Indian Economy Guide: Investment in India

Investment Climate in India

“India has among the highest return on foreign investment”
US Department of Commerce

“India is among the three most attractive FDI destinations of the world”
A. T. Kearney -FDI Confidence Index 2005

Any country across the globe aspiring to become world leader in business, can hardly afford to miss the investment opportunities in India. With the population crossing one billion marks, this country offers huge market and reservoir of cheap and skilled labor for every enterprise. According to World Bank and many other financial institutions of the world, India would overtake many of the developed nations by 2030Investment opportunities in India today are at acme. Backed by its natural strength, India offers investment opportunities in excess of $500 billion in diverse sectors over the next five years. Today, in an era of globalization, the world’s largest democracy has come to the forefront as a global resource for industry in manufacturing and services.

Why Invest In India?
“By 2032 India will be among the three largest economies of the world” - BRIC Report

The Case is simple. Investing in India is profitable and the reasons are very simple to understand. Some of the reasons can be highlighted below:

• India is largest democracies, and largest and fastest growing economies

• Geographically surrounded by seas from the three sides thereby giving access to the vast domestic and South Asian market.

• India has Strong consumer base. Nearly 300 million people constitute the market for branded consumer goods. This number is estimated to rise by 8% per annum. Consumer good demand is also rising by 12% per annum.

• Procedure for foreign investment is simple. In sixty categories of Industries, permission is granted through automatic route.

• The country is full of skilled manpower and qualified professionals and that too at competitive cost.• Comprises one of the largest manufacturing sectors in the world. Manufacturing is done in almost all the sectors.

• Has rich manpower resource including scientists, engineers, technicians and managers.• Consist of rich base of mineral and agricultural resources.

• Has good market economy infrastructure

• Sound financial sector.

• Strong capital market listing more than 9,000 listed companies with market capitalization of US$ 154 billion (March, 1996)

• Sound R&D infrastructure and technical and marketing services.

• Policy is framed to provide all benefits to the investors. Policy gives complete freedom of entry, investment, location, choice of technology, production, import and export.

• Good and balanced package of fiscal incentives.• Legal and accounting system is sophisticated and world class

• Majority of the population can speak, read and understand English very well.

• Full convertibility of rupee Current Account at market determined rate.• Full repatriation of capital, technical fee, royalty and dividends.

• Investing company can use its brand name freely

• Exemption from income tax on profits derived from export of goods.

• Export Oriented units and units in Export Processing ones.

• Corporate Tax applicable to the foreign companies of a country, with which agreement for avoidance of Double Taxation exists, can be one which is lower between the rates prevailing in any one of the two

• Investors are completely exempted from Customs Duty on industrial inputs. They are also provided sops in the form of Corporate Tax Holiday for five years for 100 per cent countries and the treaty rate.

• Parliamentary democracy is deep rooted in the country.