Foreign firms rush to India’s online marketplace

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India’s booming online marketplace business has attracted a new wave of merchants and sellers from countries such as China, South Korea, Japan, Singapore and the US. In fact, thousands of sellers are getting into tie-ups with Indian e-commerce players to kick-start operations in the country.

 

According to industry insiders, around 50,000 sellers from China, South Korea and Singapore are planning to enter India through online marketplace players.

 

“In business-to-business (B2B) segment, there is no online organised player in the country right now. The market is being created for the online businesses,” said Sanjay Sethi, co-founder and CEO of Shopclues. The company has brought in DHgate, the second largest player in China after Alibaba, on to its platform. It’s also getting 25,000 South Korean merchants on board. Tie-ups are also in process with Singapore Traders Association to enable them to sell on Shopclues.

 

American retail major Walmart is also exploring ways to tie up with leading e-commerce companies in India, including Flipkart, Snapdeal, ShopClues, Grofers and Bigbasket. It is learnt that German wholesale giant Metro Cash and Carry is also in talks with e-commerce marketplace players to sell its products online.

 

Meanwhile, e-commerce giant Alibaba is looking to make a big bang entry into India’s marketplace via One97 Communications-owned Paytm.

 

Alibaba is expected to be the support behind Paytm’s China product portfolio. With that in place, Paytm will aim to become the biggest Indian player insofar as the number of sellers on the platform is concerned. With eight million sellers, Alibaba has the widest seller range as well as product portfolio.

 

This is not for the first time that Paytm is planning to sell Alibaba’s product range. During Diwali last year, Paytm had the whole product catalogue sourced from Alibaba and merchants from China were directly shipping products to customers in India, saving Paytm the hassle of finding warehouses.

 

As for the second top player in China, DHgate, online B2B would be a gateway into India and an opportunity to get connected to 350,000 sellers through the Shopclues portal.

 

DHgate plans to list its products across categories, including electronics, accessories, beauty products and sports. “From China we are getting around 10,000 SKUs (stock keeping units) listed. It is not a retail business and the target audience for this business are other businesses in India,” said Sethi.

 

The foreign investment rules vary across retail platforms and companies often resort to complex structuring to bypass policy. While foreign direct investment (FDI) is capped at 51 per cent in multi-brand retail with states having the last say on whether international players would be permitted to operate or not, there’s no limit of foreign investment in single-brand and business-to-business or cash and carry.

 

In e-commerce, however, FDI is not permitted. But, e-commerce players are mostly run with foreign money by operating marketplace platforms, where rules have not been framed yet.

Source: http://www.business-standard.com/article/companies/foreign-firms-rush-to-india-s-online-marketplace-116020100015_1.html

Government working on approving companies’ names in 24 hours: MCA

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The government is working on ensuring that the name of a new company is approved within 24 hours, a step towards improving ease of doing business and reducing overall transaction costs.

Corporate Affairs Secretary Tapan Ray said his Ministry is focused on reducing the problems faced by the industry and ensuring that ease of doing business becomes the “order of the day”.

“Incorporating a company is now much easier and will be made further easier as we go along the road. We are aiming to get a name (of a new company) approved within 24 hours,” Ray said.

The Corporate Affairs Ministry is fully geared up to improve ease of doing business, not only for starting a venture but also for the life cycle of companies as a whole, he noted.

Speaking at an event organised by the Institute of Cost Accountants of India (ICAI) here, Ray said speedier approval of names is itself a cost-cutting experiment because any delay adds to transaction costs.

“So ease of doing business is directly related to transaction costs. So the moment you make the ease of doing business better, transaction costs comes down and ultimately it has an affect on the product,” Ray said.

Stressing the need for becoming globally competitive, he said the dream of making India a manufacturing hub can be realised when costs are low.

“People will only start manufacturing in India if it is the cheapest,” he added.

Corporate Affairs Ministry, which is implementing the Companies Act, has been taking various steps to improve ease of doing business in the country.

Ray said setting up of the National Company Law Tribunal (NCLT) would further facilitate business in the country.

The Ministry has sought comments from stakeholders on draft rules pertaining to the proposed NCLT, which would replace the Company Law Board (CLB).

Source:
http://economictimes.indiatimes.com/articleshow/50785152.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

I-T Department resolves over 100 transfer pricing cases of US companies

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Indian tax authorities have resolved more than 100 cases of transfer prices with their US counterpart, involving companies from IT and ITeS sectors, in a move expected to give a boost to investment flows into the country.

The Central Board of Direct Taxes (CBDT) has said resolution of such issues follows the framework agreement signed with the US revenue authorities in January last year as part of the Mutual Agreement Procedure (MAP).

The framework will cover about 200 transfer pricing disputes involving US companies.

“More than 100 cases have already been resolved and some more are expected to be resolved before the end of this fiscal,” the CBDT said in a statement on Thursday.

The agreement with the US was finalised under the MAP provision in the India-USA Double Taxation Avoidance Convention.

It further said MAP programmes with other countries such as Japan and the UK are progressing well with regular meetings and resolution of past issues.

The CBDT said a combination of a robust advance pricing agreement (APA) programme and a streamlined MAP would be helpful in creating “an environment of tax certainty and encourage MNCs to do business in India”.

Earlier, the US bilateral APA programme was not applicable to India. “The success of the framework agreement in a short period of one year has led to US revenue authorities opening up their bilateral APA programme to India. The US is expected to begin accepting bilateral APA applications shortly,” the CBDT said.

APA, which was introduced in the Income Tax Act in 2012, provides for signing of an agreement between a taxpayer and the Income Tax department on an appropriate transfer pricing methodology for determining the value of assets and ensuing taxes on intra-group overseas transactions.

Source:
http://economictimes.indiatimes.com/articleshow/50765124.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Foreign investment quality improves substantially with PM Narendra Modi’s Make in India push

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The quality of foreign investment coming into the country has improved substantially, according to Reserve Bank of India data.

Much of this is foreign direct investment (FDI) materialised in the September 2014-November 2015 period after Prime Minister Narendra Modi launched the Make in India campaign and bettered portfolio inflows during the period.

Gross FDI inflows amounted to $62.6 billion, 31% higher than $47.6 billion in the preceding 15 months.

This is more than triple the amount of net portfolio inflows of $14.3 billion in the same period. An analysis of the monthly trend in foreign investment inflows shows that in most months stable long-term FDI has been more than portfolio inflows, which have been more volatile in the period.

Economists say the surge in FDI is largely due to several initiatives by the government to attract investment in the manufacturing sector. “FDI and portfolio flows over the past year-and-a-half suggest that conscious efforts of the government to encourage more stable direct investments are yielding results,” said Saugata Bhattacharya, chief economist at Axis Bank. “At a time when global capital markets have become volatile, FDI flows reduce uncertainty about foreign capital outflows and, consequently, currency volatility.”

The surge in FDI in India is significant given that investment across the world has fallen by 16%, said Amitabh Kant, secretary at the Department of Industrial Policy and Promotion, at a recent event.

Though a sizeable amount is estimated to have gone to the manufacturing sector, including consumer goods and food processing, among others, a section of the market feels that a portion of the FDI inflows could have come through the private equity route.

This seldom finds its way into greenfield projects but at the same time provide an important source of finance for entrepreneurs.

“A significant part of the higher FDI has come in as PE and VC funding, which helps finance entrepreneurs,” said Bhattacharya.

Prime Minister Modi’s Make in India initiative is aimed at turning the country into a global manufacturing hub to generate jobs, raise incomes and drive growth.

The government has been seeking to drum up investment as part of this effort. India’s growth is being driven by public spending and consumption with private investment yet to kick in substantially.

Source:  http://economictimes.indiatimes.com/articleshow/50764021.cms

India less vulnerable to external shocks: S&P

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Indian economy is less vulnerable to external shocks as it is mainly driven by household consumption and government spending, and not dependent on hot money which can move out quickly, Standard & Poor’s Rating Services said today.

The US-based rating agency expects the current account deficit (CAD), which is the difference between inflow and outflow of foreign exchange, to remain at a modest level of 1.4 per cent at the end of current fiscal and would continue at similar level till 2018.

“We see India as having limited vulnerability to external economic or financial shocks. This is because growth in the economy is mainly driven by domestic factors, such as household consumption and government spending.

“At the same time this is a country that has low reliance on external savings to fund its growth. In other words, the banks are mainly deposit funded and don’t rely on wholesale funding to grow their loan books,” S&P Rating Services India Sovereign Analyst Kyran Curry told PTI.

He said India’s capital markets are diversified and deep enough for companies to raise funding.

“Another favourable aspect of India external settings is that it is generally not subject to hot money inflows that can turn into outflows with shifts in investor sentiment. As such we see the external risks for India to be relatively contained,” Curry said.

He said while export growth may be disappointing, the current account deficit likely to be a modest 1.4 per cent in 2015, with similar levels through 2018.

“Our forecasts are partly informed by our view of increased monetary credibility, which dampens the demand for monetary gold imports. In addition, we expect India to fund this deficit mostly with non-debt, creating inflows,” Curry added.

The CAD in the first half of current fiscal stood at 1.4 per cent of GDP, lower than 1.8 per cent in the same period last fiscal. For full 2014-15 fiscal, the CAD stood at 1.3 per cent of GDP.

Source: http://economictimes.indiatimes.com/articleshow/50727133.cms

France will partner India to build three ‘smart’ cities

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France partners with IndiaFrance will help India develop Chandigarh, Nagpur and Puducherry as smart cities. Agence Française de Developpement (French Development Agency) signed memoranda of understanding with the government of Union territory of Chandigarh, and government of Union territory of Puducherry and the Maharashtra government here on Sunday in the presence of French President Francois Hollande and Prime Minister Narendra Modi.

Chandigarh, designed by the French architect Le Corbusier half a century ago as a model city, is spread across 114 sq km and the urban infrastructure and green belt of the city provide it a distinguished status among India’s planned cities.

On January 26, Modi is set to announce the official list of 20 smart cities to be developed in the first phase.

A delegation of 26 CEOs from France travelled to Chandigarh with Hollande and had discussions on CEO forums to explore partnerships in renewable energy, defence, information technology and aerospace.

Modi said French companies can exploit India’s trained and affordable manpower to expand their manufacturing operations in the country. The French president committed annual investment to the tune of €1 billion to strengthen business relations with India.

An agreement between Airbus and Mahindra was also inked under Indo-French cooperation to manufacture helicopters within the Make in India initiative.

French companies will also collaborate with public sector firm Engineering Projects India to provide integrated railways solutions. The railway stations of Ambala and Ludhiana will also be redeveloped with French partnership.

The French delegation evinced interest in the areas of renewable energy, infrastructure, transport, defence, and water treatment.

Source: http://www.business-standard.com/article/economy-policy/france-will-partner-india-to-build-three-smart-cities-116012500034_1.html

India, Qatar to boost cooperation in hydrocarbons

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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