1 INDIA AT A GLANCE Geographically, the Indian subcontinent is a peninsular region in south-central Asia, rather resembling a diamond which is delineated by the Himalayas in the north. The peninsula is surrounded by the Indian Ocean in the South, Arabian Sea in the southwest and the Bay of Bengal in the southeast. India is the seventh largest country in the world. India is blessed with fertile plains and river deltas that reinforce its agriculture sector with the production and export of a variety of cash crops.
2 DEMOGRAPHICS With 1.22 billion residents reported in the 2011 provisional census, India is the world's second-most populous country. It is home to the world s largest English speaking population. Out of the total population 64% lie in the 15-64 years age group which makes up for a huge work force. Age composition 5% 64% 31% 0-14 yrs 15-64 yrs above 64 yrs Labour in India is easy to source and is known to be highly productive and cost effective. India is the largest growing market in the world with a fast growing middle class. Being a tropical country, India does not experience extreme climates. It is a cosmopolitan nation with twenty nine states and seven union territories, each with a distinct culture and heritage to call its own. Capital Population Sex Ratio New Delhi 1.22 billion 917 females to 1000 males (2011 Census) Languages Hindi (official language), English (Business language) Major Cities New Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune Time Zone Currency Unit 5 hours 30 minutes ahead of Greenwich Mean Time (GMT) Indian Rupee (INR)
3 THE INDIAN ECONOMY INDIA S GDP The GDP of India has been increasing year after year despite the global recession. It is noteworthy to mention that inspite of the increase in GDP reaching a steep low of 3.9% in 2008, India s recession resistant economy quickly jumped back the next with an 8.2% increase in the country s GDP. 12 10 8 6 4 2 0 2007 2008 2009 2010 2011 GDP COMPOSITION India s economy has seen a huge shift from it being a primarily agrarian economy to one where agriculture only contributes to less than 20% of its GDP. The shift has been because of considerablee increase in the manufacturing (secondary) sector and an exponential increase in the service (tertiary) sector. GDP Composition 19% 55% 26% Agriculture Manufacturing Services Document created by Anil K Goyal & Associates
4 AVERAGE INCOME AND SPENDING The rise in the young and independent middle class has ushered in the age of urban nuclear families, as opposed to the traditional joint family value system. Households have shifted from a single earner to having two working members in the family. The rise in the number of educational institutes as well as the quality of education has led to the rise of a highly educated, competent and technically skilled workforce. The rise in skilled workforce has resulted in higher levels of income and consequently a higher disposable income. Both the per capita income and the per capita personal disposable income have almost doubled from 2004-05 to 2009-10. Per capita Income (INR) Per capita PDI (INR) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 24,143 27,123 31,198 35,820 40,605 46,492 23,712 26,312 29,659 32,817 38,897 43,779 Source: Press Information Bureau, Government of India GOVERNMENT INCENTIVES The government of India provides several tax incentives to promote investment and growth in the country. These incentives are a great opportunity to the investors as they can provide investor with excellent Return on their Investments. The incentives can be of different types and maybe in the form of: Deductions from profits during initial years of set up Allowance of capital expenditure as revenue expense Allowance of higher depreciation Tax holidays for industries set up in SEZ (Special Economic Zones) Other industry/ sector specific incentives WORK CULTURE & EASE OF OPERATIONS India follows a contract based professional charging system versus the hourly system followed in the West which turns out to be a lot more cost effective. All offices in India follow a five or six day work week with Monday being the start of the week. The work culture is very conducive in India with reasonable work timings, easily commutable distances from work place and most importantly India has a qualified and affordable workforce to facilitate your business growth. India is one the preferred destinations in Asia in terms of ease of operations and also for expats to settle down because of the climatic conditions and the easily maintainable high quality of living.
5 INFRASTRUCTURE ROADS - India has the second largest road network in the world connecting all major towns, cities and villages. At 0.66 km of roads per square kilometer of land, the quantitative density of India s road network is similar to that of the United States and far higher than that of China or Brazil. RAILWAYS - It is one of the world's largest railway networks comprising 1.15 lac kilometers of track over a route of 65,000 km and 7,500 stations. As of December 2012, it transported over 25 million passengers daily (over 9 billion on an annual basis). Most Indian metropolitan cities also have functioning subway tube lines. HOUSING - While Indian villages have big houses with courtyards, the metros have embraced the apartment and high rise set up. Electricity, water and gas are supplied in all the metropolitan cities 24/7 with additional back up for emergencies. India offers open and spacious housing options to those that come for business at very competitive prices. India is one of the last few nations in the world where domestic help is still very easily available and affordable. SEA PORTS - India has a long coastline, spanning 7516.6 kilometers, forming one of the biggest peninsulas in the world. It is serviced by 13 major ports (12 government and 1 corporate) and 187 notified minor and intermediate ports. In 2000 there were 102 shipping companies operating in India, of which five were privately owned and based in India and one was owned by the government (Shipping Corporation of India). AIR PORTS - The airport transportation network of the country effectively fulfills the needs of a large number of tourists and visitors who are arriving in the country from distant locations. The travel and tourism sector of the country is thriving at a rapid pace. The country is home to over 20 international airports and various national airports. There are over 335 civilian airports are there for domestic transportation. BANKING - There are currently 23 public sector banks in India and 28 private sector banks in India. The IT revolution had a great impact in the Indian banking system. The use of computers had led to introduction of online banking in India. POWER ELECTRICITY - India has the world s fifth largest electricity installed capacity. India's electricity sector is amongst the world's most active players in renewable energy utilization, especially wind energy. SECURITY AND HEALTH - India has a large police force that is dedicated towards the safety and vigilance of the country. The medical facilities in India are one of the highest qualities available in South Asia and are very affordable as compared to the rest of the world, so much so that India is a choice destination for medical tourism. India offers 24/7 door to door medical assistance and easy health insurance. India offers a wide variety of dietary options since it caters to a cosmopolitan palette.
6 FDI IN INDIA Foreign direct investment (FDI) in India is allowed in almost all sectors, excepting a few sectors of strategic importance such as atomic energy, railways, etc. Further, FDI is permitted in most of the sectors under the automatic route where no government approval is required. There is huge inflow of FDI in India due to its liberal FDI policy and conducive investment climate. The FDI Equity inflows in India (in USD million) for the past few years are mentioned below: 40000 35000 30000 25000 20000 15000 12492 24575 31396 25834 19427 36504 FDI Equity inflow (USD million) 10000 5000 5540 0 Source: Department of Industrial Policy & Promotion, Government of India FDI in India spread over a wide spectrum of industries and sectors. Below mentioned are the sectors that have attracted the highest FDI: Rank Sector Cumulative Inflows April 00 - April 12 (USD million) % of total FDI inflows 1 Services (financial & non financial) 32,800 19 2 Telecommunications 12,552 7 3 Construction Activities 11,553 7 4 Computer Software & Hardware 11,230 7 5 Housing & Real Estate 11,168 6 6 Chemicals (other than fertilizers) 9,852 6 7 Drugs & Pharmaceuticals 9,554 6 8 Power 7,367 4 9 Automobile Industry 6,779 4 10 Metallurgical Industries 6,283 4 Source: Department of Industrial Policy & Promotion, Government of India
7 100% EQUITY OWNERSHIP AND FREE REPATRIABILITY In India, 100% equity can be held by foreign nationals investing in sectors that are not prohibited. There is no requirement of having a local Indian shareholder or director giving foreign investors complete freedom regarding the ownership of their Indian entity. Indian Laws allow 100% free repatriability of the funds invested into India in the form of capital. This means there are no restrictions in terms of terminating an investment or taking back funds that are already invested in India at any given point. DOUBLE TAX AVOIDANCE AGREEMENTS India has double tax avoidance agreements with most countries and territories that help avoid the burden being taxed twice in two different taxable territories. This makes India a tax neutral investment destination from the investor s point of view. EASE OF ENTERING IN INDIA Capital - Investing in a business in India requires a bare minimum risk capital of USD 5000 with an additional annual compliance cost of about USD 5000. Easy repatriability of investment - As mentioned above, capital invested into India is freely repatriable. Payments out of India - Payments in the form of Royalty for technical know-how, fee for technical services, dividends are permissible. DTAA - Double Tax avoidance agreements with several countries makes India Tax neutral from the Investors point of view Choosing a consultant - There are a number of consultants available in India in various fields of work. One should be vigilant while choosing a consultant in India. Your country s respective embassy will have some of these consultants empanelled. Hiring an agency- One can easily hire an agency as their representatives in India to do a dipstick study of the Indian markets before making a decision.
8. INSTITUTES FOR REFERENCE Embassies - The national capital region houses embassies of all the countries. Each embassy has an empanelled list of approved consultants and agencies for those that seek to venture into the markets of India FICCI - The Federation of Indian Chambers of Commerce and Industry (FICCI) is an association of business organizations established in 1927and is the largest, oldest and the apex business organization in India. It is a non-government, not-for-profit organization that works to promote business activities in various sectors. Its headquarter is located in the national capital New Delhi along with presence in 11 states in India and 8 countries across the world. NOTE** This guide is designed to provide to an investor brief information on the present business and economic environment in India. The information given is not exhaustive and is only meant to be a guide. This guide does not purport to be an offer, invitation or solicitation of any kind. Before taking any financial decisions kindly consult your tax and legal advisors. We are always at your disposal should you require any clarification or any additional information regarding doing business in India s flourishing economy. This document is available for download at our website THANKS **P.S: Anil K Goyal & Associates cannot be held liable for any action or business decision taken on the basis of information in this guide.