Doing Business in India - International Enterprise Singapore/media/IE Singapore/Files/Events... · Doing Business in India ... • Gurgaon: one"of"Delhi's"major"satellite"ci,es"and"

Those who do not know the lay of the land cannot manoeuvre their forces. Those who do not use local guides cannot take advantage of the ground.

Sun Tzu, The Art Of War

Doing Business in India International Enterprise Singapore iAdvisory Workshop

17 May 2016

© Orissa Interna,onal 2

ABOUT ORISSA INTERNATIONAL

OUR BUSINESS IS HELPING COMPANIES ENTER NEW MARKETS

•  Established in 1997

•  Over 15 export promo,on agencies from around the world refer their companies to us for trade advisory services

•  Headquartered in Singapore, with in-‐country trade consultants in Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines

•  A strong track record in guiding companies with their ini,al entry into a new market

•  Prac,cal recommenda,ons grounded in actual opera,ng experience

•  Enter new markets much faster than if you aMempt it on your own


ABOUT ORISSA INTERNATIONAL

OUR KEY SERVICES

Iden9fy poten9al agents, distributors, partners or customers in new markets

Arranging pre-‐screened business matching mee9ngs

& in-‐market visits

On-‐going marke9ng support to help clients grow their

exis9ng market

Gathering export market research specific to your

business and target markets

Establishing a direct presence in the market & related market entry services


OUR UNIQUE SELLING PROPOSITION

INCREASE THE EFFICIENCY OF YOUR BUSINESS EXPANSION

Business solu9ons that are customized to your specific needs

In-‐country trade specialists to work hand-‐in-‐hand with you at every stage

Direct presence in key markets across Southeast Asia

Come to market only aWer we iden9fy and qualify

prospec9ve partners or customers

Con9nued follow-‐up with your prospects

even aWer you leave the country


OUR UNIQUE SELLING PROPOSITION

MULTI COUNTRY – MULTI SECTOR

ICT Energy

FMCG

Medical

Environment

Manufacturing

Infrastructure

Aerospace

•  Our dis,nc,ve proposi,on stems from our experience working with a diverse set of clients in a variety of industry ver,cals.

•  This has allowed us to acquire

knowledge on various sectors and geographies over the past 18 years, while becoming familiarized with their unique characteris,cs


OUR CLIENTS

TRADE PROMOTION AGENCIES

OUR CREDENTIALS U.S. Europe

We have been iden,fied by a US state government export as one of their best export consultants globally based on feedback they received from companies they referred to us

We have received the highest level accredita,on by Swiss Global Enterprise for the quality of our work helping Swiss exporters seeking to enter the Southeast Asian markets

© Orissa Interna,onal

INDIA – AN OVERVIEW

SINGAPORE-‐INDIA TRADE OVERVIEW

KEY REGIONS, KEY CITIES, KEY SECTORS

E-‐COMMERCE IN INDIA

TRYING TO MAKE SENSE OF THE MARKET

WHY INDIA AND WHY NOW?

MARKET ENTRY


•  Economy growing at 7% and is expected to grow over 8% shortly

•  Infla,on is manageable (around 5%) and fiscal deficit under control

•  Domes,c demand is seeing an up,ck a]er a 2-‐year lull

•  Infrastructure spend is growing by 20% over previous year

•  There is a strong intent and push by the government to ra,onalize tax structure

•  Key growth sectors are aMrac,ng interna,onal interest

OVERVIEW OF INDIA

SOME MACRO HIGHLIGHTS


OVERVIEW OF INDIA

SOME MACRO HIGHLIGHTS

Source: IMF WEO database (October 2014) for 2014 es;mates, PwC projec;ons for 2030 and 2050


OVERVIEW OF INDIA

INDIA’S MIDDLE CLASS



ONE COUNTRY, 29 STATES, 18 LANGUAGES, MANY DIALECTS

•  There is no ‘single’ Indian market, but many different markets.

•  Market segmenta,on by: o  State o  City o  Race o  Geography o  Income Bracket o  Industry


Maharashtra is India’s leading industrial state contribu,ng 15% of na,onal industrial output and over 40% of India’s revenue

Key industries – petrochemicals; oil and gas; automo,ve; pharmaceu,cals; biotechnology; financial services; commercial services; electronics; media and entertainment; IT and ITeS and tex,le industries.

Major ci9es

•  Mumbai: the capital of Maharashtra and the financial capital of India, housing the headquarters of major banks, financial ins,tu,ons, insurance companies and leading corporate houses

•  Pune: the 2nd biggest city – the leading automo,ve, engineering, educa,on and IT hubs


MAHARASHTRA OVERVIEW

Maharashtra

Area: 307,731 km2

Popula9on: 112.37 million

State GDP: US$ 265 billion


Distribution of Population by Age-‐group (Per Cent) (2011)

Urban Age Group Rural

Below 1010–1920–3940–5960–79

80 and above

18.9

19.4

31.5

19.7

9.4

1

16.60

17.10

37.30

21.00

7.20

0.60


MAHARASHTRA ADDRESSABLE MARKET

Sources: Census of India, 2001; 2011 | ibef.org Industrial Development & Economic Growth | Top FDI Des;na;ons – EY’s AVrac;veness Survey

14.8% Mumbai’s % share

in number of projects 2007-‐12

FDI



MAHARASHTRA OPPORTUNITIES

Major Industry Opportuni9es Complement exis9ng industries •  Ex. Components manufacturing to serve the automo,ve

industries and Industrial sector. •  IT (hardware & so]ware) and office products •  Solu,ons services to manufacturing (e.g. IT solu,on services,

Health care) Growing consumer base with the rise of middle income popula9on •  Middle income sectors are growing that will surely drive the

demand for F&B, FMCG, and consumer retail products Service Sector •  An excellent place for R&D, engineering, financial, and IT

services due to the presence of skilled labor force •  A financial and commercial hub with enough supply of skilled

workforce. •  Ex. Outsourcing, shared services, IT Services, and Consul,ng. Other poten9al opportuni9es •  Educa,on, training and skill development •  Research: collabora,on and commercializa,on •  Infrastructure; Township developments, ports and water

front development •  Water, waste water and waste management

Leader in Industrial Sector in

the country

Gateway for imports into Western India

Accounts for over 30% of India’s so]ware exports

Maharashtra Financial

and Commercial Hub of India

Home to R&D

ins,tutes and

centres of excellence

Among the top 2

des,na,ons for FDI in India


Delhi is one of the largest ci,es of India and shares borders with its neighboring states of UMar Pradesh and Haryana. Delhi has been the center of economic, poli,cal, and cultural ac,vi,es in the county. Due to its loca,on, connec,vity, and cultural heritage the city has been the primary tourist spot and posses an aMrac,ve market.

Key industries – Banking, Financial Services, & Insurance (BFSI), Agricultural & processed food, Construc,on and Real Estate, IT & ITeS, and Tourism

Major ci9es

•  New Delhi: the capital of India and the seat of the execu,ve, legisla,ve and judiciary branches of the Government of India, and also one of India’s largest commercial and financial centres.

•  Gurgaon: one of Delhi's major satellite ci,es and part of the NCR. It is also the IT hub & centre of various BPO companies, and home to the local offices of 250 Fortune 500 companies


DELHI OVERVIEW

Delhi

Area: 1,483 km2


GDP: US$ 75 billion




Below 1010–1920–3940–5960–79

80 and above

20.7

20.7

37.3

15.7

4.9

0.5

17.90

19.10

38.30

18.70

5.50

0.50


DELHI ADDRESSABLE MARKET


16.1% New Delhi/NCR’s % share

in number of projects 2007-‐12 FDI



DELHI OPPORTUNITIES

Major Industry Opportuni9es Electronics •  Semiconductors and Electronic component Supplier for emerging

consumer electronics segment •  IT (hardware & so]ware) and office products Huge Consumer base •  E-‐commerce (i.e., online store, app development) •  Food & Beverage, FMCG, and other consumer retail products Service Sector •  Around 30% of the workforce sector is qualified for engineering,

medicine, law, and consultancy professions. •  Highly qualified workforce and a major hub for IT enabled services

and E-‐commerce •  Ex. Outsourcing, Shared Services, IT Services, and Consul,ng Hospitality and Tourism •  Hotels, Restaurants, Travel agencies, leisure ac,vi,es, recrea,onal,

historical and cultural places to serve business and leisure tourist Other poten9al opportuni9es •  Real Estate, Property, and Construc,on •  Research partnerships with industry and educa,onal ins,tu,ons •  Agriculture commodi,es, hor,culture, dairy and agribusiness (e.g.

milk market is huge in NCR) •  Water management and treatment •  Educa,on, training and skill development

A tourist

des,na,on and also the tourist gateway to North India

Fast growing economy and a huge consumer market

Home to major Indian

and Interna,onal Companies

Delhi Poli,cal Center of India

Largest property & property

development market

Major hub for IT

enabled services and e-‐commerce


Tamil Nadu is the 3rd largest state contribu9ng to India’s GDP and is a manufacturing powerhouse of India

Key industries – manufacturing; heavy commercial vehicles; automo,ve and auto components; electronics; tex,les; healthcare; IT & ITeS; leather; chemicals; petrochemicals; cement; paper; steel; agro; pharmaceu,cals; tourism.

Major ci9es

•  Chennai: the capital of Tamil Nadu, with major automo,ve manufacturing and has been dubbed as the “Detroit of India”.

•  Coimbatore: the hub for tex,le, engineering, foundry and motor sports


TAMIL NADU OVERVIEW

Tamil Nadu

Area: 103,791 km2


State GDP: US$ 161.20 billion




Below 1010–1920–3940–5960–79

80 and above

15.7

16.4

33.9

23

10

1

14.80

15.20

36.10

23.90

9.20

0.90


TAMIL NADU ADDRESSABLE MARKET


10.1% Chennai’s % share

in number of projects 2007-‐12 FDI


TAMIL NADU OPPORTUNITIES

Major Industry Opportuni9es Complement exis9ng industries •  Components supply to manufacturing sector •  IT (hardware & so]ware) and office products •  Solu,ons services to manufacturing (e.g. IT solu,on

services, Health care) Growing consumer base with the increase of working class and tourists •  Food & Beverage, FMCG, and other consumer retail

products Product Distribu9on/Trading •  Tex,le exporta,on and distribu,on Logis9cs and Transporta9on •  Logis,cs and Transporta,on Services to serve/transport/

distribute products from manufacturing, electronic, and agricultural sector.

Other poten9al opportuni9es •  Water and waste water management •  Educa,on, training and skills development, research

partnerships

Largest number of registered factories in

India

Excellent transporta,on Infrastructure

Produces 18% of India’s

electronic output

Tamil Nadu

home to 50% of India’s machine tools

industry

Produces 19% of India’s tex,le output

One of the leading states in domes,c and foreign tourist arrivals



Gujarat is the 5th largest economy in India and accounts for 26% of India’s foreign direct investment. The state is one of the leading industrialized states and considered as the petroleum capital of India because of its large refining capacity. Key industries – engineering and automo,ve manufacturing; food and agribusiness; tex,les; gems and jewellery; minerals and mining; port and shipbuilding; chemicals; petrochemicals; oil and gas; IT; Power; pharmaceu,cals. Major ci9es

•  Ahmedabad: the largest city and the commercial hub of the state. Ahmedabad has a diversified industry base spanning educa,on, IT and research industries.

•  Surat: Gujarat’s 2nd largest city, Surat’s industry strengths are in tex,les, chemicals and diamond polishing.

GUJARAT OVERVIEW

Gujarat

Area: 196,791 km2







Below 1010–1920–3940–5960–79

80 and above

18.8

20.3

32.7

19.6

8

0.7

16.80

17.50

36.90

21.00

7.10

0.70

GUJARAT ADDRESSABLE MARKET KEY REGIONS, KEY CITIES, KEY SECTORS


$12.12B AMracted cumula,ve FDI

2000-‐2015, 2nd next to Maharashtra

FDI


GUJARAT OPPORTUNITIES

Major Industry Opportuni9es Agro and Food Processing •  Agri commodi,es, Agri business technology and

services, dairy technology, hor,culture, etc. •  Food Processing Technology Product Distribu9on/Trading •  Diamond exporta,on and distribu,on •  Agro and Dairy products exporta,on and distribu,on Logis9cs and Transporta9on •  Logis,cs and Transporta,on services to serve/transport/

distribute products from the agriculture, food processing, and mineral sectors.

Other poten9al opportuni9es •  Key entry point for LNG imports •  Manufacturing, as the state has affordable economic

zones, good infrastructure, and stable power supply •  Educa,on, training and skill development •  Waste water treatment and water technologies •  Renewable energy, bioenergy (waste to energy, landfill

gas, etc.)

the largest producer of milk and

dairy products in

India

The gateway to the land-‐locked North

India

Business-‐Friendly State in India

Gujarat

World’s largest

producer of processed diamonds

The 'Petroleum Capital' of

India

A mineral rich state



Karnataka is the 6th largest economy in India and is the IT powerhouse of India. The state boast a vibrant atmosphere in automobile, agro, aerospace, tex,le, and garment, biotech, and heavy engineering indus,ries.

Key industries – IT & ITeS, biotechnology, aerospace, engineering, telecommunica,ons, space r e sea r ch , r enewab l e ene rgy , hea l t h & pharmaceu,cal, and so]ware development

Major ci9es

•  Bangalore: the IT capital of India, Bangalore is home to the 4th largest technology cluster and the largest bio-‐cluster in the world

KARNATAKA OVERVIEW

Karnataka

Area: 191,791 km2

Popula9on: 62 million






Below 1010–1920–3940–5960–79

80 and above

17

19.1

34.3

20.8

8.1

0.7

16.30

17.40

37.50

21.40

6.90

0.60

KARNATAKA ADDRESSABLE MARKET KEY REGIONS, KEY CITIES, KEY SECTORS


15.0% Bangalore's % share

in number of projects 2007-‐12

FDI


KARNATAKA OPPORTUNITIES

Major Industry Opportuni9es Product Distribu9on/Trading •  IT and electronic exporta,on and distribu,on Growing consumer base driven by increasing middle income popula9on •  Food & Beverage, FMCG, and other consumer retail

products Services Sector •  An excellent place for IT, Electronic, Engineer, Medicine

and Allied Health services, due to the availability of talent pool plus strong IT, knowledge, and telecommunica,on infrastructure.

Other poten9al opportuni9es •  Clean/Renewable energy – solar, mini-‐hydel, wind, river

rejuvena,on, waste management, waste-‐to-‐energy, etc •  Educa,on, training and skills development •  Infrastructure – green buildings, roads, airports •  Aerospace and defense – surveillance systems, MRO,

airport infrastructure and security

Largest number of doctors, engineers, medical

technicians

Strong knowledge

Infrastructure

IT Hub of India Karnataka

Availability of talent pool

Good Telecomm-‐unica,on Services

Home to aerospace & defense R&D ins,tutes



•  A government program of India which aims to put emphasis on e-‐governance and transform India into a digitally empowered society and knowledge Economy

•  Launched in 2015, by Prime Minister Narendra Modi

Vision Areas of Digital Ini9a9ve: •  Digital Infrastructure as a Core U,lity to

Every Ci,zen •  Governance and Services on Demand •  Digital Empowerment of Ci,zens

DIGITAL INDIA

DIGITAL INDIA PROGRAMME


Programme Pillars 1.  Broadband Highways 2.  Universal Access to Mobile Connec,vity 3.  Public Internet Access Programme 4.  e-‐Governance – Reforming

Government through Technology 5.  eKran, -‐ Electronic delivery of services 6.  Informa,on for All 7.  Electronics Manufacturing 8.  IT for Jobs 9.  Early Harvest Programmes

DIGITAL INDIA

DIGITAL INDIA PROGRAMME


DIGITAL INDIA

E-‐COMMERCE TRENDS IN INDIA IN 2016

•  India has: •  More Internet users than the U.S. •  980 million mobile subscribers •  Majority below 25 years, many being

English-‐speaking •  E-‐commerce market in India is growing at an

average of 37% per year, over 2013-‐15 •  Key players include Flipkart Ltd and Snapdeal

Quick look at www.storeking.in -‐ transforming rural markets www.urbanclap.com -‐ transforming services in India


•  Mr Modi’s Smart Ci,es program aims to rejuvenate Indian ci,es with augmented urban services like potable drinking water in taps, traffic management, water and waste management, and health facili,es.

•  The smart ci,es’ purpose is to provide a sustainable landscape, drive economic growth, and improve the quality of life of residents by leveraging on technologies.

•  ICT will be the primary infrastructure of a smart city and fundamental in providing essen,al services to people.

•  In January 2016, India iden,fied the list of 20 smart ci,es for the “Smart Ci,es Mission” who are going to receive funds as they begin working to turn their city into a smart city.

•  Singapore is one of the key partners in this ini,a,ve. Singapore's SMES can contribute their experiences, for example, in so] applica,ons that they have tried and tested in Singapore, or even in area of training.

DIGITAL INDIA

SMART CITIES


DIGITAL INDIA

LIST OF FIRST 20 CITIES UNDER ‘SMART CITIES MISSION’

Source: TheHindu.com, “Govt. announces list of first 20 smart ci;es under ‘Smart Ci;es Mission’”


Significant opportuni,es for Singapore companies in India:

•  Consumer Sector: India is one of the largest consumer markets in the world, presen,ng opportuni,es for consumer-‐focused companies. Eg. Singapore food companies can take advantage of the demand for higher food quality.

•  Digital India: As India digitalises, there are loads of opportuni,es in the tech and e-‐commerce space, especially as the government is inves,ng heavily in Internet access

•  Smart Ci9es: Singapore is already working with the government of Andhra Pradesh to develop its new capital city Amarava,. The Indian government is looking to develop 100 smart ci,es, and has also set its sights on Singapore as a partner.

•  Skill Development: Singapore also established the World Class Skill Development Centre in New Delhi. Considering India’s huge requirement for skill development, the centre could act as a model for seung up of similar centres in the rest of India especially the North-‐East.

•  Manufacturing: Within the manufacturing space, these are 3 main areas Singapore companies can find opportuni,es – automo,ve components, electrical machinery/ electronic systems, and food processing.

WHY INDIA AND WHY NOW

A LAND OF OPPORTUNITY FOR SINGAPORE


MARKET ENTRY

• Start with trade through distributors – this is the fastest route into the market

• Find the right distributor that has experience selling your type of product, an established customer base and a good reputa>on

Start

• Define the scope of your business and create a business plan

• Selec>vely expand trade • Set up legal en>ty

Establish • Decide on manufacturing • Decide on JV or 100% • Get advice on markets, legal issues, taxa>on

• Ensure that you have compelling and binding agreements

Consolidate

HAVE A CLEAR STRATEGY AND A LONG TERM VIEW

•  Start with direct export from Singapore

•  Selling online & Working with partners/agents/distributors

•  Work towards establishing a direct presence in the market


MARKET ENTRY

•  No expecta>on visit – establish strategy

•  Assistance from the right trade advisory partners

•  Rules of engagement with trading partner

•  Review regularly & stay connected to market

•  Establish need for asset crea>on -‐ manufacturing

•  Choose the right loca>on and partner, if needed

•  Legally secure the business – seek legal and taxa>on advice

•  Finalisa>on of long-‐term plans

SETTING UP A BUSINESS -‐ START CAUTIOUSLY CONSOLIDATE SLOWLY

Trust… but verify •  Due diligence is key, so is pa,ence and perseverance

•  Engage qualified consultants, tax advisors, legal counsel, accountants

•  Draw from the experiences of other companies

•  Ensure that your partner is trustworthy

Secure your business •  Contracts require protec,ve clauses

•  Secure a ‘forward waiver’ – Indian JV partners to provide an ‘NOC’

•  Tax exposures – Indemni,es need to be dealt with differently

•  Restric,ve covenants – Pre-‐approvals should be condi,on precedents

•  Clear exit mechanisms / earn-‐out mechanisms

•  Veto rights & Rights to appoint CFO and audit firm


MARKET ENTRY

OPERATING IN INDIA AS AN INDIAN COMPANY

A foreign company can commence opera,ons in India by incorpora,ng a company under the Companies Act, 1956 through a JV or a wholly owned subsidiary A Joint Venture •  Forge a strategic alliance with an Indian partner •  Established distribu,on/ marke,ng set up of the Indian partner •  Available financial resource of the Indian partners •  Established contacts of the Indian partners which help smoothen the process of seung up

of opera,ons

A Wholly Owned Subsidiary •  Foreign companies can also set up wholly owned subsidiary in sectors where 100% foreign

direct investment is permiMed under the FDI policy


MARKET ENTRY

OPERATING IN INDIA AS A FOREIGN COMPANY

A foreign company can set up their opera,ons in India through a Liaison/Rep Office or a Branch Office

A Liaison/Representa9ve Office •  Not permiMed to carry on any income

earning ac,vity in India •  Expenses of liaison offices are to be met

en,rely through inward remiMances of foreign exchange from the headquarters outside India

•  Not liable to income tax •  PermiMed ac,vi,es:

•  Represen,ng parent company in India

•  Ac,ng as a communica,on channel between the parent company and Indian companies

•  Promo,ng export/import from/to India

•  Promo,ng technical/financial collabora,ons between the parent company and companies in India

A Branch Office •  Can earn income in India •  Liable to all taxes in India •  Income tax at 40% plus surcharges (effec,vely

42.23%) •  Transfer pricing provisions applicable •  PermiMed ac,vi,es:

•  Represent their parent company in India •  Undertake export/import of goods •  Rendering professional/consultancy

services, research work •  Promote technical/financial

collabora,ons between Indian companies and parent

•  Represent the parent company as a buying/selling agent in India

•  Render IT/so]ware development services in India, or render technical support to the products supplied by parent companies.


MARKET ENTRY

HOW TO GET IT RIGHT IN INDIA

•  Do your homework before visi,ng the country – Market research, understand the business •  Send your most experienced manager •  Have an open approach – Agency agreement, technology transfer, joint venture, strategic

alliance, etc. •  Regula,ons and Taxes – Complex get local advice •  Indian business people are sharp and crea,ve – Well aware of what’s going on in the world in

their par;cular sector •  Be commiMed – No low hanging fruit •  Regional approach – India is a large country •  People is everything – it’s all about rela;onships

THOSE WHO GOT IT RIGHT

•  Developed an India Strategy – Market research •  Appointed strong local partners – In different regions •  Appointed a local manager – In India •  Supported their partners – Sales literature, samples and at exhibi;ons •  Developed a strong offering – Clearly ar;culated USPs •  Market visits – Frequently and close follow up •  Visited new poten,al and exis,ng clients on every trip to India

Orissa Interna9onal Pte Ltd 1003 Bukit Merah Central

#05-‐06 Inno Centre, Singapore 159836 T: +65 6225 8667

E: admin@orissa-‐interna>onal.com W: www.orissa-‐interna>onal.com

Documents

Doing Business in India - International Enterprise Singapore/media/IE Singapore/Files/Events... · Doing Business in India ... • Gurgaon: one"of"Delhi's"major"satellite"ci,es"and"