Doing Business in India

Doing Business In:

India

Country StatisticsCountry Statistics

Capital – New Delhi.

Geographical Size – slightly more than one-third the size of the United States.

Population – 1.14 Billion (2nd most on the planet). 63% between ages of 15 and 64.

Government – Federal Republic.

Administrative Divisions – 28 States and Seven Union Territories.

Legal System – Based on English Common Law. Separate law applies to Muslims, Christians, and Hindus.

Economic ConditionsEconomic Conditions

Diverse economy – farming and agriculture, modern industry, variety of services.

Service industry accounts for more than half of country output with less than one-third of labor.

Agriculture accounts for three-fifths of work force.

Current GDP - $3.319 Trillion. By sector: agriculture 17.2%, industry 29.1%, services 53.7%. Labor force: 523.5 Million.

EnvironmentEnvironment

Climate – ranges from tropical monsoon in the south to temperate in the north.

Natural Hazards – droughts, flash floods, flooding from monsoonal rains, severe thunderstorms, earthquakes.

Environmental Issues – deforestation, soil erosion, overgrazing, air pollution, water pollution.

CultureCulture

HISTORY India’s culture has been shaped by

their long history and unique geography, customs and traditions over the past five millennia.

Ancient India is one of the world’s earliest urban civilizations.

CultureCulture

India is the birthplace of several different religious systems: Hinduism- is the predominant religion in India with more than

80% following it. Buddhism- basic teachings involve the Four Noble Truths and

the Eightfold Path. Sikhism- teaches the pursuit of salvation through disciplines,

personal meditation on the name and message of God. Practice of Islam- is a monotheistic religion which originated

with the teaching of the Islamic prophet Muhammad.

CultureCulture

Language:

There are 415 living languages in India (different dialects).

Society:

Caste System- represents the social stratifications in India, where social classes are defined by an inherited social status.

Family and Arranged Marriages Arranged marriages have been a tradition in Indian culture for

centuries. Low divorce rates.

CultureCulture

Bollywood- the Mumbai based film industry

Bollywood is the largest film producer in India and one of the largest in the world.

ResourcesResources

Land area 3,287,263 sq km; 2.4% of the world’s surface

57% is agricultural land

Education 17% of the world's population, but some 40% of the world's illiterates.

India also possesses a large pool of highly educated and vocationally qualified people, although they make up a small fraction of the population.

ResourcesResources

GDP - real growth rate: 9.2% (2007 est.)

Population: 1,147,995,904 (2008 est.)

Population growth rate: 1.578% (2008 est.)

Population Below Poverty Line: 25% (2007 est.)

ResourcesResources

Agriculture sector employs about 60% of the country's workforce but accounts for

less than one-fifth of GDP.

Mining Mining contributed 2.7% of GDP in 2006/07

Titanium reserves are estimated to account for 30% of global reserves of the metal.

ResourcesResources

Energy: 5th largest power producer in the world

More than 700bn kwh

Shortages are substantial- occurring 8% during normal hours 15% during peak

Majority of the power is dirty

Sources: Coal is the dominant power source at 62% Hydroelectric 25% Nuclear only 3%

ResourcesResources

Water Supply

86% of the population has access to improved water

Only 30% treated

Does not meet international standards

No city has continuous water supply

PoliticsPolitics

Founding: January 26, 1950

Type: Sovereign, socialist, secular, democratic republic.

Constitution: Legal Rights, Not fundamental rights

Rivals: Pakistan

Two Main Parties: -

Hindu Nationalist Bharatiya Janata Party

- The Congress Party

Current Political Current Political ClimateClimate

Who’s in power: The Congress Party

Pres. Devisingh Patil

Dr. Manmohan Singh

New BusinessNew Business

Regulatory Agencies Companies Act of 1956

Companies Bill 2008 Various environmental agencies

New Business Steps

Special Economic Zones

Developing Developing EntrepreneurshipEntrepreneurship

Foreign outsourcing of labor to India

China vs. India Entrepreneurial Culture

Chinese communism Business Icons Entrepreneurship-oriented bodies

I.e. TiE Network Muslim Minority

Why They WonWhy They Won

Current Administration Should have lost because:

Mumbai attacks Rampant corruption

Won because Economic growth Muslim Minority

Overview of IndustriesOverview of Industries

Marketplace for Indian business is quite varied.

Agriculture, Automobiles, Business Services, Computers, Education, Information Technology, Travel and Tourism.

Major IT Companies – Tata, Wipro, Infosys, Satyam Computer Services.

Large Indian Business – Tata Group, Birla Group, Reliance Ambani Group.

Recent News Recent News HeadlinesHeadlines

Scandal at Satyam. Chairman admits to creating fictitious cash balance of over $1

billion. Board of Directors replaced by Indian Government and founders

jailed and awaiting trial. PWC partners arrest on charges of criminal conspiracy and

cheating in connection with a fraud investigation.

Cut Backs at Infosys. Cutting employee bonuses and compensation packages. Cuts revenue forecasts for current fiscal year. Warns of struggles leading to year 2010.

World Bank – Wipro and Megasoft. Indian firms blacklisted from new contracts with World Bank.

Trade RelationsTrade Relations

India accounts for $525 billion in trade

2008: Accounts for nearly 1.5% of world trade

Introduced the “Foreign Trade Policy” in 2004

India should achieve 5% world trade by 2020

Major trading partners: U.S., China, EU, Russia, Japan

India – U.S. TradeIndia – U.S. Trade

The United states is India’s largest trading partner

Bilateral merchandise trade in 2007 was $41.6 billion

Formed The United States-India Trade Policy Forum (TPF) in 2005

In April 2007, created the Private Sector Advisory Group (PSAG)

India Trade India Trade AgreementsAgreements

Free trade agreements exist with India and Sri Lanka, Afghanistan, Chile, and Mercosur

Trade agreements exist with 18 other countries including China, Japan, Korea and others.

India – EU Strategic Partnership Joint Action Plan was formed during the Summit of 7 in September 2005.

FDIFDI

Total FDI in 2008 estimate: $142.9 billion, 23rd in the world (CIA factbook) China 7th, Brazil 16th

2007 – $95.96, 27th

2006 – $67.72, 31st

FDIFDI

Sector availability to FDI Automatic entry – does not mean 100% equity Approval from Government Prohibited Sectors

Atomic energy Lottery business Gambling and Betting Retail trading, except Single Brand Product

retailing

FDIFDI

Sample sector entry route and FDI caps Atomic Minerals: 74% cap and Government

approval Cable Networks: 49% cap and Government

approval Insurance: 26% cap and automatic entry Petroleum & Natural Gas: 100% cap and

automatic entry Publishing a newspaper: 26% cap and

government approval Cellular service: 74% cap and automatic up to

49%, government approval beyond 49%

Intellectual PropertyIntellectual Property

Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) - 1995 Negotiated during the Uruguay round of GATT Tries to close the gaps in intellectual property

rights in different countries Incorporates the Paris Convention (patents) and

the Berne Convention (copyright) rules India had 10 years to comply with TRIPS


Patents Indian Patents Act 1970, Amended 2005 In compliance with TRIPS Patents are good for 20 years, previously 14 Uses first to file system of granting patents Expanded what can be patented In 2006-2007 – 28940 patents filed, 7539 granted

US in 2007 – 484955 filed, 182901 granted China in 2007 – 245161 filed, 67948 granted

In 2005-2006 – 24505 patents filed, 4320 granted In 2004-2005 – 17466 patents filed, 1911 granted


Copyrights The Indian Copyright Act,1957 Based on Berne Convention 1952 Brought into compliance with TRIPS in 2000 Copyrights now last 50 years after the death of

author, previously only 25 years Expands what can be copyrighted – computer

programs Getting a copyright has been made easier, can apply

online Still cumbersome to get a copyright – example a CD