China-India Business Update: Aug. 2

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Aug. 2 – Welcome to our regular China-India round up in which we examine the latest bilateral news and commentary affecting foreign investment in the two countries.

Emerging Asian Companies Take a Larger Cut in Fortune 500 Rankings
While U.S. companies still dominate Fortune magazine’s most recently released annual ranking of the world’s 500 largest companies by revenue, Chinese and Indian companies have significantly expanded their presence and influence. A total of 61 Chinese companies and 8 Indian companies now have their names on the list.

New Issue of India Briefing: Tax and Financial Management
In this new issue of India Briefing, we take a look at the Indian tax environment generally, including types of taxes, fees and key dates, and continue on to focus specifically on requirements for foreign companies. Next, we look closer at the generous tax benefits available in Special Economic Zones, contingent on sector and operating dates, and finally expand our focus to India’s international trade agreements.

Complimentary Doing Business in East China Download
China Briefing’s recent “Doing Business in East China” book has just been made available for complimentary PDF download on the Asia Briefing Bookstore. Covering the regions of Shanghai, Jiangsu Province and Zhejiang Province, the 122-page guide contains city overviews of Changzhou, Hangzhou, Jiaxing, Nanjing, Ningbo, Shanghai, Shaoxing, Suzhou, Taizhou, Wenzhou, Wuxi, and Yangzhou as well as an introduction to each of the development zones within.

This book was originally written for the Indian business community, however will also be of considerable interest to any business executive interested in the region. It does, however, also contain anecdotes from Indian businesses in China, a list of Indian investors in the region, and specific contacts and details as concerns Indian foreign investment in East China.

Amazon Eyes India’s Online Market
The boom in India’s electronic commerce market, together with the recent relaxation in investment regulations for foreign retailers, has tempted the world’s largest retailer Amazon to enter the populous market. Currently in the process of staff recruitment and partnership negotiations, the Seattle-based company may start operations in India as early as the first quarter of next year.

FDI in India’s Multi-Brand Retail
India’s Committee of Secretaries (CoS) voiced its approval for 51 percent FDI in multi-brand retail and the nodal Department of Industrial Policy and Promotion (DIPP) is expected to prepare a Cabinet proposal on this subject matter. The Cabinet Secretary has asked the DIPP to proceed rapidly on the issue and act fast for Cabinet approval, but clearance depends primarily on the recommendations of the CoS.

Sri Lanka Favors China’s Renminbi over India’s Rupee
Sri Lanka’s Central Bank announced that China’s national currency, the renminbi, will now be allowed to be used in international transactions as China is gradually becoming a leading player in the international business environment. This reflects the growing influence of China in South Asia and the closer ties between the two countries.

HSBC India Foreign Bank Account Client Indicted on FBAR Tax Return Charges
The U.S. Department of Justice (DOJ) and Internal Revenue Service (IRS) announced last week the indictment of an HSBC India client on four counts of filing false tax returns and four counts of failure to file a Foreign Bank Account Report, form TD F 90-22.1 (FBAR).

DBRS Upgrades India Outlook
The Canadian credit rating company Dominion Bond Rating Services (DBRS) has upgraded the inclination of India’s Long Term foreign and local currency debt ratings for the first time from BBB Negative to a stable outlook. DBRS has been rating India since June 2007 and, according to the agency, the Indian government’s efforts to reduce the fiscal deficit for 2011-12 are very appreciable.

Ford to Invest US$1 Billion in New Gujarat Plant
U.S. auto giant Ford said yesterday it would invest US$1 billion to build a vehicle assembly and engine plant in Gujarat as it increases production to exploit the country’s burgeoning car market. The new factory will employ around 5,000 workers and will be the firm’s second in India.

China Celebrates 60th Anniversary of Liberating Tibet
China has just celebrated the 60th anniversary of the “peaceful liberation of Tibet,” holding a rally and Chinese parade outside the Potala Palace in Lhasa. China’s Vice-President Xi Jinping made a speech concerning the event, attributing Tibet’s development over the past six decades as being purely down to the Communist Party.

India Considers its First SWF to Meet Energy Demand
India is mulling over the proposal to set up the country’s first sovereign wealth fund (SWF), which plans to utilize a certain amount of India’s foreign exchange reserves. The SWF is hoped to help satisfy the country’s increasing demand for energy.

Dezan Shira & Associates provide foreign direct investment advice and services to clients in both China and India. The firm provides due diligence, incorporation, tax, accounting and other business services from ten China offices and five in India. Please contact the practice at china@dezshira.com or india@dezshira.com as appropriate, visit the firm’s web site here, or download the firm’s brochure here.

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