1. All rights reserved CHAPTER - 2 DOING BUSINESS IN INDIA

2. All rights reserved Chapter Objectives To understand the ground realities of doing business in India To identify the socio-cultural issues facing an Indian entrepreneur To list the various forms of business ownership available in India To understand some of the major laws and regulations governing conduct of business in India

3. All rights reserved Problems Bureaucracy Corruption Labour Local Sentiments Gray Market Social Capital

4. All rights reserved Bureaucracy Characteristics of ideal bureaucracy: Official business is conducted on a continuous basis Official business is conducted according to written rules Roles and responsibilities are defined within a hierarchy, with rights of supervision and appeal Official and private business and income is strictly separate

5. All rights reserved Factors Working Against Corruption There is greater transparency in procedures to be seen across government departments. The right to information act (RTI) has significantly changed the situation Lately the media too has played an active and visible role

6. All rights reserved Measures Against Gray Markets Manufacturers may drastically reduced prices to narrow the gap in prices in local and overseas markets. Warranties may not be extended to products not purchased through the regular channels. Some high tech solutions have also been devised like the use of DVD regional codes to protect movies and other digital content.

7. All rights reserved Social Capital Negative consequences of ‘Pehchaan’: Exclusion of meritorious outsiders Excessive claims on group members Restrictions on individual freedom Norms aimed at downward leveling

8. All rights reserved Types of Ownership Sole Proprietorship Partnership Company Limited Liability Partnership Small Company One Person Company

9. All rights reserved Taxes, etc Income tax Sales tax Excise Service tax Profession tax

10. All rights reserved Features of VAT Input tax credit even on capital goods Credit is carried forward for 2 yrs and then it is refunded in case it cannot be offset Uniform rates throughout the country Self assessment of possible tax liability is allowed Audit In case of excess payment, refund is made within 60/90 days Interest can be claimed on delayed payments

11. All rights reserved Paying VAT Sell after stock transfer Be careful of bogus stock transfer Collect Forms C D F & H on time Advise your dealer to be registered Use ‘input tax credit’ on capital goods Encourage dealers to get registered Ensure that purchase and sales registers and stock- books are maintained Claim interest for delayed payment

12. All rights reserved Central Excise Find out if the product is excisable Find out its classification Find out its rate of duty Pay the tax File returns

13. All rights reserved Paying Excise Bill directly to the buyer Advice all distributors and dealers of your products to be registered Avail of SSI concession if your unit is eligible Know your product properly. There may be an opportunity for reclassifying your product in a lower rate slab. Avail of all concessions under ‘CENVAT’ Let the customer pay separately for add-ons like transport and warehousing expenses so it does not get included in calculating the total excise liability

14. All rights reserved Other Regulations Company law Labour law Import Export Pollution control