Country GuideIndia

From Global Connections

India's foreign direct investment (FDI) inflows nearly doubled to reach USD59 billion in 2015. According to UNCTAD's World Investment Prospects Survey 2014 – 2016, India ranked fourth in the world as a top prospective host economy for transnational corporations.

India ranked 130th in the World Bank's 2016 Doing Business rankings, up four places from 134th in the year prior. The rankings recognised a number of reforms enacted to make doing business easier in India. India made starting a business easier by eliminating the minimum capital requirement and the need to obtain a certificate to commence business operations. Further reforms were made to make getting electricity easier.

Key facts about starting a business in India:

  • It takes 14 procedures and approximately 29 days to start a new business in India; this process is detailed in the Doing Business in chapter
  • Foreign nations wishing to work in India must, amongst other requirements, be sponsored by an employer and earn a salary of more than USD25,000 per year; employment regulations are discussed in detail in the Labour chapter
  • Indian Accounting Standards (Ind AS) are mandatory for companies with a net worth of INR5 billion or more; further details can be found in the Audit chapter
  • Companies wishing to list securities can choose between the Bombay Stock Exchange and the National Stock Exchange of India; this is discussed further in the Finance chapter

India's attractiveness as an investment location can be attributed to a number of factors, including its young population, expanding middle class and strong economic performance. Nevertheless, in order to make an informed decision, it is critical to understand the nuances of any local regime. The manner in which people conduct business in India may differ from the home countries of investors. Furthermore, variations on these distinctions may exist depending on the region and industry in which a company operates.

India's official language is Hindi, but different states have their own official languages. Nevertheless, English is the lingua franca of business. Hierarchy is central to Indian society and this is reflected in business culture. Business attire is conservative.

Punctuality is expected when doing business in India. A handshake is the typical business greeting. Business cards will usually be exchanged at the first meeting and should be given with the right hand. Gift giving is not expected as part of business interactions.

Those looking to establish a business in India may look across Asia for alternative options. However, India can be differentiated on the following factors:

  • India overtook China as the fastest growing major economy in the world in 2015, expanding by 7.3 per cent
  • More than 50 per cent of India's population is below the age of 25
  • In the 2015 Budget Speech, it was indicated that the rate of corporate tax will be reduced from 30 to 25 per cent over the next four years; the tax regime is detailed in the Tax chapter
  • The government has committed USD11 billion to Private Sector enterprises for infrastructure investment; further details can be found in the Infrastructure chapter
  • There are currently more than 200 operational Special Economic Zones in operation, providing a number of tax incentives and exemptions; discussed further in the Trade chapter

While India is at the forefront of global foreign investment flows, there are still a number of challenges for foreign businesses. Despite significant economic liberalisation, restrictions to foreign investment in certain sectors still exist. There are high levels of bureaucracy in state bodies which contribute to delays in setting up and operating a business. Furthermore, India was one of the lowest ranking countries when judged on the strength of its intellectual property rights enforcement; further discussed in the Legal chapter.

This guide has been developed to provide businesses with an overview of India, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in India. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 Ministry of Commerce and Industry
2 Income Tax Department
3 Central Board of Excise and Customs
4 Bureau of Immigration
5 Controller General of Patents, Designs and Trademarks
6 The Ministry of Communications and Information Technology
7 Invest India
8 Ministry of Labour and Employment

 

Sources

1 FDI Statistics
2 UNCTAD World Investment Prospects Survey
3 Doing Business Rankings
4 India Economic Growth Statistics – Central Statistics Office

 

Download Country Guide - India (1.41MB, PDF)

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