SECTOR PROFILE

WHY INDIA?01

CHAMPION SECTORS02

PROFILE03

INVESTMENT OPPORTUNITIES04

BUSINESS & REGULATORYENVIRONMENT IN INDIA

05

WHY INDIA?01

ADVANTAGE INDIA

World’s largest democracy with

1.3 billionpeople

Expertise acrossa spectrum of

services

Largecompetitively-priced skilled

talent pool

Large andgrowing domestic

consumermarket

Demonstratedcapability to deliver

high-quality,cost-effective

solutions

Integrated taxstructure

Enablingbusiness

environment

Focus oninfrastructuredevelopment

Access totechnology

INDIA - A FAVORED INVESTMENT DESTINATION

Fastestgrowing major economy in the world in 2018 and 2019

6th largest economy in the world by nominal GDP and 3rd largest economy globally by PPP

1st rankglobally in inward greenfield FDI inflows in 2016

India ranks 8thin global services exports accounting for 3.4% ofworld trade incommercialservices

Services,

57%

Automobile, 5%

Pharma, 4%

Power, 4%

Others,

26%

Chemicals, 4%

Agriculture17%

Industry22%

Services61%

6.1

60.1Mauritius, 34%

Singapore, 17%

Japan, 8%

%UK, 7%

USA, 6%

Netherlands, 6%

Others,22%

India’s GDP is likely to touch US$ 5 trillion by 2025

2.6

4.7

2017 2023

GDP in current prices (US$ Trillion) GVA share of sectors in FY18

43.2

163.1

27.8

95.7

2004-05 2016-17

Exports

Imports

Services Trade (US$ Billion)

14%

10%

1%

1%74%

Category-wise Services Export (2016-17, % share)

17%

15%

1%1%

66% Travel

Transport

Insurance

G.n.i.e

Miscellaneous*

Category-wise Services Import(2016-17, % share)

Gross Foreign Inflows-FDI (US$ Billion) Top FDI source countries (% share in inflows- Apr’00 to Mar’17)

G.n.i.e- Government not included elsewhere; * includes software, business, financial and communication services

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

Sector-wise FDI inflows (% share in inflows-Apr ‘00 to Mar’17)

75

60

45

30

15

0

Source: IMF, FDi intelligence report 2017, RBI, WTO

GROWTH ENABLERS

Growing domestic consumer base Large, young human capital base

Rising disposable income and urbanization More than 800 million people under the age of 34 years

Urb

an p

op

ula

tio

n (%

of

tota

l)

Pe

r-c

ap

ita I

nc

om

e (

INR

)

18,523

61,855

27.8

31.270000

60000

50000

40000

30000

20000

10000

0

32.0

31.0

30.0

29.0

28.0

27.0

26.0

2001 2011

Urban Population and Per-capita Income

Per capita income Urban population

Per-capita Income data pertains to 2001-02 and 2011-12Source: Census 2011, MOSPI

Size of the workforce (millions)*

37

35

27

1400

1200

1000

800

600

400

200

0

Korea Thailand Japan US Europe China India

2015 2025 (Projected) 2050 (Projected)

49

47

36 77

71

55

213

217

235

492

466

405

1008

984

795 860

985

1145

* Population aged 15-64 yearsSource: United Nations population statistics

CHAMPIONSECTORS

02

Transport

& Logistics Healthcare Accounting

& Finance

Construction

& Related

Engineering

Services

Media &

Entertainment

Education

Services Financial

Services

Environmental

Services

Tourism

& Hospitality

IT & ITeS Legal

Services

Communication

Services

((( (((

ACCOUNTING AND FINANCE

Definition

Accounting may be defined as

preparation and analysis of

financial information reported

to internal and external users

via financial statements.

Auditing may be defined as the

evaluations of the reliability and

credibility of financial information

as well as “the systems and

processes responsible for

recording and summarizing that

information”.

Under the Services

Sectoral Classification List

(MTN.GNS/W/120),

Accounting and Auditing

Services are included

under Professional

Services.

PROFILE:ACCOUNTING AND FINANCE

03

ACCOUNTING AND FINANCE

• As of April 2015, the Institute of Chartered Accountant of India has 2,50,000 members out of

which 152,899 are Associates and 76,247 are Fellows. In addition, 830,000 students are

enrolled in the Chartered Accountancy course.

• The accounting and auditing sector in India is significantly fragmented. In April 2017, there

were 85617 entities in the sector, including large, medium and small firms.

• India’s accounting and auditing sector revenue has been increasing at the rate of 15-17

percent annually. This is the result of increasing FDI into India.

• The new regulations including the implementation of the Companies Act 2013 and

convergence of the Indian Accounting Standards with the International Financial Reporting

Standards has stimulated the demand for the Indian chartered accountants in the West Asia,

Australia and Singapore.

Profile

ACCOUNTING AND FINANCE

• The accountancy profession in India is self-regulated. Until 2013, both the Institute of

Chartered Accountants of India (ICAI) and the Institute of Cost Accountants of India (ICAI-

CMA) were responsible for regulating Chartered Accountants (CA) and Cost and

Management Accountants, respectively.

• However, as the Companies Act of 1956 was revised in 2013, the Act provided for the

establishment of the National Financial Reporting Authority (NFRA), which is envisioned as

the entity responsible for the overall regulation of the accountancy profession.

• The NFRA is expected to

• Monitor and enforce compliance with accounting and auditing standards;

• Oversee the quality of the services provided by members of the profession;

• Make recommendations to the government on the establishment of accounting and

auditing policies and standards; and

• Investigate and sanction professional misconduct by auditors and audit firms. As of

2017, the NFRA has not yet become operational.

Legal & Regulatory Environment

INVESTMENTOPPORTUNITIES

04

ACCOUNTING AND FINANCE

Accounting and auditing services are

categorized as professional services under WTO

General Agreement on Trade in Services.

All four modes of services supply are used for

trade in accountancy services. But Mode 2 and

4 are widely used channels for accounting and

audit exports with regards to India.

Accounting and auditing experts are on a high

demand globally. There is a significant base of

qualified and certified accounting professionals

in India, who can visit a foreign country on a

temporary basis to offer their services.

Trade Potential Trade Challenges

Several nations require audit and

accountancy professionals to be

citizens and residents of the home

nation

Differing professional certification

requirements create barriers for the

entry of Indian audit professionals

Significant differences in accounting

practices across nations leads to

differing accounting norms and

lack of standardisation in

accounting practices

ACCOUNTING AND FINANCE

Relaxation in allowing FDI in accounting

and auditing services is expected to

provide greater exposure to young

accountancy professionals and boost

their potential to export services

Allowing foreign audit firms through “joint

audit” will be an opportunity for domestic

audit firms to interact with bigger global

firms to share their knowledge and

compete on a global scale

Investment Potential Investment Challenges

Only graduates of an Indian university can

qualify as professional accountants in India.

Internationally recognized firm names may

not be used, unless they comprise the

names of proprietors or partners, or a name

already in use in India.

The ICAI continues to ban the use of logos

of accounting firms. Only firms established

as a partnership may provide financial

auditing services. Foreign accountants may

not be equity partners in an Indian

accounting firm.

BUSINESS & REGULATORY ENVIRONMENT IN INDIA

05

REFORMS FOCUS

Fiscalprudence andaccountability

Integratedtax

regime

Enabling Ecosystem

Servicespush

Job creation and inclusive

growth

REGULATORY ENVIRONMENT - INDIA

Foreign Investment Framework

• Governed by Foreign Exchange Management Act, 1999

• Progressive liberalization in the policies

• Automatic route (No prior approval requirement) such as railway and road infrastructure

• Approval route (Prior government approval required before setup) such as multi brand retail trading

Foreign Direct Investment (FDI) in India

Evolution of foreign investment regulations

FDI INVESTMENT ROUTE

Under Automatic Route Prior Approval Route

No requirement of any prior regulatory approval

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Required approval from Govt. of India – Considered by respective Administrative Ministry/Department.

BUSINESS PRESENCE IN INDIA - FORM OF ENTITIES

Establishes local presence

Operates as a foreign company

Foreign Company

Liaison Office Project Office Branch Office Joint Ventures Limited Liability Partnership

Wholly Owned Subsidiary

Key considerations for choosing

investment vehicles

• Commercial considerations

• Regulatory framework (prior approval requirements for Chinese companies)

• Tax considerations

• Cost of operations{

This Report has been prepared by CII.