factors while doing business in india

8/6/2019 Factors While Doing Business in India

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Factors to be kept in Mind while Doing Business in India

1) FDI Scenario:

Today, investors are largely attracted to India because of the size of the domestic market and itspotential for growth. Since 1991, when major economic liberalization started, Indias FDI has grownrapidly. FDI as a share of its GDP grew from less than 0.03% in 1991 to 3.5% in 2008, before fallingin 2009 as a result of the global financial crisis. As borne out by our survey results, India has movedbeyond being attractive mainl y as a BPO location. India continues to benefit from a youngpopulation, which provides a relatively low -cost, yet educated labour force.

Since 1991, successive waves of liberalization have reduced the involvement of the state andextended the list of industries in which FDI can be approved through streamlined procedures. Theseinclude up to 100% FDI ceilings that are automatically processed in sectors such as brewing,advertising, food processing, hotels, hospitals, management consulting, mining, oil re fineries,pharmaceuticals, and power. Certain sectors, such as print media (26%), insurance (26%), cablenetwork broadcasting (49%), private sector banking (74%) and telecommunications (74%) have

lower FDI ceilings. The only sectors that remain off limits to foreign investment are multi -brandretailing, atomic energy, which are considered as being of strategic importance to the state.

FDI flows to leading sectors

AutomotiveIndias automotive sector is growing fast: domestic sales of passenger automobiles rose by 33.9%year-on-year between April and August 2010 9. This large growth is due to the expanding middleclass and facilitation of borrowing. With Indias well -trained labor force and strong supplier base inautomotive, many global firms are also looking to increase their exports from India potentiallymaking it an Asian hub to compete with Thailand. Given the attractiveness of the Indian market andthe presence of large domestic demand, it is not surprising that the number of FDI projects in thi ssector has more than doubled between 2003 and 2010.

InfrastructureIndia has experienced an infrastructure revolution over the last two decades. Expansion of satellitetelephony and the internet in rural areas, together with investment in communications infrastructure,especially roads, by successive governments since the mid-1990s, has supported the growth ofsmaller cities and rural areas. Better communications have made it possible for urban -basedbusinesses to penetrate rural markets to a greater deg ree. With the liberalization of FDI ceilings intelecommunications in 2005 and increasing demand for foreign investment in infrastructure, thenumber of FDI projects in infrastructure rose rapidly from 2003.

Consumer productsIndias consumer market is fo recast to become the fifth largest consumer market in the world by2025. As more Indian households join the middle class, spending capacity will increase further anddrive demand for consumer products. Consumption patterns will change from being largelynecessity-based to focus more on discretionary spending, as a smaller proportion of family incomeis spent on basic goods. One forecast indicates that while spending on necessities is expected torise at an annual rate of 4.5%, spending on personal goods and services will grow at 9.2% annually.


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Fast growing FDI flows

Health careImproving national health is one of Indias priorities, and foreign investors are keen to enter theIndian market. The total value of the health care market was estimated at US$35 billion in 2007 andis projected to reach US$70 billion by 2012, and US$145 billion by 2017. Private health carecorporates have been gaining market share and now control about 90% of this expanding market.For example, the Columbia Asia Group, a hospital chain, invested in 13 FDI projects in 2009 alone.

Renewable energyRenewable energy generation capacity in India has grown at a healthy CAGR of about 24% overthe last 5 fiscal years to reach 17 GW at present. Wind, with a share of about 70% has dominatedtill now, with small hydro and biomass making up the balance. In order to harness its tremendoussolar potential, India has embarked on an ambitious solar mission, targeting 20 GW by 2022.Moreover, the government targets renewable energys share in elect ricity generated (in kWh terms)to increase from around 4% at present to 15% by 2020. In order to facilitate investment in thissector, India is providing capital subsidies and financial incentives.

Biotechnology

The majority of leading states have issued biotechnology policies that aim to increase investmentactivity, sometimes with innovative incentives. The main objective of these policies is to improve thequality and quantity of R&D by assisting research centres financially. The process also involves thedevelopment of human resources and infrastructure to sustain growth in this sector.

Plastics and chemicalsIndias Government announced the Petroleum, Chemicals and Petrochemicals Investment Regionspolicy (PCPIR) in 2007. It aims to encourage domesti c and foreign investment in these sectors inIndia through the introduction of transparent and business -friendly policies and a highly developedinfrastructure.

What are the different routes through which a foreign investor may invest in India?

There are 3 routes through which a foreign investor may invest in India, namely:

y Foreign Direct Investment (FDI), either under the automatic route or after seeking priorregulatory approval. Investors coming in through the FDI route, in both cases, do not requir eany prior registration with any regulatory authority in India; but are subject to the FDI policy.

y Investment as a Foreign Institutional Investor (FII) or a sub -account of an FII, duly registeredwith the SEBI and the Reserve Bank; and

y Investment as a Foreign Venture Capital Investor (FVCI) registered with the SEBI and theReserve Bank.

2) Cultural Aspects

Geert Hofstedes academic exercise, that differentiates nations on the basis of cultural variables isperhaps the most optimum way to highlight the differences in Indian and Western Culture .

Hofstede laid out certain dimensions of culture which he used to compare different nations. Thesedimensions are notindividual traitsbut simply averages or tendencies of whole groups. TheHofstede dimensions are as follows:


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y Power Distance (PD): The attitude of people towards differences in power and wealthcountries with a great power distance will have strict hierarchies and this will be acceptedby those in the lower levels of the hierarchy.

y Individualism/ Collectivism (IC): This measures the ability to live in groups or chooseones own path, regardless of what the group/community is thinking or doing. Individualachievement is highly valued.

y Masculinity (MF): This measures a cultures masculine traits like competitiveness,aggression and giving importance to material things and feminine traits like sensitiveness,empathy, importance given to quality of life. This masculine/feminine terminol ogy has alsobeen dubbed as Quantity of Life vs. Quality of Life. Interestingly a country which scores highon Masculinity will have a female population which is more aggressive and competitive thanthat of a country with a lower score. Another thing in the masculine societies, thedifference between men and women is greater, the men being much more aggressive andcompetitive than the women, unlike the more feminine societies where the differencesbetween men and women are lesser.

y Uncertainty Avoidance (UA) This dimension (added later by Hofstede) shows how peoplereact to uncertainty in their environment. This dimension also shows the level of tolerance ina society for differences.

The graph below depicts how India fares as compared to the rest of the world

1. India has a highPOWER DISTANCE (77), much higher than the world average (56.5). In Indiasocial hierarchies are very much in place and even at work it is not easy to be friendly with onesboss in most organizations. Calling ones boss by his first name is rare in India. In fact abuse byseniors is also common and usually the employee is helpless and his only recourse is to leave. Asfor Indian politics, one can see the groveling that goes on. China has a slightly higher PD (80) ascompared to India and both India and China are higher than the Far Eastern Asian nations whichhave an average of 60. Japan is only 50. Countries In Northern Europe have a lower PD ascompared to countries in Southern and Eastern Europe . The United States has less than 40 and

the United Kingdom around 30.

2. India is at 61 in LONG TERM ORIENTATION, higher than the world average of 48 but lowerthan the Asian average of 85. Asian cultures generally have higher scores on long -termthinkingwhich means that they are more perseverant and parsimonious. Its interesting to notethat even when Indians travel abroad they work very hard and sacrifice a lot for long -term benefit,which is the education of their children. Staying put in one job is also an indication of long termorientation and this is used to be very common in India once. It is changing now. Perhaps becausestaying in one job is not that beneficial in the long run. Leads to stagnation as opportunities to grow


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become limited. China is at 95 and Japan at almost 80. Western nations are on the opposite endsof the scale. The United States and Sweden score below 30. Britain and Canada score evenlower, around 20.

3. Indias MASCULINITY score is 56, slightly higher than the world average of 51 and the Asianaverage of 53. India scores high on masculinity as compared to countries like Sweden , but lower as

compared to Japan. But the materialism and aggression in the Indian society seems to beincreasing. Indias scores are bound to change soon, as it tries hard to reach the developed statelevel. Just one example at one time in India businessmen were not respected, but today they arerevered. A poor teacher would get as much respect as a rich person, but not more. Japan is themost masculine culture with scores of above 90. Such cultures are usually male oriented andworkplaces are often autocratic. China at 50 has average scores. Sweden is the most feminineculture in the sense that the Swedish population has qualities the qualities of sensitiveness andempathy and they give less importance to material things than countries with masculine traits. Thisalso means that there is less difference between the sexes with regard to these qualities. Both menand women are like this. Canada is just below 50, United States just below 60 and Britain justabove 60.

4. India gets just 40 in the UNCERTAINITY AVOIDANCE (UA) dimension as compared to the

world average of 65. A low score means that the society that has fewer rules and does not attemptto control all outcomes and results. It also means a greater level of tolerance for a variety of ideas,thoughts, and beliefs and a high tolerance for ambiguity. This might be because of the multi-cultural cauldron that India is. However, India also has rigid rules where religion and dress (forwomen) are concerned, so this score could be slightly questionable . The Asian average is 60, butJapan is almost at 90. This indicates a less tolerant society. China is lower than India at 35. The USis 46, Canada around 45 and Britain at 30. The European average is 74, and it is theMediterranean cultures which bring it up. Germany (around 60) and Switzerland (58] are at samelevel, and the Swedes have the lowest scores , at 25.

5. India doesnt do too badly on the INDIVIDUALISM dimension (45) if one compares it to the Asianaverage of 24. Indians are pretty much bound by community ties, but at the same time individuals inthat community get a fair amount of leeway to be individualistic. The reason may be the democratic

tradition, or the freedom within the Hindu religion, but overall individuality is not seen as threatening.Japan is also just about average (40), but China is much lower (20). A low score means that thesociety has committed members as in a collectivist culture. Loyalty in a collectivist culture isconsidered the most important thing and generally people in this socie ty are bound togetherstrongly. The higher the Individualism score, the poorer the bonds that people in the society havewith each other.

3) Ease of Conducting Business

The following tables would give a good idea of ease/difficulty in conducting business in India.

India is ranked 134 out of 183 economies. Singapore is the top ranked economy in the Ease ofDoing Business. The data set covers 183 economies: 46 in Sub -Saharan Africa, 32 in Latin Americaand the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in theMiddle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies.


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Of the different fileds, India fares best in the areas o f Getting Credit & Protecting Investors. On the

other hand, it has the lowest rank in the areas of Enforcing Contracts & Dealing with ConstructionPermit. The table below gives us a snapshot of Indias rank across these different areas.

The table below draws a contrast between India, South -Asia and OECD in the criteria of

procedures, time required, cost incurred and paid -in minimum capital required while Starting a

Business.


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A snapshot of the same criteria in other fields of doing business in India is provided in the table

below. On the leftmost column of the table, we can see the various macro fields, and within each

fields, on the right portions we see the other particular and their count.


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The below table is a helpful resour ce for businesses to get a good idea of time and cost implications

of various steps that need to be performed while starting business in India.


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4) Conduct & Behavior

Doing Business - Meeting and Greeting

When doing business in India, meeting etiquette requires a handshake.

Names speak volumes about an Indian's background. For example, a Singh will always be a Sikh.The suffix "-jee" ( as in Banerjee) is a sign of a high caste. "Kar" (as in Chandraskar) de notes thatperson is of Maharashtrian high caste. Arabic sounding names will be used by Muslims.

When addressing an Indian whom you know personally, always use the appropriate formal title,whether Professor, Doctor, Mr, Mrs or if you do not know their names then Sir or Madam will suffice.

When doing business in India, business cards should be exchanged at the first meeting. Be sure toreceive and give with your right hand. Make sure the card is put away respectfully and not simplypushed into a trouser pocket.

Doing Business - Building Relationships

Doing business in India involves building relationships. Indians only deal favourably with those theyknow and trust - even at the expense of lucrative deals. It is vital that a good working relationship isfounded with any prospective partner. This must take place on a business level, i.e. demonstratingstrong business acumen, and at a personal level, i.e. relating to your partner and exhibiting thepositive traits of trustworthiness and honour.

Doing Business - Meetings and Negotiations

Meetings should be arranged well in advance. This should be done in writing and confirmed byphone. Avoid meetings near or on national holidays such as Independence Day, Diwali or either of

the two Eids. Avoid the heat by sch eduling between October and March.

Punctuality is expected, although being 10 minutes late will not have disastrous consequences.Flexibility is paramount. Family responsibilities take precedence over business so last minutecancellations are possible whe n doing business.

When entering a meeting room you must always approach and greet the most senior figure first.Meetings should always commence with some conversation. This is part of the 'getting to know you'process. Favourable topics of conversation ar e the latest business news, the fortunes of theBombay Stock Exchange or cricket. Avoid talking about personal matters and, if new to India, do notcomment on matters such as the poverty or beggars.

If your business dealings in India involve negotiations, always bear in mind that they can be slow. Iftrust has not yet been established then concentrate efforts on building a rapport. Decisions arealways made at the highest level. If the owner or Director of the company is not present, thechances are these are early stage negotiations.

Indians do not base their business decisions solely on statistics, empirical data and excitingPowerPoint presentations. They use intuition, feeling and faith to guide them. Always exercisepatience, show good character and n ever exhibit frustration or anger.


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When negotiating avoid high pressure tactics. Do not be confrontational or forceful. Criticisms anddisagreements should be expressed only with the most diplomatic language. Indian society has anaversion to saying "no" as it is considered rude due to the possibility of causing disappointment oroffense. Listen carefully to Indians' responses to your questions. If terms such as "We'll see", "I willtry" or "possibly" are employed then the chances are that they are saying ' no'.

Once terms have been agreed you will be expected to honour them. When negotiations endsuccessfully continue the relationship building process with a celebration dinner.

5) Mergers & Acquisitions with Indian Companies

1. What are the various methods of mergers and acquisitions available in India?

The methods of mergers and acquisitions available under Indian law are broadly classified intoacquisitions by private arrangement and court based restructurings. Acquisitions by privatearrangement are contractual agreements between the parties and typically take the form of: (i)

share acquisitions; (ii) asset transfers; or (iii) spin offs or slump sales. Court based restructuringsinvolve the formulation of a sc heme of restructuring primarily for the purpose of merger,amalgamation, demerger or slump sale.

2. What is the process and timing for each method?

A share acquisition involves an agreement for share purchase between the parties. An assettransfer involves a contract to transfer the various assets of a company, as separate assets, toanother company. A slump sale or spin -off, involves the transfer of an undertaking or business unitas a going concern to another company. Each process typically involves d ue diligence of thecompany whose shares/assets/business is being acquired and negotiation of the contractualdocumentation. The timing for each of these methods would largely be determined by the partiesand may be completed expeditiously depending upon t he duration of the due diligence exercise andthe time period for obtaining the relevant regulatory or contractual approvals.Restructuring through the court requires a scheme of arrangement formulated pursuant to theCompanies Act. The requisite majority of each class of shareholders and creditors of the companiesinvolved in the restructuring must approve the scheme by way of a special resolution and therelevant high court in India (based on the location of the registered office of the companies involve d)must sanction it. It usually takes approximately 4 to 6 months for the scheme to become effective,but this could vary owing to the court process and would also depend on whether any objections tothe scheme are raised in the court.

3. Are the above forms of restructuring also available to foreign companies?

A foreign company is permitted to enter into a restructuring or acquisition transaction in Indiasubject to compliance with various regulatory requirements such as the exchange controlrestrictions on pricing and payments, the need for prior consents and waivers and in many cases,obtaining the approval(s) of the Reserve Bank and the FIPB. Further, in a court based restructuring,while the transferor company may be a foreign company the Companies Act does not specificallycontemplate a foreign company as the transferee company.


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4. What are the usual transaction costs and taxes that are attracted?

The transaction costs and taxes vary with each method of acquisition. For example, an assettransfer, as compared to a slump sale, may result in higher income tax (for the seller) andVAT/sales tax (for the buyer) liability. Further, the restructuring through the court route often entailsbenefits under the Income Tax Act / stamp duty laws but the sa me may take a longer duration oftime in comparison to the private arrangements.

5. What are the factors pertaining to the Target and its business that should be consideredwhile structuring the transaction?

The nature of the target significantly impac ts the structure of the transaction. The relevant factors tobe borne in mind include:- whether the target is a company, partnership, sole proprietorship;- where the target is a company, whether it is a private company, unlisted public company, listedpublic company or a subsidiary of a public company;- the business undertaken by the company and its classification under the National IndustrialClassification Code 1987, and the foreign investment restrictions governing the sector;- whether the business undertaken by the target is highly regulated and license intensive;

- whether any material licenses or contracts of the target have any conditions requiring prior consentof the relevant regulator/ contracting party for the change of control ;- whether the transfer of shares requires the prior consent of the sector specific regulator; and- whether the acquisition of shares of the target would result in the direct or indirect acquisition ofshares or control of a listed company.

6) Taxes

1. What determines the extent of an entitys liability to pay Income tax in India?

Taxable income is a function of a person s residential status and the source of the income.Residents companies (Indian company or company whose control and management wholly lies inIndia) are liable to pay tax in India on their global profits unless exempted under the relevant DTAA.Non-resident companies (companies other than resident companies) are essentially taxed on theincome deemed to be accruing arising in Indi a.An individual resident in India for:- a period of 182 days or more; or- a period of 60 days or more in an year, if in the 4 years preceding that year he/she has been inIndia for an aggregate period of 365 days or more is treated as a person reside nt in India.

2. What is the corporate tax rate and how is it applied?

Resident companies are subject to tax on the net taxable income (gross revenue less theadmissible expenditure) earned during the financial year at a rate of 33.99% (inclusive of 10%surcharge as well as 3% education cess) where the taxable income exceeds US $ 208122 (and at

the rate of 30.90% where the taxable income is up to US $ 208122).In case a companys taxable profit is less than 10% of its book profit, then it may be subject to aMAT at the rate of 16.995% (inclusive of education cess) where such profit exceeds US $ 208122and at the rate of 15.45% (inclusive of education cess) where the taxable profit is less than US $208122.

3. What is the tax rate applicable to foreign companies on their income earned in India?

Foreign companies with total income up to US $ 208122 are taxed at an effective rate of 41.20%,inclusive of education cess. Foreign companies with total income above US $ 208122 are taxed at


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an effective rate of 42.23% (including surcharge and education cess). However, if the company hasno permanent establishment in India, the tax rate depends on the nature of the income (capitalgains, royalty, etc.) and the provisions of the relevant DTAA.

7) Intellectual

Property

1. Are intellectual property rights protected in India?

India has a robust IP regime with legislations in place to protect Copyright, Designs, Patents,Trademarks, Topographies of Integrated Circuits and Semiconductors (mask works), GeographicalIndications, and Plant Varieties and Farmers Rights. Legislations relating to Integrated Circuits andSemi-conductors, have not yet been enforced. In addition, protection for business goodwill isafforded under common law and precedents from o ther common law jurisdictions are accepted asprecedents in a judicial determination.

As a signatory to the TRIPs Agreement and keeping in line with India s obligations, amendmentshave been made in the existing legislations for compliance. Copyright prot ection for computerprograms and protection for service marks are a few examples of such new provisions since signing

of the TRIPs Agreement. The Patents (Amendment) Act, 2005 and Patents (Amendment) Rules,2006 introduced product patents from January 1, 2 005 in line with Indias obligations under theTRIPs Agreement.

2. How are computer software and programs protected in India?

India recognizes and protects computer programs, tables and compilations including computerdatabases as literary works under the Copyright Act. Both the object and source codes can beprotected as literary works under the said Act and the term of protection extends to 60 years.Patent law also provides protection to computer implemented inventions and claims to methods areallowed. The Patent Office is deliberating on the approach that it would take in decidingapplications. Whilst at present the jurisprudence from the European Patent Office is moreacceptable, the U.S. position at times also finds favor.

Indian IP laws are largely TRIPS compliant and the rights provided by patent law bestow on thepatentee the exclusive right to prevent third parties from the acts of using, offering for sale, selling orimporting for those purposes, the patent article.

3. Are trademarks and service marks protected in India?

The Trade marks Act grants protection to service marks, trademarks and shape marks.Remedies for infringement of registered trademark/service marks are also provided under theTrademarks Act. In the case of unregistered trademarks/service marks, civil remedies in the form ofan action for passing -off, injunction and damages are also available.

4. How does one protect confidential information and trade secrets?

The protection of confidential information is governed by common law principles and contract law.The manner and extent to which information may be treated confidential may be covenanted.

5. Can the employees of an Indian company be required to sign confidentiality agreements?

Yes. Confidentiality provisions including requirements for personnel to return all confidentialinformation and material to their employer at the time of termination of their employment are


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standard provisions enforceable under Indian law. Additionally, requirements preventing suchpersonnel from utilizing such confidential information in their new job may also be imposed.

6. What are the relevant data protection laws in India?

Currently, there is no specific legislation dealing with Data Protection in India. However, theInformation Technology Act, 2000 ( IT Act) has been amended recently to introduce certainaspects of data protection. These provisions provide for compensation to the affected person forfailure to protect his personal data and information. Anybody dealin g with or processing sensitivepersonal data or information is negligent in implementing and maintaining reasonable securitypractices and procedures causing wrongful loss or wrongful gain, shall be liable to pay damages ascompensation to the affected person.Another provision provides that any person including an intermediary, who while providing servicesunder the terms of a lawful contract, has secured access to any material containing personalinformation about another person and with intent to cause or knowing that he is likely to causewrongful loss or wrongful gain, discloses the material to another person without the consent of theperson concerned or in breach of a contract, then the person disclosing such information can be

punished with imprison ment for up to 3 years and/or can be fined up to US $ 10,000 or both.With introduction of these provisions in IT Act, it gives statutory protection against abuse of personaldata and leaves it open for parties to provide detailed contractual obligations for the same.In addition to the aforesaid provisions in the IT Act, the right to privacy has been well -recognized byvarious decisions of the Supreme Court of India and High Courts as part of the Fundamental Rightsenshrined under Article 21 of Constitut ion of India.Various other Indian statutes such as, (i) Indian Contract Act, 1872; (ii) Indian Penal Code, 1860;(iii) Consumer Protection Act, 1986; (iv) Specific Relief Act, 1963; (v) Copyright Act etc. also containprovisions, which directly or indire ctly protect the breach of confidentially and unauthoriseddisclosure of the personal data.

8) Currency Control

1. Are there any restrictions on the amount of local currency that can be brought into ortaken out of India?

The regulations issued by the Reserve Bank prohibit export or import of local currency byforeigners. However, persons resident in India may take out, or bring into India other than to/fromNepal and Bhutan, up to US $ 100.

2. Are there any restrictions on the amount of foreign currency that may be brought intoIndia?

There are no restrictions on the amount of foreign exchange that can be brought into India provided

that the foreign exchange is in any form other than currency notes, bank notes, travelle rs chequesand unissued notes.

In case of foreign exchange in the form of currency notes, bank notes and travellers cheques,foreign exchange aggregating up to US $ 10,000 (or its equivalent) in value and / or foreigncurrency notes up to US $ 5000 (or its equivalent) may be brought into India without anyrestrictions. Bringing in of foreign exchange in excess of the limits specified above is permittedsubject to condition that the person bringing in the foreign exchange makes a declaration of thesame to Indian customs authority upon arriving in India.


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3. Are there any restrictions on the amount of foreign currency that may be taken out ofIndia?

A person may send/ take out of India: (a) cheques drawn on foreign currency accounts maintainedin accordance with applicable regulations; (b) foreign exchange obtained legitimately through anauthorised dealer; and (c) currency in the safes of vessels or aircrafts that has been brought intoIndia or taken on board of the vessel or aircraft with the permissio n of the Reserve Bank.In addition, a person may take outside India foreign exchange possessed by such person inaccordance with relevant regulations, which in the case of persons resident in India includesunspent foreign exchange brought back to India w hile returning from travel abroad. Such foreign

exchange should be in the form of currency notes, bank notes and travellers cheques that do notexceed, in aggregate, US $ 2000 in value. There is no limit prescribed for the foreign currency thatmay be possessed, and hence, sent / taken out of India by a person who is not permanentlyresident in India, i.e. is in India only for a specified duration or for a specific job or assignment fornot more than 3 years if the foreign currency was acquired by such per son while residing outsideIndia and was brought into India in accordance with the regulations specified above.

A person resident outside India may take out of India unspent foreign exchange that does notexceed the amount brought in by him, and if required, declared as specified above.

4. Are there any restrictions on inflow and outflow of foreign exchange?

Any transaction that alters the assets or liabilities (including contingent liabilities) outside India ofpersons resident in India or assets and liabilities in India of persons resident outside India requiresthe permission of the Reserve Bank.These transactions broadly include, subject to certain exceptions:

transfer or issue of any foreign security;transfer or issue of any security by a person resident outside India;any borrowing or lending in foreign exchange;any borrowing or lending in rupees bet ween a person resident in India and a person resident

outside India;transfer of immovable property outside India.

There are no restrictions on the sale or withdrawal of foreign exchange if such withdrawal does notfall under the restricted categories. Hence, payments due in connection with foreign trade, othercurrent business services, short -term banking and credit facilities in the ordinary course of business,payments due as interest on loans, etc., do not require prior permis sion.

factors while doing business in india

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