OPPORTUNITIES , CHALLENGES AND MARKET BREAKTHROUGHS TO EXPORT IN ASIA (INDIA) MARKET
INTRODUCTION • India and Indonesia have shared two millennia of close cultural and commercial contacts. The shared culture, colonial history and post-independence goals of political sovereignty, economic self-sufficiency and independent foreign policy have a unifying effect on the India- Indonesia relations 2
• India has reached demographic transition stage wherein more than 60 percent of the population comprises of economically active age group of 15-59 years, commonly referred to as the DEMOGRAPHIC DIVIDEND • Indonesia ranks No.10 amongst Top 25 importers of India 3
G 20 Summit 2019 4
G 20 Summit 2019 • The leaders of India and Indonesia, who were in Osaka, Japan for the G20 Summit, met and discussed ways to boost bilateral ties and enhance cooperation in trade and investment. • According to Ministry of External Affairs India spokesperson Raveesh Kumar, India and Indonesia set a $50 billion target for bilateral trade by 2025. 5
OPPORTUNITIES FOR EXPORTING TO INDIA 6
• English Widely Spoken English speaking India overcomes the Language barrier and helps the trade to move in a more efficient and fast manner. • Common Law The Constitution of India is the supreme law of India. It provides details of the administration of both the Union and the States, and codifies the relations between the Federal Government and the State Governments. 7
• Rising personal incomes creating a new middle class consumer market India's middle class is set to grow rapidly from up to 80 million today to 580 million people – or about 41 per cent of the population – by 2025. • Fastest growing economy with one of the world’s largest youth population India is home 20% of the world's youth. Half of its population of 1.3 billion is below the age of 25, and a quarter is below the age of 14. India’s young population is its most valuable asset. 8
• Purchase Power Parity - While China ($27.4 trillion) is the largest economy in the world in terms of PPP , the United States ($21.4 trillion) comes a distant second. India is a distant third, with a GDP adjusted to PPP at $11.4 trillion. - However, in terms of nominal GDP , the United States is the largest economy in the world followed by China. Japan is the third largest economy while Germany and India occupy the fourth and fifth positions in the world. 9
- GDP comparisons using PPP are arguably more useful than those using nominal GDP when assessing a nation's domestic market because PPP takes into account the relative cost of local goods, services and inflation rates of the country, rather than using international market exchange rates which may distort the real differences in per capita income. 10
• Palm Oil Imports - India Imports worth $5.5 billion of Palm oil which is about 17.5% of total Palm oil imports India has agreed to reduce import duties on Indonesian processed palm oil to 45 per cent bringing about parity with imports from Malaysia. 11
• Availability of Skilled and Low cost Labour India possesses a large labor pool as almost half its population of 1.2 billion is of working age. Naturally, the structure of India’s labor market is diverse; foreign companies need to understand this structure to benefit from India’s demographic dividend. 12
FUTURE PROSPECTUS OF INDIA 13
• Good Networks of Banks, Financial Institutions and an Organized Capital Market. India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. 14
• Gems and Jewellery Industry in India 15
EXPORT TO INDIA BREAK THROUGHS 16
• Ease of Doing Business India climbed 23 points in the index to 77th place in 2019, becoming the top ranked country in South Asia for the first time and third among the BRICS. 17
• Digitalization Indian Government launched the revolutionary reform Digitization in India in September 2015, under which it envisioned increased internet connectivity and making India a digitally empowered nation. 18
• Foreign Direct Investment Policies Investment climate in India has improved considerably since the opening up of the economy in 1991. This is largely attributed to ease in FDI norms across sectors of the economy. India, today is a part of top 100 club on Ease of Doing Business (EoDB) and globally ranks 1st in the greenfield FDI ranking. 19
• Some of The sectors in Which 100% FDI is allowed are as follows: 1. Agriculture & Animal Husbandry 2. Air Transport Services (non-scheduled and other services under civil aviation sector) 3. Airports (Greenfield & Brownfield) 4. Automobiles 5. Biotechnology (Greenfield) 6. Broadcast Content Services (Up-linking of Non- ‘News & Current Affairs’ TV Channels/ Down- linking of TV Channels) 20
7.Broadcasting Carriage Services. 8. Capital Goods 9. Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs) 10. Chemicals 11. Coal & Lignite 12. Construction Development: Townships, Housing, Built-up Infrastructure 13. Construction of Hospitals 21
14. Credit Information Companies (CIC) 15. Duty Free Shops 16. E -commerce activities 17. Electronic Systems 18. Food Processing 19. Gems & Jewellery (Manufacturing) 20. Healthcare (Greenfield) 21. Industrial Parks (new and existing) 22
22. Pharmaceuticals (Greenfield) 23. Petroleum & Natural Gas 24. Plantation Sector 25. Ports and Shipping 23
• NITI Aayog NITI Aayog is a State-of-the-art Resource Centre, with the necessary resources, knowledge and skills, that enables it to act with speed, promote research and innovation, provide strategic policy vision for the government, and deal with contingent issues. NITI Aayog’s entire gamut of activities can be divided into four main heads: 1. Design Policy & Programme Framework 2. Foster Cooperative Federalism 3. Monitoring & Evaluation 4. Think Tank and Knowledge & Innovation Hub 24
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INDIA THREE YEAR ACTION AGENDA 2017-18 TO 2019-20 The action Agenda is divided into 7 broad parts: • Medium-Term Revenue and Expenditure Framework • Economic Transformations in Major Sectors • Regional Development • Growth Enablers • Government • Social Sectors • Sustainability 26
• Taxation Reduction in Corporate Tax Rates The corporate tax rates have been slashed with effect from this fiscal year, but there is an option to choose the reduced corporate tax rates and if one chooses that option, then the company cannot avail the incentives and exemptions. In other words, it is an irreversible choice. If that choice is adopted, there is no MAT either (the rate for other companies opting for lower tax rate is now slashed from 21.55% to 17.47% inclusive of surcharge and cess). 27
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• After the reduction the rate has become significantly comparable to rates in other Asian countries. 29
• Duty Draw Back 1. Section 74 and 75 of Customs Act1962 2. Re-export of imported goods (Drawback of Customs duties) Rules, 1995 3. The Customs and Central Excise Duties Drawback Rules, 2017 30
HOW TO ENTER INDIA 31
CHALLENGES FOR EXPORTING TO INDIA 32
• High Tariffs and Protectionist Policies Like any other country even India for protecting its domestic market keeps in place various polices and Tariffs on import of Goods. However Government in order to improve bilateral trade between Nations have entered into Multiple agreements and MOU’s with respect of the Import Tariff and procedures with different nations 33
• Local Government Local governments vary in their attitude, ability, and capacity to support business and industry. 34
• Bureaucratic Hurdles Bureaucratic means involving complicated rules and procedures which can cause long delays. NRIs generally do not invest in manufacturing units in India because of bureaucratic hurdles and the lack of transparency and accountability at all levels. 35
• Developing Infrastructure, Including distribution and logistics as much of India remains Rural Improving the country’s infrastructure can lead to better connectivity, which in turn can create more jobs and enable free flow of trade. India Ranks 44 in The LPI (Logistic Performance Index) is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance. The LPI 2018 allows for comparisons across 160 countries 36
• Weather Conditions weather extremes with extremely hot weather in summer and wet weather in the monsoon season can affect business Climate change impact trade through a number of channels, not all of which can be easily quantified 37
SUMMARY • India to remain one of the fastest growing economies in the world. • Leading investors ranked India as the most attractive market. • Perfect Time to invest and trade in India!!! 38
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