India COUNTRY STARTER PACK Country Starter Pack 2 Introduction to India India at a Glance
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India COUNTRY STARTER PACK Country starter pack 2 Introduction to India India at a glance POPULATION - 2014 GNI PER CAPITA (PPP) - 2014* US$1,610 1.267 INCOME LEVEL billion Lower middle *Gross National Income (Purchasing Power Parity) World Bank GDP GROWTH 2014 CAPITAL CITY 7.2% GDP GROWTH FORECAST (IMF) New Delhi 7.4% (2015), 7.4% (2016) & 7.5% (2017) RELIGION CLIMATE CURRENCY FISCAL YEAR apr-mar HINDUS: 80%, MUSLIMS: 13%, CHRISTIANS: 2%, SIKHS: 1% Extremely diverse Indian Rupee (INR) 1 April - 31 March ARID DESERT IN THE WEST, GLACIERS IN THE NORTH, TROPICAL AND HUMID IN THE SOUTH > TIME DIFFERENCE AUSTRALIAN IMPORTS AUSTRALIAN EXPORTS EXCHANGE RATE FROM AUSTRALIA FROM INDIA (2014) TO INDIA (2014) (2015 AVERAGE) 4.5 hours A$4.31 A$10.46 (inr/AUD) behind (AEST) billion billion A$1 = INR 47.06 SURFACE AREA 3.3 MILlion Contents 1. Introduction 4 square kmS 1.1 Why India? Opportunities for Australian businesses 5 1.2 India at a glance 11 1.3 India and Australia: the bilateral relationship 18 2. Getting started in India 22 GDP 2014 2.1 What you need to consider 24 2.2 Researching India 37 2.3 Possible business structures 41 US$2.067 trillion 2.4 Manufacturing in India 46 3. Sales and marketing in India 48 3.1 Agents and distributors 50 POLITICAL STRUCTURE 3.2 Online sales 52 3.3 Direct selling 54 Constitutional 3.4 Franchising 55 3.5 Marketing 55 democratic republic 3.6 Labelling requirements 58 4. Conducting business in India 60 GENERAL BUSINESS HOURS 4.1 Indian culture and business etiquette 61 4.2 Building relationships with Indians 65 Monday to Friday 4.3 Negotiations and meetings 70 9am to 4.30pm 4.4 Due diligence and avoiding scams 74 Saturday 9am to 2pm 5. Business practicalities in India 78 5.1 Laws and regulations 79 INTERNATIONAL DIALLING CODE 5.2 Import duties, tariffs and regulations 86 5.3 Taxation 89 5.4 Audit and accountancy 98 5.5 Employing workers 98 5.6 Banking in India 104 5.7 Repatriating profits and getting paid 106 +91 6. Visiting India 108 STOCK EXCHANGE 6.1 Visas 109 6.2 Currency 112 National Stock Exchange of India (NSE) 6.3 Air travel and airports 113 6.3 Ground transport 114 OFFICIAL LANGUAGE 6.4 Hotels and dining 115 6.5 Health and welfare 117 Hindi and English 7. Engage with us 122 Country starter pack 4 Introduction to India 1. Introduction Country starter pack 5 Introduction to India 1.1 WHY INDIA? OPPORTUNITIES FOR AUSTRALIAN BUSINESSES India is one of the two ‘giants’ of Asia, and one of the world’s fastest-growing economies. It is also a democracy – the largest in the world. And it has one of the world’s oldest and most diverse civilisations. Yet for all its outstanding attributes as a nation – and as a place for outsiders to consider investing and doing business – India is still not quite in the same stratosphere as that other Asian giant, China, when it comes to economic drawing power. But the gap is surely closing. With a rapidly growing population of more than 1.2 billion, India is expected to overtake China as the world’s most populous nation within a decade. It may be a lot longer than that before China’s economic supremacy in the region is challenged. But if there is a single serious long-term rival to China as an economic powerhouse in Asia, India is it. And all the signs are that India’s rapid economic expansion will continue, making it an even more compelling option for Australian businesses looking to expand their operations into Asia. Consider some key facts: • India was the world’s ninth-largest economy in 2014, with gross domestic product (GDP) of just over USD 2 trillion • With GDP predicted to continue growing at more than seven per cent, India has been forecast to jump two places to become the world’s seventh-largest economy by the end of 2015, overtaking Brazil and Italy • On the alternative measure of purchasing power parity, India is predicted to replace the United States as the world’s second-largest economy by 2050 • Household incomes in India are steadily increasing, creating a burgeoning population of middle-class consumers that will reach 583 million in 2025 • India’s middle-class population is expected to soar to about 200 million by 2020, generating huge demand for high-quality, protein-rich foods as well as numerous opportunities across a number of different sectors of the economy, including healthcare, infrastructure, education and financial services. China’s staggering economic growth of the past three decades has tended to dominate the global conversation about Asia’s rise, often overshadowing the opportunities that other Asian nations present. In the case of India, all signs point to strong and steady growth over the next decade, with a continuing explosion in the extent and range of business and investment opportunities for Australians and other outsiders. India is currently Australia’s 12th-largest trading partner and its seventh-biggest export market. In 2014 Australia exported goods and services worth about $10.5 billion to India, while our imports from India totalled just over $4.3 billion. Country starter pack 6 Introduction to India In an effort to further deepen trade links, the nations’ Resources and mining: India’s rapid economic growth two governments began negotiating the Australia-India since its initial economic liberalisation in 1991 has Comprehensive Economic Cooperation Agreement generated increasing demand for resources and minerals. (CECA) in 2011. The negotiations are expected to The country’s mining sector spans a vast geographical conclude at the end of 2015, bringing to fruition another area, and extracts more than 80 different types of in a series of bilateral trade agreements between Australia minerals. Much of the sector has historically been and its key partners in the Asian region. dominated by a handful of public sector companies, but more private sector participation has emerged in the The implementation of CECA with India is expected to last decade. With the Indian Government’s focus on make a major contribution to further growth in trade in amplifying the efficiency and profitability of the local goods and services, as well as investment. India’s vast mining sector, there are abundant opportunities for geographical area and diverse regions present numerous Australian businesses with expertise in mining to supply market opportunities for Australian businesses. Differing mining equipment, technology and services. This could levels of wealth and development across the country include mine management systems, safety systems, create the need to import a wide range of goods and environmental protection technology as well as simulation services, including food, education, financial services and training for industry professionals and workers infrastructure. Agriculture: With India’s population expected to exceed Doing business in India is not without challenges, some of China’s within a decade, the country faces an enormous which may seem insurmountable at first. Cultural barriers task just feeding its own population and establishing aside, bureaucratic red tape and India’s numerous distinct more sustainable agricultural practices while relying and diverse markets across the country may all seem like on quickly depleting resources. India’s jobs market is impediments to success. These issues are compounded by heavily reliant on this sector, with 70 per cent of the a complex regulatory framework that can vary from state total population engaged in agriculture and related to state. business activities. To date, the sector has been buoyed by significant government intervention. Currently, India But Australian businesses willing to invest the time and contributes to one per cent of the global food trade energy required to research opportunities and prepare and the Government is aiming to double this figure. for the potential obstacles could reap considerable To achieve this target, the Ministry of Agriculture has rewards. Successive Indian governments have instituted made policy amendments to encourage more private economic liberalisation policies over the last two decades, sector participation in the industry, to improve efficiency making foreign investment and trade in the country a and productivity. Among the current inhibitors to the more attractive option than ever. The following sectors sector’s advancement are a lack of modern storage and of the economy are among those that could present big infrastructure to handle grain supplies (resulting in annual opportunities for Australian businesses: Considering doing business in India? 1. Do your Research • Be flexible & open to difference • Speak to industry experts • Understand the local culture and • Connect with Australian businesses prepare before meeting with local operating in India business partners • Go to industry events & information • Practice Indian business etiquette. seminars 3. Building relationships is crucial in • Seek professional advice. Indian culture, but it can take time 2. Become aware of cultural differences • Be patient with developing relationships and ways of doing business in India • Follow up and maintain contact with • Gain an understanding of your customer your networks. & local business partners Country starter pack 7 Introduction to India losses of up to 12 per cent of production), low or stagnant crop yields, unscientific and outdated production methods and below-par water application and irrigation. The Government’s aspiration to overcome these shortcomings presents huge opportunities for Australian businesses that can provide the necessary technology and CECA – what are we expertise to help India achieve a much-needed boom in agricultural production. negotiating? Food and food products: The increasing affluence of the The trading relationship between Indian middle class is generating big changes in dietary habits and, by extension, changing demands on the Australia and India has grown remarkably agriculture sector.