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Starting a Business in India

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Starting a Business in India

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Why Start a Business in India?

India does unusual things to the Western mind. Everyone has something to say about it. It's one of those got-to-visit places where students and bohemians go to become enlightened, transformed and reborn. You will have been told countless itineraries and recommendations, shown photographs, heard the anecdotes, and you would be forgiven for thinking you have already experienced the crippling poverty, transcendental temples and gastronomic authenticity of its street vendors. Actually, you will have done everything there is to do in India except actually visit it.

Yet the one thing that doesn't get reported back with the same insufferable touristy gusto is that other, less-known side to the country. Not its history and heritage, but its present and future.

To say India's economy has been reincarnated - risen to a new level of evolution and existence - would be an understatement. Its status as one of the fastest advancing economies is reciprocated by a fast-growing consumer class. And the consumer classes make the material world go round. The Hindu wheel of virtue has finally turned in India's favour, and if we're talking cyclicality, India is predicted to be the third largest economy in the world by 2050, which is quite the karmic turnaround.

India, although strict, is a democracy that generally follows the ideology left behind by the Brits after their hundred-year holiday there. But we won't kid ourselves, the Indian government might class itself as a fantastically alliterative sovereign socialist secular democratic republic, but things aren't that unequivocal. However, they are also not blurred enough to adversely affect its business, commerce, market and, more importantly, foreign investment. In fact, when it comes to direct investment, India is one of the largest recipients, with a colossal four billion each year. Trade barriers have been lifted, tariff rates are down and quantitative restrictions on imports have ceased. Yet, India's foreign investment potential still remains strangely unfulfilled.

Thus, there lies immeasurable opportunity for UK investors, particularly in the sectors of construction, media, education, engineering, the environment, healthcare, power and transport. People always talk about special relationships and strong ties between countries, and in the instance of India and the UK there couldn't be a better epithet. We are historically entwined and have shared, adopted, traded and welcomed facets of each others culture and personality.

If you fancy joining the karmic quest toward 2050, setting up a business in India now could be the best move you ever make. Read on to see what the wheel of virtue will spin for you.

Guide To Living And Working In India

What currency will I be using in India?

India's currency is the Rupee, written INR or Rs for short.

What opportunities does India have to offer?

Part of what economists are calling BRIC (Brazil Russia India China), India is now enjoying an emerging market status. This provides a positive boost not only for the economy but for ground level workers; there is a sense of pride because India is keeping up with the rest of the world.

The main area for growth and opportunity is the internet. E-commerce, help desking, multimedia, software development, and most recently Wi-Fi network installation have all proven fruitful in India, and the country boasts a high digital skill range. Many dealers have capitalised on the lack of geographical boundaries that the internet brings by selling India-specific goods online. There are moral implications, and some say that India is getting more like the United States every day.

India Free Trade Zones

  • Kandla Special Economic Zone, India. India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.

SuRSEZ is the First Operating Zone in the private sector in India. The track record of SuRSEZ in the last 5 years speaks for itself. From a level of about Rs.62 crores in 2000-01, exports from SuRSEZ rose to Rs. 2400 crores in the year 2005-06.

  • Inspira Pharma and Renewable Energy Park, Aurangabad, Maharashtra, India
  • Sricity Multi product SEZ, part of Sricity
  • Arshiya International Ltd, India's first Free Trade and Warehousing Zone The largest multi-product Free trade and warehousing infrastructure in India. Arshiya's first 165-acre FTWZ is operational in Panvel, Mumbai, and is to be followed by one in Khurja near Delhi. Arshiya's Mega Logistics Hub at Khurja to have 135 acre FTWZ, 130 acre Industrial and Distribution Hub (Distripark) & 50 acre Rail siding. Arshiya International will be developing three more Free Trade and Warehousing zones in Central, South and East of India.
  • Cochin Special Economic Zone is a Special Economic Zone in Cochin, in the State of Kerala in southwest India, set up for export- oriented ventures. The Special Economic Zone is a foreign territory within India with special rules for facilitating foreign direct investment. The Zone is run directly by the Government of India. Cochin SEZ is a multi-product Zone. Cochin is strategically located. It is in southwest India, just 11 nautical miles off the international sea route from Europe to the Pacific Rim. Cochin is being developed by the Dubai Ports International as a container transhipment terminal with direct sailings to important markets of the world, which could position it as Hub for South Asia.
  • EON Free Zone
  • Hardware Park, Hyderabad
  • Madras Export Processing Zone (source)

What's the climate like in India?

The climate is terrain-driven in India, and therefore it varies between regions. The north is moderately cold in winter (January to March), due to the Himalayas, which act as a powerful barrier against the katabatic winds coming from Central Asia. For the same reason North India can be extremely hot in summer; remaining moderate in temperature in the other seasons. The very south of India is called the Deccan Plateau (from the Sanskrit dakshina meaning 'south'), and takes in the states of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala. Its climate is one of tropical monsoon, and rainfall brought in from the sea by monsoon winds can last up to three months. Monsoonal rain is seasonal but heavy. Eastern India experiences the Bay of Bengal monsoon, and so the weather behaves in much the same way. Western India is largely arid desert; but the whole country is categorised as tropical.

Seasons in India run as follows:

Monsoon season, June-September - slowly sweeps across and up the country, ending in North India at the start of October

Post-Monsoon, October-December - Northwest India becomes cloudless in October and November

Winter, January to March - In January average temperatures are around 10-15 degrees C in the North; 20-25 in the South

Summer, March-July - in northern regions May is the hottest month; in southern and western India April is hottest. Average temperatures are 32-40 degrees C

What's the population?

The population of India is 1.291 billion

Economic Overview

What are the main industries in India?

Agriculture and textiles are the principle industries in India. Agriculture tallies as employment for about two thirds of the population - and with India representing 15% of the world's humans (second densest after China) it is a dominant industry. Textiles appear in the job title of around twenty million Indians. Indian industry production includes: aircraft, ships, cars, locomotives, heavy electrical machinery, construction equipment, power generation and transmission equipment, chemicals, precision instruments, communication equipment and computers.

The steel industry is one of the biggest key industries of India, and is over 120 years old. Bhilai, Durgapur and Rourkela are all major public sector steel-producing areas. There are also plants at Bokaro and Vishakhapatanam. Private sector plants, of which the Tata Iron and Steel Company (TISCO) is the biggest, have been allowed to raise their capacity. A modernisation scheme is underway, instigated by the Steel Authority of India (SAIL), which controls the public sector plants. Other major industries include engineering and machine tools, electronics, textiles and IT and software, which is globally recognised as a 'thrust industry' benefiting India exponentially in recent years. Tourism, too, is booming in India.

How does India's economy compare to the rest of the world?

One profession that India produces in abundance is economists. Therefore whatever the state of India's economy, there will always be consultation services enough to predict and preserve. Some experts believe that although the country's emerging economy is a good thing, too much of an opening may raise the rupee's power while devaluing its exports. Many also think that India has the potential to shoulder up to the world's most powerful economies, stunted only by illogical economic moves, such as pushing heavy engineering, chemicals and petrochemicals businesses, rather than the industries more reliant on unskilled labour, which India has a lot of.

India's GDP is around a trillion US dollars at the time of writing. It is the twelfth largest economy in the world.

What and how does India export?

Textiles accounts for a third of the country's exported goods. Produce required for power projects, fertilizer, cement, steel, petrochemical plants and mining equipment are exported from India. The country also builds and exports construction machinery, irrigation equipment, transport vehicles, diesel engines, and tractors. Software is a big export. In a way, the outsourcing of contact centre labour could be considered an export, and of course tea. Also exported, mainly to the west, are scholars and medical staff.

India's main trade partners are USA, China, UK, Belgium, Hong Kong, Germany, and Singapore.

What's the unemployment situation in India?

Unemployment is at 7 %.

What's the national minimum wage in India?

The National Rural Employment Guarantee Scheme stipulates that the minimum wage in India is Rs 60 per day ($1.50). 260 million are below the poverty line.

Who invests?

Non-Resident Indians (NRIs) enjoy exclusive incentives to invest in India like tax exemption and higher interest rates on deposits.

The number of shareholders in your new company is restricted to fifty, if it is a private limited company.

These titles are available for foreign investors/foreign companies doing business in India:

  • Liaison Office
  • Representative Office
  • Project Office
  • Branch Office
  • Wholly owned Subsidiary Company
  • Joint Venture Company

Etiquette

Business culture in India assumes a mixed presence, a blend of national and international values, but the main business language is English. Indians generally expect to be referred to by their designation (Dr., Professor, etc.) if they have one. They are a race globally recognised for their politeness, and this is emphasised in the Indian practice of business.

The main religions in India are: Hindu 81.3%; Muslim 12%; Christian 2.3%; Sikh 1.9%; and other groups including Buddhist, Jain, Parsi - totalling 2.5%.

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