Starting a Business outside India

Table of Contents

1. List of major overseas investments by Indian companies
2. Laws /Authority governing Setting up Business outside India
3. Issues In Choosing Location Outside India
4. Recent initiatives for Setting up a Business in New Zealand
5. Recent initiatives for Setting up a Business in Singapore
6. Recent initiatives for Setting up a Business in Hong Kong SAR, China
7. Recent initiatives for Setting up a Business in New York City

1. List of major overseas investments by Indian companies

1. 1. Reliance Industries Ltd. (RIL) is going to invest US$ 25 million in Israel-based Jerusalem
   2. Innovation Incubator (JII) which will focus on start-ups working in the field of big data, analytics, Internet of Things and other similar areas.
   3. Adani Enterprises Ltd. has announced the final approval of the company’s board to proceed with the US$ 16.5 billion worth Carmichael mine and rail projects in Central Queensland, Australia which would be one of the largest single infrastructure and job creating developments in Australia’s recent history.
   4. Adani Enterprises has announced plan to develop 1,000 megawatt (MW) of solar power projects in Australia over the next five years.
   5. Intas Pharma has announced purchase of two companies in UK and Ireland, Actavis UK Ltd. and Actavis Ireland Ltd., from Israeli pharma major Teva Pharmaceutical Industries Ltd. for an enterprise value of GBP 600 million.
   6. India-focused private equity firm Everstone Group through its Singapore arm Everise Services has agreed to buy C3, a US-based global CRM solutions provider for an estimated deal value of US$ 150 million.
   7. India’s third largest software services firm Wipro will be spending US$ 500 million to acquire US-based cloud services firm Appirio.
   8. Sun Pharmaceutical Industries Ltd., India’s largest drug maker, has entered into an agreement with Switzerland-based Novartis AG to acquire the latter’s branded cancer drug Odomzo for around US$ 175 million.
   9. WNS Global Services the Mumbai-based business process management company has announced its plans of acquiring Denali Sourcing Services a US-based business process outsourcing company for US$ 40 million.
   10. Aurobindo Pharma has bought Portugal based Generis Farmaceutica SA a generic drug company, for EUR 135 million.w
   11. Motherson Sumi Systems Ltd. an automobile components manufacturer has acquired Finland-based truck wire maker PKC Group Pic for EUR 571 million.

2. Laws /Authority governing Setting up Business outside India

2.1 Reserve bank of India

Reserve Bank of India has started issuing Master Directions on all regulatory matters beginning January 2016.

Master Directions consolidate instructions on rules and regulations framed by the Reserve Bank under various Acts including banking issues and foreign exchange transactions.
The process of issuing Master Directions involves issuing One Master Direction for each subject matter covering all instructions on that subject.

Master Directions will be updated suitably and simultaneously whenever there is a change in the rules/regulations or there is a change in the policy.

All the changes will get reflected in the Master Directions available on the RBI website along with the dates on which changes are made.
Explanations of rules and regulations will be issued by way of FAQs after issue of the Master Directions in easy to understand language wherever necessary.

2.2 Master Direction – Direct Investment by Residents in Joint Venture (JV)/Wholly Owned Subsidiary (WOS) Abroad

Transfer of technology and skill, sharing of results of R&D, access to wider global market, promotion of brand image, generation of employment and utilisation of raw materials available in India and in the host country are other significant benefits arising out of such overseas investments.

Important drivers of foreign trade through increased exports of plant and machinery and goods and services from India and also a source of foreign exchange earnings by way of dividend earnings, royalty, technical know-how fee and other entitlements on such investments.

In keeping with the spirit of liberalisation, which has become the hallmark of economic policy in general, and Foreign Exchange regulations in particular, the Reserve Bank has been progressively relaxing the rules and simplifying the procedures both for current account as well as capital account transactions.

3. Issues in choosing a location outside India

3.1 Geographical Location of Business

1. 1. Infrastructure (ports, airports, storage, specific storage types – such as cold-storage, secure storage).
   2. Access (transportation of goods, materials and personnel).
   3. Relevance to supply-chain (raw material sourcing, processing, despatch of finished produce).
   4. Availability of talent pool for productions (labour), services and management.

3.2 Economic Aspects

1. 1. Ease of doing business: entering, establishing, restructuring and closing the business, visa availability.
   2. Cost of doing business: return on investment computations vis-à-vis comparable locations.
   3. Laws relating to labour.
   4. Laws relating to taxation : investment allowances, subsidies, distribution of profits, repatriation of profits, withholding taxes, existence of double-taxation avoidance agreements, information sharing requirements such as FATCA, TRC, etc.

3.3 Political Aspects

1. 1. Friendly country, MFN status.
   2. Long-standing and established legislative precedents with companies going through regulatory recourse.
   3. Their relations with nearing countries and neighbours and your country.

3.4 Social Aspects

1. 1. Trade bodies, interaction between commercial entities of both nations.
   2. Expatriate-friendliness of the nation for relocating key employee personnel.

3.5 Technological Aspects

Intellectual property protection: create, maintain and extract IP at the location or provision thereof from another location to the nation with free entry and egress.
Power, communication, telecom – availability, quality and cost issues like infrastructure, geography, time zone, political considerations/conditions, safety of investments, economic policy and stability of the country, culture and language have a critical bearing on the strategy for globalization.

4. Recent initiatives for Setting up a Business in New Zealand

In the Year 2014

Enforcing Contracts: New Zealand made enforcing contracts easier by improving its case management system to ensure a speedier and less costly adjudication of cases.

In the Year 2015

Getting Credit: New Zealand improved access to credit information by beginning to distribute both positive and negative credit information.

In the Year 2016

Getting Electricity: The utility in New Zealand reduced the time required for getting an electricity connection by improving its payment monitoring and confirmation process for the connection works.

In the Year 2017

Paying Taxes: New Zealand made paying taxes easier by abolishing the cheque levy. New Zealand made paying less costly by decreasing the rate of accident compensation levy paid by employers. Payment of Taxes becomes more costly by raising property tax and road user levy rates.

In the Year 2018

Paying Taxes: New Zealand made paying taxes easier by improving the online portal for filing and paying general sales tax.

Enforcing Contracts: New Zealand made enforcing contracts more difficult by suspending the filing of new commercial cases before the Commercial List of the High Court of New Zealand during the establishment of a new Commercial Panel.

In the Year 2019

Starting a Business: New Zealand made starting a business less expensive by reducing the fees for name search and company incorporation.

5. Recent initiatives for Setting up a Business in Singapore

In the Year 2017

Dealing with Construction Permits: Singapore made dealing with construction permits easier by streamlining procedures and improving the online one-stop shop.

Registering Property: Singapore made it easier to transfer a property by introducing an independent mechanism for reporting errors on titles and maps.

Paying Taxes: Singapore made paying taxes easier by introducing improvements to the online system for filing corporate income tax returns and VAT returns. At the same, the social security contribution rate paid by employers increased and the rebate of 30% on vehicle tax expired.

In the Year 2018

Trading across Borders: Singapore made exporting and importing easier by improving infrastructure and electronic equipment at the port.

Resolving Insolvency: Singapore made resolving insolvency easier by establishing a new scheme of arrangement procedure with features of the debtor-in-possession reorganization regime and introducing provisions applicable to pre-packaged restructurings.

Employing Workers: Singapore adopted legislation that requires employers with more than 10 employees to notify the Ministry of Manpower if five or more employees are retrenched within any six-month period.

In the Year 2019

Starting a Business: Singapore made starting a business easier by abolishing the corporate seals.

Enforcing Contracts: Singapore made enforcing contracts easier by introducing a consolidated law on voluntary mediation.

In Year 2020 Dealing with Construction Permits: Singapore made dealing with construction permits easier by enhancing its risk-based approach to inspections, improving public access to soil information and streamlining the process to obtain a construction permit.

6. Recent initiatives for Setting up a Business in Hong Kong SAR, China

In Year 2015

Starting a Business: Hong Kong SAR, China, made starting a business more difficult by increasing the registration fee.

Protecting Minority Investors: Hong Kong SAR, China, strengthened minority investor protections by introducing requirements for directors to provide more detailed disclosure of conflicts of interest to the other board members.

In the Year 2016

Starting a Business: Hong Kong SAR, China, made starting a business easier by eliminating the requirement for a company seal.

Getting Electricity: The utility in Hong Kong SAR, China, made getting electricity easier by streamlining the process for reviewing connection application and for completing the connection works and meter installation.

Getting Credit: Hong Kong SAR, China, improved access to credit by implementing a modern collateral registry.

Paying Taxes: Hong Kong SAR, China made paying taxes easier and less costly for companies by simplifying compliance with the mandatory provident fund obligations and increasing the allowance for profit tax resulting in increasing the maximum contribution to mandatory provident fund and reduced the property tax waiver.

In the Year 2017

Starting a Business: Hong Kong SAR, China made starting a business less costly by reducing the business registration fee.

Getting Electricity: Hong Kong SAR, China, streamlined the processes of reviewing applications for new electrical connections and also reduced the time needed to issue an excavation permit.

In the Year 2018

Starting a Business: Hong Kong SAR, China-made starting a business more expensive by reintroducing the business tax fee.

Registering Property: Hong Kong SAR, China, improved the quality of its land administration system by enhancing its reliability and establishing a complaints mechanism.

In the Year 2019

Getting Electricity: Hong Kong SAR, China, made the process of getting an electricity connection faster by establishing a specialized task force to undertake the trenching, excavation and reinstatement of the underground cable.

In the Year 2020

Dealing with Construction Permits: Hong Kong SAR, China, made dealing with construction permits easier by enhancing its risk-based approach to inspections.

7. Recent initiatives for Setting up a Business in United States of America (USA) | New York

In the Year 2011

Paying Taxes: In the United States the introduction of a new tax on payroll increased taxes on companies operating within the New York City metropolitan commuter transportation district.

In the Year 2015

Starting a Business: In the United States starting a business became easier in New York City thanks to faster online procedures.

In the Year 2018

Employing Workers: The United States – Los Angeles increased the maximum paid days of sick leave a year.

In the Year 2019

Employing Workers: The United States (New York City) changed regulations pertaining to parental leave.

In the Year 2020

Starting a Business: The United States made starting a business easier in California by introducing online filing of the statement of information for limited liability companies. This reform applies to Los Angeles.

Paying Taxes: The United States made paying taxes less costly by decreasing the corporate income tax rate. This reform applies to both New York City and Los Angeles.

Enforcing Contracts: The United States (Los Angeles) made enforcing contracts easier by introducing electronic filing and electronic payment of court fees.