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Introduction
The geopolitical changes that have taken place around the world in the last few years and the gradual changes in Indias economic policies have led to a transformation in the bilateral relationship between India and the US which is best reflected in the vastly increased cooperation of the two countries in political, strategic and economic spheres.
Indo-US co-operation in battling terrorism around the world is well established, as is Indias commitment to promote globalization and democracy, to alleviate poverty both at home and abroad and to work closely with the US to contain regionally focused armed tension and promote global peace. Strategic co-operation between the two countries is probably at an all time high with the much debated Indo-US nuclear deal.
In the economic sphere, waves of economic reform that swept through the Indian economy from 1991 onwards brought a sea change in the economy as well as the global perception of it. India started being perceived as an attractive destination for investments. The India story comes for an interesting telling and at this point the world is witnessing a strong, fast-growing and vibrant Indian economy, which is rapidly integrating with the global economy.
India has an abundant English speaking, educated, skilled human resource base which offers its services at far cheaper rates than that may be found in any other developing or developed country. India is worlds leader in global outsourcing with more than 80% of the market.
India has at this time a young population with roughly 80% of its population below 45 years of age.
The India market is made more attractive by the fast growing consumer-class that is markedly western in its orientation With favourable foreign investment policies, tax incentives and strong economic fundamentals, India offers attractive returns to prospective investors.
Manufacture of items reserved for Small Scale Sector. Proposals attracting locational restrictions GREAT OPPORTUNITIES FOR US FDI! Note The exemption from licensing also applies to all substantial expansion of existing units.
Opportunities exist for investing in India in sectors as diverse as tourism and infrastructure, petrochemicals and mining technology and engineering, real estate, biotechnology, bio-informatics and nanotechnology. India is also being seen as the global destination for R&D, engineering design and prototype development and a manufacturing hub for high technology products.
FDI Policy
According to the current policy, FDI is not permitted in the following sectors Certain sectors, namely: Atomic energy; Lottery business/gambling and betting; Agriculture (excluding floriculture, horticulture, seed development, animal husbandry, pisciculture and cultivation of vegetables, mushrooms, etc.) Plantations (excluding tea plantation)
Acquisition of Shares
Acquisitions may be made of an existing Indian company which may be either a private or a public company.
Acquisition of shares of a public listed company is subject to the guidelines of the Securities Exchange Board of India (SEBI)
Foreign investors looking at acquiring equity in an existing Indian company through stock acquisitions can do so under the automatic route.
Global Depository Receipts (GDRs)/ American Depository Receipts (ADRs)/ Foreign Currency Convertible Bonds (FCCBs)
Indian companies listed on the stock exchange are allowed to raise capital through GDRs/ADRs/FCCBs. Foreign investment through GDRs/ADRs/FCCBs is also treated as FDI. Issue of GDRs/ADRs does not require any prior approvals except where the FDI after such issue would exceed the sectoral caps, in which case prior approval of FIPB would be required. Issue of FCCBs upto USD 500 million also does not require any prior approvals
Preference shares
Indian companies can mobilize foreign investment through issue of preference shares for financing their projects/industries.
Repatriation of Capital
Foreign capital invested in India is generally repatriable, along with capital appreciation, if any, after the payment of taxes due on them, provided the investment was on repatriation basis.
Laws Contd
Geographical Indications of Goods Act, 1999 Indian Patents Act, 1970 Designs Act, 2000 Industrial Disputes Act, 1947 Workmen Compensation Act, 1956 Employees Provident Fund Miscellaneous Provisions Act, 1952 Consumer Protection Act, 1956
investment
IT and ITES India is worlds leader in global outsourcing with more than 80% of the market share. Electronic Hardware Technology Park (EHTP) and Software Technology Park (STP) schemes. Undertakings setup in EHTP/STP are eligible for deduction of 100% export profits till March 31, 2009 100% FDI permitted without any prior approvals.
Exemption from Service Tax for both developer and a SEZ unit.
SEZ Contd.
No minimum export obligation. A 100% permitted under the automatic route for SEZ development. 15 year corporate tax exemption on export profits to a SEZ unit.
One main reason for growth implementation of product patent regime in India in accordance TRIPS.
Nanotechnology
100% FDI permitted without prior approval.
100% pass through tax incentive to VCFs and FVCIs
Manufacturing
What is needed? Globalization in Indian manufacturing capabilities by creation of dynamic manufacturing hubs in India. India is also being seen as the global destination for R&D, engineering design and prototype development and a manufacturing hub for high technology products. expansion in core sectors in India such as
Steel
Chemicals and petrochemicals Consumer durables
Retail Trading
Single brand product retailing permitted under FDI policy.
Tourism
India is fast emerging as one of the most enticing destinations for the global leisure traveler. The tourism sector in India is expected to grow at 8 per cent per annum, in real terms, between 2007 and 2016.
As travelers surge into India, the demand for rooms, across segments, has skyrocketed. Hotels in the luxury and business traveler segment are recording nearly 100 per cent occupancy, spiraling tariffs, and a strain on capacity and manpower.
Tourism contd
The present governments major policy initiatives include: Liberalization in aviation sector Pricing policy for aviation turbine fuel which influences internal air fares Rationalization in tax rates in the hospitality sector Tourist friendly visa regime Immigration services Procedural changes in making available construction of hotels Allowing setting up of Guest Houses land for
Tourism Contd.
100% FDI is allowed in Tourism in India 100% FDI is also allowed in hotels, which includes restraints, beach resorts and other tourist complexes providing accommodation and/or catering and food facilities to tourists. Tourism related industries also include travel agencies, tour operating agencies, units providing facilities for cultural, adventure and wild life experience to tourists, surface, air and water transport facilities to tourists, leisure, entertainment amusement, sport and health units for tourists and convention/seminar units and organisations.
Tourism Contd.
Outbound Tourism With the rise in living standards, India has become an impressive source for outbound tourist traffic. Thomas Cook, Cox & Kings India Limited, Star Luxury Cruises, Queen Mary II Cruise Liners etc have launched full fledged operation in India The introduction of package tours to all five continents by various travel agencies/companies has become very popular over the past few years.
Tax Contd
Fringe Benefit Tax (FBT) - ESOPs brought under FBT (w.e.f. Apr 1, 2007) Banking Cash Transactions Tax 0.1% to apply for withdrawals over INR 50,000 Double Tax Avoidance Agreements (DTAAs) Other Direct Tax Wealth Tax Important concept Transfer pricing and determination of arms length price (ALP)
Indirect Tax
Customs Duty CENVAT (Excise Duty) Sales Tax Value Added Tax Service Tax Octroi Duty/Entry Tax Stamp Duty R&D Cess Works Contract Tax