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1 October 2010, India Briefing

Top Reasons to Invest in India Now

Still having second thoughts about investing India? This article decodes the Indian economy’s appeal to foreign investors.

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Strong economic indicators

    • India is the fourth largest economy in terms of purchasing power parity
    • The nation’s GDP is expected to grow by over 8.5 percent in 2010-2011
    • Liberal and transparent foreign investment regime
    • Well developed banking system and vibrant capital market
    • Strong and independent judicial system
  • Among the highest rates of returns on investment

Incredible human capital skills

    • Strong pool of scientific and technical manpower from such places as the  India Institute of Technology and the India Institute of Management
    • Over 255 of Fortune 500 companies getting services from India
    • Second largest English-speaking population in the world
    • Abundant, high-quality, cost-effective, competitive manpower. Over 100,000 IT professionals added each year
  • IT Industry over US$14 billion and growing at 50 percent per year

Pervasive entrepreneurial spirit

    • Prevalence of foreign technology licensing: Ranked 1st in the world
    • Availability of scientists and engineers: Ranked 2nd
    • Quality of management schools: Ranked 9th
    • Firm level innovation: Ranked 12th
  • Firm level technology absorption: Ranked 16th

Easy industrial licensing policy

    • Under the Industries (Development and Regulation) Act of 1951, an industrial license is only needed for items that fall under compulsory licensing, are reserved for small-scale sector, or in a location that is restricted
    • All industries exempt from industrial licensing required to file an Industrial Entrepreneur Memorandum
  • No approval is required, only notification needed 
  • Financial sector reform
    • Stable tax regime; only three rates of indirect tax and trade facilitation measures have been introduced
    • The Foreign Exchange Management Act, 1999 provides a liberal regime; forex procedures are straight forward
    • Stocks can be sold on without prior approval
    • Profits, dividends and capital investment can be repatriated
  • Royalties can be paid by wholly owned subsidiaries to parent companies

Trade policy reforms

    • Trade policy liberalized and most items are on an open general license
    • Policies fully compatible with the WTO
  • Functioning of the Directorate General of Foreign Trade is computerized: all 33 locations are web-enabled, 70 percent of the total transactions of exporters and importers are web-enabled, transaction times have been reduced to just six hours and on-line banking fully integrated

Proactive FDI policy

    • FDI under automatic route, except in few areas
    • Investor can bring automatic route cases for Foreign Investment Promotion Board approval
    • Foreign technology collaborations freely allowed under automatic and government approval routes
    • India rated best destination for outsourcing and one of the most attractive destination for FDI
    • Global competitive report ranks India in first place in terms of prevalence of foreign technology licensing
    • Major destination for foreign venture capital funds.
    • Foreign Investment Implementation Authority helps solve foreign investor problems and meets periodically with investors to sort out operational difficulties and facilitates implementation
    • An empowered sub-committee of the National Development Council set up to create an investor friendly climate and remove regulatory barriers to investments
  • All IPR laws are TRIPS compliant and the Intellectual Property Appellate Tribunal is functional

Infrastructure development

    • Roads – Transport Minister Kamal Nath indicates that India is likely to attract US$10 billion for roads in next two years; India has one of the largest road networks in the world totaling 3.34 million kilometers and the National Highways Development Project (NHDP), the largest highway project ever undertaken by the country, is being implemented by the National Highway Authority of India
    • Airports – Major upgrades of airports at New Delhi and Mumbai are underway and other major cities given significant increase in business and leisure air travel
    • Ports – Major program aimed at developing ports and shipping sector at an estimated investment of US$22 billion; India has approximately 12 major ports and 185 minor ones; government incentives include automatic approval of up to 100 percent foreign equity participation with regard to the construction of ports and harbors
    • Telecommunications – India will be the second largest telecommunications market globally by the end of 2010; 9 million phones are being added every month in India; the industry is expected to generate revenues worth over US$40 billion by 2013
    • Urban planning – Development of townships for the rapidly growing and increasingly affluent urban middle class; city level infrastructure is needed in roads, bridges, IT parks, sanitation and water supply
  • Power – The power sector is a high priority given the sheer size of market and the returns available on the investment capital; the Indian government has an ambitious mission of “power for all by 2012,” which would require that installed generation capacity be at least 200,000 megawatts by 2012

Dezan Shira & Associates is a foreign direct investment practice offering business advisory, tax, accounting, due diligence, payroll and audit services to multinational clients in china, Hong Kong, India and Vietnam. For professional advice and assistance with tax and regulatory matters, please contact or visit

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