sector or activity in which it is made, any investment from a neighboring country or where the

beneficial owner of an investment in India is based or a resident of a neighboring country

requires prior government authorization. (Requirements for doing business in India, 2022)

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Economic Factors

Due to its robust democracy and strong partnerships, India has the fastest-growing major

economy in the world and is predicted to rank among the top three economic superpowers

within the next 10 to 15 years. According to preliminary projections for the first quarter of

2021–2022, India's GDP was US$ 694.93 billion at the time. India is the country with the fourth-

largest population of unicorns, with 81 of them valued at a total of $73.2 billion. By 2025, India

is predicted to have 200 unicorns. (Indian Economy: Overview, Market Size, Growth,

Development, and Statistics, IBEF's 2022 report)

GDP Growth - India

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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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 GDP 2020

-8 -6 -4 -2 0 2 4 6

Pakistan India China Bangladesh Afghanistan

Inflation Rate - India

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1500

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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

India has to increase the number of non-farm jobs it creates between 2023 and 2030 in order to

increase productivity and the country's economy. Government initiatives like Make in India and

Digital India are encouraging many foreign businesses to set up shop in India. The Make in India

initiative was started by Mr. Narendra Modi, India's Prime Minister, with the intention of

advancing the manufacturing sector of the nation and raising the purchasing power of the
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average Indian consumer, which would then increase demand, encourage development, and be

advantageous to investors. The Indian government is seeking to boost the manufacturing

sector's contribution to GDP from its current level of 17 percent to 25 percent under the Make

in India initiative. (Indian Economy: Overview, Market Size, Growth, Development,

Statistics...IBEF, 2022)

GDP Per Capita in Dollars - India

2500

2000

1500

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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Two years after the COVID-19 pandemic started, the global economy is still plagued by

instability due to new waves of mutant variations, supply shortages, and a return of

hyperinflation in both developed and poor countries. In addition, the anticipated withdrawal of

liquidity by major central banks during the coming year could increase the volatility of

international financial flows. Analyzing both the rate of India's economy's recovery and the

potency of macroeconomic stability indicators is crucial. Assessing vaccine success is

particularly important since it acts as a defence against the economic disruptions brought on by

recurrent pandemic waves rather than only as a medical response. According to quarterly GDP
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predictions, the Indian economy has been steadily improving from the second half of 2020–21.

The economic impact of the epidemic wave that occurred in April–June 2021 was less severe

than that of the nationwide lockdown the year before, despite the fact that it was much more

severe in terms of health. Preliminary projections indicate that GDP will increase by 9.2 percent

in 2021–2022 As a result, real economic output will surpass that of the years prior to COVID in

2019–20. (Requirements for doing business in India, 2022)

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Recommendations

Every nation has set a goal to reach net zero carbon since the 2015 Paris Agreement in order to

ensure the sustainability of this planet for future generations. Through their services, Carbon

Engineering is on a mission to assist organisations and nations in doing the same. India is a

nation full of young people who are aware of these criteria and will take them into account

when picking their leaders in the next years. The current cultural environment in India is ideal

for Carbon Engineering to enter the market and make an impression on people. There is a rival

company called Carbon Capture Solution, but they have not yet begun operations in India, so

whoever begins first will benefit from being the first to market. The political environment is

favourable for market entry because the Indian government wants to reach net zero carbon

emissions by 2070, but the upcoming election in 2024 and the need to combat corruption will

be major obstacles to overcome. Despite globalisation, India still has strict legislative

restrictions on international businesses setting up shop there. However, following COVID-19,

the government has agreed to enter into some conversations with foreign businesses, such as

Tesla. Legal rules shouldn't be an issue with Carbon Engineering because it is a purpose-driven

company that will assist Indian businesses and the government in achieving their carbon

emission goals. The Indian economy is in recovery mode after suffering its worst blow since

independence, and the current administration is making sure to take the necessary measures to

ensure that the economy is back on track before the 2024 elections so that they can retake

power. The government stated in February 2022 that the corporate tax rate would drop from

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12 percent to 7 percent, which should benefit firms. In order to begin working with the

government before establishing operations in the nation, I advise Carbon Engineering to

appoint a small leadership team located in India. With these steps, Carbon engineering should

be able setup the business in India.

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