Presentation slides from the Smart Exporter: Doing Business in India event held in Edinburgh on Thursday, 31st October 2013.

1. Doing Business in India
Thursday, 31st October 2013
The Caledonian Hotel, Edinburgh

2. Doing Business in India
Cherise Mascarenhas
Business Development Manager
SDI India

3. Doing Business in India
Mr. Oscar Kerketta
Consul General of India

4. Doing Business in India
Cherise Mascarenhas
&
Maneeta Sahmey
SDI India

5. DOING BUSINESS IN INDIA
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6. SDI’s Strategic Focus in India
Outward Opportunities:
Providing support to
Scottish companies
Collaborative
Pursuing collaborative
opportunities between
India and Scotland
Inward Opportunities
Target key India
companies with strategic fit
for Scotland

7. Scottish Investors In India

8. Indian Investors in Scotland

9. Snapshot..
India exports software
to 90 companies. The
Indian IT-BPO
Industry has crossed
US $100 billion
Education Market In India
expected to grow to $ 80billion
‘India - the world’s back office’
Mobile phone users: 800 million (fastest gowing
market)- 1 billion by March 2014

10. India- At a glance….
•
Second fastest growing economy
•
Asian Development Bank predicts India's GDP
to grow by 6% for 2013-14.
•
29 States & 6 Union Territories
•
7th largest country in the world
•
Population of 1.2 billion
•
22 Official Languages; 4000+ dialects

11. Political Set up
•
Democratic Republic with a Parliamentary system of
Government
•
The President of India is the Head of State, while the
Prime Minister is the Head of the Government
•
The Lok Sabha (lower house) and the Rajya Sabha
(upper house) are the two parliament houses.
•
Judicial Branch: The Supreme Court of India is the
apex body of the Indian legal system, followed by
other High Courts and subordinate courts.

12. Life Sciences in India
•
$4 billion industry, projected to reach $8 billion by 2015
•
India is ranked amongst the top12 biotech destinations in the world
•
M&A activity on the rise; Global companies setting up a base in India
•
The pharmaceutical industry in India is valued at USD 12 billion and is expected to
grow to USD 55 billion by 2020.
•
India a major destination for generic drug manufacture.
•
Indian companies are concerned about the lack of new drugs in their pipeline.

13. Opportunities in the Life Sciences sector
•
Medical Technology and Diagnostics
•
Bioinformatics
•
Drug discovery
•
Stem Cells and regenerative medicine

14. ICT In India
•
£100bn industry
•
Indian exports have grown by about 35% year on year in the last eleven years.
Contributes to 6.1% of the nation’s GDP
•
Appetite for new products, technologies to create bespoke solutions
•
Directly employs over 2.5 million people, 70% of which falls in the 26-35 age group
•
Indian ICT companies continue to grow internationally largely via acquisiitons

15. Opportunities in the ICT Sector
•
Telecomms
•
E-commerce
•
Gaming and Animation
•
IT Education
•
Other areas of opportunities are :
Software, electronics, cyber security, e-learning,
advance engineering, aerospace, marine and defense

16. Education in India
• Indian HE largest in the world in terms of institutions and third largest in
terms of students with 620 Universities, 31,000 plus colleges and 15
million students
• As per 2009 estimates, size of the private education sector was about
$57bn, growing at 14%
• Expenditure on higher education likely to go up from US$ 10.3bn to US$
30bn by 2017-18
• Concurrent list--both federal and provincial governments have
jurisdiction over education sector
• Complex higher education system
• Vocational education, skill development and support services are
sectors of high growth

17. Opportunities - Education
• Institution
to
Institution
linkages
–
articulation,
faculty
development/exchange, research.
• Skills development – opportunities with state governments
• Corporate training – directly with companies, through training
companies
• Continuous Professional Development Courses

18. Food & Drink in India
• Retail is one of fastest growing industries in
India.
Changing
consumer
preferences,
organized retail is gradually becoming popular.
• Only 5% Indian Retail is in the organized sector,
supermarkets & hypermarkets (2011 IGD).
India is largely disorganized retailers (family
owned kiranas).
• Government has initiated steps towards allowing
higher levels of Foreign Direct Investment,
paving way for foreign retailers to open
independent retail stores in India

19. Opportunities – Food & Drink
• Whisky
• Premium Grocery:
• Bakery & Confectionary
• Seafood
• Salmon
• Dairy
• Scottish Brands available in India –
– Gardiners of Scotland, Walkers, Deans of Huntly, Edinburgh
Shortbread House, Borders Biscuits, Baxter Soups, Mackay Jams,
Loch Duart, Highland Smoked Salmon, Lions Group- salmon

20. Textiles in India
• India is the world's second largest producer of textiles and garments.
• Abundant availability of raw materials such as cotton, wool, silk and jute
and skilled workforce have made India a sourcing hub.
• The size of Indian textile and apparel market was US$ 89 billion in 2011
and is expected to touch US$ 221 billion by 2020. Growing at the rate of
13%
• India's growing population has been a key driver of textile consumption
growth in the country. Changing lifestyle, rising incomes and increasing
demand for quality products are set to fuel demand for apparel.
• Dominated by Apparel - Menswear (43%), Women’s wear (38%) and then
Children’s wear (19%)
• Influx of premium brands in India through partnerships & JV’s

21. Opportunities – Textiles
• Fabric – High end fabric for menswear
• Interiors
• Accessories – scarves, stoles, shawls
• Existing brands – Reid & Taylor, Holland & Sherry

22. Setting up in India – Market Entry Options
• Liaison office :
– Represent parent company, promote export/import, communication
channel to in market partners
– Cannot undertake any business activity to earn income
• Branch office :
– Export/import goods, offer professional services
– Represent partner company for buying/selling
– Cannot carry out retail trading, manufacturing or processing activities
• Subsidiary office:
– Wholly owned subsidiary under FDI guidelines.
– Collaborations via JV route with an Indian company
– Funding – foreign / local allowed
– Governed by Indian law including taxation

23. SDI Support
•
•
•
•
Preliminary research
Organise and set up meetings with potential partners during overseas visit
Introductions to consultants for market entry or other set-up requirements
Engage with available Networks – GlobalScots, UK Trade & Investment, British
Business Group, Trade Associations

24. Doing Business in India - Essentials
•
•
•
•
•
•
Prepare well for your visit to India :
– Understand the market, do preliminary research for your product and its
suitability for the market
Carry business cards, marketing collateral, samples
Choosing the right partner
Due diligence
Business works on relationships – Spend time on building trust
Patience & persistence!

26. Doing Business in India
Nachiket Deo
Associate Director - India Tax Desk
EY

27. Doing Business in India
Edinburgh - 31 October 2013

28. India - The Macro picture
3rd most attractive FDI
5th largest consuming
destination in the world for
2013-14
country by 2025
Youngest country in the
2nd highest number of
world by 2020 with
median
internet users by 2015,
age of 29
only behind China
US$9 billion worth
US$35 billion worth
private equity across 534
M&A across 977 deals in 2012
deals in 2012
Page 28

29. Political, legislative and economic overview
Recent legislative
development
Political scenario
►
Largest democracy of
the world
►
New Companies Act
enacted
►
Central Elections in
2014
►
►
Possibility of a
coalition Government
at Centre ?
Food security bill
signed aims to
provide subsidized
food grain to 1.2 bn
people
►
Page 29
Cost of exchequer to
be US$ 21 bn p.a.
Economic development
►
India’s GDP growth
was at 4.4% in June
quarter, lowest in four
years – but likely to
only improve
►
Concerns over rupee
depreciation which
had declined appx 25
per cent – RBI
measures likely to
arrest the decline

30. Foreign Direct Investment (‘FDI’)
FDI in India – a mixed bag…..
Regulatory updates
►
FDI up by 12% to US$ 7.05 bn for
Apr-Jun 2013
►
FDI in various sectors (like retail,
aviation, defence,
telecommunications etc) liberalized
►
Total FDI for FY 2012-13 stood at
US$22.42 bn vis-à-vis US$36.5 bn
►
Certain regulations pertaining to
funding Indian operations
liberalized
►
Large investments announced by
companies such as Unilever, Ikea,
etc
Page 30

31. India business presence - Overview of the forms
Foreign Company
Operates as a foreign
company
Liaison
Office [‘LO’]
Project
Office [‘PO’]
Establishes an
Indian company
Branch
Office [‘BO’]
Joint Ventures
Wholly Owned
Subsidiary [‘WOS’]

Limited Liability Partnership [concept recently introduced] is another option of establishing presence in
India.

Each of the options have their own commercial and tax advantages and disadvantages which would need
to be evaluated based on facts of the case.

For example if the Indian operation is to limited to preliminary functions of understanding the Indian markets
business , etc, the LO option could be considered. However, where the India expansion plans are
imminent, one would need to consider the BO or WOS option
One would need to determine a suitable form of business presence in India based on the nature of
operations in India and the proposed business expansion plans
Page 31

32. Basic tax provisions
Indian domestic tax laws
For the purposes of corporate income-tax, tax year runs from April 1 to March 31 of the following
year.
Taxable profit is computed in accordance with common business or accounting principles, subject
to specific limitations
Different tax rates for domestic and Indian companies. Also, one needs to consider Dividend
Distribution Tax (‘DDT’)
Provisions of domestic law or relevant tax treaty, whichever is more beneficial to the taxpayer,
apply
Deduction
is
allowed
only
for
business-related
while capital expenditure [other than those specified] are not deductible
revenue
expenses,
Robust ‘transfer pricing regulations’ governing cross-border transactions between related parties
Page 32

33. India business presence
Permanent Establishment (‘PE’) considerations
Fixed place PE
►
►
Created if Foreign Co has premises in India at its disposal from where it carry
on its operations
Service PE
PE exclusion available to preparatory/auxiliary activities
►
Constituted if Foreign
Co furnishes services,
through employees or
other personnel in India
[subject
to
time
threshold]
►
Some of India’s tax
treaties do not contain
this clause
Installation PE
►
►
Constituted if Foreign Co
assembles or installs
equipment in India or
undertakes
connected
supervisory activities in
India [subject to time
threshold]
If a PE is constituted for Foreign Co in India,
income attributable to the PE would be
taxable at 42.23% on net income basis
►
If the income constitutes Fees for Technical
Service / royalty and is not attributable to a
PE in India, India withholding tax on gross
basis applicable
Agency PE
►
Arises if Foreign Co has an agent in India who, inter alia, concludes contracts, secures orders or maintains
stock in India
►
Agent of independent status is excluded from the purview
The presence of a PE to be determined based on the relevant facts and tax treaty
Page 33

34. Recent tax updates
Tax Residency Certificate
considered necessary but not
sufficient for claiming tax treaty
benefits
GAAR - Applicable from 1
April 2015 in cases where
the aggregate tax benefit
exceed INR30m
Investment allowance on new
plant and machinery
Page 34
Tax @ 20% on buyback of
shares
Key
updates
Income derived from transfer
of investments made prior to
30 August 2010 not covered
by GAAR
Domestic law rate up from
10% to 25% on Royalties/FTS

35. Incentives
Page 35

36. Regional Tax Incentives
Research & developments – overview
India
Relief available
►
Weighted deduction of 200% of expenditure incurred (other than cost of land and
building) on scientific research on in-house research and development facility as
approved by the prescribed authority, would be available to companies engaged in
business of bio-technology or any business of manufacture or production of any
article or thing
Eligible expenditure
►
Expenditure on scientific research other than cost of land or building
IP ownership requirement
►
General requirement to own IP
R&D work performed in country
►
Yes
Page 36

37. Regional Tax Incentives
Manufacturing – overview of direct tax incentives
India
Name of incentive
►
Special Economic Zone Scheme
►
Corporate tax benefits
► Tax
holiday
100% of profits from export for first 5 years and 50% of profits from export for next 5
years . From year 11 to 15, 50% of profits may are allowed as a deduction subject to
satisfaction of certain conditions.
However, units will be liable to pay Minimum Alternate Tax on book profits
►
15 year tax holiday
►
Duration
Page 37

38. Regional Tax Incentives
India – investment/expenditure linked tax incentives
Agricultural Extension Project
► Weighted deduction of 150% of expenditure incurred would be available to any taxpayer who incurs any expenditure on Agricultural
Extension Project notified by the Board in accordance with the prescribed guidelines.
Skill Development Project
► Weighted deduction of 150% of expenditure incurred, other than expenditure on land and building, would be available to company which
incurs any expenditure (other than on land & building) on Skill Development Project notified by Board in accordance with prescribed
guidelines.
Employment of new workmen
► An Indian company engaged in the manufacture or production of article or thing is eligible for deduction, from gross total income, of 30%
of additional wages paid to new regular workmen employed in the previous. The deduction is available on satisfaction of the prescribed
conditions. Further, the deduction is available for 3 years, including the year in which employment is provided.
Developers of SEZ
► Eligibility – Taxpayer being a developer, derives income by an undertaking or enterprise from business of developing SEZ, notified on or
after 1 April 2005 under SEZ Act, 2005.
► Quantum of deduction – 100% of the profits derived from such business for 10 consecutive years, at the option of the taxpayer, out of 15
years beginning from the year in which SEZ is notified.
Business of processing of bio-degradable waste
► Eligibility - Taxpayer engaged in the business of collecting and processing or treating of bio-degradable waste for:
i] Generating Power or ii] Producing bio-fertilizers or bio-pesticides or other biological agents or iii] Producing bio-gas or iv] Making pellets
or briquettes for fuel or organic manure.
► Quantum of deduction – 100% of the profits derived from such business for 5 consecutive years beginning from the year in which such
business commences.
Page 38

39. Regional Tax Incentives
India – investment/expenditure linked tax incentives
Specified business
► Weighted deduction for expenditure incurred is available to all taxpayers who incur capital expenditure (other than on land or
goodwill or financial instrument) wholly and exclusively for the purposes of specified business carried on during the year in
which expenditure is incurred.
►
For the specified business of – i] Setting up & Operating a cold chain facility; ii] Setting up & operating a warehousing facility
for storage of agricultural produce; iii] Building & Operating a hospital anywhere in India with at least 100 beds; iv] Developing
& Building a housing project under a scheme for affordable housing framed by Government and notified by Board; and v]
Production of fertilizers in India, deduction is available up to 150% of the expenditure incurred.
►
The quantum of deduction would be 100% of the expenditure incurred for the following specified business: i] Laying and
Operating a cross country natural gas or crude or petroleum oil pipeline network for distribution; ii] Building and Operating
anywhere in India a hotel of two star or above category; iii] Developing & Building a housing project under a scheme for slum
redevelopment or rehabilitation framed by Government and notified by Board; iv] Setting up and operating an inland container
depot or a container freight station; v] Bee-keeping and production of honey and beeswax; vi] Setting up & Operating a
warehousing facility for storage of sugar.
►
Deduction is available subject to satisfaction of specified conditions.
Page 39

40. Thank you
This document is not meant to be a
comprehensive guide to any of the Indian tax
issues and is meant only for reference
purposes. Any action should be taken only
after obtaining professional guidance

41. Doing Business in India
Isabelle Henderson
International Trade Adviser
Smart Exporter

42. WHAT IS SMART EXPORTER?
• Smart Exporter is an international trade skills
programme designed to increase exporting skills and knowledge
amongst Scottish businesses
• This initiative is delivered by SDI and funded by ESF
• Smart Exporter services are available on a free or subsided basis to
businesses and individuals across Scotland

43. EXPORT ADVISOR SUPPORT
Access to support from an Experienced Export Advisor which
includes:
• An one to one meeting to discuss your international plans and how the Smart
Exporter programme can help your business
• Help with market research about the market potential for your product or service
or information about your competitors
• Access to free export training through workshops or online
• Practical advise on how to be paid from an overseas sale to help with distributor
agreements via Smart Exporter’s technical support

44. SMART EXPORTER – WHATS COMING UP
Market Awareness events
•
•
•
•
•
Doing Business in India (31st October 2013, Edinburgh)
Access Europe 2013 (6th November 2013, Edinburgh)
Doing Business in Japan (28th November 2013, Glasgow)
Doing Business in Russia (10th December 2013, Edinburgh)
Emerging Europe 2014 (5th February 2014, Glasgow TBC)
Exporting workshops
-
Introductory Programme (New Exporters) – Edinburgh (November 2013)
Introductory Programme (New Exporters) – Glasgow (January 2014)
-
Intermediate Programme (Inexperienced in international trade), Glasgow (Jan to March 2014)
Intermediate Programme (Inexperienced in international trade), Stirling (Jan to March 2014)
Future International E-commerce events and workshops to be scheduled
All Smart Exporter Events: http://www.sdi.co.uk/Events.aspx

46. Doing Business in India
Networking Break
Sign up for one to one meetings at
the registration desk

47. Upcoming missions to India
•
Food & Drink Learning Journey – Mumbai and Delhi
25-29 November 2013
•
Horizontal Mission – Bangalore and Hyderabad
10-13 February 2014
•
Bangalore India Bio - Bangalore and Hyderabad
10-12 February 2014

48. Doing Business in India
Andrew Wilson
Projects Director
BE Group

49. SDI Cross Sector
Mission to India
10 – 13 February 2014
Andrew Wilson
BE Group

50. Cross Sector Mission to India – February 2014
 Background
 Funding
 Notes from previous mission
 Programme information
 Benefits of attending

51. Cross Sector Mission to India – February 2014
Background
• SDI Cross Sector Missions are aimed
primarily at SMEs who are either new
exporters or wish to develop and grow their
business in a particular market.
• It can also include large companies or very
experienced exporters who may be well
established in a market.

52. Cross Sector Mission to India – February 2014
• We are targeting between 15 and 25
companies for each of the missions. SDI are
running 5 such missions per year up until end
March 2015.
• There is a set subvention grant for specific
markets, covering travel and hotel costs.

53. Cross Sector Mission to India – February 2014
•
•
•
•
•
Project team is established for each mission
We use SDImissions@scotent.co.uk
Joint working with SDI Marketing Team
Enquiries receive brochure + application form
Applications are sent to SDI for approval

54. Cross Sector Mission to India – February 2014
• Countries visited so far:
–
–
–
–
–
–
South Africa
India
USA / Canada
Brazil
China
UAE / Qatar
Nov 2012
Nov 2012
Apr 2013
Jun 2013
Sep 2013
Apr 2013

55. Cross Sector Mission to India – February 2014
Funding
• Funding is provided by UKTI’s MVS (Market Visit
Support) service.
• The MVS funding level for India is £550
• Eligibility criteria apply – for example a company
needs to be new to market or not exceed a
certain level of exports.
• BUT – good news - SDI top up the UKTI funding
even if company not eligible for full subvention

56. Cross Sector Mission to India – February 2014
• Funding is provided retrospectively.
• We collect bank details and send the subvention
direct to the company.
• No travel receipts or complex documentation is
required.
• The completed Mission Application Form is all
that is needed.

57. Cross Sector Mission to India – February 2014
Notes from previous mission
Mumbai and Pune
26 – 30 November 2012
10 companies attended

58. Cross Sector Mission to India – February 2014
Company
Delegate
Website
Bollywood Scotland
Nick Scott
www.bollywoodscotland.com
Enocell
Gordon MacMillan
www.enocell.com
Europharma
Sunil Kadri
www.europharma-uk.com
Future Factory
Derek Peacock
www.futurefactory.co.uk
Galloway Group
Cameron Robertson
www.gallowaygroup.co.uk
Glenglassaugh Distillery company Limited
Stuart Nickerson
www.glenglassaugh.com
Natural Fruit and Beverage Co
Gerry Dunn
www.naturalfruitandbeverage.co.uk
Restaurant Diary
Mike Conyers
www.restaurantdiary.co.uk
Scottish Investment Operations
Alan Thornburrow
www.sio.org.uk
Vets Now
Richard Dixon
www.vets-now.com

59. Cross Sector Mission to India – February 2014
2012 programme
25th November Arrive Mumbai - welcome drinks hosted by SDI & GlobalScots
26th November Mission briefing by SDI India and PWC
Overview of India and State of Maharashtra
Business workshop – with GlobalScots
One to one business meetings
Scottish Business Network Reception
27th November One to one meetings / British Business Group Mumbai
28th November Individual meetings
29th November Travel to Pune
Site visit to Tata Services Archive Centre
One to one business meetings
Scottish Business Network reception and whisky tasting
30th November One to one business meetings / Mission debrief

60. Cross Sector Mission to India – February 2014
Programme information
• This mission is part of a wider continuing series:
–
–
–
–
–
Turkey
China
West Africa
Gulf
Europe
• Updates will be shown on SDI website

61. Cross Sector Mission to India – February 2014
Benefits of attending
•
•
•
•
•
•
•
Perfect introduction to market
Connect with SDI and further UKTI support
Meet new customers
Non-competitive environment
Space for your own agenda / business meetings
Pre-mission research / support can be provided
Follow up support provided

62. Cross Sector Mission to India – February 2014
Benefits of attending
“The support provided by SDI was outstanding. Entering
a market such as India is difficult due to communication,
logistics and understanding the cultural influences. The
SDI team in India delivered real support at all levels
throughout the visit thus allowing me to focus on
opportunities and meetings, maximising our impact and
time management.”
Gordon Macmillan, Enocell

63. Doing Business in India
Alastair McGhee
Commercial Development Executive
Coatbridge College

64. Doing Business in India
Panel Session
Questions and Answers

65. Doing Business in India
Thank You!