Raghu Babu Gunturu (Co-founder & Partner - R & A Associates & Samisti Legal) made this presentation at TatXpo2019 in Sydney on 27 Aug 2019. The presentation covers, how India made various moves to see how its very attractive destination to make investments and to do easy business with. http://www.rna-cs.com https://www.samistilegal.in

1. Indian Government -
Enabler for Businesses
TatXpo 2019 @ Sydney-
Australia
27Aug 2019
Raghu Babu Gunturu
R & A Associates |Samisti Legal
RAGHU@RNA-CS.COM

2. Foreign Direct
Investment
(FDI)
India has very liberalised FDI policy whereby in most of the sectors 100%
FDI is permitted which enables foreign companies to own 100% equity in
their subsidiaries and control in India. No approval is needed only reporting
requirement.
100% FDI – Select list of sectors: Information Technology (IT), IT Services,
Floriculture, Horticulture, Plantation, mining, manufacturing, airports,
construction, industrial parks etc.,
Prohibited sectors - Lottery Business; Gambling and betting including
casinos; Chit funds (except for investment made by NRIs and OCIs on a non-
repatriation basis); Nidhi company; Trading in Transferable Development
Rights (TDRs); Real Estate Business or Construction of Farmhouses;
Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of
tobacco substitutes.
Activities/ sectors not open to private sector investment viz., (i) Atomic
energy and (ii) Railway operations

3. FDI – sectors
having
restriction
Banking – Private sector – 49% under automatic route; up to 74%
with the Approval.
Pharmaceuticals – Greenfield – 100% automatic; Brownfield –
automatic up to 74% with approval up to 100%.
Defence – 49% under automatic route, up to 100% with the
Approval, where no industrial licensee needed.
Telecom Services – automatic up to 49%; approval route – 100%.
Wholesale cash & carry / B2B Ecommerce / Single brand retail –
100%
Multi brand retail – 51% with approval.
Insurance – Automatic route up to 49%.
Pension – Automatic route up to 49%.

4. FDI – recent
policy
initiatives
Dec 2018 - 100% FDI is allowed in the
marketplace based model of e-commerce.
Also, sales of any vendor through an e-
commerce marketplace entity or its group
companies have been limited to 25 per
cent of the total sales of such vendor.
In January 2018, Government of India
allowed foreign airlines to invest in Air
India up to 49 per cent with government
approval. The investment cannot exceed
49 per cent directly or indirectly.

5. Recent big
ticket
investments in
India
In October 2018, VMware, a leading software innovating enterprise of US
has announced investment of US$ 2 billion in India between by 2023.
In August 2018, Bharti Airtel received approval of the Government of India
for sale of 20 per cent stake in its DTH arm to an America based private
equity firm, Warburg Pincus, for around $350 million.
In June 2018, Idea’s appeal for 100 per cent FDI was approved by
Department of Telecommunication (DoT) followed by its Indian merger
with Vodafone making Vodafone Idea the largest telecom operator in India
In May 2018, Walmart acquired a 77 per cent stake in Flipkart for a
consideration of US$ 16 billion. .
In February 2018, Ikea announced its plans to invest up to Rs 4,000 crore
(US$ 612 million) in the state of Maharashtra to set up multi-format stores
and experience centres.
Kathmandu based conglomerate, CG Group is looking to invest Rs 1,000
crore (US$ 155.97 million) in India by 2020 in its food and beverage
business, stated Mr Varun Choudhary, Executive Director, CG Corp Global.
International Finance Corporation (IFC), the investment arm of the World
Bank Group, is planning to invest about US$ 6 billion through 2022 in
several sustainable and renewable energy programmes in India.

6. FDI in FY
2018-2019
FDI equity inflows in India in 2018-19 stood at US$ 44.37
billion
Data for 2018-19 indicates that the services sector attracted
the highest FDI equity inflow of US$ 9.16 billion, followed by
computer software and hardware – US$ 6.42 billion, trading –
US$ 4.46 billion and telecommunications – US$ 2.67 billion.
During 2018-19, India received the maximum FDI equity
inflows from Singapore (US$ 16.23 billion), followed by
Mauritius (US$ 8.08 billion), Netherlands (US$ 3.87 billion),
USA (US$ 3.14 billion), and Japan (US$ 2.97 billion).
India has set a goal to achieve USD 100 billion FDI in next few
years

7. External
Commercial
Borrowings
Currency of Borrowing - Permitted to borrow in Indian and Foreign
Currency (FCY).
Type of Loans - Loans including bank loans; floating/ fixed rate notes/
bonds/ debentures (other than fully and compulsorily convertible
instruments); Trade credits beyond 3 years; FCCBs; FCEBs and Financial
Lease.
Eligible borrowers – Who are eligible to receive FDI
Recognised lenders - Multilateral and Regional Financial Institutions |
Individuals as lenders can only be permitted if they are foreign equity
holders or for subscription to bonds/debentures listed abroad | Foreign
branches / subsidiaries of Indian banks are permitted as recognised
lenders only for FCY ECB
Minimum Average Maturity Period / MAMP - 3 years; some categories
have higher maturity period.
All in cost ceiling – Bench mark plus 450 bps spread.

8. External
Commercial
Borrowing
End use restrictions / negative list - Real estate
activities | Investment in capital market | Equity
investment |Working capital purposes | General
corporate purposes| Repayment of Rupee loans | On-
lending to entities for the above activities.
Limit and leverage – borrow up to USD 750 mill
subject to eligibility; borrowing from foreign equity
holder leverage max should be 7:1; Up to USD 5 mill
this doesn’t apply.
Trade Credit - Suppliers / Buyers Credit – up to USD
50 mill per transaction | Period shall be up to 3 years
| all-in cost ceiling benchmark + 250 bps spread.

9. Insolvency &
Bankruptcy
Code 2016
(IBC Code)
The Code brings a paradigm shift from "Debtors in possession & control" to
"Creditors in Possession & Control“
Insolvency test moved from "erosion of net worth" to “payment default to
a creditor“
Government dues shall rank below secured financial creditors (moved
down from priority over secured financial creditors)
Consolidated code to cover all kind of insolvencies.
180 +90 days of time bound resolution process.
National Company Law Tribunal, specialised quasi judicial body to deal with
insolvency matters.
Regulations made very conducive to the bidders / investors – immunity
from prior liabilities, fresh life to carry forward losses, delisting provision,
ability to bring overseas debt etc.,

10. Recent
insolvency
transactions
Acquisition of Bhushan Steel (capacity - 5.6 MTPA) by Tata Steels
resulting 63.5% recovery to creditors (INR 35000 cr / USD 5 billion)
Vedanta acquires Electro Steel (INR 5320 cr / USD 800 mil)
Arcelor Mittal acquiring Essar Steel (capacity – 10M) (INR 42000 cr /
USD 6 billion)-pending for final approval.
Digchi Port | Orchid Pharma | Deccan Chronicle
Jet Airways – undergoing insolvency resolution, looking for bidders.
ABG Shipyard heads into liquidation

11. Competition
Law
Notification to Competition Commission
• Parties to the Combination
• In India - Assets of >INR 2000 cr / Turnover of INR >6000 Cr in India.
• outside India - Assets USD > 1000 million including at lease INR 1000 cr in India / Turnover of
USD >3000 million including at least 3000 cr in India.
• Group to which the enterprise would belong after the acquisition, merger or amalgamation
• In India - Assets INR > 8000 crores / turnover INR > 24000 crores
• Outside India – Assets USD > 4 billion including at least INR 10,000 cr in India / turnover of USD
> 12 billion including at least INR 3000 cr in India
Any enterprise whose control, shares, voting rights or assets being acquired, that
has either assets of no more than INR 3500 mill (USD 50 mill) in India or turnover
of INR 10000 mill (USD 143 mill) in India is exempted from notifying the CCI.
Green Channel mechanism introduced for transactions such as - to the parties
which do not have any horizontal, vertical or complementary overlaps.
Upon receipt of an acknowledgment of a notification filed under the green
channel, the transaction will be deemed approved.

12. Income Tax
Start-ups registered with the Department for Promotion of Industry
and Internal Trade (DPIIT) will be exempt from angel tax, an anti-
evasion provision in the Income Tax Act.
Super rich tax - Government decides to scrap the increase in surcharge
on the income tax outgo for both domestic as well as foreign
investors that came into effect as part of the second full year budget of
2019 (Where effective tax rate was to be 43% as against 37%).
Corporate tax cut to 25% from 30% for companies having turnover up
to INR 400 cr / USD 70 mill (this covers close to 99% of corporates.
Unique Digital doc number for all letters issued by income tax dept
from 1 October 2019 – to improve accountability and transparency and
to end harassment of harassment of taxpayers.
PAN (Tax identification number ) and Aadhar (unique identification
number for an individual) interchangeable.

13. Sabka Vishwas
(Legacy
Dispute
Resolution)
Scheme, 2019
To deal with the pending litigation under Central Excise and
Service Tax. Covers litigation where tax dues are INR < 5
million / USD 70,000
India has significant amount of pending litigation from the
pre-Goods and Services Tax (GST) regime estimated at
INR3.75 trillion / USD 52 billion. The scheme aims at quick
closure of these litigation and allow businesses to move on.
The relief granted under the scheme ranges from 40% to 70%
of tax dues along with a full waiver of interest and penalties.
Tax determined as payable under the Scheme must be paid in
cash and not by utilization of input tax credits.

14. Other
initiatives
Goods and Service Tax – one tax – one nation.
Credit Guarantee Enhancement Corporation will be set up in
2019-20, action plan to deepen markets for long-term bonds
with specific focus on infrastructure sector to be put in place.
Wage Code - The Code on Wages seeks to universalise the
provisions of minimum wages and timely payment of wages.
Commercial Courts - The Act prioritised the expedited disposal
of high-stakes commercial litigation by reforming the
procedural framework for commercial civil suits.

15. Other
Initiatives
Introduced Alternate Investment Funds, Real Estate Investment Trusts
Special Economic Zones
Gujarat International Finance Tec City / GIFT City.
Allowed issue of Differential Voting Shares.
Strong and independent regulators – Reserve Bank of India (Central Bank), Securities and Exchange
Board of India (Securities market regulator), Competition Commission (Antitrust authority),
Vibrant Capital Markets – Main Board, Small and Medium Listing Enterprises
India has well established statutory, administrative, and judicial frameworks for safeguarding IP and
IPRs. India has complied with its obligations under the Agreement on Trade Related Intellectual
Property Rights (“TRIPS”) by enacting the necessary statutes and amending its existing statues.

16. Other
initiatives
Arbitration – Enforcement of foreign awards - If a party
receives a binding award from another country which is a
signatory to the New York Convention or the Geneva
Convention and the award is made in a territory which has
been notified as a convention country by India, the award
would then be enforceable in India. Close 50 countries
have been notified for this purpose incl Australia.
Enforcement of foreign judgement - A foreign judgment
may be enforced by filing a suit upon judgment under
Section 13 of CPC or if the judgment is rendered by a
court in a “reciprocating territory”, by proceedings in
execution under Section 44A of the CPC.

17. Ease of Doing
Business –
world bank
ranking
• India climbed another 23
points in the World Bank’s ease
of doing business index to 77th
place, becoming the top ranked
country in South Asia for the
first time and third among the
BRICS.
In the last two years the
country has climbed 53
notches, a performance
matched in the past only by
Bhutan. The biggest gain was in
construction permit where
India climbed 129 ranks to
52nd place on the back of
targeted government effort to
remove hurdles.

18. State of
Telangana
(Hyderabad)
Telangana’s Gross State Domestic Production grew at a CAGR
of 12.60 per cent (in Rupee terms) between 2011-12 and 2017-
18. At current prices, Telangana’s GSDP was estimated at US$
116.72 billion during 2017-18
Hyderabad is the major IT hub of the state across the country.
During 2017-18, the value of IT exports from the state of
Telangana was recorded at Rs 93,422 crore (US$ 14.50 billion)
Key sectors – IT & ITES, Pharma& Biotech, Agriculture and
Tourism.
Telangana introduced the Telangana State Industrial Project
Approval and Self-Certification System (TS-iPASS) Act, which
came into effect in June 2015. Under the law, any new
enterprise in manufacturing or services with an investment of
more than Rs 200 crore will be approved within 15 days and all
other proposals will be green-lit in 30 days
For the fifth consecutive time, Hyderabad bagged Mercer’s
Quality of Living India rankings 2019 along with the Pune.

19. Google has been a trusted partner for
Telangana who have already set up their
office in Hyderabad and are in the
process of setting-up their 2nd largest
campus in Hyderabad.
Amazon has opened its largest campus
yet. Located in the financial district of
Hyderabad, India, the 9.5-acre campus
can accommodate more than 15,000
employees.
Swedish retail major Ikea opens first store
in Hyderabad, India.
Hyderabad is one of the Core Centres for
Novartis

20. Our Work
Australia - A leading provider of end to end document and digital solutions
company (eDiscovery and electronic court room) set up operations in
Hyderabad in 2017 and currently employs 150+ people.
Norwegian Company - Advised a Norwegian company that delivers HR and
payroll services worldwide. Their Indian entity was dormant for four years,
revived that company, structured as wholly owned subsidiary and
providing compliance solutions. Provides captive services to parent and
other companies in the group across globe.
Joint Venture between Japanese and UAE Pharma – This is aimed at
providing custom manufacturing to both the partners; Structured and
drafted Joint Venture Agreement and provides regulatory and compliance
support.
Hydroponics business – Had set up India operations for UK based
Hydroponics business; Advises and manages contracts, compliance issues.

21. Thank you