Invest in India (1)

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Investing in INDIA

• Presented By S Ravi Shankar
• Law senate Law Firm New Delhi Mumbai
• ravi_at_lawsenate.com

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Government Structure
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Government Structure in india

• Government of India 
• Government of the State ( Maharashtra)
• Local Bodies (Pune Munipality)
• Statutory Bodies
• Investment Promotion Board
• Regulatory Bodies
• Securities Exchange Board of India
• Reserve Bank of India

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Powers of the governments

• Constitution of India
• Central List (Customs Duty, Central Excise Duty,
  Central Value Added Tax, Income Tax, Foreign
  exchange regulations, Visas etc.,)
• State List (Labour laws, Value added Tax,
  Electricity, Security)
• Concurrent List (Environment laws)
• Powers of Statutory Bodies (Reserve Bank of
  India)
• Local Body powers 

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General Business models of FDI

• Branch office
• Liasion office
• Project office 
• Joint venture Company 
• 100 Subsidiary of a Foreign Company 

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100 Subsidiary of a Foreign Company

• Permitted in all fields where 100 Foreign
  investment is permitted by Government of India
• 100 export units
• Manufacturing except the items reserved for Micro
  Small scale Sector 
• Manufacturing except items which are reserved 
• 100 profit after deduction of taxes repatriable
  to the Mother Company 

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Investment routes
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Join Venture Company

• Joint venture company is a Company formed by two
  or more share holders
• Partnership Company
• Limited Liability Partnership (LLP)
• Private Limited Company 
• Public limited Company

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Private Limited Company

• A minimum of two share holders
• A Maximum of 200 Share holders
• A minimum of two Directors
• Minimum authorised Capital 2200 USD
• Foreign Nationals also have to get a DIN
  (Director Identification number) to become a
  Director
• Foreign Nationals can be Directors
• KYC required for all share holders
• KYC (Know your customer) norms can be full filled
  from any foreign country 

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Private limited company

• Shares of a Private Limited Company can not be
  listed in a Stock Exchange 
• Required Documents Address Proof of Share
  holders, identity proof of share holders, Address
  of the Registered office, Memorandum of
  Association, KYC, DIN etc.,

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Governing bodies of a Company

• General Body 
• Board of Directors
• General Body - Forum of all share holders of the
  Company
• Powers of the General Body includes 
• Powers to elect the Directors
• Adopt the Audited Finance Statements
• Change in Memorandum Articles of Association 
• Appointment of Auditors
• Issuance of Shares 

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Powers of the board of Directors

• Board of Directors do the Day to Day Management
  of the Company
• Borrowing of funds
• Investment Decisions
• Diversification decisions
• Office Management
• Reporting Compliances 
• Absence in two meetings can lead to termination
  of a Director from the board 
• Powers of the Board can be restricted by the
  General Body

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Taxation in India

• Corporate Tax- Income Tax - 30
• Dividend Disbursement tax - 15
• Short Term Capital Gains Tax - 30
• Long Term Capital Gains Tax - 10-15
• Central Excise Duty - Approx 23
• VAT - 12-14-5
• Customs duty Depends on the item/ use

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Labour Laws in India

• Regular Labours are protected by Industrial
  Disputes Act
• Enquiry, Disciplinary Action, Suspension,
  retrenchment, removal etc., are allowed by law
• Contract Labour system is legal in India
• Industrial Disputes Act apply only to Labours
  (Workmen)
• There is no protection for officer category
  employees
• Employees provident Fund, Employees State
  Insurance etc., are mandatory

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Investment Flow Chart
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Government Investment Promotion Schemes
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Government Promotion Schemes
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Exit Options

• Exit options are decided and incorporated into
  the Investment contract between the parties
• Shares of the Exiting Partner can be Sold to
  Third parties 
• Shares of the Exiting Partner can be sold to JV
  Partners
• Liquidation of the Company
• Full amount realized from Exit can be repatriated
  to the country of investor.

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Dispute Resolution options
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Dispute Resolution

• International Arbitration Clauses are preferred
  because Court litigation takes long time in India
• India is a New York Convention country hence
  India China recognize the arbitration awards
  passed in each other.
• India has good Arbitration Institutions like ICA,
  IDAC India, DIAC etc.,
• CITAC, SHIAC BAC Arbitration Centre awards are
  recognized in India
• ICC, SIAC, HKIAC, LCIA are popular in India