DOING BUSINESS IN INDIA


Doing business in India guide - E&Y
 
In the past year, the Government has taken steps toward creating non-adversarial,environment in India. Measures have also been taken to attract foreign investment, which include easing foreign direct investment (FDI) policy and extended cooperation with many countries (e.g., Japan, the US, etc.). Several schemes have been announced and implemented to address diverse social-economic needs and “Make in India”. This scheme promotes manufacturing in India to boost job creation and skill enhancement, facilitate investment, foster innovation, protect intellectual property, and build best-in-class manufacturing infrastructure. Other schemes include smart cities, digital India and Swachh Bharat Abhiyaan (Clean India leading cap). These schemes have opened up multifaceted opportunities for the multinational corporation (MNC) such as financial institutions, private equity firms, equipment suppliers, contractors and consultants. Read more about this report here
 
FDI in Figures
 
India is one of the largest FDI recipients in the world and is expected to receive increasing amounts of foreign investment. This is thanks to its many assets, especially its high degree of specialisation in services, with a skilled, English-speaking and inexpensive labour force and a potential market of one billion inhabitants. A few years ago, investment into India fell due to the debt crisis in the Eurozone, corruption scandals and political paralysis that had eroded investor trust. However, a number of reforms to attract FDI have been put in place to boost growth (such as opening the retail sector to foreign investment). The Indian business climate seems to have improved in 2015, and the country gained four places in the Doing Business report of the World Bank, even though it still ranked 130th out of 189 countries.
 
The Indian State is trying to promote FDI in the industry sector. During a diplomatic visit to China in May 2015, Mr Modi managed to obtain USD 20 billion in promised investment in industry parks. in August 2015, the Taiwanese company Foxconn announced that it planned to invest USD 5 billion to move some of its production to India. In 2014, FDI flows to India increased sharply, reaching USD 35 billion. This increase continued and FDI reached USD 73.5 billion at the end of the 2014-2015 fiscal year. Find out more
 
Foreign Direct Investment 2012 2013 2014
FDI Inward Flow (million USD) 24,196 28,199 34,417
FDI Stock (million USD) 224,987 226,552 252,331
Number of Greenfield Investments*** 781 496 680
FDI Inwards (in % of GFCF****) 4.2 5.1 5.9
FDI Stock (in % of GDP) 12.3 12.1 12.3

Source: UNCTAD, 2015

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows in India By Countries and Industry

Main Investing Countries 2015, in %
Mauritius 29.0
Singapore 21.0
The Netherlands 11.0
Japan 6.7
USA 5.9
United Kingdom 4.6
Germany 3.6
France 2.0
Cyprus 1.9
UAE 1.1
Main Invested Sectors 2015, in %
Service sector 18.4
Telecommunications 16.0
Trade 15.6
Car industry 14.5
IT and software 12.6
Drugs and pharmaceutical products 8.5
Construction 4.2
Chemical products (except for fertilisers) 3.7
Energy 3.7
Metallurgy 2.7

Source: Department of Industrial Policy and Promotion, Ministry of Commerce and Industry - 2016.

 

Protection of Foreign Investment

Bilateral Investment Conventions Signed By India
India has bilateral investment treaties with the United Kingdom, France, Germany, Canada, Malaysia, and Mauritius. UNCTAD has an updated list of conventions signed by India.
International Controversies Registered By UNCTAD
Foreign investors frequently complain about a lack of "sanctity of contracts." UNCTAD offers a database listing disagreements and the countries involved.
Organizations Offering Their Assistance in Case of Disagreement
ICCWBO , International court of arbitration, International chamber of commerce
ICSID , International Center for settlement of Investment Disputes
United States Council for international Business 
Member of the Multilateral Investment Guarantee Agency
Yes.
 
Foreign Direct Invest - Frequent Question and Answer
 
India has the distinction of being one of the fastest growing economies in the world. In the past two decades, liberalization has transformed India from being an inward-looking state-based economy, into a globalized market-based economy, now identified as one of the most attractive investment locations globally. With Gross Domestic Product (GDP) growth rate of about 5.7% in the first quarter of 2014-15 and a sustained 7-8% average growth for the past decade, the Indian economy has shown itself to be robust and remarkably resilient during the global economic slowdown. The success of Indian economic reforms is evidenced by high GDP growth, high growth rate in the manufacturing sector, comfortable foreign exchange reserves, improved short-term debt profile and buoyant exports. India’s potential as a prospective investment destination has been attributed to a variety of reasons. Read more about FDI in India here 
 
Doing business in India - Country Economic profile
 
Globally, India stands at 130in the ranking of 189 economies on the ease of starting a business. The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for an entrepreneur in India to start a business. Smart regulation ensures that standards are met while making compliance easy and accessible to all. Coherent and transparent rules, efficient processes and adequate allocation of resources are especially important in sectors where safety is at stake. Construction is one of them. In an effort to ensure building safety while keeping compliance costs reasonable, governments around the world have worked on consolidating permitting requirements. What construction permitting reforms has Doing Business recorded in India? What does it take to comply with the formalities to build a warehouse in India? According to data collected by Doing Business, dealing with construction permits there requires 33.60 procedures, takes 191.50 days and costs 26.00% of the warehouse value. Read more about India economic profile here.

 

 





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