Sara Federio, Celia García, Elena Meléndez and Maria Carda

Top 10 challenges to Invest in India

India is going through a period of unprecedented economic liberation, opening its vast
consumer base to international firms. However, it is a notoriously difficult place to do
business, and having local help on board is the key to unlocking the country’s vast
economic potential.

India is an enormous country with vast economic potential, but traversing the diverse and
complicated corporate landscape can be a daunting task without the right help on board.

Not only is India one of the fastest growing countries in the world, it is also going through a
period of unprecedented economic liberation, granting overseas investors more access to its
vast and varied market than ever. A large, young population and a strong export sector await
expanding businesses, with a potential consumer base that far outstrips most other nations
in the developed and developing world.

Political stability and broad consensus on reforms is also a big pull for expanding
companies, and the well developed banking system and vibrant capital market highlight the
maturity of its financial system. But doing business in India can still be a troublesome
endeavour, and having local help can really make the difference to the success of your
venture.

Starting a Business

The cost of starting a business in India is astronomical, and the procedures involved can be
daunting without local knowledge. There are 12 procedures to complete in the initial set up
of a business costing 49.8% of income per capita. It takes almost a month (27 days) to
complete the tasks on average, which is well above the OECD average of 12 days.

Dealing with Construction Permits

Construction permits are also a costly pursuit, involving 34 procedures and taking 196 days.
Obtaining Intimation of Disapproval from the Building Proposal Office and paying fees takes
around a month, and NOCs must be sought from the Tree Authority, the Storm Water and
Drain Department, the Sewerage Department, the Electric Department, the Environmental
Department, the Traffic & Coordination Department and the CFO.

Getting Electricity

The cost of getting electricity is relatively cheap in comparison to the rest of South Asia, but
the number of procedures involved can be rather daunting. What’s more, each procedure is
in itself quite time constraining, taking around eight days to receive an external site
inspection and three weeks to get externally connected, have a meter installed and conduct
a test installation.

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 Sara Federio, Celia García, Elena Meléndez and Maria Carda

Registering Property

Registering a property requires quite a bit of legwork and can also incur substantial charges.
Stamp duty of 5% of the property and a 1% charge on the market value of the property
incurred at the Sub-Registrar of Assurances are the two fees to look out for, although the
lawyer charges and fees at the Land & Survey Office can also pinch.

Getting Credit

India performs the best of all South Asian economies for ease of getting credit, ranking 23rd
in the world according to the World Bank and International Finance Corporation. The 2013
report said this when a “unified collateral registry, which is centralised geographically,
became operational in India strengthening access to credit and the secured transaction
regime”.

Protecting Investors and enforcing contracts

The concept of investor protection is one that has garnered a lot of attention of late, and new
bodies such as the Securities and Exchange Board of India (SEBI) have been set up to that
effect. Enforcing contracts will also be an area that must be looked at; India ranks as one of
the worst countries in the world for the ability to enforce a contract, taking an average of
1,420 days.

Paying Taxes

Businesses operating in India are required to make 33 tax payments a year, taking 243
hours’ worth of attention. The headline corporation tax rate stands at 30%, but companies
can also incur charges in the form of a central sales tax, dividend tax, property tax, fuel tax,
vehicle tax, VAT and excise duty.

Trading Across Borders

Despite India opening its borders to international trade, there are still several hurdles to
overcome when importing and exporting goods. Several layers of bureaucracy make it very
challenging to move goods efficiently, and companies must file a long list of documents
before moving goods across borders.

Resolving Insolvency

It takes 4.3 years to resolve insolvency in India, far longer than the South Asian and OECD
average. The laborious court system can often slow business relations.

Culture

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India is a cultural hotbed, and business is more about building relations than presenting
figures and sums. The polychronic culture can be difficult to adapt to for outsiders, and due
diligence into the destination is important before travelling.

TMF Group

We have the local knowledge to help you navigate these minefields. Whether you want to
set up in India or just want to streamline your Indian operations, talk to us.

Why to invest in India? (De https://www.investindia.gov.in/why-india)

REASON 01
One of the world's fastest-growing economies
India to remain one of the fastest-growing economies in the world.
Source: International Monetary Fund
For the first time, India has crossed the $70 Bn mark in FY 2019-20 and recorded total FDI
inflow of $73.45 Bn.
Source: Department of Promotion of Industry and Internal Trade, Govt. of India
Leading investors ranked India as the most attractive market.
Source: EY Emerging Markets Centre

REASON 02
Largest youth population in the world
The population of India is expected to rise from 121.1 cr to 152.2 cr during 2011-36.
Source: National Commission on Population, Ministry of Health & Family Welfare
India to be the largest supplier of university graduates in the world by 2020.
Source: British Council
India has the third largest group of scientists and technicians in the world.
Source: All India Management Association & The Boston Consulting Group

REASON 03
Indian infrastructure story
Over the next three decades, more than 350 mn Indians will move into cities.
Source: McKinsey Global Institute
Over the next two decades, more than $1.5 tn investments have been planned for
infrastructure.
Source: Press Information Bureau, Government of India
Investments planned across the key government initiatives in various sectors:
o Highways (Bharatmala & NHDP) - $106.5 bn
o Railways - $131.7 bn
o Ports - $61.5 bn (Port development) + $123 bn (Port-led
Industrialisation)
o Airports - $58 bn
o Industrial Corridors - $100 bn (DMIC - phase I)
o Smart Cities - $14.6 bn
Source: Government of India

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REASON 04
Rising economic influence
Centre of global maritime trade to move from the Pacific to the Indian Ocean Region. India
and China will be the largest manufacturing hubs of the world by 2030.
Source: Lloyd’s Register Marine & University of Strathclyde, Glasgow
Connectivity to Central Asia and Europe via the International North-South Transport Corridor
(INSTC).
Source: Press Information Bureau, Government of India
In the next five years, India will have greater economic influence across the Asia-Pacific
Region.
Source: Baker McKenzie & Mergermarket Group

REASON 05
Huge domestic market
Rising affluence is the biggest driver of increasing consumption in India.
Source: Boston Consulting Group
India’s consumer story will be led by its 129 mn urban mass consumers.
Source: Goldman Sachs Group
Private consumption to be four times by 2025.
Source: McKinsey Global Institute

REASON 06
Rising global competitiveness
India jumps 79 positions from 142nd (2014) to 63rd (2019) in 'World Bank's Ease of Doing
Business Ranking 2020'.
Source: World Bank

India ranks 68th on the Global Competitiveness Index 2018-19.

Pradhan Mantri Jan Dhan Yojana, a formalization of savings scheme under which 312 mn
bank accounts have been opened with savings amounting to $11.6 bn.
Source: Ministry of Finance, Government of India

Goods and Services Tax (GST), the biggest tax reforms since independence, paves way for
a common national market by integrating various indirect taxes.
Source: Government of India

REASON 07 (IMPORTANTE)
Global Innovation Index 2020
India jumps 4 positions and ranks 48th in the Global Innovation Index 2020 rankings
Source: World Intellectual Property Organization
India ranks #1 in the Central & Southern Asia Region
Source: World Intellectual Property Organization
India ranks 3rd amongst the Lower Middle-Income Economy Group

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Source: World Intellectual Property Organization

https://www.circuitstoday.com/top-20-electronics-companies-india-every-fresher-know

Second Part: Nationalization

After 10 years, due to environmental and domestic issues, your country decides to
nationalize your company.
´ Think of arguments to support your nationalization. Look for previous cases of
nationalization (recent cases Argentina and IPF and Evo Morales and previous,
Allende or in African countries).

Examples:
- Bolivia: communications, electric power plants and other sectors
Throughout history most of the companies that were nationalized were either mismanaged
and not contributing to the social benefit but they were rather aiming at private benefits; or
they were bankrupt due to crisis, in which the state must rescue these enterprises (like
Banks) in order to protect their citizens.

Turkey: After the abolition of Capitulations of the Ottoman Empire by the Treaty of Lausanne
(1923), foreign concessions were suppressed, rail transport, electric power generation and
distribution, telephone network and other big industrial firms were nationalized by Turkish
government between 1928 and 1940.

Portugal: 1974 In the years following the Carnation Revolution, the Junta de Salvação
Nacional and Provisional Governments nationalized all the banking, insurance, petrol and
industrial companies. Among those companies were Companhia União Fabril (CUF), the
assets of the Champalimaud family and SONAE. Along with the telecommunications
companies, which were state-owned even before the Revolution, many of the nationalized
companies were reprivatized in the 1980s and 1990s.

Pakistan: 2011: On December 15, 2011, Prime minister Yousaf Raza Gilani nationalized all
privately held shares in PIA, Railways, and Steel Mills, in order to protect capital flight of the
state-owned enterprises.[20] Pakistan Railways as well as Pakistan International Airlines.[21]
The current nationalization programme remains intact to restructured and made profitable
while remaining within government ownership

Arguments:
- managed by the government: social benefit above profit
- workers may feel motivated if they feel the company belongs to them
- Non-profit and fair prices: Instead of aiming to maximise profits and returns for
shareholders, a public sector utility might switch from profit maximisation to pricing
closer to an allocatively efficient price equal to marginal cost.

- Disrespect our culture because it has damaged environment and nature

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´ What would be your arguments for MNC and home country (EEUU). Also, if the
home country decides to go to the WTO of WB, what would be your arguments?
And how would you react if the home country decides to retaliate instead of
going to WTO or WB? Will you go to WTO or WB?

MNC:
- mismanagement of their responsibilities since nature and environment are really
important in India
As India rapidly grows its economy, it is also mindful of conserving its natural resources for
the future. The Nature Conservancy is working with the Indian government across the
central, state and city level, research institutions and private sector organizations to bring
stakeholders together to amplify conservation impact. We are addressing challenges to
nature and people involving climate change, freshwater, forests and livelihood, and healthy
cities. We are pursuing a shared nature-people agenda to ensure that conservation is a
critical outcome in economic development.
We are working toward:
Restoring iconic rivers
Supporting India’s renewable energy and afforestation goals
Building healthy, safe and resilient cities by restoring lakes
Reducing air pollution
Promoting drought resilience and ensuring water security for people and nature Setting
up India’s first Water Fund
For the people of India, environmental conservation is not a new concept. Historically, the
protection of nature and wildlife was an ardent article of faith, reflected in the daily lives of
people, enshrined in myths, folklore, religion, arts, and culture. Some of the fundamental
principles of ecology-the interrelationship and interdependence of all life-were
conceptualized in the Indian ethos and reflected in the ancient scriptural text. It says, 'This
universe is the creation of the Supreme Power meant for the benefit of all his creation. Each
individual life-form must, therefore, learn to enjoy its benefits by forming a part of the system
in close relation with other species. Let not anyone species encroach upon the other's
rights.'

http://ccrtindia.gov.in/readingroom/nscd/ch/ch11.php

EE. UU.:
- Nationalization of tech and electronic companies in other countries such as China in
January 2020 due to:
- tariffs and embargoes by the american government to products from abroad
that belonged to this sector because Trump considered that they were
targeting their strategic economic field. this could harm the growing
tech/electronic sector of India that is
- worth $120 billion
- contributes 2,5% of the GDP
- 13million employments (directly or indirectly)
- 8,8$ billion exports last year

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- Better results in the privatization of these companies (0,1 trillion yuans more
than private-owned companies), more competitiveness in the international
market and better exports results
- some of this companies had been rescued by the government due to lack of
efficiency in the corporate management (in this case, neglected environment
responsibilities)

https://asia.nikkei.com/Business/China-tech/Deal-breaker-China-nationalizes-strategic-tech-
with-eye-on-US

WTO:
WTO’s requirements for national trading enterprises: The substantive obligations of
Members under the rules governing state trading can be summarized in the following four
points:
(1) non-discrimination, commonly referred to as "most favoured nation" or "MFN" treatment;
(2) no quantitative restrictions;
(3) preservation of the value of tariff concessions; and
(4) transparency.

By nationalizing the company, the government does not intend to damage this economic
sector. Our aim is to benefit our society and the electronics industry is one of our economic
pillars, meaning that the only purpose of the nationalization of the company would be to help
our community and we intend to keep improving the competitiveness of the company, its
efficiency and the job opportunities that it offers.
In order to do so, we are committed to fulfill the requirements of the WTO for state-owned
trading enterprises, because by imposing barriers to other companies or similar products, we
are only hurting our economy.

https://www.wto.org/english/tratop_e/statra_e/statra_info_e.htm
https://www.worldbank.org/en/news/press-release/2016/12/19/regarding-the-nationalization-
of-privatbank

Elena:
liberalization super fuerte para 2030 se espera que su economia sea casi mayor

++ workers
english
domestic market

Startup India Movement:

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 Sara Federio, Celia García, Elena Meléndez and Maria Carda

India is well endowed with mineral and agricultural resources and it has seen a significant
increase in offshore outsourcing and manufacturing over the last couple of decades, which
has helped India’s economy grow at a tremendous rate. It is very interesting how foreign
companies and foreign investors are benefited by doing business in India