Doing Business Guide India
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Edition No. 1 January 2019 Doing Business Guide India This guide has been produced by the Morison KSi Indian member firms About This for the benefit of their clients and associate offices worldwide who are Guide interested in doing business in India. Its main purpose is to provide a broad overview of the various issues that should be considered by organisations when considering setting up business in India. The information provided cannot be exhaustive and – as underlying legislation and regulations are subject to frequent changes – we recommend anyone considering doing business in India or looking to India as an opportunity for expansion should seek professional advice before making any business or investment decision. While every effort has been made to ensure the accuracy of the information contained in this guide, no responsibility is accepted for its accuracy or completeness. The information in this guide is up to date as at the edition date. For more information, please contact: SCV & Co. LLP Bhuta Shah & Co. LLP www.scvindia.com www.bhutashah.com Sachin Vasudeva Sneha Padhiar [email protected] [email protected] T: +91 11 26499111 T: +91 22 43439172 B-41 Lower Ground Floor 901/902 Regent Chambers Panchsheel Enclave Nariman Point New Delhi 110017 Mumbai 400 021 India India Disclaimer: Morison KSi is a global association of independent professional firms. Professional services are provided by individual member firms. Morison KSi does not provide professional services in its own right. No member firm has liability for the acts or omissions of any other member firm arising from its membership of Morison KSi. www.morisonksi.com Edition No. 1 January 2019 Contents Introduction 1 Business Structures 6 Labour and Personnel 9 International Mobility 11 Taxation System 13 Banking and Finance 19 Reporting Requirements 21 Grants and Incentives 22 Agencies Providing Assistance 23 Why India? India’s prime minister, Mr. Narendra Introduction Modi, has introduced a series of India has emerged as the fastest- policy measures that are expected growing major economy in the to increase the country’s economic world, according to the Central growth fivefold by 2040. Statistics Office and International Monetary Fund (IMF). The IMF As stated by TRAI in its report of forecasts that the Indian economy June 2018, India has a subscriber 5 will grow by 7.5%1 in FY 2018–19, base of around 1.2 billion people making it the fastest-growing and this telecom revolution has country among major economies. led to huge growth for the Indian India has retained its position as e-commerce industry. the third largest startup base in the world, with over 6,0002 startup History applications approved by the Department of Industrial Policy & India is one of the oldest civilisations Promotion (DIPP). in the world, with a kaleidoscopic variety of sights and a rich cultural India’s labour force is expected heritage. As the land of vast empires to touch 160–170 million by 2020, and historic trade routes, the Indian based on the rate of population subcontinent has been associated growth, increased labour force with cultural and commercial participation and higher education wealth for much of its long history. enrolment, among other factors, Gradually annexed by the British according to a study by ASSOCHAM East India Company from the early and Thought Arbitrage Research eighteenth century and colonised Institute. M&A deals in India have by the UK from the mid-nineteenth reached US$104.5 billion in 2018, century, India became a Sovereign trouncing the previous annual record Nation in 1947 after a struggle for with almost 4 months left in the year. independence that was marked by widespread use of non-violent India is expected to be the third resistance as a means of social largest consumer economy as protest. Since then, it has achieved its consumption may triple to all-round socio-economic progress. US$4 trillion by 2025, owing to As well as being self-sufficient in shifts in consumer behaviour and agricultural production, India is expenditure pattern. According now one of the top industrialised to the Boston Consulting Group countries in the world and one of report ‘The New Indian: The Many the few nations to have ventured Facets of a Changing Consumer’3, into outer space. India’s nominal year-over-year expenditure growth of 12% is more The country’s official name, ‘India’, than double the anticipated global is derived from Sindhu, the Old rate of 5% and will make India the Persian name for the river Indus. third-largest consumer market by Another name in common usage, 2025. In their report ‘The World in and officially recognised by the 1. https://www.ibef.org/economy/indian- 4 Constitution of India, is ‘Bharat’ – economy-overview 2050’, consulting firm PwC projects 2. https://startupindia.gov.in that India’s GDP will exceed US derived from the Sanskrit name of 3. https://www.bcg.com/en-gb/ GDP in purchasing power parity an ancient Hindu king whose story publications/2017/marketing-sales- terms by 2040 (purchasing power is to be found in the Mahabharata. A globalization-new-indian-changing- third name, ‘Hindustan’ (Persian for consumer.aspx parity accounts for variations 4. https://www.pwc.com/gx/en/ in price levels across countries). ‘Land of the Hindus’), has been used world-2050/assets/pwc-world-in-2050- This would make India the largest since the Mughal Empire (sixteenth slide-pack-feb-2017.pdf economy in the world after China. century). 5. https://main.trai.gov.in/sites/default/files/ PRNo91Eng20082018.pdf www.morisonksi.com India 1 Geography Constitution and law India covers an area of over 3 million India is a union of states and is km2, extending from the snow- a sovereign, socialist, secular covered Himalayan heights to the democratic republic with tropical rainforests of the south. As a parliamentary system of the seventh largest country in the government. The president of India world, India stands apart from the is the official head of the state, rest of Asia, marked off as it is by elected indirectly by an electoral mountains and the sea, which give college. The prime minister is, the country a distinct geographical however, the de facto head of the entity. Bounded by the Great government and exercises most Himalayas in the north, it stretches executive powers. southwards to the Tropic of Cancer, where it tapers off into the Indian India is the largest democracy Ocean between the Bay of Bengal in the world, with a federal form and the Arabian Sea. India is of government comprising three subdivided into 29 states and seven branches: union territories. • Executive. The president; vice Lying entirely in the northern president; and the Council of hemisphere, the mainland extends Ministers, headed by the prime between latitudes 8° 4´ and 37° 6´ minister north and longitudes 68° 7´ and 97° • Legislature. The bicameral 25´ east; it measures about 3,214 km parliament consists of the Upper from north to south between the House (Rajya Sabha, Council of extreme latitudes, and about 2,933 States) and the Lower House (Lok km from east to west between the Sabha, House of the People) extreme longitudes. It has a land frontier of about 15,200 km. The • Judiciary. The three-tiered system total length of the coastline of the is led by the Supreme Court in mainland, Lakshadweep Islands and New Delhi, with High Courts Andaman and Nicobar Islands is standing at the head of each 7,517 km. state judicial system, followed by District and Sessions Courts in the Population and language judicial districts into which the states are divided. The third tier The latest United Nations Estimates comprises local Courts of Civil and (September 2018) indicate that Criminal Jurisdiction. India’s population is over 1.35 billion.6 India accounts for only 2.4% Every state has a Legislative of the world’s total surface area, yet Assembly. Certain states also have supports and sustains 17.74% of the an Upper House, called the State world’s population. Legislative Council. Executive power is vested in each head of A number of languages are spoken state, a governor appointed by the in India; 22 are officially recognised president. The Council of Ministers, and accepted nationally, while headed by the chief minister, advises another 33 languages and around the governor in the discharge of 2,000 regional dialects have also executive functions. The Council of been identified. Hindi, written in the Ministers of a State is collectively the Devanagari script, is the official responsible to the Legislative language of the Union Government Assembly of the State. 6. http://www.worldometers.info/world- of India, while English is the population/india-population/ secondary official language. www.morisonksi.com India 2 The economy the government’s ‘Make in India’ programme. Services are the The Indian economy is one of main source of economic growth, the fastest-growing economies, accounting for more than half currently ranking 6th largest in terms of India’s output with less than of nominal GDP (almost US$2.8 one-third of its labour force. The trillion in 2018) and third largest in services sector is the biggest terms of purchasing power parity. contributor to the national GDP – The country is one of the G-20 major making a contribution of 53.66%, economies, a member of BRICS7, compared with industry (29.02%) and a developing economy that is and agriculture (17.32%) according to among the top 20 global traders, statistics for 2016–17. according to the World Trade Organization. It is one of the most Foreign direct investment attractive destinations for business and investment opportunities due In recent years, India has emerged as to a vast manpower base, diverse an attractive FDI destination.