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India, Newsletter

India Ranks 63rd in the World Bank’s Report Titled Ease of Doing Business 2020

October 25, 2019

India has stepped up 14 places to take the 63^rd position among 190 countries in the World Bank’s Ease of Doing Business ranking which was released on Thursday after the announcement of numerous economic reforms by the Narendra Modi-led government.

India was at the 77th place among a total of 190 countries in the last year’s ranking, which is a gain of 23 places. The report evaluates enhancement in the ease of doing business environment in cities like Delhi and Mumbai, which also shows that company formation in India is much simpler now.

“Sustained business reforms over the past several years has helped India jump 14 places to move to 63rd position in this year’s global ease of Doing Business rankings. India put in place four new business reforms during the past year and earned a place in among the world’s top ten improvers for the third consecutive year,” the World Bank Group’s Doing Business 2020 study said.

The newest reforms are in the Doing Business areas of Setting up a Business, Managing the Construction Permits, Handling the Trade Across Borders and also Resolving Insolvency.

In Doing Business 2020 report, India along with other top-gaining countries executed a total of 59 regulatory reforms in the years 2018/19—which accounted for almost one-fifth of the total reforms recorded globally.

Junaid Ahmad, World Bank’s Country Director in India said that India’s remarkable headway in the Doing Business rankings over the last few years is an incredible accomplishment, specifically for an economy which is so enormous and complex. Special attention given by the country’s top leadership, and the relentless attempts made to propel the business reforms agenda, both at the central and the state level, aided India to make such significant improvements. Now, the focus should be carrying on with this trend to maintain and further improve this ranking.

Doing Business recognises the 10 economies that have progressed the most on the ease of doing business after executing the regulatory reforms. In Doing Business 2020 report, the 10 top improving nations are Saudi Arabia, Togo, Jordan, Bahrain, Pakistan, Tajikistan, Kuwait, India, China, and Nigeria.

The founding of a modern insolvency regime in the year 2016 under the comprehensive policy to reorganise corporate law paved the path for steady upsurge in the number of reorganizations, in spite of some implementation-related challenges. Consequently, the overall rate of recovery for creditors moved up drastically from 26.5 to 71.6 cents on the dollar. “India now is by far the best performer in South Asia on this component and does better than the average for OECD high-income economies,” it said.

Concluding the procedures necessitated building a warehouse now costs only 4 percent of the total warehouse value. Creating quality control measures has also improved, and now only six economies globally have a score, which is more than India’s 14.5 out of 15 on this index.

Importing and exporting has become much simpler for companies for the fourth year in a row. With the newest reforms, India now stands at the 68^th position worldwide on this indicator and does considerably better than the regional average. The time needed for the logistical processes such as exporting and importing goods is also now significantly reduced.

Doing business ranking is constructed on quantitative indicators on regulation for setting up a new business, handling construction permits, getting facilities like electricity, registering the property, protecting minority investors, getting credit, paying taxes, doing trade across borders, applying contracts and also resolving insolvency.

Newsletter, U.A.E

UAE Announces the Introduction of Economic Substance Regulations

October 23, 2019

In the earlier part of 201, the Cabinet of Ministers in the UAE announced the release of Resolution No 31 of 2019 (Resolution), which was regarding the Economic Substance Regulations (ESR) that would be applicable with immediate effect.

ESR was introduced to make sure that all the companies that are conducting their business in the UAE, pursuant to the trade license gained from relevant authorities, comply with the Economic Substance Test. The resolution offers useful and important guidelines and parameters to perform any such substance tests.

This particular resolution is also a move to meet the EU’s obligation to remove UAE from the EU black list. EU has had a list of non-co-operative jurisdiction aimed for tax purposes. Consequently, on 10 October 2019, the EU has struck off UAE’s name from its black list.

Where is it applicable?

ESR is applicable to all UAE companies who have gained a trade license or permit from relevant authorities to perform ‘Relevant Activity,’ which includes the Free Zone and also the Financial Free Zone.
Nonetheless, this resolution would not be applicable to the companies that are owned by the Government of the state, other Government authority or body, or Emirate of the state directly or indirectly.

Relevant businesses and their core income-generating activity

Relevant Business or Activity	Core Income-generating Activity
Shipping	Managing the crew or voyages Maintaining or overhauling the ships Managing and tracking shipments
Holding Company	All the activities performed and related to the business For income besides dividend or capital gains, any activities to earn such other income
Banking	Raising the funds and controlling the risk Taking hedge positions Offering loans or credit
Insurance	Forecasting and calculating the risk Insuring and re-insuring against any possible risk Underwriting insurance and re-insurance
Investment Fund Management	Making decisions upon holding or selling Computing the risk and reserve
Lease-Finance	Agreeing on the funding terms Recognising and acquiring assets that are to be leased (for leasing activity) Managing and controlling the risks
Headquarter	Taking various management decisions Managing the operating expenditure on the behalf of various group entities Managing and coordinating group activities
Intellectual Property or IP (where IP is patent/non-trade intangible) and it is a High-Risk IP Licensee*	Making strategic decisions and handling the risk factor related to developing, exploiting or protecting the company’s intangible assets Carrying out ancillary trading activities aimed for exploiting intangible assets
Distribution and Service Centre	Transportation and storage activities Handling inventories

* High-Risk IP Licensee is defined as a licensee who:

Did not create an IP that is held for business and acquired an IP from any related persons, in deliberation for funding any research and development activities carried out by another person located outside of the UAE and licenses such IP to related persons or generates any income
Does not perform any research and development activity, or any marketing, branding, or distribution activities as part of main income-generating activity

What are the main parameters for the Economic Substance Test?

Licensee should mandatorily satisfy the below-mentioned criteria to be able to meet the Economic Substance Test in relation to the Relevant Activity:

Perform the core or key income-generating activities in the UAE
Licensee should be guided and managed in the UAE
- Required frequency of the Board of Directors meetings to be held in the UAE
- Directors should be having the required knowledge and expertise to carry out their duties
To hire the required number of qualified and trained full-time employees, or satisfactory outsourcing expenditure spent for third party service providers
To own the required amount of physical assets in the UAE

Requirement from the compliance point of view

Notifications to be submitted
Licensee has to notify the authority on following every year:

Whether or not it is performing the Relevant Activity
If yes, then the gross income for the Relevant Activity depends on the tax outside the UAE
If the financial year is followed by the licensee
Reports to be submitted
If the licensee is performing the Relevant Activity, then it is needed to submit a detailed report every year within 12 months from the end of that Financial Year, detailing all the operations-related information, which includes but is not limited to employee details such as their experience, qualifications, type of contract, duration of employment, etc. and also detailed information on intangible details of the licensee.

What are the various offenses and penalties that are prescribed?

The resolution has recommended the following offenses and their penalties as mentioned here:

Offenses	The related penalty
Failure to comply with the Economic Substance Test	AED 10,000 – AED 50,000 (First Year)
Failure to comply with the Economic Substance Test	AED 50,000 – AED 300,000 (Subsequent Year)
Failure to give the required information or provide inaccurate information	AED 10,000 to AED 50,000

However, before a penalty is levied, the relevant authority should issue a notice (that is, giving an opportunity of being heard) to the licensee.

In addition, the authority can neither decide the economic substance test of the licensee nor levy any penalty after 6 years from the end of that financial year (an exception is only if there is deliberate misrepresentation or any fraudulent action done by the licensee or any other individual)

What lies ahead?

The UAE has announced Country-by-Country-Reporting (CbCR) Regulations recently, which are in line with its commitment for implementing the Base Erosion and Profit Shifting (BEPS) standard for Action Plan 13. After the introduction of ESR, UAE has been able to send a positive signal to the rulers of its trade partners located in the other jurisdictions.
Additionally, announcement of these regulations have already aided the UAE in striking off their names from the EU blacklist. However, the execution and implementation process of these regulations in the UAE, could pose some challenges as it does not have any taxation related law till date.
In spite of the regulations offering some very useful guidelines, the licensees will need a lot of judgment professionally to decipher if a particular activity meets the substance test or not.
The above-mentioned regulations also bring out extra compliance requirements on part of the licensee and all the businesses operating in the UAE who are still struggling with the GST-related issues and compliances in the area.

Multinational companies are recommended to be pro-active and reconsider their current operational activities to alleviate and avoid any probable risk of non-compliance with regards to the above regulations.

Newsletter, Saudi Arabia

Saudi Arabia Opens to Foreign Holidaymakers, Chases Tourism Investment

October 21, 2019

Saudi Arabia opened its doors to global tourists recently and announced a new visa regime, which will be applicable for 49 countries. The sultanate is also encouraging foreign companies to come and invest in a sector which hopefully would contribute almost 10% of the gross domestic product by the year 2030.

The kingdom, which was comparatively closed for decades, has recently, relaxed some of its severe social codes such as differentiating men and women in various public places and necessitating women to dress in all-covering black robes called abayas.

The tourism chief, Ahmed al-Khateeb mentioned before the official announcement that abayas would now not be compulsory; however, modest dress should be worn, which covers shoulders and knees, especially in public places and also at public beaches.

He also said that alcohol would remain banned. Visas, however, are now easily available online, either on arrival or at various Saudi diplomatic missions for a cost of about $120 which includes a health insurance fee. Outbound countries comprise of the United States, China, Russia, Japan and many European states as of now. More countries are slated to be added later.

Visas permit multiple entries and one could stays up to 3 months. There are no constraints for unaccompanied women, as was in the past, and Muslims can also do pilgrimage other than the Haj season.

Till now, any foreigners who were travelling to Saudi Arabia were majorly restricted to resident workers and their dependents, Muslim pilgrims who are allotted special visas to visit the holy cities like Mecca and Medina, and other business travellers.

The plans to welcome considerable numbers of tourists who come for leisure have been discussed for long, but was not accepted due to conservative views and bureaucracy. An added benefit was the e-visa meant for sporting events and concerts, which was announced last December.

This move comes as a part of the de facto ruler Crown Prince Mohammed bin Salman’s impressive plans to cultivate new industries to deter the world’s top oil exporter off crude and open up the country’s society by introducing formerly banned entertainment.

In quest of investments

In addition, the tensions with arch-enemy Iran have also flared up. Riyadh accuses Tehran for an assault earlier this month on Saudi oil facilities, which is denied by Iran.

However Khateeb, the chairperson of the Saudi Commission for Tourism and National Heritage, mentioned that the country is quite safe and this attack would not influence the plans to attract more tourists.

Tourism remains high on the crown prince’s memo or agenda, in spite of a shortage of infrastructure. To push further growth, Khateeb projected that almost 250 billion riyals ($67 billion) of investments are required, which includes 500,000 new hotel rooms by the year 2030 — half from government-supported mega projects and other half coming from private investors.

The government has also signed a memoranda of understanding which totalled to approximately 100 billion riyals with about regional and global investors like conglomerate Triple Five and UAE-based developer, Majid Al Futtaim. This of course signals that the next few years are going to be a perfect time for company formation in Saudi Arabia or foreign company registration in Saudi Arabia.

The government wishes to entice 100 million annual visits in the year 2030, which is up from about 40 million currently. The contribution to the country’s GDP is aimed to reach 10% from the current 3%.

This country, which shares its borders with Iraq in the north and Yemen in its south, claims of vast tracts of desert but also lush mountains, untouched beaches and heritage and historical sites that include five UNESCO World Heritage Sites.

This development drive has a purpose of adding almost 1 million tourism jobs. However, adding hundreds of thousands of Saudis into the workforce still remains as a key challenge for the crown prince, who has been able to manage making a dent in the official unemployment rate which is currently over 12%.

Newsletter, Oman

Oman-India Forum all Set to Attract Indian investors

October 21, 2019

The Public Establishment for Industrial Estates (Madayn) arranged an Oman-India Investment Meet between September 29 to September 30 at Crowne Plaza in Muscat under the support of Yahya bin Said Al Jabri, who is the Chairman of the Special Economic Zone Authority at Duqm (Sezad) and Chairman of Ithraa.

The event falls within the endeavours of Madayn to pull in new foreign investments to the Sultanate and bolster affiliation with the private sector, specifically in the industrial sector. The meet hosted a very high-profile Indian business delegation comprising almost 35 businessmen who represented various sectors like food, logistics, telecommunications, information technology and renewable energy. Many business and investment officials who represented the public and private sectors in the Sultanate also came for the event.

This event also provided a perfect platform to highlight the investment opportunities available in Oman and Madayn’s industrial towns in particular. It also opened a great opportunity for exploring alliances between the Omani and Indian organizations and factories, which would ultimately add more value to the national economy, offer more job opportunities for the Omani groups in the industrial sector and allow business setup in Oman.

This high level event also highlighted Madayn’s vision in improving the Sultanate’s rank as a leading regional hub of manufacturing, innovation and entrepreneurship excellence, information and communications technology (ICT), and its quest in enticing industrial investments and offering continued support, through regionally and internationally-competitive policies, strong infrastructure, newer value-adding services, and simple and easy-to-manage governmental processes.

The event came in line with Madayn’s attempts to attain its key objectives which include pulling in global investments into the Sultanate while localising the national capital; thus, encouraging the private sector to realise sustainable economic and social development; attaining environmental sustainability, and also help in creating new job opportunities for the national factions and encourage company registration in Oman.

Newsletter, U.A.E

How can you Retain 100% Foreign Ownership by Forming a Branch Company in the U.A.E.

October 21, 2019

Foreign ownership in UAE has been a topic of discussions, especially after the FDI Law. But somehow, most of the companies are not aware that retention of 100 percent foreign ownership in the UAE via alternative modes, especially through establishing a branch of a Foreign Company where the ownership of the branch company is vested fully or 100 percent with the Foreign Company.

Article 327 of the UAE Federal Law No (2) of 2015 on Commercial Companies (“UAE Commercial Companies Law”) provides Foreign Companies with the right to function in the UAE depending only upon the provision of the law. Article 328 explains that any Foreign Company setting up its principal office or branch in UAE mainland should get a relevant license first from the representative Emirate’s or State’s governing authority. Foreign companies might not perform any activity or set up their own branch or principal office in the State without getting a license from the relevant authority after the approval of the ministry. The license would decide the activity which can be performed or practiced by the company.

As specified by Article 330, sub-article (2) of the above Law, the branch or office of a foreign company in the State to be considered as the main office of its activity in the State, and this activity would be dependent on the law’s provision which is in force in the State. As per the law, a legal person cannot perform any economic activity or form a branch office to any activity prior to getting a license to perform any such activity provided by the relevant authorities in the Emirates. The Department of Economic Development (“DED”) determines the relevant license pursuant to which any individual or legal party can perform economic activities in the UAE.

It is important to note that the license that a company would get and the business form of such a company are two separate aspects; but both are administered independently by the DED, which is accountable to issue the apt license which is in accordance with the pertinent trading activity.

Basically, the aim of the branch office is to endorse and market the products and/or services of the Parent Company, conduct the same business as the Parent Company is conducting, perform the transactions and complete the agreements under the name of the Parent Company, and finally provide services to the customers located in the UAE. It is important to note that a branch company is not permitted to conduct in any activities which are different from its Parent Company, thus, no new or different activity than that of conducted by the Parent Company can be undertaken by the branch company. But, in case the Parent Company does 10 activities, then the branch company is allowed to either undertake all or pick any of those.

After taking the license from the Economic Department, for practicing permanent or temporary activities, the branch company needs to also get the Chamber of Commerce registration.

Article 1 of the Ministerial Decision No. 377 2010 says, ” The Manual of license procedures for branches and offices of firms incorporated abroad and free zones in the UAE attached to the Decision shall be adopted”, thus, before getting the initial approval for setting up a branch of a foreign company within UAE, the DED would need an approval of the Ministry of Economy as a precondition.

Companies that want to conduct business, go in for company formation in Dubai or open their office here would need to obtain a license from the relevant authority in the Emirate and also obtain a certificate of entry at the Ministry. Article 329 of the UAE Commercial Company Law permits foreign companies the right to set up their own offices or branches in the UAE as long as their agent is a UAE national. In case the agent is a company, then it should be a UAE company and all their partners should necessarily be UAE citizens.

To conclude, for opening a foreign branch within the UAE assures 100 percent foreign ownership. However, the branch company is only allowed to conduct similar activities as that of the Parent Company. Also, the parent company remains accountable for the branch’s obligations or debts and is needed to entitle a representative for managing the branch’s affairs.

Newsletter, Singapore

What are the Essentials for Incorporating a Company in Singapore?

October 21, 2019

Singapore is a thriving market to set up a new business in; however you should ensure that you are aware of all the obstacles you might face in this process and know minute details of how to start a business in Singapore.

For companies who are wanting to expand their operations in the Asia Pacific region, Singapore happens to be an attractive and top choice. It is known for the ease of doing any business, attractive tax rates and related incentives, availability of skilled workforce, country’s stability and steady economic growth. So, if you are thinking of setting up your company there, the first step should be to get the incorporation process right from the start, thus, avoiding any delays that could cost a lot.

The key steps to incorporate a company in Singapore

There are three key steps for company formation in Singapore.

1.Name reservation: This can be done in just an hour or so, if you have an approved name reserved for four months starting from the application date (please note that no extension to this time period is allowed). To avoid any chance of rejection, it’s best to check the Accounting and Corporate Regulatory Authority’s (ACRA) database first to avoid identical names to any existing companies. In case your company is a part of some group, then a letter of appeal has to be submitted for using a similar naming to the other group companies, though the appeals process can end in a delay of up to two months. Same kind of delays could be incurred in case the name has certain words like ‘bank’, ‘law’, ‘finance’, ‘school’ and ‘media’ as other government authorities would be required to approve the use of the term. You would then need to submit all the details of the directors and shareholders when you apply for a name, so you should have already decided this.

2.Appointment of a minimum of one resident director:The director should be at least 18 years of age, of full legal capacity and must be a permanent resident, a Singapore citizen, and an Employment Pass holder (EP) or Entry pass holder, though an EP has to first get a letter of consent from the Ministry of Manpower prior to becoming a company director. This individual should also not have been disqualified anytime previously from acting as a director.

Company registration process: The application can be submitted through the ACRA online filing system. After submission of your registration documents, an instant approval from ACRA would be given to you through an email and the incorporation procedure would usually be effective on the same date. In some exceptional cases, ACRA might perform random background checks specifically on the information submitted during company registration process, which could further delay the registration by around two months. A company might opt for a preferred registration number out of a list of reserved registration numbers, which comes for a fee. This can be done during the company’s incorporation or registration. ACRA would offer a complimentary business profile after they incorporate the company.

Newsletter, U.A.E

Dubai Gets the tag of ‘City of the Future’ in terms of Investments

October 21, 2019

His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, whose the Crown Prince of Dubai and Chairman of the Dubai Executive Council, stressed that foreign direct investment (FDI) flows coming into Dubai this year have continued to grow significantly, thus making the emirate one of the top three international FDI locations.

This accomplishment was made possible by the vision and guidance of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, Sheikh Hamdan said.

He also said that such a success shows the confidence of the local and international investor community in Dubai’s tactical plans and foresight for the future.

In this regards, Sheikh Hamdan had released orders to hold the fifth edition of Dubai Investment Week (DIW 2019) that started from September 29 to October 3, which had the theme ‘Investing in the City of the Future’. He said this week-long programme of multiple events would demonstrate how Dubai has changed the challenges that future cities could face into opportunities for their growth, innovation and partnership to cope up with the requirements of the present and spearhead the world as the sustainable and smart city of the future.

“Dubai leadership’s push in adopting Fourth Industrial Revolution technologies and creating regulatory frameworks for new business models have further developed Dubai’s investment environment and opportunities as well as its human capital, and hard and digital infrastructure advantages,” said Sheikh Hamdan. He also mentioned that today, Dubai has become a preferred international FDI destination when it comes to artificial intelligence or robotics.

Sheikh Hamdan bin Mohammed acclaimed the role of Dubai Investment Week, which was organised by the Dubai Investment Development Agency (Dubai FDI), in augmenting the promptness of the investment atmosphere and investor confidence in the emirate, while stressing the current and upcoming investment prospects in the strategic and developing economic sectors in the emirate.

He also acclaimed the growth attained in facilitating investments, company registration in Dubai and aiding the success and growth of businesses through introducing new and more innovative legislation and services.

Sami Al Qamzi, who is the director-general of Dubai Economy, mentioned that DIW 2019 edition has been brought out at a time when the UAE’s and Dubai’s investment environment is seeing many positive developments

This could be a good time for company formation in Jafza and company formation in DMCC

India, Newsletter

Corporate Tax Rates reduced in India – A Revolutionary Move to Revive the Economy

October 21, 2019

India’s economy has been little slow in the first quarter of this fiscal year supplemented with a drop in consumer demand and also investment. The GDP’s slowdown affected the investments in various sectors such as automobile, real estate, manufacturing, etc. and these sectors are also going through a slump. The Indian Government is quite aware of this current situation of the economy and has made efforts to give a few economic boosters a couple of weeks back. However, now the government has announced a great benefit for the Indian Corporate sector. On 20 September 2019, the Indian Government has passed a Taxation Laws (Amendment) Ordinance, 2019 which is meant to amend the Finance (No. 2) Act, 2019 to offer effect to the corporate tax cuts, elimination of super-rich surcharge which was levied on capital gains tax, etc. The main takeaways from this announcement and ordinance are as mentioned below:

The takeaways

1.Decrease in Corporate Tax to 22% certain for domestic companies:

Reduction in corporate tax to almost 22% (effective tax rate comes to 25.17% after surcharge and cess) applicable for all domestic firms from Financial Year (FY) 2019-20.
This rate will be applicable subject to the following:
- Company is not availing any exemptions or other incentives, which inter-alia includes:
- Any SEZ benefits
- Extra depreciation allowance
- Deduction for investments made in new plant and/or machinery specifically in notified backward states
- Deduction given for tea, coffee, rubber development allowance or in site restoration fund
- Expenditure made on account of scientific research, skill development project, agricultural extension project, etc.
- Specific Tax Holidays given under Part C of Chapter VI (such as profit link deduction for SEZ development, undertakings in particular states or areas, housing projects, etc.). But, deduction in regards to employment of new employees given u/s 80JJAA would still continue to be given.
Company would not set off any loss which is carried forward from the previous year in case such loss is attributable to any of the exemptions or incentives that are mentioned above in the current or following year.
Tax return should be filed by the firm within the prescribed due date.

Please note that the above-mentioned concessional tax rate is at a discretion of the taxpayer, that is, they could either go for the concessional tax rate of 22% or have an option of continuing with the existing tax rate of 25%/30% with continuing the tax incentives/exemptions that are provided above. In case the option of a concessional tax rate of 22% is exercised even once in any year, then it cannot be withdrawn subsequently.
Companies which are not opting for applying the concessional tax rate could carry on paying at the current corporate tax rate and continue claiming the exemptions or incentives. After the tax holiday period or exemption expires, the firms can choose the concessional rate.

The entity opting for 22%, would not be liable for Minimum Alternate Tax (MAT).

2.Decrease in Corporate Tax to 15 % for some particular manufacturing firms:

The concessional corporate tax rate applicable for a new manufacturing company is now reduced to 15% (at an effective tax rate of 17.01%), and is subject to the below-mentioned conditions:
Company should be incorporated after 1 October 2019 and should have started production on or before 31 March 2023.

The company should be involved in manufacturing or production, or research with regards to such article produced.
All the terms and conditions mentioned for taking this 22% rate (specified in point 1) would be applicable.
Such firms should not have been formed by splitting any already existing businesses or by using previously used plant or machinery or utilise any building that was earlier used as a hotel or convention centre.

Additionally, provisions of Domestic Transfer Pricing would be applicable for the transaction which happens between a new manufacturing firm and all the related parties.
Please note that the above-mentioned concessional tax rate is at a discretion of the taxpayer and after the option is exercised in any year, it cannot be withdrawn subsequently.
The company which is going for 15% tax rate, would not be eligible for Minimum Alternate Tax (MAT).

3.Decrease in MAT rates:

MAT has been cut from 18.5 % to 15%, in case of the firms that do not choose to pay tax under these concessional tax rates.

4.Rollback of increased surcharge:

The increased surcharge which was announced in the Finance Act 2019 in regards to individuals, Association of Person (FPIs would get covered here), HUF, etc. on income going above some stated limit has been relaxed in terms of capital gains resulting from sale of equity share in a firm or a unit of a business trust which is eligible for securities transaction tax (STT), or a unit of an equity-oriented fund.
Increased surcharge which was introduced in the Finance Act 2019 would also not be applicable to Foreign Portfolio Investors (FPI’s) while a sale of any security including derivatives is done.

5.Respite from Buy-back tax:

Listed companies which have announced buy-back of shares earlier than July 5, 2019, would not be charged with any buyback tax.

The FM has also talked about increasing the scope of Corporate Social Responsibility (CSR) spending of the usual 2% to other beneficial areas. The CSR can now be consumed on incubators which are funded by central or state governments, or any agencies or PSU of central or state government, and also publicly-funded universities, National Laboratories, IIT’s, and any Autonomous bodies who are involved in research in fields of science, engineering, technology and medicine.

India, Newsletter

India: Government woos global investors and opens doors to new FDI

September 11, 2019

The government recently allowed foreign direct investment (FDI) in the sectors of coal mining, digital media, and contract manufacturing while simplifying rules for all the single-brand retailers to make it more attractive and appealing for global brands like Apple, Uniqlo and IKEA to come and invest in the country.

Additionally, the finance ministry has informed about new rules that allow 100 percent FDI for insurance intermediaries. These FDI amendments are in line with the recent budget announcements, though a ruling on aviation is still awaited. “The changes in FDI policy will result in making India a more attractive FDI destination, leading to benefits of increased investments, employment and growth,” said Piyush Goyal, the commerce and industry minister.

This simplification of FDI norms has been done days after India’s finance minister Nirmala Sitharaman introduced a draft of new measures to offer a boost to the slowing economy. These steps come amidst a predicted slowdown in the flow of global FDI and are aimed at encouraging investment, particularly in new ventures, provided that domestic firms are denying to pump in money for expanding facilities, quoting the main reason as excess production capacity.

At least two of these amendments are intended for more high-profile businesses. Thus, simpler rules in single-brand retail are basically aimed at supporting international players like Japanese retailer Uniqlo, who can now hope to accept online sales for the next couple of years while it opens its retail outlets. The Swedish household goods and furniture retailer IKEA, for example, could not commence online sales till the time they opened their first store in Hyderabad city recently.

Likewise, by permitting 100 percent FDI in the field of contract manufacturing, the government is hoping to pull in investment from big organizations like Apple that has stayed away from India so far and has been demanding some special sops. Though the government eased rules in the past too for the iPhone manufacturer, by decreasing the sourcing burden, this American giant has not agreed to open stores in the country. In addition, some rules were simplified recently to treat all the exports from India as part of the 30 percent domestic sourcing obligation, Piyush Goyal announced.

The minister also mentioned that the twin moves are basically meant to make Indian companies a part of the international value chain especially at a time when global players are thinking of expanding their footprint much beyond China and setting up in other markets as well.

Various analysts are of the view that the amendment in the rules for the coal mining sector, where 100 percent FDI was permitted in case of captive mines only, is now expected to open the entry for global giants like Shenhua Group, BHP Billiton and Anglo American Plc. Now, these organizations would be permitted to sell the coal that they mine besides the process of handling, separation, washing the coal and crushing it. In the last five years, the government led by Narendra Modi has simplified the rules for the coal sector, and has also moved to a method of auctioning blocks after a Supreme Court order. These steps are intended to tackle with the coal shortages in India, which happens to be among the biggest global producers of the mineral.

Newsletter, U.A.E

Over 2,200 Indian companies join Dubai Chamber in H1 2019

September 11, 2019

India is Dubai’s second-largest trading partner due to bilateral non-oil trade between the two countries. So if you are thinking of new business setup in Dubai, then this is surely a good idea.

Approximately 2,208 Indian firms joined as new members in Dubai Chamber of Commerce and Industry (DCCI) in the very first six months of this year. This marked an almost 18 percent increase as compared to same time period in last year and also highlighted a mounting confidence in the emirate as an investment hub.

Indian companies accounted for about 24.4 percent of new member firms that got registered with DCCI in the time period between January to June 2019, thus bringing the total figure of Indian members to 38,704.

The latest numbers were released by the DCCI before the official visit of Indian Prime Minister Narendra Modi to the UAE last week.

Hamad Buamim, the President and CEO of DCCI, said that the rise in Indian members joining the Chamber ensues important developments that have reinforced the India-UAE relationship in the past few years, which includes various high-level visits and meetings, strategic cooperation agreements being signed by both the governments, a stable upsurge in bilateral trade and the flow of investment and expansion of direct flights. All these steps taken by both the countries have pulled in more people to go in for Dubai company formation.

India is still Dubai’s second-largest trading partner as it clocked a figure of $31.6 billion (116 billion UAE dirhams) worth of bilateral non-oil trade last year. As per data, currently, the bilateral trade is dominated by mineral products and base metals, precious metals and pearls.

Recent DCCI analysis suggested that there are many areas where India could potentially enhance its exports to the UAE such as pharmaceuticals, vehicles, electrical machinery, apparels and clothing accessories.

Besides that, printed books, carpets, natural pearls and textiles were recognised as high-potential products that could be exported from the UAE to India in the near future.

This year, according to data, almost 9,062 firms joined DCCI as new members in the H1 of 2019, thus marking a year-over-year (y-o-y) increase of approximately 22 percent and getting the organisation’s total membership 240,000 plus.

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