“ We
advise and support companies in
a global environment “
DOING BUSINESS IN INDIA
CULTURAL DIVERSITY
DEMOGRAPHIC PROFILE
POLITICAL PROFILE
INDIA´S ECONOMIC
REVOLUTION
FOREIGN DIRECT INVESTMENT
ENTRY OPTIONS IN INDIA
TAX SYSTEM IN INDIA
INDIA´S LONG AUTOMOBILE TRADITION
INDIA´S GROWING VEHICLE MARKET
CULTURAL DIVERSITY
Religion
Hinduism, Islam, and Christianity
are the four main religions followed
in India, other religions followed are
Buddism, Jainism and Judaism.
Language
Hindi is the official Language of
India, apart from Hindi there are 21
official languages, such as, Bengali,
Telengu, Marati, Gujarati, Malyalam
etc.
Festivals
Depawali,Holy,Gurun, Nanak,Jatanti,
Christmas, Id ul.
DEMOGRAPHIC PROFILE
•
Population 1.2 billion (urban: 30%, rural: 70%).
•
Population growth rate 1,312% per annum.
•
Birth rate 20.6 (births/1,000 population).
•
Death rate 7.43 (deaths/1,000 population).
•
Life expectancy 67,14 years.
•
Sex ratio 940 females per 1,000 males.
•
India has a young population with approximately 65%
in the age group of 15 to 64 years. The median age in
the country is around 26,2 years, which is lower than
many countries in the world.
POLITICAL PROFILE
India is a secular state and the largest
democracy in the world with a
parliamentary form of
government.
Legislative
The Government of India
officially known as
Union Government
of India was
Lokh Sabha
established by the
constitution of
India in 1950.
Rajya Sahba
The Government of India is divided into
three distinct but interrelated branches
the Legislative, Executive and Judiciary.
Government
of India
Executive
Judiciary
President
Supreme
Court
Vice
President
High Court
Prime
Ministe
District
Court
INDIA´S ECONOMIC REVOLUTION
India initially based its economy around a combination of capitalist
and socialist economic models. On the one hand, the government
promoted industrialization, while on the other it maintained strict
control over industries. A former USSR model of five year plans was
also implemented. Each plan focused on the development of key
sectors.
Until 1990, India had made few significant achievements with the
exception of the Green Revolution, which made it self-sufficient in
food grain production. By 1990, India was burdened with mounting
debt, poor economic development, and average long-term indicators.
All this was to change with the liberalization ushered in during 1991.
In the Year 1991 under the prime Minister V Narasimha Rao the
government implemented economic reforms to liberalize the
economy, since then India has become an open door economy to the
world.
FOREIGN DIRECT INVESTMENT
Foreign Direct Investment (FDI) regime has been progressively
revised during the course of 1990s and it continues in the 2000s,
with most restrictions in the foreign investment removed and the
procedures being simplified, and now foreigners can make direct
investments with limited exceptions.
Today there are very few industries where investment is prohibited,
moreover the investment ceilings which are available in certain
cases are being taken out / phased out.
With the objective of promoting foreign direct investments through
a simple, transparent, and less regulatory policy framework, the
Government of India has implemented the following measures:
No government approval is required for FDI in all the sectors and
activities which are in the Automatic Route, except for a negative list
formulated by the Government of India.
Foreign Investment Promotion Board considers proposals that
not qualify for the Automatic Route.
are
ENTRY OPTIONS INDIA
 Liaison office
 Branch office
 Project office
 Local Indian subsidiary (wholly
owned)
 Limited Liability Partnership
ENTRY OPTIONS INDIA
A foreign company can commence operations in India by incorporating a company
under the Companies Act, 1956 through a:
Liaison office
Foreign companies are allowed to open a liaison office in India, to undertake
liaison activities on their behalf but subjected to a Special permission from the
Reserve Bank of India. These offices act as a channel of communication between
the principal place of business or head office and entities in India. Liaison office is
granted permission for the following purposes:
1. •
Representing the parent company/group companies in India.
2. Promoting export/import from/to India.
•
3. Promoting Technical/ financial collaborations between parent group companies
and companies in India.
4. Acting as a communication channel between the parent company.
•
Liaison office is not allowed to do any business activity in India and cannot
earn money in India, expenses to such office have to be met entirely through
inward foreign remittance of foreign exchange from offices outside India.
ENTRY OPTIONS INDIA
Branch office
A foreign company can open a branch office in India to do business there, this requires
specific approval from the RBI (Reserve Bank of India).A Branch office is permitted by the
RBI to represent the Parent / group companies and undertake the following activities:
1.Export / import of goods.
2. Rendering professional or consultancy services.
3. Carrying out research work in which the parent company is engaged.
4. Promoting technical or financial collaboration between Indian companies and the
parent or overseas group companies.
5. Representing the parent company in India and acting as a buying / selling agent
in the country.
6. Providing IT services and developing software in India.
7. Rendering Technical support for the products supplied by parent/ group
companies.
Branch office is not allowed to carry out retail trading and manufacturing except
manufacturing within SEZ ( Special Economic Zones).
ENTRY OPTIONS INDIA
Project office
A foreign corporation that has secured a contract from an Indian company to
execute a project in India without obtaining prior permission of the RBI
provided:



The project is funded directly by invade remittance from abroad.
The project is funded by a bilateral or multilateral financial agency.
The project has been cleared by an appropriate authority.
A company or entity in India awarding the contract has been granted a term
loan by a public financial institution or a bank for a project.
However if criteria are not met, the foreign entity has to approach the RBI
or central office for approval.
ENTRY OPTIONS INDIA
Local Indian subsidiary
Foreign Corporation can set up wholly owned subsidiary companies in India in
the form of private companies, subject to prescribed guidelines. Further
foreign corporations can set up a Joint Venture company with an Indian or
Foreign partner.
Foreign Direct Investment in such companies, set up in India is permitted
through Automatic Route and do not require prior approval from the
Government of India or the RBI, When the activities do not come through the
Automatic Route, a prior approval of the RBI and the Government of India is
required.
As compared to branch/liaison and project office, a subsidiary company
provides maximum flexibility to conduct business in India. A company can be
funded through a mix of equity, debt, both foreign and local/internal accruals
ENTRY OPTIONS INDIA
Limited Liability Partnership
LLP aims to provide the benefits of a limited liability company, and at
the same time, to allow its members to achieve the flexibility of
organizing their internal management on the basis of mutual agreement.
LLP is a legal entity, the liability of its partners is limited to their agreed
contribution to the LLP.
100% Foreign Direct Investment is permitted in LLP with prior approval
of foreign investment promotion Board in sectors were 100% FDI is
allowed under the Automatic Route. However, institutional investors /
foreign venture capital investors are not permitted to invest in LLP.
Capital contribution made by partners in a LLP should only be in the
form of cash, furthermore, LLPs are not permitted to avail external
commercial borrowings.
TAX SYSTEM IN INDIA
India has a well developed tax structure and both the Central and the
State Government levy Taxes.
The Indian Tax Year extends from 1st April of a year to 31st March of the
subsequent year. All companies registered in India also applied the same
dates, all the Indian companies are required to file their income tax
retunes by 30th of September of every year, even in the event of loss or
no gains.
Every corporate tax liabilities need to be estimated and discharged in four
installments, 15th June, 15th Sep, 15th December & 15th March.
Corporate Tax- Direct Tax
Domestic companies : 30% + Educational taxes 3% + surcharges 5%
depending on limits of income.
Foreign Companies : 40 % + Educational taxes 3%+ surcharges 2%
depending on limits of income.
INDIAN´S LONG AUTOMOBILE TRADITION
1901
First Indian to own a car in India:
Mr. Jamsetii Tata, founder of Tata Group.
2009
Launch of Tata Nano, the world’s
cheapest car, a breakthrough in
automobile history.
16
INDIAN´S GROWING VEHICLE MARKET
• World’s 2nd largest two-wheeler market.
• 6th largest Passenger Cars producer.
• 4th largest in Heavy Trucks.
• 2nd largest tractor manufacturer.
• Annual production of vehicles of all types
around 20 million.
• The monthly sales of passenger cars in India
exceed 120,000 units.
DOING BUSINESS IN SPAIN
OVERVIEW
Why choosing Spain ?
GLOBAL RANKING ON
THE EASE OF DOING BUSINESS
LEGAL MATTERS: Creating a company
Creating a branch
Commercial Agreements
Other legal matters
OVERVIEW
“We advise and support companies in
a global
environment”
SPANISH
ECONOMY
FIGURES
Region: OECD high income
GNI per capita (US$): 30,990
Income category: High income
2013 rank: 44
Population: 46,235,000
2012 rank: 42
Unemployment rate:27,16%
Change in rank: -2
(first quarter 2013)
WHY CHOOSING SPAIN?
“We advise and support companies in
a global environment”
INTERNATIONAL BUSINES HUB
• Strategic geographic location,exceptional for key markets in
Southern Europe and Latin America.
• More than 10.300 foreign companies are already established in
Spain,75 of which are Forbes Top 100 multinationals.
• Access to 1,3 billion consumers.
• Apart from its domestic market, Spain offers a privileged situation
a gateway to the European market, Latin America and North Africa.
WHY CHOOSING SPAIN?
ULTRAMODERN TRANSPORTATION INFRASTRUCTURE
“We advise and support companies in
Airports
global environment”
Spain has two of tenaEurope's
largest airports, Madrid and Barcelona.
250 airlines operate in our country at 47 airports.
Spain ranks 3rd in Europe in passenger traffic.
Ports
46 Atlantic and Mediterranean ports, making Spain 4th in maritime
transport of goods.
Roads
Spain boasts the number one network of freeways and divided
highways in Europe.
‡ Rail Network
19 Spanish provinces and 27 cities are connected directly to the
Spanish highspeed rail network.
In 2020 Spain will have the largest high-speed rail network in Europe
(10,000 km).
WHY CHOOSING SPAIN?
ATRACTIVE ECONOMY
•
12th largest economy
in the
andcompanies
5th in thein
EU and ranks
“We advise
andworld
support
7th in direct FDI (Foreign
Direct
Investment) received.
a global
environment”
•
7th-ranked exporter of business services.
•
Spain offers investment opportunities in sectors and activities
with significant added value with high technological value and a
significant level of R&D&I: the environment and water treatment,
biotechnology and health sciences, aeronautics and aerospace,
and renewable
energies
•
Favorable Tax Treatment for channeling investments:
 ETVE (Special System for Entities Holding Foreign Securities) for
channeling investments towards Central and South America.
 80 Double Taxation Agreement which allows an excellent Tax
planning strategy.
WHY CHOOSING SPAIN?
ATRACTIVE LIFESTYLE
Barcelona and
top in
10 business cities
“WeMadrid
adviseare
andamong
supportEurope's
companies
for expatriates, according
to the European City Monitor 2011
a global environment”
report prepared by Cushman & Wakefield.
Best health care system: modern and excellent quality.
Rich history and cultural heritage.
Unique and internationally famous cuisine.
8,000 km (4,970 miles) of coastline and lovely beaches, with an
excellent climate.
Three Spanish business schools (IE, IESE and ESADE) appear
among the top 20 in the ranking by the Financial Times: Global
MBA ranking 2011.
52,7 M of international tourists arrivals in 2010.
GLOBAL RANKING
Where economies stand in the global ranking on the ease of doing business:
“We advise and support companies in
Globally, Spain standsaatglobal
136 inenvironment”
the ranking of 185 economies
CREATING A COMPANY
Summary of procedures for starting a business in Spain, the time and cost.
No.
Procedure
Time to
complete
Cost
1
Obtain a certification of uniqueness of proposed company
name from the Mercantile Register
3 days
EUR 15.95 (certificate)
+ EUR 3 (stamps)
2
Open a bank account for the company; deposit capital in the
bank and obtain a deposit certificate
1 day
No charge
3
Grant a public deed of incorporation before a public notary
1 day
Approx.500€
4
Submit Declaración Censal de Inicio de Actividad and obtain
the Tax Identification Number
1 day
No charge
5
Obtain a tax declaration of exemption from the Asset Transfer
and Legal Documented Acts Tax
1 day
No charge
6
File the public deed of incorporation of the company for its
registration with the Mercantile Registry
6 days
155€
7
Legalize company books
8
Submit a notification of start of operations to the municipal
9
File for social security and affiliate all workers with the local
general treasury of social security.
10
Notify the Delegación Provincial de la Consejería de Trabajo e
Industria
15 days
7 days
EUR 25 the books +
EUR 21.49 to legalize
350€
No charge
1 day
No charge
CREATING A COMPANY
STOCK COMPANIES
• The most usual Spanish commercial structures are the Stock Company or Sociedad
Anónima (SA) and the Limited Liability Company or Sociedad de Responsabilidad
Limitada (SL).
• The main characteristics of Stock Companies are the following:
• Share capital: The minimum capital required to incorporate a Stock Company is
Euros 60.000,00 and at least 25% of it must be paid up at the start. The capital is
divided into negotiable shares, which can be either bearer or nominative.
• Transfer of Shares: Shares are freely transferable, but should the founders wish to
establish certain limitations for the transmission of the shares, they must then be of
a nominative type and such restrictions must be expressly established in the
company’s By-Laws.
• Contributions in kind: If contributions in kind need to be made at the incorporation
or in subsequent capital increases, a stock company will need a special report
drawn up by an independent expert appointed by the Commercial Registry.
• Management of the Company: The Company can be managed by a Board of
Directors, a Sole Director, two Joint Directors or by two or more joint and several
Directors.
CREATING A COMPANY
LIMITED LIABILITY COMPANIES
•
Limited Liability companies are intended for business which wish to benefit from limited
liability and simpler and more flexible legal formalities and documentation requirements.
The main characteristics of this type of companies are the following:
•
Capital: The minimum capital of a Limited Liability Company is Euros 3,000.00, which
must be fully paid in at the date of incorporation and it is divided into “participations”,
which cannot be represented by negotiable shares.
•
Transfer of Participations: The main difference with the Stock Companies is that the
transfer of these participations is more restricted, and the existing members have a preemptive acquisition right.
•
Contributions in kind: If contributions in kind need to be made at the incorporation or in
subsequent capital increases, the report of an independent expert appointed by the
Commercial Registry will not be necessary.
•
Management of the Company: Like in the Stock Company, the Company can be managed
by a Board of Directors, a Sole Director, two Joint Directors or by two or more joint and
several Directors.
START UP COMPANIES
A big boost for innovative and high tech with fast -growing companies. Not special
Spanish legislation applicable.
CREATING A BRANCH
BRANCH OF A FOREIGN CORPORATION
• A branch is an establishment that forms part of the business. It does not have
its own separate legal personality or share capital. Businesses which establish
a branch will be liable with their own assets for the branch’s obligations and
responsibilities. Branches can engage in business activities on behalf of the
business to which they belong and normally enjoy management
independence.
• To set up a branch in Spain, a public deed must be signed and registered at
the Commercial Registry. It is also necessary to deposit the share capital in a
bank account, and apply for a tax number. The branch must have a legal
representative with authority to manage its affairs. It does not have any
formal managing or administrative bodies as such, and it largely operates as if
it were a company in its commercial dealings with third parties.
• The main requirements for granting the deed are: a certificate that proves the
existence of the parent company, issued by the institution in charge with
company registration of the respective country; a copy of the Memorandum of
Association of the foreign company with a sworn translation into Spanish; and
certified of the Minutes with the decisions of the parent company about the
creation of the branch and the appointment of Directors.
COMMERCIAL AGREEMENTS
AGENCY AGREEMENTS
Definition: By means of an agency agreement, a natural o legal person called
an agent binds himself before another person in a continuous or stable manner
and in exchange for a remuneration to promote commercial acts or transaction
for the other´s account, ans an idependent intermediary, without assuming,
unless otherwise agreed, the risk of such transactions.
It differs from the mercantile commission agreement in the fact that the
agency agreement gives rise to a long lasting relationship between the parties,
while the mercantile entails a mandate whereby a person agrees to perform a
trade act or trasaction for another´s account.
It is not a mediation contract either since the mediator acts in a sporadic and
impartial way, trying to bring the parties together in the conclusion of an
agreement but without representing any of the parties.
It differs from a distribution agreement because this one contracts with third
parties for his own account and assumes in all cases the risk inherent to the
resale of the products acquired.
It is not an employment contract since the agent is independent.
COMMERCIAL AGREEMENTS
AGENCY AGREEMENTS (I)
Basic aspects of commercial Agency Agreements
Scope of application. From a material point of view, the Law 12/1992
applies only to mercantile agency agreements. However, certain agreements
which would, in principle, be governed by the said Law, escape in whole or in
part from the scope of application of the same.There are in Spain specific
regulations relating to determined categories of agent which are applied, with
priority character with respect to the general system set forth in the Law
12/1992, as:
• Insurance agents
• Credit entities agents
• Advertising Agents
• Ship´s agents
From a temporal point of view, the Law 12/1992 is presently applied to all the
mercantile agency agreements, whether the same have been entered into prior
to or after the entry into force of the Law 12/1992.
COMMERCIAL AGREEMENTS
AGENCY AGREEMENTS (II)
Comparision Spanish Law 12/1992 and European Directive 86/653/EEC
Both of them aim to protect the supposedly weaker party to the mercantile
agency agrement: the agent (the validity of thepostulate upon which both the
ED and the Spanish Law are based are questionable since there are a great
number of examples where the agent is not in a position of inferiority with
trespect to the principal), and it is for this reason that the LAW 12/1992 sets
forht that its provisions have an imperative character unless expressly
otherwhise provided by the issue.
The European Directive, contrary to the Spanish Law, does not establish
the general imperativeness of its provisions but only some of them expressly
state their imperative character.
Impact of Competition Law on Agency Agreements after the entry into
force of the EC Treaty of categories of Vertical Agreements Regulationand
concerted practice (1st January 200)and in particular its Article 81(1).
If Law12/1992 expressly contenplates and permits any covenant which would
restrict competition., but does not impose the same, then Spanish competition
law does not seem applicalbe but Art. 81(1( of the EC Treaty if the agreement is
capable of affecting trade between Member States.
COMMERCIAL AGREEMENTS
DISTRIBUTION AGREEMENTS (I)
The distributorhip agreement is the agreement whereby an entrepreneur (called
distributor),agrees, on a a regular an continuous manner, to acquire in his own
name and under his own risk, the products of another entrepreneur (called
supplier), for the purposes of reselling them in a given territory and its main
features are:

It is an atypical agreement, since it has no sepcific legislation.

It is an adhesion agreement, to the extent that very frequently contrac forms or
patterns prepared by the supplier are used.

It is a contract involving duration since it entails a performance over a period of
time, either fixed or unlimited.

It is a consensual agreement which is consummated by the consent of the
parties.

It is an agreement “intuitus personae”, since it is based on mutual trust between
the parties.

It is an agreement where there is an economic dependence of one of the parties
(distributor).
COMMERCIAL AGREEMENTS
DISTRIBUTION AGREEMENTS (II)
The legal system applicable to distributorship agreements is
made up of three categories of regulations:
1. The general regulations on contracts, contained in the Civil Code and in the
Commercial Code.
2. Spanish and European community rules on competition (application of
Article 81(3) of the EC Treaty to categories of vertical agreements and
concerted practices, which is to be applied when assessing the compatibility
of distribution agreements with Spanish competition rules).
3. Finally, it should be taken into account that Spain is a party to the Vienna
convention of 1980 on the International Sale of Goods, and therefore the
provisions contained in said convention may, as the case may be, apply to
distributorship agreements subject to the Spanish Laws.
COMMERCIAL AGREEMENTS
JOINT VENTURES
• Joint Ventures are quite common in commercial practice in Spain.
Although they are not specifically foreseen in commercial Spanish laws,
they are in practice executed according to Spanish general rules
applicable to contracts.
• Sometimes the Joint Ventures are created by means of a Temporary
Business Association (Unión Temporal de Empresas: UTE) which allows
several companies to operate together in one common project for a
limited period of time. The UTE has not legal entity. This form of
association is usual in engineering and construction projects.
OTHER LEGAL MATTERS
FOREIGN COMPANIES AND/OR INDIVIDUALS IN SPAIN
• Tax Identification Number (N.I.F.) and Foreign Identity Number (N.I.E.)
• The applicable Spanish legislation currently requires that any individual or
legal entity with economic or professional interests in Spain, or involved in a
relevant way for tax purposes, must hold a Tax Identification Number (NIF) in
the case of legal entities or a Foreign Identity Number (NIE) for individuals.
For example they must be obtained in order to set up a company or a branch,
and therefore foreign shareholders and directors of Spanish companies must
have NIF or NIE.
• NIF is issued free of charge and NIE at a small cost.
• Regarding the procedure for obtaining the NIF, a specific form must be filed
with the competent Spanish tax authorities, along with certain documentation,
and a number is automatically assigned.
• NIE can be obtained in Spain, at the Police Station, or abroad, at Spanish
diplomatic missions or consular offices.
• Foreign individuals and companies can be appointed as Directors of Spanish
companies.