WELCOME TO INDIA

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WELCOME TO INDIA

• The Land of Opportunities.

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Doing Business In India

• Preface-
• This overview provides from companies
  decisions of doing business in and with India, a
  birds eye view on the investment climate,
  taxation, forms of business organizations,
  business, regulatory, cultural and accounting
  practice in India. The complex decision - making
  process involved in undertaking foreign
  operations requires an intimate knowledge of a
  countrys commercial climate, along with a
  realization that the climate is constantly
  evolving. Companies doing business in India, or
  planning to commence business in India, are well
  advised to obtain current and detailed
  information from experienced professionals.

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Basic Statistics

• Geographical Location Between latitudes 804
  and 3706 North and longitudes 6807 and 97025
  East.
• Land Area 3.29 Million Square Kilometers.
• Climate Mainly tropical with temperatures
  ranging from 100C 400C in most parts of the
  country.
• Capital New Delhi.
• Population 1.147 Billion (estimated as at March
  2008).
• Population growth rate 1.606 per annum.
• Population density 348 persons / square
  kilometer. (Population / land area in sqkm)
• Life expectancy at birth 66.28 years, male
  71.17 years, female.
• Literacy rate 65.47 (as per 2001 Census).

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• Topography
• Spread over 3 million square kilometers and
  located entirely in the northern hemisphere,
  India is the seventh largest country in
• the world in terms of geographical size. The
  Himalayas in the North, the Indian Ocean in the
  South, the Bay of Bengal in the east
• and the Arabian Sea in the west form natural
  boundaries for the country. Indias neighbours
  are Bangladesh and Myanmar in the
• east Bhutan, China and Nepal in the North
  Pakistan in the west and Sri Lanka in the south.
• Climate
• India has a tropical monsoon climate with the
  following seasons winter, spring, summer and
  monsoon. The intensity of the
• weather varies depending on the region one is in.
  In general, the northern and central parts of the
  country experience extreme
• temperatures during summer (above 40oC) and
  winter (below 5oC), while the southern and the
  coastal regions enjoy relatively
• milder weather.
• People
• As per the last census, India has a population of
  approx 1.217 billion, and the country is expected
  to overtake China and become
• the most populous nation by 2045. The cities
  having a population of more than 5 million are
  Greater Mumbai (16.4million),
• Kolkata (13.2 million), Delhi (12.8 million)
  Chennai (6.4 million), Bangalore (5.7 million)
  and Hyderabad (5.5 million). The
• countrys population presents a kaleidoscope of
  rich and diverse culture.
• Language
• Given its cultural diversity, scores of languages
  and dialects are spoken in the country. Of these,
  22 languages are recognized

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• Cost of Living
• India offers the advantage of a low cost of
  living, relative to American and European
  countries. The cost of living varies by the
• type of location (urban / rural), size of
  location (small / large / metro), etc. The
  standard of living is comfortable in urban areas,
  
• with the availability of well developed
  residential areas equipped with all utilities.
• Recreation
• India offers a wide repertoire of avenues for
  recreation and entertainment. Metropolitan and
  large cities have five star hotels,
• clubs, pubs, restaurants, discotheques, cinema
  theatres, art galleries and drama theatres.
  Hotels and clubs offer facilities for a
• wide range of sports including bowling, squash,
  tennis, snooker and swimming. Most large cities
  also have golf courses.
• India has a highly developed print media which
  publishes numerous books and magazines to suit
  diverse tastes. Electronic
• media offers a variety of national and
  international channels like the Door Darshan,
  BBC, CNN, CNBC, Discovery, HBO, AXN,
• National Geographic, and ESPN. Cities also have
  FM music channels and the satellite radio
  organization Worldspace too.
• Indian cuisine is known and loved the world over
  for its rich and spicy taste. Most large cities
  have restaurants that specialize in
• French, Italian, Greek, Mexican, Thai, Japanese,
  Chinese and Lebanese cuisines. Multinational fast
  food chains such as
• McDonalds, Subway, Dominos Pizza and Pizza Hut
  are present in the country.
• Shopping
• India is a veritable paradise for shoppers.
  Leading global players such as Coca Cola, Pepsi,
  Kelloggs, P G, Unilever, Colgate
• Palmolive, Gillette, Garnier, Sony, Panasonic,
  LG, Samsung, Rolex, Mont Blanc, Armani, Nokia,
  Luis Vuitton, Mercedes Benz,

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Indian Economy Overview

• 1). India's Gross Domestic Product (GDP) in
  purchasing power parity (PPP) is 4.726 trillion
  in January 2008 and is ranked 3 in the world.
• 2). India has joined the elite club of 12
  countries with a trillion dollar economy.
• 3). Propellers of GDP growth
• Trade, hotels, transport communications -12.1
  
• Construction - 12 .
• Services 10.5
• Electricity, gas and water supply - 8.3
• Banking Insurance Sector 13.9
• Passenger growth in civil aviation - 32.2 .
• Information technology 30.7 .
• 4). Estimates of Gross Domestic Product (GDP)
  growth in 2007-08 is at 8.7 .
• 5). FDI flow of US 20.137 billion in 2007 08
  (against US 11.8 billion in 2006 07).
• 6). FIIs net inflows - US 31 billion (compared
  with outflows of US 9.33 billion in the
  corresponding period of 2006-07)

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• Continued
• 11). Foreign exchange reserves - US 301.2
  billion as at March 31, 2008 (against US 173
  billion in 2006 -2007)
• 12). India among 5 countries sharing 50 of the
  World Production.
• 13). The annual inflation rate in terms of WPI
  6.68 as of March 31, 2008 (against 5.74 a
  year ago).
• 14). Indian Rupee Value against US is Rs.
  39.97 / Dollar in March 31, 2008 (against Rs.
  43.59 / Dollar as at March 31, 2007).
• 15). Number of Indian millionaires rose by 20.5
  per cent from 83,000 in 2005 to 100,015 in 2007
  -- making India the world's second fastest
  growing nation in terms of millionaires after
  Singapore.
• 16). 4 Indians have featured in the top 10
  worlds wealthiest CEOs according to Forbes.
• 17). 7 Indian Micro Finance Companies in the top
  50s Forbes List.
• 18). India has highest number of billionaires in
  Asia and fourth highest in the world - 36 (next
  only to US, Russia and Germany).
• 19). Merchandise exports increase for 2007 -
  2008 at a rate of 22.9 to touch US 138.4
  billion.

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INDIA ENTRY STRATEGY
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Foreign Direct Investment In Specified Industries

• Restricted Sectors (FDI disallowed)
• Gambling and Betting
• Lottery Business
• Atomic Energy
• Retail Trading (except single branded product
  retailing)
• Agriculture

• Sectoral Caps on FDI in Certain Industries
  (illustrative list)
• Defense Production (26)
• Insurance (26)
• Telecommunication (49)
• Print Media (26) i.e. publishing of newspapers
  and magazines dealing with news and current
  affairs.
• Civil Aviation Domestic Airlines Sector (49)
• Trading (51)
• Banking (74)

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INDIA SUBSIDIARY Or Branch Office Or
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FIPB Foreign Investment Promotion Board. RBI
Reserve Bank Of India IT Income Tax
Authorities RoC Registrar of Companies.
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CORPORATE TAX

• CORPORATE TAX IS PAID BY COMPANIES, BRANCHES, AND
  PROJECT OFFICES OF OVERSEAS
• COMPANIES ON PROFITS AND OTHER INCOME.
• 1 plus surcharge at 2.5 for foreign companies
  if income exceeds INR 10, 000, 000 (USD 222,000
  approx) and education cess of 3
• 2 plus surcharge at 10 for domestic companies
  if income exceeds INR 10, 000, 000 (USD 222,000
  approx) and education cess of 3
• CORPORATE TAX
• Businesses need to determine their annual tax
  payment and ensure deposit under an installment
  plan referred as ADVANCE TAX by June
• 15th (15), September 15th (45), December 15th
  (75) and March 15th (100).
• TRANSFER PRICING
• Businesses having cross border dealing with
  related concerns fall within ambit of Indian
  Transfer Pricing regulations, which requires

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PAYROLL TAX

• EMPLOYER NEED TO WITHHOLD TAXES ON EMPLOYEE
  EARNINGS
• Surcharge at 10 on income exceeding INR
  1,000,000 (USD 25,000 approx)
• An employer is required to contribute and comply
  with a social tax namely Provident Fund. There is
  also an Employee State
• Insurance cost. Both of these primarily focus on
  blue collared staff.
• Foreign nationals deputed to work in India will
  be taxed on the basis of tax residential status,
  which is linked to the number of
• days stayed in India. An employment / business
  visa is necessary, as is registration with the
  Foreigners Regional Registration
• Officer (FRRO).
• There are certain state specific regulations e.g.
  Professional Tax and Shop and Establishment Act,
  which apply in Indian states

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INDIRECT TAX

• TAX ON GOODS AND SERVICES
• India aims to adopt a comprehensive Goods
  Service Tax (GTS) by 2010. In the meanwhile,
  the following indirect taxes apply
• EXCISE DUTY
• Manufacturing units need to pay an excise duty on
  goods produced in India. The duty varies between
  products and the unit is
• required to periodically deposit the duty on
  removal of products. Furthermore, these units are
  to maintain detailed stock records
• and accounts in respect of duty payable on final
  goods, credit claimed on inputs etc and submit
  annual returns. Submission
• dates are linked to level of operations.
• CUSTOMS DUTY
• Movement of goods across borders would need
  compliance to customs duty regulations. This duty
  varies between products. The
• compliance requirement includes determination and
  deposit of duty prior to clearance of goods by
  the customs authority.
• SERVICE TAX
• Businesses rendering specified services are
  liable to a Service Tax at 12 percent plus
  education cess on the billable value. They
• are required to monthly deposit the tax
  collected.
• CENTRAL SALES TAX (CST) / VALUE ADDED TAX
  (VAT)
• Businesses trading in goods between states are
  liable to charge CST whereas those trading within
  the same state are subject to

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REGULATORY COMPLIANCE

• COMPANIES
• Two main forms Private Limited Company (PVT)
  and Public Limited Company (LTD). PVT is the
  most common form for an
• international subsidiary.
• Audited accounts are filed annually on public
  record with the Registrar of Companies (RoC),
  in a format set out under the Indian
• law and Indian Accounting Standards, within a set
  time scale. Companies also file an Annual Return
  which gives detail of
• shareholders and directors.
• Businesses are required to follow fiscal year
  i.e. April 1st to March 31st, for compliance
  under the Indian Income tax laws.

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Dreaming With BRICs The Path to 2050

• SUMMARY
• Over the next 50 years, Brazil, Russia, India and
  Chinathe BRICs economiescould become a much
  larger force in the world economy. Using the
  latest demographic projections and a model of
  capital accumulation and productivity growth,
  Goldman Sachs has mapped out GDP growth, income
  per capita and currency movements in BRICs
  economies until 2050.
• The results are startling. If things go right, in
  less than 40 years, the BRICs economies together
  could be larger than the G6 in US dollar terms.
  By 2025 they could account for over half the size
  of the G6. Currently they are worth less than
  15. Of the current G6, only the US and Japan may
  be among the six largest economies in US dollar
  terms in 2050.
• About two-thirds of the increase in US dollar GDP
  from the BRICs should come from higher real
  growth, with the balance through currency
  appreciation. The BRICs real exchange rates
  could appreciate by up to 300 over the next 50
  years (an average of 2.5 a year).
• The shift in GDP relative to the G6 is expected
  to take place steadily over the period, but is
  most dramatic in the first 30 years. Growth for
  the BRICs is likely to slow significantly toward
  the end of the period, with only India seeing
  growth rates significantly above 3 by 2050. And
  individuals in the BRICs are still likely to be
  poorer on average than individuals in the G6
  economies, with the exception of Russia. Chinas
  per capita income could be roughly what the
  developed economies are now (about US30,000 per
  capita).
• The key assumption underlying Goldman Sachs
  projections is that the BRICs maintain policies
  and develop institutions that are growth
  supportive. Each of the BRICs faces significant
  challenges in keeping development on track. This
  means that there is a good chance that the
  projections are not met, either through bad
  policy or bad luck. But if BRICs come anywhere
  close to meeting the projections set out here,
  the implications for the pattern of growth and
  economic activity could be large.
• The relative importance of the BRICs as an engine
  of new demand growth and spending power may shift
  more dramatically and quickly than expected.
  Higher growth in these economies could offset the
  impact of greying populations and slower growth
  in the advanced economies. Higher growth may lead
  to higher returns and increased demand for
  capital. The weight of the BRICs in investment
  portfolios could rise sharply. Capital flows
  might move further in their favour, prompting
  major currency realignments.
• Rising incomes may also see these economies move
  through the sweet spot of growth for different
  kinds of products, as local spending patterns
  change. This could be an important determinant of
  demand and pricing patterns for a range of
  commodities.
• As todays advanced economies become a shrinking
  part of the world economy, the accompanying
  shifts in spending could provide significant
  opportunities for global companies. Being
  invested in and involved in the right
  marketsparticularly the right emerging
  marketsmay become an increasingly important
  strategic choice.
• The list of the worlds ten largest economies may
  look quite different in 2050. The largest
  economies in the world (by GDP) may no longer be
  the richest (by income per capita), making
  strategic choices for firms more complex.

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Rankings selected by region - South Asia
IndiaRegion South AsiaIncome category Low
incomePopulation 1,109,811,147GNI per capita
(US) 820.00
Note Doing Business 2007 rankings have been
recalculated to reflect changes to the
methodology and the addition of three new
countries.
Starting a Business The challenges of launching a
business are shown below. Included are the
number of steps entrepreneurs can expect to go
through to launch, the time it takes on average,
and the cost and minimum capital required as a
percentage of gross national income (GNI) per
capita.
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Dealing with Licenses Shown below are the
procedures, time, and costs to build a warehouse,
including obtaining necessary licenses and
permits, completing required notifications and
inspections, and obtaining utility connections.
Employing Workers The difficulties that employers
face in hiring and firing workers are shown
below. Each index assigns values between 0 and
100, with higher values representing more rigid
regulations. The Rigidity of Employment Index is
an average of the three indices.
Registering Property The ease with which
businesses can secure rights to property is shown
below. Included are the number of steps, time,
and cost involved in registering property.
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Getting Credit Measures on credit information
sharing and the legal rights of borrowers and
lenders are shown below. The Legal Rights Index
ranges from 0-10, with higher scores indicating
that those laws are better designed to expand
access to credit. The Credit Information Index
measures the scope, access and quality of credit
information available through public registries
or private bureaus. It ranges from 0-6, with
higher values indicating that more credit
information is available from a public registry
or private bureau.
Protecting Investors The indicators below
describe three dimensions of investor protection
transparency of transactions (Extent of
Disclosure Index), liability for self-dealing
(Extent of Director Liability Index),
shareholders ability to sue officers and
directors for misconduct (Ease of Shareholder
Suits Index) and Strength of Investor Protection
Index. The indexes vary between 0 and 10, with
higher values indicating greater disclosure,
greater liability of directors, greater powers of
shareholders to challenge the transaction, and
better investor protection.
Paying Taxes The data below shows the tax that a
medium-size company must pay or withhold in a
given year, as well as measures of the
administrative burden in paying taxes. These
measures include the number of payments an
entrepreneur must make the number of hours spent
preparing, filing, and paying and the percentage
of their profits they must pay in taxes.
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Trading Across Borders The costs and procedures
involved in importing and exporting a
standardized shipment of goods are detailed under
this topic. Every official procedure involved is
recorded - starting from the final contractual
agreement between the two parties, and ending
with the delivery of the goods.
Enforcing Contracts The ease or difficulty of
enforcing commercial contracts in is measured
below. This is determined by following the
evolution of a payment dispute and tracking the
time, cost, and number of procedures involved
from the moment a plaintiff files the lawsuit
until actual payment.
Closing a Business The time and cost required to
resolve bankruptcies is shown below. The data
identifies weaknesses in existing bankruptcy law
and the main procedural and administrative
bottlenecks in the bankruptcy process. The
recovery rate, expressed in terms of how many
cents on the dollar claimants recover from the
insolvent firm, is also shown.
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Comparison Charts
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Ten Top Tips for Doing Business in India

• Research the market before you invest. Understand
  the size, potential and price dynamics - and how
  and where you want to enter it. Is your product
  or service right for the Indian markets?
• Make sure that you have top management commitment
  and adequate resources to manage a business
  relationship in India.
• 3. Visit the market and take time to build
  personal relationships - be prepared to make
  follow up visits.
• Choose your partner with care - do thorough Due
  Diligence and take independent advice. Consider
  what kind of agreement you need and don't give
  away too much information in advance of
  finalizing any agreement.
• Allow plenty of time for meetings and traveling
  around the market.
• Don't be patronising or under-estimate how
  quickly India is developing.
• Understand the business culture and do not be
  aggressive.
• Don't assume anything - find ways of checking
  progress without causing the other party to 'lose
  face'.
• Be patient - it always takes longer than you
  think!
• 10. Talk to your local International Trade
  Adviser and find out what help is available.
  OR Talk to WealthTree Partners.

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Basic Etiquette at Meetings
The following information will help guide you
through a first meeting at an appointment with
business contacts you may not have met in person.

• CommunicationsRemember - Be flexible! Make
  appointments in advance and confirm one week
  before arriving and once you have arrived.
  Arrive on time. Businessmen appreciate
  punctuality though they may not always be
  punctual themselves. Be prepared to spend
  time getting to know each other before talking
  business. Send any agendas and back up
  materials in advance. Follow up the meeting
  with an overview of what was discussed and the
  next steps.

• DressRemember - Be modest! Business wear is
  conservative for men and women. Men should
  wear a dark suit and tie. Women should wear
  a suit or dress and not show too much skin!

• Business CardsRemember Take plenty!
  Exchange these after the initial handshake.
  Put your title and any qualifications on your
  card. Present it formally and with your name
  towards the recipient so they can read it when it
  is handed over.

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Contd

• InstructionsRemember Talk to the most senior
  person first often the oldest one there!
  Handshakes are normal between men. Wait for
  women to put out their hand before offering a
  handshake. English is the common language of
  business.

• NegotiatingRemember Be patient!Use this as a
  chance to build good relationships. Be punctual
  and expect seating to be hierarchical. Be
  prepared for time to be spent on general
  conversation at the start of the meeting. People
  may tell you what you want to hear and dont
  assume a smiling face means acceptance. Stress
  your common aims. The most senior person
  will make the decisions. If he is not at the
  meeting, you are at the early stage of
  negotiation. Decision making can be a slow
  process. Dont lose your temper as that
  means you lose face and are seen as
  untrustworthy. Concessions are expected in
  price and terms. Expect them in return.
  Concentrate on building rapport. Do not be
  confrontational or forceful. Dont disagree
  in public with other people on your team.
  Politeness, praise and respect are important and
  dont make people feel hurried.

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Contd

• Body LanguageRemember A smile may not mean
  YES!A gesture you will notice is a distinctive
  rotational move of the head. When done with a
  smile it can mean yes or I understand. A
  direct No can be seen as rude, so silence or
  We will try may be used instead. Dont
  Point with your finger, that is rude.
  Whistle or wink this is seen as impolite.
  Hug, hold hands or embrace in public, even at an
  airport, or with your partner!

• Going for a mealRemember Take this time to
  learn about your hosts!If you are going out for
  a meal, ask about the dress code. Table manners
  can also be formal and food may eaten with the
  fingers, or you may be provided with a spoon and
  fork. Be prepared to be invited to wash your
  hands before and after a meal. Bottled water,
  soft drinks or beer are normally drunk with
  food.Indians eat late. Wait to be told where to
  sit. Guests may be served in a particular order,
  with the guest of honour served first. If you
  uncertain about anything, ask your host how you
  should behave.Normally the person who gave the
  invitation will pay for everyone. Offering to pay
  will be seen favourably, but expect to be turned
  down. To reciprocate and show appreciation,
  invite your host out another time.Dietary
  restrictions are affected by religion,
  Hindus do not eat beef and many are vegetarians.
  Muslims do not eat pork or drink alcohol.
  Sikhs do not eat beef. Lamb, chicken and
  fish are the common main courses for
  non-vegetarians.

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Contd

• Currency Indian Rupees (Rs. / INR)Remember
  Carry some small change!Type of Currency and
  Denominations available are Paper currency
  One, Two, Five, Ten, Twenty, Fifty, Hundred,
  Five Hundred and One Thousand. Coin currency
  Ten paisa, Twenty five paisa, Fifty paisa, One
  rupee, Two Rupees and Five Rupees. Some
  uniquely used Indian terms 1 Lakh One Hundred
  Thousand, 1 Crore Ten Million.

• Keep Healthy Be SafeIn AdvanceBefore you
  leave your country, check with your GP if you
  need any immunization and make sure you take a
  supply of any regular medication. A small First
  Aid Kit is a good idea. Include some disposable
  needles in case of an emergency, sun cream,
  malaria tablets, treatment for diarrhoea and
  stomach problems.PreventionUse bottled water
  for drinking and cleaning your teeth. Avoid milk
  and raw foods. Eating vegetarian dishes, boiled
  rice and eggs are safest.In an EmergencyGo to
  a private hospital or clinic recommended by the
  High Commission or your hotel.Emergency
  Telephone Numbers Police 100 Fire
  101 Ambulance 102

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Thank You

• S. Venkataraman
• (Director)
• venkat_at_wealthtree.in
• Mobile- 91 9821152537
• Bhavesh Kothari
• (Vice President)
• bhavesh_at_wealthtree.in
• Mobile- 91 9820436076

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