A NORWEGIAN GUIDE TO DOING BUSINESS IN INDIA

“The credibility of the Indian economy has been re-established.

The world is predicting that it is India's chance to y.”Arun Jaitley, Hon'ble Finance Minister of India

“India's biggest strength in the coming years is going to be her demographic

dividend. More than 50 percent of population is under 25 years and soon, one-fth of the

world's working age population will be in our country.” Pranab Mukherjee, Hon'ble

President of India

“Indian innovation is an engine of the global economy. And even with the recent

challenges, the Indian economy continues to grow at an impressive rate. The Indian

people have displayed a remarkable capacity to meet India's challenges.” Barack

Obama, Hon'ble President of US

“We project that India will be a bright spot in otherwise mediocre global economic

outlook. Prime Minister (Mr. Narendra Modi) and his government are quickly putting in

place the building blocks for even more rapid growth. With the leadership of Prime

Minister Modi, with the leadership of all of you here in this room today and most

importantly, with the hard work of the people of this great country, we can unleash a

movement that will remake history.” Jim Yong Kim, President, World Bank Group

“One of the most important things we can do is to make sure we have good

agreements on tax systems between India and Norway. Good visa agreements that

will increase Norwegian presence.” Erna Solberg, Hon’ble Prime Minister of Norway

“We welcome India's recent economic reforms as steps in the right direction. I have

no doubt that future reform will strengthen trade and investment ties as well as benet

India's domestic industry.” Axel C Heitmann, Chairman, Lanxess

“India is probably the most competitive country in the world for the automotive

industry.” Toru Hasegawa, Corporate Vice President for Africa, The Middle East And

India, Nissan.

“India is the largest growth market in the world in the next few years. China has been

and has done very well and China will continue to be a large market. But the acceleration

of growth is going to be the most in India.” Arun Maira, Member, ex-chairman BCG and

former member, Planning Commission

“The potential rate of growth of the (Indian) economy is very high. India certainly

deserves an investment grade and perhaps even better. Since India’s growth rate will be

much higher than the rate of growth of the world economy, its share in the world output

will continue to increase. There are some positive features in the Indian economy, which

will propel the country towards higher growth.” Dr. C. Rangarajan, Ex-Governor, Reserve

Bank of India

A NORWEGIAN GUIDE TO DOING BUSINESS IN INDIA 3

India to Become World’s Fastest Growing

Economy – International Monetary Fund

The recent policy of reforms, improved business

condence has provided a booster shot to

economic activity. Using India’s new GDP

series, the IMF expects growth in India this

year in the range of at 7.2, and we see that

at 7.5 per cent next year, making India

one of the fastest growing economies in

the world. Of all the large economies, India is the

fastest. And indeed a brighter future is being

forged. By 2019, the economy will have more than

doubled in size compared to 2009. And when

adjusting for differences in purchase prices

between economies, India’s GDP will exceed that

of Japan and Germany combined.

BIC Survey Ranks India as No. 1 Destination for Future Investments

Japan Bank for International Cooperation (JBIC) has ranked India

as the number 1 destination for future investments followed by Indonesia and

China.

India to become fastest-growing economy in PM Narendra Modi

government’s 4th year: World Bank

India is set to become the fastest-growing big economy in the world in the fourth

year of Prime Minister Mr. Narendra Modi’s Government. India is set to register a

7 per cent rise in gross domestic product (GDP) in 2017 surpassing China, as

per the World Bank publication.

India to become world's 3rd largest automobile manufacturer by 2020 –

David Dubensky, MD, Ford

India’s automotive industry is expected to reach 7 million vehicles milestone by

2020, making the country the third-largest auto manufacturer in the world, behind

the US and China. The automotive sector has a direct bearing on the economy

with a near 7 per cent contribution to the GDP, playing an important role in the

development of other crucial sectors as well.

5A NORWEGIAN GUIDE TO DOING BUSINESS IN INDIA

AN OVERVIEW OF THE INDIAN ECONOMY

The post-independence Indian economy

(from 1947 to 1991) was

a mixed economy with an inward

looking, centrally planned,

interventionist and import-substituting

economic policies.

In 1991, India adopted the free-market

principles and thereafter liberalised its

economy to international trade. A shift from a

closed-door economy to an open economy

helped India realise its growth potential.

AN OVERVIEW OF THE INDIAN ECONOMY

After a slow economic downturn, the Indian economy is moving rapidly on a

well-dened roadmap, which has emboldened the investors’ condence. India

currently ranks as the 10th largest economy in the world and 3rd largest

(replacing Japan) in terms of PPP. India is ranked 142 out of 189, in World

Bank’s 2015 ‘ease of doing business’ index. The Government has introduced

proposals in Union Budget 2015-16 to facilitate the ease of doing business in

India and claried that the theme of ‘minimum government and maximum

governance with focus on ease of doing business’ will be one of its major

priorities.

With 1.2 billion people and the world's third-largest economy, India’s growth and

development in the recent past has been one of the most

signicant achievements. In the past six and a half decades

since independence, the country has brought about a

landmark agricultural revolution which has transformed

the nation from chronic dependence on grain imports into

a global agricultural powerhouse that is now a net

exporter of food. Life expectancy has more than doubled,

literacy rates have quadrupled, health conditions have improved, and a sizeable

middle class has emerged. India is now home to globally recognised companies

in pharmaceuticals, steel, information and space technologies, and a growing

voice on the international stage in line with its enormous size and potential.

Historic changes are unfolding, unleashing a host of new opportunities to forge

a 21st-century nation. India will soon have the largest and youngest workforce.


At the same time, the country is in the midst of a massive wave of urbanisation

as around 10 million people move to towns and cities each year in search of

jobs and opportunity. It is the largest rural-urban migration of this century.

World Bank Chief Economist and Senior Vice-President Kaushik Basu said,

“According to our analysis, India will catch up with China's growth in the year

2016 and 2017.” The World Bank in its report has forecasted a growth rate of 7

per cent each in the scal year 2016 and 2017 as against China’s 7 per cent and

6.9 per cent respectively. This would be for the rst time in the recent past that

India’s growth rate would catch up with that of the Asian giant China.

According to the Global Competitiveness Report 2014-15 released by World stEconomic Forum, which covers 144 countries, India holds the 71 position.

rd thFurther, India stands in the 3 position in terms of market size, 49 position in stterms of innovation and 51 position in terms of nancial market development,

thus outweighing many other countries.

The government has recently unveiled a new statistical method to calculate the

national income with a broader framework that turned up a pleasant surprise

showing that the GDP in the previous year 2013-14 grew at 6.9 per cent instead

of the earlier calculated 4.7 per cent.

The revision in base year of India's national accounts will increase the size of the

economy to INR 111.7 trillion (USD 1.8 trillion) in nancial year 2013-14,

according to India Ratings. The size of the Indian economy was at about INR

93.89 trillion (USD 1.51 trillion) in 2012-13.

India has become a promising investment destination for foreign companies

looking to do business here. Mr Narendra Modi, Prime Minister of India, has

launched the ‘Make in India’ initiative with the aim to give the Indian economy

global recognition. This initiative is expected to increase the purchasing power

of the common man, which would further boost demand, and hence spur

development, in addition to beneting investors.

With the improvement in the economic scenario, there have been quite a few

investments in various sectors along with M&A in India. Some of them are as

follows:

AN OVERVIEW OF THE INDIAN ECONOMY8

Ÿ India has emerged as one of the strongest performers in the deal-street

across the world as mergers and acquisitions (M&A). M&A activity increased

in 2014 with deals worth US$ 38.1 billion being concluded, compared to

US$ 28.2 billion in 2013 and US$ 35.4 billion in 2012

Ÿ The combined index of eight core industries stood at 166.2 in November

2014 – 6.7 per cent higher compared to the index of November 2013. Its

cumulative growth during April to November, 2014–15 was 4.6 per cent.

Ÿ India’s consumer condence continues to remain highest globally and

showed improvement in the fourth quarter of calendar year 2014 (Q4), riding

on positive economic environment and lower ination. Nielsen’s ndings

reveal that the consumer condence of urban India increased by three

points in Q4 from the preceding quarter. With a score of 129 in Q4, urban

India's consumer condence is up by 14 points from the corresponding

period of the previous year (Q4 of 2013) when it stood at 115.

Ÿ India’s foreign exchange reserves touched a record USD 322 billion,

surpassing the previous high of almost USD 321 billion in September 2011.

Latest data has revealed accretion of USD 2.7 billion during the week ended

January 16, 2015, essentially due to a rise in foreign currency assets. Market

players said that the Reserve Bank of India (RBI) has been buying dollars to

ensure that the rupee stays strong. At current levels, reserves are sufcient

to cover imports for eight-and-a-half months.

Ÿ Gujarat Cooperative Milk Marketing Federation (GCMMF) is planning to

invest close to INR 5,000 crore (USD 806.01 million) to set up ten new

processing plants as well as expand the current capacity to touch 32 million

litres per day by 2020.

Ÿ The Visakhapatnam Port Trust (VPT) has outlined INR 3,000 crore (USD

483.61 million) expansion-cum-modernisation plan aimed at enhancing the

port’s capacity by nearly 50 per cent.

Ÿ The Uttar Pradesh Government has secured investment deals valued at INR


5,000 crore (USD 806.01 million) with companies like Samsung, Spice

Mobiles, Lava and cellular associations for setting up mobile manufacturing

units in the state.

Ÿ Indian smartphone maker Maxx Mobilink plans to start production of mobile

handsets at its Haridwar plant. Maxx will invest over INR 6 crore (USD

967,241.29) initially in setting up the R&D lab, which will take care of device

testing and software innovation such as language packs, user interface and

other utility-based applications.

Ÿ Indostar Capital Finance Ltd and Reliance Capital Ltd have invested INR 200

crore (USD 32.24 million) in Alliance group, a real estate company. The

investment will be deployed in two projects – one in Chennai and the other

in Bengaluru. The company plans to invest close to INR 120 crore (USD

19.34 million) in the Chennai project.

Ÿ In line with Prime Minister Narendra Modi's ‘Make in India’ initiative to give

domestic manufacturing a major push, the country’s oil and gas sector is

expected to see investments worth as much as INR 5-6 lakh crore over the

next ve to seven years. Manufacturing opportunity is expected to be

created in the near-to-medium term across the oil and gas value chain

including upstream segment (oil and gas exploration and development),

midstream segment (gas pipelines and LNG ship building) and downstream

segment (rening and petrochemicals).

Ÿ Infosys CEO Vishal Sikka proposed a double offering aimed at aiding the

Government’s new initiatives – a promise to allocate half of its USD 500

million venture fund as an ‘Innovate In India Fund’ and to share expertise for

the development of smart cities. The money will be used to fund start-ups in

innovative technologies and provide them an ecosystem to scale up. In

return, these innovations will help Infosys climb up the value chain in the

software services space.

Ÿ Pune-based Suzlon Group has announced its plans to invest INR 24,000

10 AN OVERVIEW OF THE INDIAN ECONOMY

crore (USD 3.86 billion) over the next 5 years on energy projects to

generate 3,000 megawatt (MW) in Gujarat. This will also mark the

foray of Suzlon in solar energy.

Ÿ ITC Ltd will invest INR 1,000 crore (USD 161.2 million) for its

ambitious foray into dairy and juice businesses. The Kolkata-based

cigarette-to-FMCG-hospitality conglomerate will make the proposed

investment on manufacturing capacity, marketing, brand building

and distribution expenses.


FOREIGN DIRECT INVESTMENT

SCENARIO

The regained investors’ condence in India

economy has burgeoned foreign direct

investment (FDI) inows since April 2014.

India has been ranked among the top 3

attractive destinations for inbound

investments. A report by

Department of Industrial Policy &

Promotion (DIPP) has revealed a 37

per cent increase in FDI inow in India

from April 2014 to January 2015 as compared

to the period April 2013 to January 2014. The

total FDI inow in January 2015 has increased

more than two-fold as compared to inow in

January 2014. A fact sheet on FDI inow is

provided (Facing page).

FDI EQUITY INFLOW (MONTH-WISE):

Financial Year 2014-15

Financial Year 2014-15(April to March)

Amount of FDI equity inows

(In Rs crores) (In USD million)

April 2014 10,290 1,705

May 2014 21,373 3,604

June 2014 11,508 1,927

July 2014 21,022 3,500

August 2014 7,783 1,278

September 2014 16,297 2,678

October 2014 16,288 2,655

November 2014 9,486 1,537

December 2014 13,562 2,161

January 2015 27,880 4,481

Total (April 2014 to January 2015) 155,489 25,526

Total (April 2013 to January 2014) 113,401 18,749

% growth over last year (+) 37% (+) 36%

Source: DIPP, FDI Statistics, 2015


Mauritius is the leading jurisdiction with highest FDI contribution of INR

417,148.08 crores (USD 86,187.26 million) thereby constituting 35.45 per cent of

the total FDI inow in India in the past 15 years. This is followed by Singapore,

UK, Japan, Netherlands and USA which contributed 12.63, 9.01, 7.35, 5.91 and

5.56 per cent of the total FDI inow respectively.

Service sector attracts the highest FDI inow for India (USD 42,101.98 million)

contributing 17.32 per cent of the total FDI inow. This is followed by

construction development townships, housing, built-up infrastructure and

construction-development projects contributing to 9.88 per cent of the total FDI

inow during the period April 2000 to January 2015. Telecommunications,

computer hardware, software and drugs & pharmaceuticals follow next with

contribution of 6.99 per cent, 5.81 per cent and 5.29 per cent respectively to the

total FDI inow respectively during the same period.

Based on the recommendations of the FIPB, the Government of India has

recently approved 14 proposals resulting in FDI of INR 1,528.38 crore (USD

246.42 million) approximately. Out of the 14 approved proposals, six of them

related to the pharmaceutical sector.

The Government has announced that foreign investors can put in as much as

INR 90,300 crore (USD 14.65 billion) in India's rail infrastructure through the FDI

route, according to a list of projects released by the Ministry of Railways.

Israel-based world's seventh largest agrochemicals rm ADAMA Agrochemicals,

formerly known as Makhteshim Agan Industries, plans to invest at least USD 50

million over the next three years. ADAMA's global president and Chief Executive

Chen Lichtenstein said the idea was to expand both manufacturing and research

& development facilities in India aimed at growing better than the average

industry growth.

Apple, the world’s most admired electronics brand that sells devices such as the

iPhone, iPad tablet and iPod media player, is planning to open 500 ‘iOS’ stores

in India in its rst major push that will include moving into smaller towns and

cities.

14 FDI

Foreign investment inows are expected to increase by more than two times and

cross the USD 60 billion mark in nancial year 2015-16 on account of increasing

condence of foreign investors, as per an industry study. The global investors

are enthusiastic to invest in India which is expected to witness over 100 per cent

increase in foreign investment inows – both FDI and FIIs – to above USD 60

billion in the current nancial year, as against USD 29 billion during 2013-14

according to the study. India will require around USD 1 trillion in the 12th Five-

Year Plan (2012–17), to fund infrastructure growth covering sectors such as

highways, ports and airways.


INDIA & NORWAY

India and Norway are important partners

where increased trade, investments and

economic cooperation with mutual benets are

the topmost priority.

Economic and business co-operation

Ÿ Norwegian businesses are doing well in India, Telenor being an excellent

example. Telenor has selected Tata Consultancy Services Ltd. to modernise

its xed-line network operations. ‘As much as India emerges as a promising

mass market opportunity for the Telenor Group, it is our endeavour to ensure

that our international markets also open up for our Indian business partners.

Our partnership with India should bring affordable services to subscribers in

the country, global opportunities with us to Indian businesses and the

benets of the top-class competence and capabilities of

these partners to the Telenor Group.’: Sigve Brekke,

Head of Telenor Asia operations.

Ÿ During the rst six months of 2014, the Norwegian

Embassy issued approximately 10 per cent more

business visas for Indian citizens, as compared

to the same period of last year.

Ÿ There are two visible indicators of growing business cooperation between

India and Norway. The Norwegian Business Association (India) (NBAI) was

established in 2013 with the aim to promote bilateral relationships and

promote business in general between India and Norway. It has grown to

approximately 60 members. Secondly, India has been chosen as the host of

the Norway Asia Business Summit 2015, thereby illustrating the important

role of India as a business partner in the region.

Ÿ The overall Indo-Norwegian cooperation covers wide areas such as energy

and climate change, environment and biodiversity, clean technologies, geo-

hazards, health, gender, local governance, culture, and business.


FDI

thŸ In terms of FDI inow, Norway ranks 37 out of 140 countries with a total FDI

inow of INR 881.62 crore (USD 171.67 million) in India.

Ÿ Norwegian embassy ofcial website reports that Norwegian businesses have

directly generated at least 10.000 jobs in India. Norwegian companies are

showing increased interest in recruiting Indian IT professionals and

engineers.

Norway-India Partnership Initiative

Ÿ The Norway-India Partnership Initiative (NIPI) was established in 2006

through a joint statement by the Prime Ministers of Norway and India.

Ÿ The vision of NIPI is to provide strategic, catalytic and innovative support to

the health care system for improved maternal and child health under the

National Rural Health Mission (NRHM), a programme by Indian Government

that aims to improve healthcare in 18 states in India.

Ÿ During the rst six years, the initiative focused primarily on four states (Bihar,

Madhya Pradesh, Odisha and Rajasthan) and was implemented by the

United Nations Ofce for Project Services (UNOPS); the United Nations

Children's Fund (UNICEF) and the World Health Organisation (WHO). In

2013, both countries decided to extend the duration of NIPI to 2017.

Ÿ NORAD in its report held that NIPI largely achieved its stated objectives with

main value add towards bringing forward the neo-natal health agenda in the

country.

Clean India Campaign in Varanasi

Ÿ The Swachh Bharat Abhiyan (Clean India Campaign) was launched

nationwide by NDA Government in India to focus on sanitation, hygiene and

waste management. It aims at making India a clean country by 2019, the

150th birth anniversary of Mahatma Gandhi.

Ÿ Norway’s Ambassador to India, Eivind S. Homme met Varanasi Mayor Ram

18 INDIA & NORWAY

Gopal to take forward the campaign in Varanasi, India. It was reported that

Norway based telecommunications company Uninor and its Indian

subsidiary will help civic agencies in Varanasi to clean the city as well as the

river Ganges.

Social Security Pact with Norway

Ÿ The Social Security Agreement (SSA) signed between India and Norway on

November 2, 2010 has been made operational with effect from January 1,

2015.

Ÿ The agreement aims to ensure that employees, and their employers, fall

under one country's social security regime (India or Norway), avoiding

instances of double social security liability.

Ÿ Under the agreement, the employees of one country

deputed by their employers to other country for short-

term assignments are exempted from social security

contributions, in the deputed country, up to a period of

60 months, subject to production of prescribed certicate.

This would enable that the deputed Indian, as well as

Norwegian employees, are not subjected to social security

contribution, under both the states, and enhance competitiveness of their

products and services.

Research and Education

Ÿ The Norwegian Ministry of Foreign Affairs nanced a 10-year research

programme of NOK 20 million annually to follow up on the Norwegian

Government's India strategy (2009).

Ÿ Indian Ministry of Human Resource Development, University Grants

Commission, the Norwegian Ministry of Education and Research and the

Norwegian Centre for International Cooperation in Education work closely on

matters of research and higher education.


Arctic and Polar Research

Ÿ Year 2013 brought India and Norway closer to one another in questions

related to Polar Research. Norway supported India in becoming a

permanent observer in the Arctic Council in May 2013.

Culture

Ÿ Culture is an important part of Norway's diplomatic missions around the

world and an integrated part of Norway's foreign policy. The rst White Paper

to Parliament in Norway on culture was presented in 2013. It highlighted

cultural rights and further cooperation in emerging economies like India.

Ÿ Norway and India signed its current culture cooperation agreement in 2010.

The Norwegian Embassy in India works with several local and Norwegian

partners, currently focusing on contemporary art, dance and music, literature

and theatre.

Recent pacts

Ÿ During October 2014, India and Norway entered into six Governmental

agreements for cooperation in the elds of earth sciences, culture, and

scientic research.

Ÿ Eight memorandums of understanding were signed with educational

institutions in Norway with a view to promote faculty, student and research

exchanges.

20 INDIA & NORWAY

Mr Pranab Mukherhee, the Hon'ble President of

India during his visit to Norway in October 2014

invited Norwegian companies to join the ‘Make

in India’ initiative of the new Indian Government

and to explore possibilities of investment in

India's infrastructure sector.

“We welcome foreign direct investments in our

railways, roads and ports, power and

communications sectors, we invite Norwegian

companies to join Indian counterparts in the

‘Make in India’ initiative of the new government

and we are presently simplifying the procedures

to facilitate their participation in India's growth

story. I am condent that the bilateral

agreements that we have signed will lead to

fruitful engagement in many elds where India

and Norway have obvious complementarities"

Mr Pranab MukherjeeHon’ble President of India


REGULATORY ENVIRONMENT

The regulatory environment in India is

impacted by the foreign exchange

control policies of the RBI,

securities law governed by the

Securities and Exchange Board of

India and various other legislations

affecting set up and operation of entities in

India.

1. Establishing a presence in India: A foreign company setting up operations

in India has the following options:

(i) Wholly-Owned Subsidiary (WOS):

Ÿ A foreign company can set up a WOS company in India to carry out its

activities. Such an Indian subsidiary is treated as an Indian resident under all

Indian regulations. WOS can be set up in India in form of an incorporated 1entity registered under the Companies Act 2013 .

Ÿ Generally, WOS is regarded as a distinct legal entity, separate from its

shareholders.

Ÿ WOS can undertake any legal activity provided that the same is stipulated in

its charter document (i.e Memorandum of Association)

(ii) Joint Venture with an Indian Partner (Equity Participation)

Ÿ Although a wholly-owned subsidiary has proved to be the preferred option,

many foreign companies have also begun operations in India by forging

strategic alliances with Indian partners.

Ÿ The trend is to choose a partner who is in the same eld/area of activity or

who brings synergy to the foreign investor's plans for India.

(iii) Limited Liability Partnership (LLP)

Ÿ LLP combines the advantages of a company, such as being a separate legal

entity having perpetual succession, with the benets of organisational

exibility associated with a partnership.

Ÿ The FDI policy permits foreign investment in LLPs (subject to prescribed

conditions) making this a possible viable entity form for foreign investors.

(iv) Liaison ofce

Ÿ Liaison ofce is a place of business which acts as a channel of

communication between the principal place of business/ head ofce and

parties in India.

Ÿ The role of such ofces is generally limited to collecting information about

the possible market and to providing information about the company and its

products to prospective Indian customers.

1Companies Act 2013 has replaced the extant law i.e Companies Act, 1956. Note, there are certain provisions under the Companies Act 2013 which are not effective yet; corresponding provisions of the Companies Act 1956 are applicable in the interim.


Ÿ A liaison ofce is not allowed to undertake any activities other than those

prescribed under exchange control regulations. Also it . cannot undertake

any prot earning activities.

(v) Project ofce

Ÿ A project ofce is generally set up to execute specic projects in India.

Ÿ The RBI has granted general permission to a foreign entity for setting up a

project ofce in India, subject to the fullment of certain conditions.

(vi) Branch Ofce

Ÿ Typically, BO is understood as an establishment –

ú Described as a ‘branch’ by the company;

ú Carrying on either the same, or substantially the same activity,

as carried on by head ofce of the company

Ÿ As per exchange control regulations, BO can undertake the following

activities:

ú Export/Import of goods

ú Rendering professional/consultancy services

ú Carrying out research work in areas in which parent company is

engaged

ú Promoting technical/nancial collaborations between Indian companies

and parent or overseas group company

ú Rendering services in information technology and development of

software in India

ú Rendering technical support to products supplied by parent/group

companies

ú Certain other activities as specied by the RBI

24 REGULATORY ENVIRONMENT

FDI in India is permitted under the automatic approval route – depending on

the sector in which the investment is made.

Under the automatic route there is no requirement of any prior regulatory

approval. Only post facto prescribed ling by the Indian company to the RBI

through an authorised dealer (Banker) is required.

Under the approval route, a prior approval of the Government is required.

Approval is granted by the FIPB on a case to case basis after examining the

proposal for investment. Pursuant to obtaining FIPB approval, the prescribed

lings as applicable under the automatic route are also required to be carried

out.

Ÿ Some recent policy measures/ development in FDI regime – The

Government of India, in last 2-3 years, has launched a package of reforms by

2. Foreign Investment in India

FOREIGNINVESTMENTS

Foreign Direct

Investments

Company

AutomaticRoute

Govt.Route

LLP FFIs/QFIsRFPIs

NRIs/PIOs NRIs/PIOs

PROI

VCFs,IVCUs

SEBIregistered

FVCIs

FIIs, RFPIsNRIs, PIOs,

QFIs

Foreign Portfolio

Investments

Foreign VentureCapital

Investments

OtherInvestments

(G-Secs, NCDs, etc)

Investments onnon-repatriable

basis


relaxing the restrictions on investment and opening up some sectors under

the automatic route. Some of these are provided below:

ú 100 per cent FDI has been allowed in the telecom sector. (49 per cent

under the automatic route, above 49 per cent under the approval route).

ú 100 per cent FDI has been allowed in single-brand retail. (49 per cent

under the automatic route, above 49 per cent under the approval route).

ú 49 per cent FDI in commodity exchanges, stock exchanges &

depositories, power exchanges, petroleum rening by PSUs, courier

services earlier under the approval route has now been brought under the

automatic route.

ú Prescribed restriction on the tea plantation sector has been removed.

ú FDI limit has been raised to 74 per cent in credit information companies

(CIC) and 100 per cent in asset reconstruction companies.

ú FDI limit of 26 per cent in defence sector has been raised to 49 per cent

under the approval route. FPI up to 24 per cent has been permitted under

automatic route. FDI beyond 49 per cent is also allowed on a case to

case basis with the approval of Cabinet Committee on Security.

ú Construction, operation and maintenance of specied activities of railway

sector has been opened for 100 per cent FDI under automatic route.

ú Review of FDI Policy to relax conditions for investment in construction

and development activities (townships, housing, built-up infrastructure).

Ÿ The NDA Government has launched an ofcial website,

www.makeinindia.com, which provides a platform for an investor to obtain an

understanding of the policy measures, sectors with restrictions, sectors with

caps, sectors requiring Government approval, sectors under automatic route,

entry routes, etc.

Ÿ Overseas loans by Indian companies/entities from foreign lenders are

governed by the ECB guidelines issued by the RBI under the FEMA. The

ECB Policy stipulates detailed guidelines for eligible borrowers, recognised

lenders, amounts and maturity periods, all-in-cost interest ceilings, end-use,

compliances, etc. Issue of any non-convertible, optionally convertible or

partially convertible preference shares or debentures to non-residents is

considered as ECB under exchange control regulations and hence need to


comply with the ECB guidelines.

Ÿ FIIs/FPIs that are eligible and apply/register with SEBI can invest in India

under the prescribed guidelines, ceilings and parameters.

Ÿ FVCI which is eligible and registered with SEBI can invest in an Indian

VCF/Indian VCU and may also set up a domestic asset management

company to manage the funds. All such investments are allowed under the

automatic route subject to SEBI and RBI regulations and the FDI Policy.

Ÿ NRIs/PIOs can invest in the shares or convertible debentures of an Indian

company on a repatriation basis on the Indian stock exchange under

portfolio investment scheme, subject to limits and conditions. NRIs/PIOs can

also invest in the shares or convertible debentures of an Indian company

(not engaged in the sectors of agricultural or plantation activities, real estate

business, construction of farm houses or dealing in transfer of development

rights) on a non-repatriation basis subject to prescribed conditions.

Ÿ Proposals have been made by the Government to allow FDI in AIF registered

with SEBI, however, the same is yet to be notied.

3. Companies Act 2013

The long-awaited Companies Bill 2013 got its assent in the Lok Sabha on

December 18, 2012 and in the Rajya Sabha on August 8, 2013. After having

obtained the assent of the President of India on August 29, 2013, it became the

Companies Act, 2013 (New Act) replacing the Companies Act, 1956 (Old Act).

However, all the provisions of New Act have not come into place and the

corresponding provisions of Old Act shall continue to be in effect.

The Old Act was in need of a substantial revamp with more comprehensive

provisions for ease of doing business and new concepts for setting up of

business in India.

The New Act introduced signicant changes in the provisions related to

governance, compliance, disclosure norms, and mergers and acquisitions. The

New Act had introduced a new concept for the form of entity i.e ‘one-person

company’. Provisions relating to mandatory ‘corporate social responsibility’ have


also been introduced.

In accordance with recent media reports, the Ministry of Corporate Affairs is

planning to roll out a three-stage plan for implementation of the remaining 40 per

cent provisions of the New Act and it wants to notify most of the remaining

sections by the end of 2015.

4. Some recent proposals

One of the most important objectives of the NDA Government is to curb and

trace black money. The SIT was set up by the Government for this purpose

which listed down the names of persons who have been found to stash INR

4,479 crore of black money in Swiss banks. Further, SIT provided

recommendations to the Government for conscation of domestic properties of

those with illicit assets abroad and for extending the scope of Prevention of

Money Laundering Act (PMLA).

The Hon'ble Finance Minister of India in the budget speech 2015 proposed to

enact a comprehensive new law on black money to specically deal with such

money stashed away abroad.

Some of the key features of the proposed new law on black money are:

Ÿ Concealment of income and assets and evasion of tax in relation to foreign

assets will be prosecutable with rigorous imprisonment up to 10 years.

Further:

- this offence will be made non-compoundable;

- the offenders will not be permitted to approach the Settlement

Commission; and

- penalty for such concealment of income and assets at the rate

of 300 per cent of tax shall be levied.

Ÿ Non ling of return or ling of return with inadequate disclosure of foreign

assets will be liable for prosecution with rigorous imprisonment up to 7 years.

Ÿ Income in relation to any undisclosed foreign asset or undisclosed income

from any foreign asset will be taxable at the maximum marginal rate.

Exemptions or deductions which may otherwise be applicable in such cases,

shall not be allowed.


Ÿ Benecial owner or beneciary of foreign assets will be mandatorily required

to le return, even if there is no taxable income.

Ÿ Abettors of the above offences, whether individuals, entities, banks or

nancial institutions will be liable for prosecution and penalty.

Ÿ Date of opening of foreign account would be mandatorily required to be

specied by the assessee in the return of income.

Ÿ The offence of concealment of income or evasion of tax in relation to a

foreign asset will be made a predicate offence under the PMLA. This

provision would enable the enforcement agencies to attach and conscate

unaccounted assets held abroad and launch prosecution against persons

indulging in laundering of black money.

Ÿ The denition of ‘proceeds of crime’ under PMLA is being amended to

enable attachment and conscation of equivalent asset in India where the

asset located abroad cannot be forfeited.

Ÿ FEMA is also proposed to be amended to the effect that if any foreign

exchange, foreign security or any immovable property situated outside India

is held in contravention of the provisions of this Act, then action may be

taken for seizure and eventual conscation of assets of equivalent value

situated in India. These contraventions are also being made liable for levy of

penalty and prosecution with punishment of imprisonment up to ve years.

Ÿ Making false declaration/false documents, etc under customs law, shall be

treated as an offence under PMLA.

As regards curbing domestic black money, a new and more comprehensive

‘Benami Transactions (Prohibition) Bill’ is proposed to be introduced in the

Parliament. This law will enable conscation of benami property and provide for

prosecution, thus blocking a major avenue for generation and holding of black

money in the form of benami property, especially in real estate. These proposals

would, with or without amendment, come into effect post approval by both

Houses of the Indian Parliament and Presidential assent.


TAXATION FRAMEWORK

Tax system in India is a three tier system,

controlled by the Central Government, the State

Governments and the Urban and Rural Local

Bodies. The Central Government is empowered

to levy taxes on income (except tax on

agricultural income, for which the power

vests with the State Governments), customs

duty, central excise and service tax. Value

Added Tax (VAT), stamp duty, State Excise, land

revenue and tax on professions are levied by

the State Governments. Local bodies are

empowered to levy tax on properties, octroi and

for utilities like electricity, drainage etc.

Introduction

Over the last decade or so, an attempt has been made to reform and rationalise

the taxation system. The tax rates have been on the decline, while tax

compliance has been on the rise. Administrative reforms have also been

undertaken, aimed at facilitating compliance with the tax laws.

The rapidly changing economic scenario has led to the need for constant

updation of the tax laws to keep up with this rapid pace of economic change.

The transfer pricing regulations were introduced in the ITA in the year 2001

which has helped to streamline the taxation of cross-border transactions

between related / group entities, while also helping the Government to augment

tax revenues by preventing taxpayers from shifting prots outside India.

On the legislative front, the Government of India had presented

draft Direct Taxes Code (DTC) to the parliament on August 30,

2010 to replace the existing ITA. The Government of India

released a revised draft of the DTC on April 1, 2014. However,

during the Union budget 2015 speech, the Hon’ble Finance

Minister proposed to drop the implementation of DTC.

Goods and Services Tax (GST), a comprehensive tax to be levied on

manufacture, sale and consumption of goods and services at a national level is

all set to be implemented from April 1, 2016.

Determination of residency

A company is regarded as resident in India, if it is incorporated in India or its

entire control and management is situated in India. The Finance Bill, 2015 has

proposed to introduce the concept of Place of effective management (POEM)

which would replace the ‘wholly controlled and managed’ test for determination

of residence of a foreign company. POEM has been dened to include a place

where key management and commercial decisions that are necessary for the

conduct of the business of an entity as a whole are, in substance made. In

accordance with the Finance Bill 2015, the test of POEM is applied at any time

during the year to determine tax residency in India. It was also proposed that in

due course, a set of guiding principles would be issued.


Scope of taxation

An Indian resident company is subject to tax on its worldwide income, unless the

income is specically exempt. Non-residents corporation are taxed in respect of

Indian-sourced income i.e. income received or accrued or arisen or deemed to

accrue or arise in India. Certain payments such as interest, royalty and fees for

technical services are deemed to accrue or arise in India if paid by an Indian

resident or a non-resident in case they are used for the purpose of a business

carried on in India or for earning any income from a source in India.

Corporate taxation

Resident corporations are subject to tax at the rate of 30 per cent (plus

surcharge and cess) on worldwide income and non-resident corporations are

subject to tax at the rate of 40 per cent (plus surcharge and cess) on prots

attributable to Indian operations. At present, there is no branch prot tax in India.

Any income from transfer of a capital asset is taxable under the head ‘capital

gains’. The tax rate at which the capital gains are taxable in India depends on

whether the capital asset transferred is a short-term capital asset or a long-term

capital asset.

The capital asset may be classied as short-term or long-term, depending upon

the period of holding of such asset. When the holding period exceeds 36

months, the asset is regarded as a long-term capital asset. However, in case of

listed securities or units of equity oriented mutual fund, the 36 months test is

replaced by a 12 months period. Other assets qualify as short term capital asset.

Gains arising from transfer of long-term capital assets are taxed at special rates/

eligible for certain exemptions (including exemption from tax where the

transaction is chargeable to STT). Short-term capital gains arising on transfer of

assets other than certain specied assets are taxable at normal rates. Capital

gains are computed by deducting cost, adjusted for cost ination index in case

of all assets, other than bonds or debentures, and other expenses linked in

connection with such transfer from net sale proceeds.

32 TAXATION FRAMEWORK

Rates of surcharge (for nancial year 2014-15)

The Finance Bill 2015 has proposed to levy an additional surcharge of 2 per cent

for domestic companies having taxable income exceeding INR 10 million.

The income tax rate applicable on the above short term/ long term capital gains

has been provided in the table below:


Other direct taxes

Ÿ Dividend distribution tax at 15 per cent (plus applicable surcharge and cess)

is liable to be paid on the dividend declared, distributed or paid by a

domestic company.

Ÿ Buyback tax at the rate of 20 per cent (plus applicable surcharge and cess)

is levied on specied distributed income of unlisted domestic companies that

buy back shares from its shareholders.

Ÿ Minimum Alternate Tax is levied at the rate of 18.5 per cent (excluding

applicable surcharge and cess) in case the normal income tax payable under

domestic law is less than 18.5 per cent of the book prot computed under

ITA.

Ÿ STT is levied on the value of taxable securities transactions at specied rates.

The taxable securities transactions are purchase/sale of equity shares in a

company or a derivative or a unit of an equity-oriented fund entered into in a

recognised stock exchange; sale of a unit of an equity-oriented fund to the

mutual fund, etc.

Ÿ Wealth tax is levied on specied assets (such as precious metals, urban land

and buildings not used in the business and motor cars), net of debt used to

nance the assets. Tax is imposed on the taxable value in excess of INR 3

million. The rate of wealth tax is 1 per cent. However, Finance Bill 2015

proposed to abolish wealth tax.

Withholding of taxes

Ÿ Under the ITA, select payments made to residents are liable to withholding

tax by the payer. In case of non-residents, the payments made are subject to

tax withholding if such payment is chargeable to tax in India in the hands of

non-resident recipient. Under the ITA, the withholding tax rates for payments

to non-resident companies are subject to the following:


4 Taxes are required to be withheld at the rate of 20 per cent or rate prescribed under the ITA, whichever if

higher, if the recipient does not have a Permanent Account Number.

5 This is the basic rate provided under the ITA which shall be supplemented by surcharge and education

cess, as applicable.

6 Interest under a loan agreement or long term infrastructure bonds is liable for withholding at the rate of 5

per cent.

7 The Finance Bill 2015 proposes to restore the rate of tax to 10 per cent (plus applicable surcharge and

cess) on royalty and fees for technical services earned by non-residents from April 1, 2015 onwards.


Tax Treaties

India has comprehensive double-taxation avoidance agreements in force with

several countries. ITA permits a non-resident to be governed by the provisions of

the ITA or a tax treaty, whichever is more benecial to the non-resident.

Accordingly, the taxability of non-resident is likely to be restricted or modied.

However, in order to obtain treaty benets, a non-resident is required to obtain a

Tax Residency Certicate (TRC) issued by revenue authorities of the country of

residence along with some additional information (in Form 10F). Tax rates

applicable on various transactions involving payment of royalties, fee for

technical services, interest are generally governed by tax treaties.

A new tax treaty was entered into between India and Norway which has been

valid from January 1, 2012 in Norway and from April 1, 2012 in India.

India follows UN based model in its tax treaties with most of the countries and

taxes the income on source basis rather than residency whereas Norway follows

OECD-model. India-Norway tax treaty adopts UN based model for taxation of

royalties, fee for technical services and capital gains whereas OECD model is

followed for taxation of income from immoveable property, business prots, etc.

Though India is a non-OECD member country, it has been strongly engaged

with the OECD to support the G20 initiative of tackling tax evasion and improving

tax transparency. It has played a leading role in key OECD/ G20 initiatives such

as the Base Erosion and Prot Shifting project, and has endorsed several

important instruments such as the OECD Declaration on Automatic Exchange of

Information.

Transfer Pricing

Ÿ The price of any ‘international transaction’ between ‘associated enterprises’,

is computed with regard to the Arm's Length Price (ALP). The ITA denes the

term ‘international transaction’ and also provides specic situations wherein

two enterprises shall be deemed to be associated enterprises.

Ÿ The transfer pricing regulations also apply to certain domestic transactions 8dened as SDT covering the following:

ú Payments (i.e. only expenditure) to specic related parties;

8The Finance Bill 2015 proposed to increase the threshold of INR 5 crores to INR 20 crores for applicability of domestic transfer pricing.


ú Transactions between tax holiday eligible units and other business units

of the same taxpayer;

ú Computation of ordinary prots of a tax holiday unit of the taxpayer where

there are transactions with entities having close connection;

ú Such other transactions, as may be prescribed

Ÿ The transfer pricing regulations require the ALP in relation to an international

transaction to be determined by any one of the following methods:

ú CUP method;

ú RPM;

ú CPLM;

ú PSM;

ú TNMM; or

ú Other Method which permits use of a ‘price which has been charged or

paid, or would have been charged or paid’ thereby allowing use of

bonade quotations, bids, proposals as comparable transactions or

prices, and also economic and commercially justiable models and

similar approaches.

Ÿ The transfer pricing regulations have prescribed an illustrative list of

information and supporting documents required to be maintained by

taxpayers. Stringent penalty provisions have been incorporated in the ITA for

non-compliance.

Indirect taxes

Service tax

Ÿ Service tax was introduced by Finance Act 1994 on a positive list basis to

levy taxes on the provision of services. However, the Government of India

vide Finance Act, 2012 shifted the mechanism to levy service tax on a

negative list approach. Under this approach, service tax is levied on all

services except those provided under the negative list.

Ÿ Generally, the service tax is payable by the service provider except in certain

specied categories where the recipient is liable to pay the service tax on a

reverse charge basis such as manpower supply services, goods transport

services, works contract services, legal services, etc.


Ÿ A mega exemption list has also been introduced by the Government wherein

the specied services are exempted from service tax.

Ÿ Service tax paid on input services received can be claimed as credit against

the output service tax liability.

Ÿ Service tax is levied at the rate of 12.36 per cent (including cess). The

Finance Bill 2015 proposed to increase the service tax rate to a consolidated

rate of 14 per cent in order to facilitate a smooth transition to the GST

regime.

Excise duty

Ÿ Excise duty is applicable on the manufacture of goods in India and is

payable by the manufacturer.

Ÿ The goods which are mentioned under Central Excise Tariff Act, 1985 are

liable to excise duty at the rate mentioned therein. Most of the goods attract

a uniform rate of 12 per cent (plus 3 per cent cess). The Finance Bill 2015

has proposed to propose to subsume the cess component. In effect, the

general rate of central excise duty of 12.36 per cent including the cess is

being rounded off to 12.5 per cent.

Ÿ Goods manufactured in India can be exported without payment of excise

duty, subject to specied conditions.

Ÿ Exemption upto INR 150 lakhs is provided to small scale industries whose

aggregate value of clearances is upto INR 400 lakh in the preceding nancial

year, subject to prescribed conditions.

Ÿ The manufacturers can take credit for excise duty paid on inputs and capital

as well as service tax paid on input services used in the manufacture of

excisable goods. Manufacturers can utilise such credit to pay excise duty on

the nal goods. The Finance Bill 2015 proposed to increase the time limit for

taking CENVAT credit on inputs and input services from six months to one

year as a measure of business facilitation.

Customs duty

Ÿ Customs duty is levied on the import of goods into India. It is also levied on


export of certain goods.

Ÿ The rate of customs duty applicable to a product to be imported/ exported

depends upon on its classication under the Customs Tariff Act. The

Customs Tariff is aligned with the internationally recognised Harmonised

Commodity Description and Coding System of Tariff Nomenclature (HSN)

provided by the World Customs Organisation.

Ÿ Customs Duty comprises of Basic Customs Duty (BCD), Additional Customs

Duty (ACD), Special Additional Customs Duty (SAD) and cess. The Finance

Bill 2015 proposed to reduce the rates of basic customs duty on certain

inputs, raw materials, intermediates and components so as to minimise the

impact of duty inversion and reduce the manufacturing cost in several

sectors. This proposal was announced keeping in consideration the ‘Make in

India’ initiative of the Government.

Ÿ While the general principles adopted for valuation of the goods in India are in

conformity with the World Trade Organisation agreement on customs

valuation, the Central Government has established independent Customs

Valuation Rules applicable to the export and import of goods.

Value Added Tax (VAT)

Ÿ VAT is a matter of state list which is imposed by the respective State

Governments on sale of goods.

Ÿ State level sales tax was replaced by VAT with effect from April 1, 2005 in the

majority of Indian states.

Ÿ Under the VAT regime, the VAT paid on goods purchased from within the

state is eligible for VAT credit. The input VAT credit can be utilised against the

VAT/ Central Sales Tax (CST) payable on the sale of goods. This ensures that

the cascading effect of taxes is avoided and that only the value addition is

taxed.

Ÿ State VAT is charged at varying rates of 1 per cent, 4 per cent, 5 per cent and

20 per cent. Goods other than those notied to be covered under the above

rates are charged at a general rate ranging from 12.5 per cent to 15 per cent.


Ÿ Interstate sales are liable to CST which is imposed by the Government of

India and administered by State Governments.

Ÿ A sale involving the import or export of goods is not liable to VAT or CST,

subject to prescribed conditions.

Recent/ Key Developments

General Anti Avoidance Rule

Ÿ The introduction of General Anti Avoidance Rules (GAAR) in ITA has been

relatively swift since GAAR was rst proposed in the DTC. Under the

provisions of ITA, GAAR will take effect from April 1, 2015 in respect of which,

the working rules have been notied. However, the Finance Bill 2015 has

proposed to defer the implementation of GAAR by two years, and GAAR is

now proposed to be effective from April 1, 2017. It has also been proposed

to grandfather investments made till April 1, 2017 and apply GAAR

prospectively to investments made on or after April 1, 2017.

Ÿ In the Indian context, judicial decisions have varied on the question of

substance over form and tax avoidance vs. tax planning. Though there were

certain specic anti-avoidance provisions enacted in the extant ITA, GAAR

provisions also inter alia seek to deny treaty benets otherwise available to a

non-resident if the transaction lacks commercial substance or aimed at

treaty-shopping.

Ÿ Rules for application of GAAR provisions have also been prescribed.

However such rules could also be subject to change in light of the changes

proposed by the Finance Minister while presenting the Union Budget 2015.

The impact of GAAR provisions on the taxability of an arrangement would be

determined based on the specic provisions applicable at the time of

implementation, read with the rules and departmental guidance on their

application, to be notied by the Indian revenue authorities.

Indirect transfer of shares

Ÿ One of the biggest issues for overseas investors is taxation of transfers of

shares in a foreign company holding Indian assets. The said issue was dealt

with in the controversial ruling of Vodafone International Holdings BV wherein


the Supreme Court held that an indirect transfer of capital assets located in

India would not be subject to tax in India. The Supreme Court recognised the

legal form of structure by adopting a ‘look at’ approach for a transaction

rather than a ‘look through’ approach.

Ÿ The Finance Act, 2012 amended the ITA retrospectively with effect from April

1, 1961. The said amendment claries that any share or interest in a

company or entity registered/ incorporated outside India will be deemed to

be situated in India if it derives its substantial value, directly or indirectly, from

assets located in India. By virtue of this deeming provision, the sale of shares

of a foreign company could be liable to capital gains tax in India if it satises

the test of substantially deriving value from Indian assets.

Ÿ The Finance Bill 2015 has proposed changes to the retrospective law to

provide for clarications on the applicability of these provisions. Such

proposals include clarication on determination of threshold for applicability

of indirect transfer provisions and exemption for investors with small holdings

(voting power or share capital or interest not exceeding ve per cent).

Advance Pricing Agreement

Ÿ With the introduction of Advance Pricing Agreement (APA) vide Finance Act,

2012, India joined the league of maturing transfer pricing regimes for

managing cross-border disputes through means other than litigation.

Ÿ It is an agreement between the taxpayer and the tax authorities for the

upfront determination of the arm's length price or pricing methodology for an

international transaction and is concerned with identifying the transfer pricing

methodology for an international transaction.

Ÿ As per media reports, Indian taxpayers led over 140 APA applications in the

introductory year 2013. By March 31, 2014, 232 applications were led ie an

increase of almost 60 per cent over the previous year. The Hon’ble Finance

Minister of India has proposed to strengthen the administrative set up of APA

to expedite disposal of applications.

Safe Harbour Rules

Safe harbour refers to circumstances under which the Indian revenue authorities


would accept the transfer price declared by the taxpayer. CBDT issued draft safe

harbour rules on August 14, 2013 inviting comments from various stakeholders.

After considering comments received from interested parties, the CBDT issued

nal safe harbour rules on September 18, 2013.

The safe harbour option has been provided for ve years. Also, the Government

has covered bigger players in the IT, ITeS and KPO industry in the safe harbour

regime. These rules shall act as a relief for the taxpayer thereby reducing the

burdensome litigation procedures.

Goods and Services Tax

One of the biggest taxation reforms in India – GST is all set to integrate state

economies and boost overall growth. GST will create a single, unied Indian

market to make the economy stronger. GST is a comprehensive tax levy on

manufacture, sale and consumption of goods and services at a national level.

GST is likely to improve tax collections and boost India’s economic development

by breaking tax barriers between states and integrating India through a uniform

tax rate. GST is expected to play a transformative role in the way our economy

functions. It is expected to add buoyancy to Indian economy by developing a

common Indian market and reducing the cascading effect on the cost of goods

and services. GST will be put in place in the indirect tax system by April 1, 2016.


CONCLUSION

With the new economic reforms and projects undertaken by the Government,

India has made a comeback after a period of slow economic growth. The

constitution of new Government has reinforced the faith and condence of

investors on the Indian economy. The Government under ‘Make in India’

Campaign is promoting companies to manufacture products in India. The

project on ‘smart cities’ seeks to create a strong economic base with a globally

competitive environment and state-of-the-art infrastructure to activate local

commerce, enhance investments and attain sustainable development.

Efforts are being made to ease the process of doing business in India – new de-

licensing and deregulation measures are reducing complexity, and signicantly

increasing speed and transparency. The Government is following its objective of

minimum government and maximum governance to undertake administrative

reforms. With a view to boost investment in the country, the Government has

taken steps to liberalise FDI norms and have cleared substantial number of

pending projects.

Taking an initiative of bank account for every citizen, the Government has

launched its mega pet project, the ‘Pradhan Mantri Jan Dhan Yojana’. The Jan

Dhan Yojna aims to make available formal banking to 1 crore people and

provided accident insurance cover to 1.5 crore people.

Aiming to get the feedback of people about the Government, the Government

launched a web portal ‘MyGov’ (www.mygov.nic.in). MyGov is a technology-

driven medium which will provide citizens an opportunity to contribute towards

good governance. It aims to help citizens contribute in governance by giving

their opinions and views on important issues.

No doubt, the Government has infused condence in the investors and captured

the imagination of the public thus taking India’s growth on well-dened track.

The world is estimating that India will surpass other countries to emerge as the

largest growing economies. What remains to be seen is how the Government

will move ahead in bringing out the tax, regulatory and administrative reforms to

make India's growth target a success.


44 GLOSSARY

Abbreviation Particulars

AIF Alternate Investment Fund

CBDT Central Board of Direct Taxes

CPM Cost Plus Method

CUP Comparable Uncontrolled Price

DIPP Department of Industrial Policy and Promotion

ECB External Commercial Borrowings

FEMA Foreign Exchange Management Act, 1999

FII Foreign Institutional Investors

FIPB Foreign Investment Promotion Board

FPI Foreign Portfolio Investors

FVCI Foreign Venture Capital Investor

GDP Gross Domestic Product

INR Indian Rupees

ITA Income-tax Act, 1961

M&A Mergers & Acquisitions

NDA National Democratic Alliance

NORAD Norwegian Agency for Development Co-operation

NRI Non-resident Indian

OECD Organisation for Economic Co-operation and Development

PIO Person of Indian Origin

PPP Purchasing Power Parity

PSM Prot Split Method

RBI Reserve Bank of India

RSP Resale Price Method

SEB Securities and Exchange Board of India

TNMM Transactional Net Margin Method

VCF Venture Capital Fund

VCU Venture Capital Undertaking

GLOSSARY

LINKS AND SOURCES

Norway Indian Chambers of Commerce and industry (www.nicci.no)

Norwegian Business Association (India) (www.nbai.in)

Norway ofcial website in India (www.norwayemb.org)

Norway India Partnership Initiative (www.nipi.org.in)

World Economic Outlook 2015 (www.imf.org/external/pubs/ft/weo/2015/update/01/info.htm)

Department of Industrial Policy and Promotion – FDI Statistics

(dipp.nic.in/English/Publications/FDI_Statistics/2015/india_FDI_January2015.pdf)

Finance Bill 2015 and Memorandum to Finance Bill 2015 (www.indiabudget.nic.in)

Make in India (www.makeinindia.com)

World Economic Forum – Global Competitiveness Report 2014-15

(www.weforum.org/reports/global-competitiveness-report-2014-2015)

Norad – Evaluation Department – Report 3/2013 – Evaluation of Norway India Partnership

Initiative for maternal and child health

India Brand Equity Foundation (www.ibef.org)

World Bank Group – Doing Business (www.doingbusiness.org/rankings)

Economic times: articles.economictimes.indiatimes.com/2015-01-

11/news/57941088_1_vibrant-gujarat-summit-world-bank-president-cent-growth

Economic times: (articles.economictimes.indiatimes.com/2015-02-

04/news/58795979_1_social-security-schemes-employees-provident-fund-organisation-epfo)

Economic times: (economictimes.indiatimes.com/industry/auto/news/industry)

World Bank (www.worldbank.org)

Business Standard: (www.business-standard.com/article/pti-stories/prez-invites-norwegian-

rms-to-join-make-in-india-campaign-114101401085_1.html)

Business Standard: (www.business-standard.com/article/news-ani/norway-to-take-up-clean-

india-campaign-in-varanasi-114121400079_1.html)

Daily News and Analysis, India (www.dnaindia.com/india/report-president-pranab-mukherjee-

invites-norwegian-rms-to-join-make-in-india-campaign-2026133)

Voice of America News (www.voanews.com/content/imf-india-to-overtake-china-to-become-

worlds-fastest-growing-economy/2686577.html)


46 ABOUT BMR ADVISORS

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A NORWEGIAN GUIDE TO DOING BUSINESS IN INDIA

Economy & Finance

Transcript of A NORWEGIAN GUIDE TO DOING BUSINESS IN INDIA