Describe various aspects of the regulatory framework enacted by the government of India to regulate its role in business
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⇒ENTRY OPTIONS
An appropriate entry strategy is a must for every foreign investor seeking to do business in India or with counterparties based in India. Entry strategy would usually vary depending upon the nature of business, the concerned sector, scale of operations and costs and other commercial objectives. Broadly, foreign investors can set up either a company, branch/liaison office or a limited liability partnership (LLP) in India. Indian companies are governed by the new company law, the Companies Act, 2013.
⇒FOREIGN INVESTMENT POLICY
Income tax in India is governed by a Central legislation, the (Indian) Income tax Act, 1961, while indirect taxes such as value added tax, customs and excise duty are subject to both Central and State laws. Currently the corporate tax rate stands at 30% (excluding surcharge and cess), however, the Government has announced that this would be progressively reduced to 25% over the next 4 years.
⇒EXIT STRATEGY AND DISPUTE SETTLEMENT IN INDIA
Cashing out on a venture that is successful
If the goals and objectives of the company/partners involved changes with time
If one of the partners involved in an agreement is acquired or gets into financial trouble
For settlement of disputes when a partnership isn’t working out
⇒EMPLOYMENT LAWS
An investor should familiarize himself with Indian labour laws at the time of commencing operations in India. Though several labour laws are formulated by the Centre, there are State specific rules that the investor should take note of, and these would vary depending on the State where the investor commences operations.
⇒ANTI-TRUST REGULATION IN INDIA
India’s Competition Act, 2002 (the Act) is the principal legislation dealing with anti-trust issues. The Act prohibits or regulates (a) anti-competitive agreements (b) abuse of a dominant position and (c) combinations.
Anti-competitive agreements are broadly defined as any agreement in respect of ‘production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India’. Certain agreements such as tie-in arrangements or bid-rigging are presumed to cause an appreciable adverse effect on competition.
An appropriate entry strategy is a must for every foreign investor seeking to do business in India or with counterparties based in India. Entry strategy would usually vary depending upon the nature of business, the concerned sector, scale of operations and costs and other commercial objectives. Broadly, foreign investors can set up either a company, branch/liaison office or a limited liability partnership (LLP) in India. Indian companies are governed by the new company law, the Companies Act, 2013.
⇒FOREIGN INVESTMENT POLICY
Foreign investments into India are governed by a comprehensive foreign direct investment (FDI) policy issued annually by the Department of Industrial Policy and Promotion, which works under the aegis of the Ministry of Commerce and Industry, Government of India. The FDI policy is supplemented by various press notes that are issued throughout the year as and when a policy change is announced. This policy framework is operationalised by rules, regulations and circulars issued by India’s Central Bank, the Reserve Bank of India.
⇒TAXATIONIncome tax in India is governed by a Central legislation, the (Indian) Income tax Act, 1961, while indirect taxes such as value added tax, customs and excise duty are subject to both Central and State laws. Currently the corporate tax rate stands at 30% (excluding surcharge and cess), however, the Government has announced that this would be progressively reduced to 25% over the next 4 years.
⇒EXIT STRATEGY AND DISPUTE SETTLEMENT IN INDIA
Maintaining a comprehensive exit strategy is important for the following reasons:
Changes in business conditions or regulatory environmentCashing out on a venture that is successful
If the goals and objectives of the company/partners involved changes with time
If one of the partners involved in an agreement is acquired or gets into financial trouble
For settlement of disputes when a partnership isn’t working out
⇒EMPLOYMENT LAWS
An investor should familiarize himself with Indian labour laws at the time of commencing operations in India. Though several labour laws are formulated by the Centre, there are State specific rules that the investor should take note of, and these would vary depending on the State where the investor commences operations.
⇒ANTI-TRUST REGULATION IN INDIA
India’s Competition Act, 2002 (the Act) is the principal legislation dealing with anti-trust issues. The Act prohibits or regulates (a) anti-competitive agreements (b) abuse of a dominant position and (c) combinations.
Anti-competitive agreements are broadly defined as any agreement in respect of ‘production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India’. Certain agreements such as tie-in arrangements or bid-rigging are presumed to cause an appreciable adverse effect on competition.
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