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7/31/2019 Presentation Icsi 26.4.08
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Prepared by:
Mythili Dinesh Leena FalnikarManoj Vartak Sameer ChavanDipti Joshi Vinay TerseManjeeta Chowdhary Swapna Jaeel
Manan Udani
AT 79TH SMTP
SETTING UP BUSINESS IN INDIA -
VARIOUS COMPLIANCES INVOLVED
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INDIAN ECONOMY AN OPPORTUNITY UNLIMITED
One of the largest economies in the world.
Strategically located.
Rapidly growing consumer market for branded consumer goods.(estimated to be growing at 8% per annum).
Skilled human resource and professional managers.
One of the largest manufacturing sectors in the world, spanningalmost all areas of manufacturing activities.
One of the largest pools of scientists, engineers, technicians and
managers in the world.
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A sophisticated and modern legal and accounting system.
Language is no barrier.
Rupee is easily convertible on Current Account at marketdetermined rate.
Free and full repatriation of capital, technical fee, royalty anddividends is available in the country.
Foreign brand names have arrived in the country and are freelyused.
Exemption from various duties and taxes in case of 100 per centExport Oriented units and units in Export Processing Zones.
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4
India: Fastest Growing Free Market Democracy
GDP Growth Forex FII Flow FDI Per Capita Inflation
1990 4.9 percent < USD 1 billion USD 1 million(1993)
USD 97 million USD 390 9 percent
2008* 8.7 percent USD 309 billion ason Mar 28, 2008
USD 16.1 billionin 2007-08
USD 12.7 billionin 2007-08 tillDecember (USD16 billion in 2006-07)
USD 740 7.4 percent ason March 29,2008
Source:Times of India, RBI, DIPP, Indian Budget, Rediff* Annualized data used to show comparison with 1990
http://epaper.timesofindia.com/Daily/skins/TOI/navigator.asp?Daily=CAP&login=defaulthttp://rbidocs.rbi.org.in/rdocs/Wss/DOCs/83782.xlshttp://www.dipp.nic.in/fdi_statistics/india_fdi_Dec2007.pdfhttp://indiabudget.nic.in/es2007-08/chapt2008/chap12.pdfhttp://www.rediff.com/money/2008/apr/11magic.htmhttp://www.rediff.com/money/2008/apr/11magic.htmhttp://indiabudget.nic.in/es2007-08/chapt2008/chap12.pdfhttp://www.dipp.nic.in/fdi_statistics/india_fdi_Dec2007.pdfhttp://rbidocs.rbi.org.in/rdocs/Wss/DOCs/83782.xlshttp://epaper.timesofindia.com/Daily/skins/TOI/navigator.asp?Daily=CAP&login=default7/31/2019 Presentation Icsi 26.4.08
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5
India's GDP at Current Prices: 2002-07
469 556638
737830
1006
0
200
400
600
800
1000
1200
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
(AE)
USDB
illion
105 105 135 145176
103 125204 231
270
561
191237
398453
0
200
400
600
800
1,000
1,200
19 99-0 0 2 00 2-0 3 2 00 5-0 6 2 00 6-07 2007-08
USDB
illion
Agriculture Industry Services
India: Among the Top-15 Countries in terms of GDP atconstant prices
The Indian economy has witnessed unprecedented growth. Booming services and industry sectors are providing the
required impetus to economic growth
Contribution of
Services -increased from
48 percent to
55 percent
Growth in sectors at Current Prices (2007-08):
Industry: 10.7%Services: 8.9%
Agriculture: 2.6%
Source:MOSPI Statistics
AE - Advance Estimates
Fastest GDP growth of 9.4 percent in 2006-07, since
last 18 years (at constant prices)
Indias GDP has witnessed high growth, and was the
second fastest growing GDP after China in 2006-07
The sound performance of each industry segment is
leading to the overall robust performance of the Indian
economy
http://mospi.nic.in/t1_30_11_07.htmhttp://mospi.nic.in/t1_30_11_07.htmhttp://mospi.nic.in/t1_30_11_07.htmhttp://mospi.nic.in/t1_30_11_07.htm7/31/2019 Presentation Icsi 26.4.08
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INTERNATIONAL INVESTORS HAVE REPOSED FAITH
IN INDIA..
0 0.5 1 1.5 2 2.5
Japan
Italy
HK
A us
France
Ger
UK
India
USA
China
Growth opportunities in India have attracted global investors including venture
capital funds and private equity investors.
Source: A T Kearney
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FINANCIALSERVICES 5%
PHARMA 6%
IT & ITES - 8%
OIL AND GAS 12%
CHEMICALS - 16%
AUTOMOTIVE - 44%
CROSSBORDER46%
DOMESTIC54%
TREND INDICATIVE OF INDIAOPENING HER DOORS TO
GLOBALISATION
M & As AND PRIVATE EQUITY DEALS
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8
Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1 billionTata Steel buys Corus Plc
USD 6 billionHindalco acquired Novelis Inc.
USD 2.3 billionTata buys Jaguar and Land Rover
USD 1.6 billionSuzlon Energy Ltd. acquires REpower
USD 1.58 billionEssar Steel acquired Algoma Steel
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9
BRIC Report,
Goldman Sachs
I have never seen
India so dynamic,
vibrant and full ofbusiness
opportunities.
- Dan Scheinman, Cisco
System Inc. as told to
Business Week, August
2005
We came to India for the
costs, stayed for the
quality and are now
investing for innovation.
John Redwood
Economic
Competitiveness Policy
Group, UK
India is now truly a
land of opportunity.
Jack WelchGeneral Electric
India is a
developed country
as far as intellectual
capital is
concerned.
Peter Loescher
President and
Chief Executive
Siemens
By 2032, India will be
among the three
largest economies in
the world.
Why India? Quote Unquote
Travyn
Rhall,ACNielsen
The Indian market has two
core advantages - an
increasing presence of
multinationals and an upswing
in the IT exports.
Craig Barrett
Intel
Corporation
India has evolved into
one of the world's
leading technology
centers.
Mr Paul de Voijs
Managing DirectorVolvo Car India
India is a very exciting
market and the luxury
car segment is growing
exponentially here.
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BUSINESS SECTORS
IN INDIA
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Diverse Industrial Sector.
Boost in Industrial growth since the commencement of Economicreforms of 1991
One of the largest manufacturing sectors in the world, spanningalmost all areas of manufacturing activities
Government has taken strong measures for Industrial Growth:
GLOBALISATION
PRIVATISATION
LIBERALISATION
Sectors Are Broadly Classified As:
INDUSTRIAL SECTOR
INFRASTRUCTURE SECTOR
SERVICE SECTOR
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INDUSTRIAL SECTORS
Auto Industry
Biotechnology
Cement
Drugs and Pharmaceuticals
Fertilizers
Food Processing
Gems and Jewellery Heavy Industry
Mines
Real Estate
Steel
Textiles Oil and Gas
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INFRASTRUCTURE SECTORS
Civil Aviation
Ports
Roads and Highways
Special Economic Zones
Health
Power
Telecommunications
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SERVICE SECTORS
Financial Sector
Business Process Outsourcing (BPOs)
Knowledge Process Outsourcing (KPOs)
Retailing
Tourism
Information Technology
Media and Entertainment
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SECTORWISE GROWTH
Type Of Industry Growth RateDuring Ninth Five Year
Plan(%)
Growth RateDuring Tenth Five Year
Plan(%)
Increase In Growth
Rate(%)
Transport & Communication 8.9% 15.3% 6.4%
Construction 7.1% 12.9% 5.8%
Manufacturing 3.3% 8.6% 5.3%
Mining 4% 6.1% 2.1%
Financing, Real Estate &
Housing
8.0% 9.5% 1.5%
Trade And Hotels 7.5% 8.5% 1%
Electricity 4.8% 5.6% 0.8%
Agriculture And Allied 2.5% 2.5% -
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FUNDING
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Equity shares
Preference shares
Debentures
Borrowings- Indian Banks, Foreign Banks and Financial Institutions
External Commercial Borrowings
Venture Capital
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EQUITY SHARES
Needs no servicing as the Company is not required to
pay to its equity share holders any fixed amount of
return in the form of interest.
Dividend is declared by the Company when the profits
of the company permit.
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PREFERENCE SHARES
No voting rights to preference shareholders
Option of Convertibility into Equity shares
Fixed rate of Dividend to the shareholders
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DEBENTURES
Less costly source of funds
If the investor chooses the option of conversion intoequity, no interest or principle amount to be paid.
Rate of interest lower than the market rates.
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BORROWINGS FROM DOMESTIC / FOREIGN BANKSAND FINANCIAL INSTITUTIONS IN INDIA
Period of funds is definite which is fixed at the time of
taking such loans.
Continued availability of funds for the pre-determined
period.
Interest burden for the pre-determined period.
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EXTERNAL COMMERCIAL BORROWINGS
Emerging source of finance
Indian corporates can use for expansion of existing
capacity as well as for fresh investments
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VENTURE CAPITAL FUNDS
Important source of finance for small and medium-sized
firms, which have very few avenues for raising funds
Gives scope for establishing business to young and
dynamic people with entrepreneurial talent and business
skills
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TYPES OF BUSINESS
ORGANISATION
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TYPES
Non Corporate Organisation
Sole ProprietorshipPartnership
Joint Hindu Family business
Corporate Organisation
Cooperative societiesJoint Stock Companies
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SOLE PROPRIETORSHIP
Features Merits Limitations
Single Ownership Ease of Formation Limited Capital
No Separate Entity Flexibility Uncertain Life
Capital Quick Decision-making Unlimited Liability
Formation Secrecy Limited Managerial Ability
Risk Bearing Direct Incentive Unsound Business
Decisions
Unlimited Liability Sense of Accomplishment
Management and Control Personal Touch
Continuity Low Overhead Costs
Minimum Government
Regulations
Social Importance
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PARTNERSHIP
Features Merits Limitations
Two or More Members Ease of Formation Limited Resources
Agreement Large Financial Resources Unlimited Liability
Lawful Business Better Management Possibility of ConflictsRisk-bearing and- Sharing of
Profits
Better Decision-making Delay in Decision-making
Agency Relationship Sharing of Risk Risk of Implied Agency
Unlimited Liability Secrecy Disruption in Continuity
Restriction on Transfer ofShare
Flexibility Less Public Confidence
Shared Decision-making and
Control
Impact of Unlimited Liability Non-transferability of interest
Continuity Easy Closure
Registration
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HINDU UNDIVIDED FAMILY
Features Merits Limitations
Application of Hindu Law Auto formation limited stability
Unlimited Liability Limited capital
Membership Economy Limited managerial ability
Management and control Decision making No link even responsibility
and reward
Unaffected by death Efficient management of the
business
Registration not compulsory Cordial relations
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JOINT STOCK COMPANY
Features Merits Limitations
Artificial Person Vast Financial Resources Difficulties in formation
Separate Legal Identity Limited Liability Excessive government control
Formation Perpetual Existence Management in the hands of a
few shareholders
Perpetual Existence Transferability of Shares Fraudulent practices by
promotes / directors
Limited Liability Professional Management Slow decision making
Transferability of Shares Scope for Expansion Neglect of minority shareholders
Control and Management Diffused Risk Lack of personal touch
Separate Property Public Confidence Difficulties in winding up
Common Seal
Risk-bearing
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COOPERATIVE SOCIETIES
Features Merits Limitations
Voluntary Association Ease of Formation Limited Capital
Open Membership Equality in Voting Rights Inefficiency in Management
Separate Legal Entity Democratic Functioning Excessive GovernmentRegulations
Limited Liability Limited Liability Lack of Secrecy
Service Motive Continued Existence Lack of Motivation
Management and Control Government Assistance Differences of Opinions or
Conflicts
Disposal of Surplus Economical Operations Misuse of Funds
Steady Supply of Goods and
Services
Fair Dealings
Equitable Distribution of Surplus
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GOVERNMENT POLICIES
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OBJECTIVES
Economic Development & Growth
Social Development
Advancement of Science & Technology
Competitive Market
Industrial Growth Equal Distribution
National Interest
Greater Transparency
Protection of Stakeholders Timely Disclosures
Management, Control and Administration
Principal of Natural Justice
Dispute Resolution
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LPG
Liberalisation Privatisation Globalisation
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LIBERALISATION
Industrial Policy : Reduction in the area exclusively reserved for the public sector
Disinvestment in the equity in selected public sector undertaking of the
Location Policy
Concessional Finance
Foreign Investment:
New Ventures
Existing Companies
Wholly Owned Subsidiary
Foreign Technology Agreements :
Subject to the Condition Specified the RBI, through its regional office
accord the approval to all the industries for Foreign Collaboration
Agreement.
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PRIVATISATION
Reduction in the areas exclusively reserved for the public sector
Disinvestment of equity in selected public sector undertaking
GLOBALISATION
Double Taxation Treaty
Indias Regional & Preferential Trading Arrangements
E-Commerce
100 per cent foreign equity in foreign branded, specialized retail
chains 100 per cent FDI in Greenfield Private Rural-Agricultural Banks
Convertibility of Indian Rupee
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INFRASTRUCTURE
General Measures :
Uniform Tax holidays
Foreign Direct Investment
Import duty structure for the project imports rationalised
POWER National Electricity Policy (NEP), 2005Targets a rise in per capita availability from 631 units to 1,000 units per annum by
the end of 2012
procurement of power by distribution licensees through competitive bidding
Power Vision 2010
ROADS Department of Road Transport and Highways has laid down comprehensive policyguidelines for private sector participation in the highway sector
projects in NHDP Phase-III to Phase-VII would be taken up on the basis of Public-
Private Partnership (PPP) on Build Operate and Transfer (BOT) mode
CIVILAVIATION
Ministry of Civil Aviation has given in-principle approval for import of 496 aircrafts
and, in the next five years
It has been decided to set up an Airport Economic Regulatory Authority to fix, review
and approve tariff structure for the aeronautical services
PORTS Private operators can enter into a service contract, a management contract, aconcession agreement
Cargo handling berths and dry docks, container terminals and warehousing facilities
and ship-repair facilities has open to Pvt. Sector on a BOT basis
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AMENDMENT AND INTRODUCTION OF ACTS
MRTP Act, Competition Bill 2007
Intellectual Property Laws
Value Added Tax (VAT)
The Micro, Small And Medium Enterprises Development Act, 2006,
Transparency In Decision Making
Planning To Introduce Goods & Services Tax
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TAXATION
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Section To whom Conditions Incentive
10A Newly establishedundertakings in the
free trade zone.
Not formed bysplitting up or
reconstruction.
Not formed bytransfer ofMachinerypreviously used for
any purpose.
Report from CAfurnished deduction
has been correctly
claimed.
No deduction will beallowed u/s 80-IA or80-IB in respect ofthat undertaking
which claimed
exemption under this
section.
Adeduction ofProfits and Gains
derived by an
undertaking from the
export of article isallowed from total
income.
Available forTenconsecutive
assessment years.
No exemption is
allowed from AY-2010-11.
First 5AY-100% ofProfits from export
business.
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Section To whom Conditions Incentive
Next 2 AY 50%profit from export
business.
Next 3 AY Lowerof50% profit fromexport business
OrAmt transfer to
SEZ ReinvestmentA/C.
10B Newly establishedHundred percentexport oriented
undertaking
Manufacture of
article only for thepurpose ofexports.
A deduction of
Profits and Gainsderived by a 100%
export-oriented
undertaking fromthe export ofarticle is allowedfrom total income.
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Section To whom Conditions Incentive
80-IA Deductions in respect of profitand gains from industrial
undertakings or enterpriseengaged infrastructuraldevelopment, etc.
Not formed by splittingup or reconstruction.
Not formed by transferof Machinery previouslyused for any purpose.
100% Profit andGains for any 10
consecutive AY.
80-IB Deductions in respect of profitsand gains from industrial
undertakings other thaninfrastructure undertakings.
Not formed by splittingup or reconstruction.
Not formed by transferof Machinery previouslyused for any purpose.
10 or more workers in
manufacturing process
with aid of power.
100% for 5 AY and25% for next AY.
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Section To whom Conditions Incentive
20 or more workers
in manufacturing
process withoutaid of power.
80-1C Deduction in respect ofprofits and gains from
certain undertakings or
enterprise in certain specialcategory States.
Engaged in
specified businessas stated under this
section.
Not form by splittingup or reconstruction.
Not formed by
transfer ofMachinerypreviously used forany purpose.
100% for ten AY
upto AY 2011-12.
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COMPLIANCES
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Various compliances under The Companies Act, 1956
Various compliances for listed Companies as per SEBI,
guidelines in Listing Agreement
Intellectual property rights
(Trade Mark, Copy Rights, Patents)
Foreign Exchange and Management Act,1999
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OTHER COMPLIANCES
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INDUSTRIAL UNDERTAKINGS
Industrial Undertakings exempt from licensing have to file six copies in Part
A of Industrial Entrepreneurs Memorandum (IEM) with the SIA, Dept. ofIndustrial Policy and Promotion, Ministry of Industry before startingcommercial production along with a fee of Rs. 1000/-
For obtaining Industrial licence, form FC-IL to be filed with the SIA, Dept. ofIndustrial Policy and Promotion, Ministry of Industry before startingcommercial production along with a fee of Rs. 2500/-. FC to be filed in PartA and IL in Part B.
For STP Registration, application to be made to Director, STPK beforestarting commercial production along with a fee of Rs. 2500/-. The followingdocuments to be attached:
Board resolution authorising the registration
Trade LicenceMemorandum and Articles
Brief Project Report
Letter of allotment of PAN
Document of allotment of Importer Exporter code
List of capital goods to be imported
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MICRO, SMALL AND MEDIUM ENTERPRISE
File Entrepreneurs Memorandum (EM) with DIC before starting
commercial production. EM to be filed in two parts : Part I to be filed
as expression of interest and Part II after commencement of
production with such applicable fee.
Following documents to be attached:
Memorandum & Articles of Association.Power of attorney / Board resolution authorising the signing of EM.
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NO OBJECTION CERTIFICATE FROM STATEPOLLUTION CONTROL BOARD
Consent form to be filed with the respective State Pollution Control
Board before commencing work at site with such applicable fee.
Following documents to be attached:
Site / location map
No objections & site clearance certificate from local board andexempted based on the degree of pollution
Project Report
Flow chart for detail of process
Affidavit for investment in fixed assets
Copies of land deed / allotment letter / lease document / rent receipt
etc.
Technical report for pollution control measures
Challan for deposit of consent fees.
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IMPORTER EXPORTER CODE (IEC)
Apply to Regional Office, DGFT, Reserve Bank of India for IEC
before importing or exporting with such applicable fee.
Following documents to be attached
Banker certificate
PAN letter
2 passport size photographs
Self addressed envelope duly stamped
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THANK YOU