India, UK to cooperate in infrastructure financing, address tax evasion

by | posted in: Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
The possibility of their investing, either directly in projects or through the National Investment and Infrastructure Fund (NIIF) that we have created, were both discussed,” he told reporters at the Indian High Commission in London.

Amid fears of the global economy edging close to recession, India and UK have agreed to open up trade and markets to support growth, carry out structural reforms and address issues related to cross-border tax evasion.

After talks between India’s Finance Minister Arun Jaitley and UK Chancellor of the Exchequer George Osborne, the two nation’s agreed to boost economic ties particularly in areas of infrastructure and financial services and renewed pledge for autonomical exchange of tax information from 2017.

“From the Indian point of view, we were extremely interested in having the British investors look at infrastructure investments in India for which various possibilities were discussed,” Jaitley said after the talks.

India, he said, is “extremely keen that large British companies, particularly involved in infrastructure financing, start investing in Indian infrastructure”.

The two nations will work together for developing an India-UK partnership fund under the umbrella of National Investment and Infrastructure Fund (NIIF) recently created in India.

“This fund will seek to increase flows of private sector capital and expertise alongside multilateral support into Indian infrastructure,” a joint statement issued after talks said.

The world’s fifth largest economy will work on development of smart cities in India. New Delhi is also looking at London for issuance of rupee-denominated bonds to get UK investors to fund its infrastructure projects.

“The possibility of their investing, either directly in projects or through the National Investment and Infrastructure Fund (NIIF) that we have created, were both discussed,” Jaitely told reporters at the Indian High Commission here.

With the IMF warning of global economy being close to recession with 3.4 per cent growth this year, the two sides said they “remain concerned that global growth is falling short of expectations and that the risks to the global outlook have increased”.

“In this regard we stand ready to take the necessary steps to open up trade and markets to support growth and jobs, and agree on the importance of structural reforms and pursuing credible fiscal policies,” the joint statement said.
The joint statement talked about advancement of cooperation in a range of sectors including infrastructure financing, addressing issues of cross-border tax evasion/ avoidance besides opening up of the Indian legal sector to foreign lawyers.

“The UK and India share a common commitment to address cross-border tax evasion and avoidance. Both sides have committed to the Common Reporting Standards (CRS) on Automatic Exchange of Tax Information and will begin exchange in 2017,” the statement said.

“We call on other countries to meet the commitments they have made and to implement the new standard on time,” it said.

During the talks, which included senior representatives from Finance Ministries, Central Banks and key regulators of both countries, the two leaders discussed ways to strengthen the Indo-UK existing economic partnership in order to further boost trade and investment, and to build on the success of Prime Minister, Narendra Modi’s recent summit with his British counterpart David Cameron in the UK.

“Given the fact that even in a somewhat difficult global scenario, India is managing a reasonable growth rate, this is one of the better options that investors have and that kind of a sentiment gets really echoed in the meetings with the investors that we had. Of course, the investors are also keenly watching which way our reform process in India goes,” Jaitley said.
The two nations agreed to work together on building commercial and regualtor-to-regulator links that can underpin further fintech growth in both countries.

“The UK and India agreed to renew the existing mandate of the India-UK Financial Partnership, and building on the re-establishment of the CEO Forum,” the statement said, adding that potential areas of interest for the India-UK Financial Partnership could be reinsurance, international use of the rupee, role of financial technology, financial inclusion, investor protection and green finance.

“The global economy is facing serious challenges and therefore the estimates of global growth also have been repeatedly lowered. Compared to how various countries across the world have been doing, India’s growth rate despite these challenges is probably the highest in the world among major economies,” Jaitley said, in reference to his meetings with investors at Goldman Sachs and London Stock Exchange.

As a follow up on Prime Minister Modi’s announcement during his UK visit last November on the listing of Rupee bonds in London, the minister said, “the UK is very keen for these to be listed in London and broadly the economic and financial dialogue was carried further”.

During the dialogue, the two sides recognised that as the leading financial centre in the world and in the view of successful issuance of Masala bonds issued by the International Finance Cooperation last year, London will be an attractive location for issuance of rupee-denominated bonds.

“The bonds, which were first announced during the visit of Prime Minister Modi to the UK in November, illustrate the crucial role that the UK’s capital markets can play in an enhanced economic relations relationship with India, with UK investors providing financing for the transformation of India’s infrastructure and continued rapid economic growth,” the statement said.

India and the UK also agreed that the development of deeper markets in rupee-linked products, and the increasingly sophisticated relationship between the Indian and UK financial sectors, are important underlying factors in fostering an enduring economic and financial partnership.

Both sides agreed to continue working closely on the development of smart cities in India.

“We will continue to build on and further embed the existing Technical Assistance Partnerships that were announced during Prime Minister Modi’s recent visit to the UK, and to continue working together on research collaboration and other measures to support India’s 100 Smart Cities programme,” the statement said.

While noting the strength of the economic outlook for both countries, the two sides expressed concern that global growth is falling short of expectations and that the risks to the global outlook have increased.

“In this regard we stand ready to take the necessary steps to open up trade and markets to support growth and jobs, and agree on the importance of structural reforms and pursuing credible fiscal policies in order to raise living standards,” it said.

India and the UK also agreed to work together with the aim of developing an Indo-UK partnership fund under the umbrella of the NIIF. The fund will seek to increase flows of private sector capital and expertise alongside multilateral support into Indian infrastructure.

The working group to be established will report back within the course of 2016 on a proposed fund strategy and delivery approach, the statement said.

“As part of this, India and the UK also both recognise the importance of identifying the sector or sectors where there is greatest potential for developing sustainable project pipelines, and of developing a supportive institutional environment for investment and delivery,” it said.

Source:http://economictimes.indiatimes.com/articleshow/50650198.cms

 

India, Qatar to boost cooperation in hydrocarbons

by | posted in: Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
Prime Minister Narendra Modi with Emir of Qatar Sheikh Tamim bin Hamad Al-Thani during the welcome ceremony.

DOHA: With Qatar having the world’s third largest gas reserves and being India’s largest supplier of liquefied natural gas (LNG), both countries are expected to give a fillip to cooperation in the hydrocarbons sector .

Qatar has gas reserves exceeding 900 trillion cubic feet (25 trillion cubic metres) or 14 per cent of global reserves. It is the largest LNG exporter in the world.

The Gulf Cooperation Council member accounted for 65 per cent of India’s total LNG imports last fiscal.

India is also hoping to tap the Gulf nation’s sovereign wealth fund, estimated at $300 billion, for infrastructure projects.

Prime Minister Narendra Modi , who is visiting Doha on the second leg of his five-nation foreign tour, praised the role of the Emir of Qatar in promoting business ties with India.

Modi on Sunday also invited Qatari industry leaders to invest in India.

“India is a land of opportunity. I have come to personally invite you to take advantage of this opportunity,” Modi said, according to a tweet by India’s Ministry of External Affairs (MEA) spokesperson Vikas Swarup.

“Business First. For first engagement of the day, PM attends roundtable meeting with Qatari Business Leaders,” the spokesperson said in another tweet following Modi’s meeting here with business leaders.

“Qatar’s Minister of Trade and Economy welcomes PM Narendra Modi, seeks more intensive eco engagement with India,” it added.

This is the second prime ministerial visit from India to energy-rich Qatar in eight years after Manmohan Singh’s visit in 2008.

“It can also be a large economic partner as it has a large sovereign wealth fund,” Foreign Secretary S. Jaishankar said on Friday in a pre-departure media briefing.

Bilateral trade between India and Qatar stands at $10 billion.

Earlier this year, India re-negotiated favourably its LNG agreement with Qatar to bring down the cost of importing natural gas to less than $5 per unit from $12.

In return for the renegotiation, India’s Petronet LNG has signed an agreement for additional import of one million tonnes of LNG per year from Qatar’s Ras Gas for about 12 years with effect from January 1, this year, at the prevailing market prices.

Ras Gas will also not seek Rs.12,000 crore from Petronet for under-lifting LNG by 38 per cent.

The new contract is effective from January 1, 2016, and ends in 2028.

Modi addressed Indian workers at a medical camp in Doha on Saturday night. There are 6,30,000 Indians living in Qatar comprising the largest expatriate community in that country.

Modi, who arrived here from Afghanistan, will also visit Switzerland, the US and Mexico during his seven-day sojourn.

Source: http://economictimes.indiatimes.com/articleshow/52603895.cms

FTA with EU: India to take up ‘stock-taking exercise’

by | posted in: Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
FTA with EU: India to take up ‘stock-taking exercise’ for a free trade agreement with the EU later this month, after a gap of three years, and pitch for greater market access in services..

India will undertake a “stock-taking exercise” for a free trade agreement with the EU later this month, after a gap of three years, and pitch for greater market access in services once the stage is set for further negotiations, a senior commerce ministry official said.

Before engaging in serious formal talks on the EU-India Bilateral Trade and Investment Agreement (BTIA), a “stock-taking exercise” will be undertaken, as some contours of the earlier negotiations have to be altered, keeping in view the changes that have taken place since the talks were stuck in 2013, Arvind Mehta, additional secretary in the commerce ministry, told FE.

For instance, India has further liberalised many sectors for foreign investments, including some of the areas where the EU had interests, over the past three years. For instance, the FDI cap in insurance has been raised to 49% from 26% and 100% FDI is allowed in telecoms. In private sector banking, full fungibility of foreign investment is now permitted and accordingly FIIs/FPIs/QFIs can now invest up to a sectoral limit of 74%, with certain conditions.

While India feels the flexibilities shown by it in further opening up to foreign investments should be considered positively by the EU, it also expects some reciprocal measures by the 28-member bloc to address its concerns, especially on data privacy and market access in the services sector. However, there will be no binding commitments until India’s core concerns are addressed suitably, Mehta said. The BTIA negotiations cover boosting goods and services trade as well as investment.

India seeks a data secure status because the high compliance cost with EU’s data protection laws will hit small and medium enterprises (SMEs) of India and make them un-competitive.

Mehta said India will be betting for a trade facilitation agreement (TFA) in services at the World Trade Organisation — similar to the TFA in goods — that would focus on liberalised visa regime, long term visas for business community and freer movement of professionals for the greater benefit of both India and the world. India will pursue it vigorously in negotiations for the BTIA as well as Regional Comprehensive Economic Partnership. RCEP is a proposed FTA between the Asean members and the six states with which it has forged FTAs, including India.

Gr3

India is keen on services, as they account for over a half of its GDP. The EU is India’s largest trade partner, accounting for close to 15% of trade in both goods and services. It is a major market for Indian textiles, garments, pharmaceuticals, gems and jewellery and IT. The EU is also the largest source of FDI inflows to India, accounting for over one-fourth of the total. However, India ranks only ninth among the EU’s top trade partners, making up for just about 2% of its total merchandise goods in 2014.

BTIA talks were to be revived last year, but the EU’s surprise ban on 700 products of GVK shocked India, which then called off the negotiations. Prior to that, the negotiations centred around India’s demand for.

The EU is interested in further liberalisation of FDI in multi-brand retail and insurance, and closed sectors like accountancy and legal services. The underutilised private banking space in India is another draw. India’s intellectual property regime (IPR), which is unlikely to allow ever-greening of patents, remains a concern for European pharma majors. Moreover, the EU has been seeking a cut in the high import duties on assembled vehicles and wines and spirits. In case of assembled vehicles, the import duties remain in the range of 60-75%.

Source: http://www.financialexpress.com/article/economy/fta-with-eu-india-to-take-up-stock-taking-exercise/191733/

Primarc Group sets up venture capital fund for start-ups

by | posted in: Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs | 0

PrimarcKolkata-based Primarc Group, which is into real estate and retailing, has set up a venture capital fund targeting start-ups.

According to Sidharth Pansari, Director, Primarc Group, the fund – Primarc iVenture – will look to fund start-ups at an angel stage or even at advanced ones.

“In the angel stage, funding will be between  Rs. 5 lakh and  Rs. 15 lakh, while in the advanced stage it will be  Rs. 25 lakh to  Rs. 1 crore. Focus will be on West Bengal-based start-ups, ones with social impact, or unique ideas,” he told media persons.

Pansari, however, did not mention the corpus of the fund.

Initiated some three months ago, the fund is controlled by the Pansaris, and has funded some 9-10 enterprises that include the likes of Ketto and Catapoolt (among crowd funding platforms); Sampurna Earth and iKure (among projects that seek to create social impact).

While there are no immediate plans to set up an incubation centre, Pansari said the group was also open to picking up stakes in companies (start-ups) that are a strategic fit with its core businesses of retail and real estate.

Such stakes may be taken up through the respective arms of the group.

Kolkata-based Primarc has an annual turnover of around Rs. 350 crore, most of which comes from retailing and real estate projects.

Currently, it has around 30-40 lakh sq feet of residential projects under construction, mostly in Kolkata and the suburbs.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/primarc-group-sets-up-venture-capital-fund-for-startups/article8069988.ece

Foreign investors find Indian realty sector attractive again after 5 years

by | posted in: Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
At least Rs 14,680 crore of funds have been raised in sector so far in current investment cycle.

Foreign investors’ interest in Indian real estate is on the rise after almost five years, India-specific fundraisings indicate.

The cycle started gaining momentum just before the 2014 general elections and at least $2.2 billion (Rs 14,680 crore) of funds have been raised so far in the current investment cycle, indicating an improvement in foreign investors’ confidence in Indian real estate, said consultancy firm JLL India. “During the pre-GFC (global financial crisis) phase, 82% of funds got raised in US dollar.

This reduced to 57% in post-GFC phase when micro-market understanding was required more than banking on the macro-economy,” said Shobit Agarwal, managing director of capital markets at JLL India. “Interestingly, the contribution, 2014-onwards, has increased considerably to 70% – hinting that the positivity is here to stay for some time.”

Recent easing of foreign direct investments rules is expected to bring in more capital into the property sector. PE funds are also looking to leverage on this rising interest among foreign investors.

“We believe this is an opportune time to invest in Indian real estate, with rigorous risk management and strong asset management.

Offshore funds are showing interest in Indian real estate and there is lot of interest from FDI funds back in Indian real estate,” said Rubi Arya, chief executive of Milestone Capital Advisors. “We are planning to leverage further on our structured debt and commercial platform to raise money from offshore funds.”

According to Arya, FDI funds are looking to invest in pre-leased commercial assets, create strategic-level partnerships with reputed developers mainly through equity deals and make structured debt investments in residential projects.

India-specific cumulative fundraising attained its peak in the pre-GFC period. During this period between 2005 and 2008, there were 50 such funds that raised $16 billion in total. However, post-GFC, only 29 funds got raised in five years, with cumulative fundraising of $3.9 billion, said the JLL India report.

Not only has the volume of investment increased, but there has also been an increase in the average investment size from $134 million to $184 million in the current cycle that started in 2014.

Source: http://economictimes.indiatimes.com/articleshow/50476154.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

E-Commerce Industry to Cross $38 Billion Mark in India

by | posted in: Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0

India’s e-commerce market is likely to touch $38-billion-mark in 2016, a 67 per cent jump over the $23 billion revenue it clocked last year, according to the Associated Chambers of Commerce and Industry (Assocham).

“Increasing internet and mobile penetration, growing acceptability of online payments and favourable demographics has provided the e-commerce sector in India the unique opportunity to companies connect with their customers,” according to the Assocham’s latest report.

Buying trends during 2015 have witnessed a significant upward movement due to aggressive online discounts. India’s e-commerce market was worth about $3.8 billion in 2009, it went up to $17 billion in 2014 and to $23 billion in 2015 and is expected to touch $38-billion mark by 2016, said D.S. Rawat, Secretary General, Assocham.

Mobile commerce

Mobile commerce (m-commerce) is growing rapidly as a stable and secure supplement to the e-commerce industry. Shopping online through smart phones is proving to be a game changer and industry leaders believe that m-commerce could contribute up to 70 per cent of their total revenues, according to the report.

Mumbaikars had left behind all other cities in India shopping online in 2015. While Delhi residents rank second, Ahemdabad came third, Bangalore fourth and Kolkata fifth in their preference for online shopping in 2015.

“The customer is connected 24×7 through their smart phones, tablets and other mobile devices which is leading to a gradual evolution of e-commerce into mobile commerce and there is an issue of convenience which also leads to impulsive buying,” Mr Rawat said. The browsing trends, which have broadly shifted from the desktop to mobile devices in India, online shopping is also expected to follow suit, as one out of three customers currently makes transactions through mobiles in Tier-1 and Tier-2 cities. In 2015, 78 per cent of shopping queries were made through mobile devices, compared to 46 per cent in 2013, said Mr. Rawat.

The highest growth rate was seen in the apparel segment, almost 69.5 per cent over last year followed by electronic items by 62 per cent, baby care products at 53 per cent, beauty and personal care products at 52 per cent and home furnishings at 49 per cent. The most important contributing factor to the rapid growth of digital commerce in India is the increase in the use of smartphones. Mobiles and mobile accessories have taken up the maximum share of the digital commerce market in India, according to the paper.
Online shoppers

Almost 45 per cent of online shoppers reportedly preferred cash on delivery mode of payment over credit cards (16 per cent) and debit cards (21 per cent).

Only ten per cent opted for internet banking and a scanty seven per cent preferred cash cards, mobile wallets and other such modes of payment.

As per the findings, many small companies have also established online stores for group buying, which enable customers to obtain goods at a discount so long as a certain number of people make the purchases.

Shopping centres, whole sale markets and supermarkets should create their online stores to reduce costs and develop product-tracking systems, Mr Rawat said.

Among the age segments, the 18-25 years age group was the fastest growing age segment online with user growth being contributed by both male and female segments, it was said in the paper.

The survey highlights that three per cent of regular shoppers are in 18-25 age group, 52 per cent in 26-35, eight per cent in 36-45 and two per cent in the age group of 45-60.

Sixty-five per cent of online shoppers are male with females constituting 35 per cent. The products that were sold most in 2015 were mobile phones, iPad and accessories, MP3 players, digital cameras and jewellery, among others.

As per the study, there would be more than a five to seven-fold increase in revenue generated through e-commerce compared to last year with all branded apparel, accessories, jewellery, gifts, footwear available at a cheaper rates and being delivered at the doorstep. The most popular among the e-commerce websites — Snapdeal, Myntra, Flipkart, Amazon, Jabong and others — have been doling out massive price cuts or discounts on purchase of popular brands of apparels, footwear, electronic goods, coinciding with the year end.

According to the report, the one of the driving factors for the online shopping is the age profile of the consumers who are young, between 15-35 years. This segment is quite net savvy and enjoys doing new type of shopping experience, virtually from their desk top in office, lap tops at home or even Android-based phones.

Source: http://www.thehindu.com/business/ecommerce-industry-to-cross-38-billion-this-year-assocham/article8058892.ece

Government extends tax residency rule – Place of Effective Management

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Income Tax,e-Filing- Individuals, Firms, Companies | 0

A deadline for comments on the draft guidelines to determine the tax residency of a foreign company has been extended to January 9.

The government felt the need to determine a company’s place of effective management due to lack of detail in the Income Tax Act leading to the possibility of tax avoidance.

“Representations requesting for extension of the last day for submitting comments and suggestions, have been received and considered,” according to a government statement announcing the extension of the deadline for comments on the issue, earlier slated for January 2.

The Place of Effective Management (POEM) of a company, as the concept was called, was introduced in the Finance Act, 2015 to determine the tax residency of a foreign company.

The draft guidelines for what defines a company’s place of effective management, released on December 23, defines the POEM as “a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made.”

“Section 6(3) of the Income-tax Act, 1961, prior to its amendment by the Finance Act, 2015, provided that a company is said to be resident in India in any previous year, if it is an Indian company or if during that year, the control and management of its affairs is situated wholly in India. This allowed tax avoidance opportunities for companies to artificially escape the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India,” according to draft guidelines issued by the Central Board of Direct Taxes.

“As per the amendment brought in by the Finance Act, 2015 a foreign company will be regarded as a tax resident of India, if its POEM in that year is in India,” according to a report by Deloitte and CII.

According to the Deloitte report, there is ambiguity around some of the provisions in the guidelines, such as the duration for which a company has India as a place of effective management. “A question may still arise that for a foreign company to be resident in India, is it necessary that the POEM should be situated in India throughout the financial year under consideration or mainly in India.

Similarly, the term “key management and commercial decisions” in the definition of POEM seems to be causing some confusion.

“Unlike, for instance, the UK, India does not define the term ‘key management and commercial decisions’ and therefore these are undefined and subjective.

In the UK, judicial precedents and tax rules lay emphasis on whether directors/officers taking major decisions are independent, are empowered to take these or whether such directors/officers are acting under the influence or direction of shareholders,” Mr.Alex Postma, Leader–Global and EMEIA International Tax Services, EY had said in a note.

Enterprises have become increasingly mobile and technology and connectivity are as important as never before in their global competence. This poses risks that a travelling executive may create significant unforeseen tax burdens in India,” Mr. Postma added in his note.

Source: http://www.thehindu.com/business/Economy/government-extends-tax-residency-rule-deadline/article8055070.ece