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Your Guide to Expand in India

Mr. Rohit Chaturvedi XnI Consultancy Services Private Ltd 161, Windsor Greens F-28, sector 50, Noida, 201301, INDIA Ph- 91-120-4316510

Index  Why India ?  8 vital Research areas for your India Expansion  Market Opportunity Assessment  Options for Setting Up an Office in India  Entry Strategy- Business Incubator or own Setup  What to Avoid when looking for Partners  Top 10 cities for Doing Business in India  Distributor Management  Import duty  Other Service Provider for your Expansion Needs

Why India ? 

A 1.6 Trillion Dollar GDP economy,

GDP growing @ 6-8% pa , and forecasted to grow at the same rate in the next 4-5 yrs

Young educated population with an average age of the population of <30 yrs (growing consumption & larger workforce)

Indian’s have a liking for foreign brands

There are 55 billionaires (4th highest in the world) in India and 125,000 HNIs(>1mln US$ worth investment capital) and growing.

Indian Industry is quite progressive and open to new technologies

There are severe shortages in some resources in the country and people are looking to fill up the gaps. Just to take one example , According to a report  India’s investment in infrastructure during 2007-12 is expected to be around $500 billion as the expected level of infrastructure investment projected in the 11th five year plan is 2.36 times that of the 10th plan. Furthermore, this is expected to almost double for the 12th five year plan (2012-17).  The report, also pointed out that about 97 million jobs are likely to be created over the next 10 years across different sectors in the country. Due to this huge increase in jobs, India may need to potentially build an average of 8.7 billion sq ft of real estate space every year, adding up to a whopping 95 billion sq ft between 2010 and 2020, RICS said.  The study, however, said there is a huge shortfall of skilled manpower (Training & Development Opportunities) in the infrastructure sector that needs to be addressed with urgency. Read more :

8 vital areas to research for your India Expansion  Macro Economic Analysis  Dipstick Survey  Opportunity Assessment  Competitive Benchmarking  How to Participate  Business Partner  Other Service Providers for your Expansion needs  Site Selection (Operations) Read more :

Market Opportunity Assessment  While India looks to be a very large and lucrative market, from the outside, things on the ground could be different. Its better to start with a realistic assessment, before committing resources.  The amount of published information in India is huge but the quality of such data to take meaningful decisions is limited. There are of course some organisations and associations which compile data from the respective industries periodically- but the number of industries thus covered are not many.  A typical Segmentation Matrix for an Industrial firm could be something like this : Customer Segments



INR 0.80x

INR 0.60-0.65x

PREMIUM Brand image/ special applications 10-20% Mkt CORE: Quality / Brand image/ Price/Availability 40-45% Mkt BASE Price 40-50% Mkt

•Global firms •Export Oriented firms •Indian Multinationals •Precise requirements •Safety & Security Important • Environmental Concerns •Large Indian Firms/ Public Sector Firms •Performance as per Specs •Value for Money •After Sales Service • Product Life/ Features •Government Companies •Base Level performance •Price Sensitive •Tenders

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Options for setting up an Office in India A foreign company planning to set up business operations in India has the following options for entry :  AS AN INDIAN COMPANY: A foreign company can commence operations in India by incorporating a company under the Companies Act, 1956 through  Joint Ventures; Foreign Companies can set up their operations in India by forging strategic alliances with Indian partners.  Wholly Owned Subsidiaries : Foreign companies can also set up wholly owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy. For registration and incorporation, set of applications have to be filed with Registrar of Companies (ROC). 

AS A FOREIGN COMPANY : Foreign Companies can set up their operations in India through:  Liaison Office/Representative Office- Liaison office acts as a channel of communication between the principal place of business or head office and entities in India.  Project Office : Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India.  Branch Office : Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes: Export/Import of goods- Rendering professional or consultancy services, Carrying out research work, in which the parent company is engaged., Promoting technical or financial collaborations between Indian companies and parent or overseas group company etc Read more :

Entry Strategy Business Incubator or Own Setup While it might be natural to start small and then grow , while entering a new market and the strategy designed accordingly

Phase # 1- At the initial stage companies find simple to export products to India , and work with established distributor of similar products or hire independent agents to market, sell and distribute their products. This of course helps to hedge the country business risk and at the same time test the water.

Phase # 2- Over time companies realize that to be successful in India they need a larger footprint , which may not be possible through a third party. In most of the cases, companies grow in size and capability and then make a local acquisition or establish local full time employee base that may involve marketing, distribution, sales, testing, assembly and ultimately manufacturing.  While the above could be done by forming your company in India and investing yourselves, there is an option to go for Business Incubator. Some new business entrants, especially from Europe & US , when they launch business in a niche segment in Indian market explore benefit of Business Incubator Offices. These offices are designed to bridge the gap between strategic plans to cost effective and low risk actionable step and assisting its development into a viable business.  Major benefit of this is starting-up of new office with minimum time and less investment along with least legal formalities. Services provided by such offices help with business basics, Networking activities, Marketing assistance, High-speed Internet access, CA, Legal etc .. Read more :

What to avoid when exploring Indian markets for partners  Avoid being too optimistic on closing the deal quickly. Unlike before lot of companies in India are fairly diversified. They have a big portfolio and they know that with the Indian markets opening up, there will be many more opportunities on their way.  Mix written and verbal communication. . Indians are emotional and they like people to people interaction. They are less likely to go into a relationship purely based on non-personal communication (email etc…).  Avoid approaching Indian market with a single solution mindset. Some Indian partners might have a propensity to minimise their initial investments/ risks and could want the approaching firm to bear some initial risks-commercial/ technological  Avoid taking few things on the face value. Read more :

Top 10 cities for doing business in India  Mumbai

 Delhi  Chennai  Bangalore  Hyderabad  Kolkata  Pune  Ahmedabad  Nagpur  Surat Read more :

Distributor Management In a general sense, following could be mentioned about Indian Distributors :  Strengths        

Strong business acumen Hard working Ambitious Supportive Emotional (believe in relationships) & Brand Loyalty Flexible Strong end user relationship Street Smart

 Weaknesses       

Not so specific on dates (repayment dates, timelines on projects etc..) Not much into forecasting of demand, need everything now/urgent. Dilly dallying at times over serious decisions Cribbing for not making profits (lot of times just to exert pressure) Over commitments on delivery, specially around long term actions Have weak in-house systems/processes Not easily willing to get into price discussions with customers

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Import Duty in India 2012-13

Sl No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Annexure 1- IMPORT DUTY - GENERAL TRANSACTION (post 2012 budget) Currency Exchange rate Description Quantity UNIT PRICE INVOICE Value Insurance (if CFR, FOB, FCA, DAP etc) without Insurance EQUIVALENT INR Landing Charge @ 1% on CIF Value Assessable value for calculation of duties

CUSTOM DUTY @ 5%, 7.5% or 10% as per classification Value for Calculation of CVD CVD + Education / Higher Ed. Cess@ 12% Total (CD+CVD) Education & Higher Ed. Cess @ 2%+1% Amount subject to Spl CVD ((D+F+G) Additional CVD @ 4% Total Duty paid (CD+CENVAT) LANDED COST (1+3+4) without C&F charges (without CVD)

USD 55.00 Value

0 1.00 5.00 12.00 3.00 4.00

Normal 1 1.00 1.00 55.00 0.55 55.55 2.78 58.33 7.00 9.78 0.29 65.62 2.62 12.69 67.69 58.07

18 Cenvat / kg.


19 Import Duty / kg.


20 Clearing & Forwarding Charge at actual


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Other Service Providers for your Expansion Needs 

Companies to assist you in Business Meeting with prospects (customers, distributors, partners etc)

Immigration formalities / Work contract- Organization of the necessary documents for FRRO/ PIO/ OCI applications, Lodging of the applications (RP) with local immigration office and successful registration with FRRO/ FRO with the issuance of Residence permit booklet.

Accommodation- Temporary Accommodation, Pre arrival Housing needs analysis, Collection from and return to temporary accommodation, ‘Welcome to India’ City information Pack, Shortlist and pre-screening of suitable properties, Accompanied visits to inspect short listed properties, Lease negotiations (rent, terms and conditions, etc.), etc

Other Settling down Services- Relocation moves, Identification of options for doctor, dentist, baby health care , Visit to the bank and post office, Visit to shopping mall/ food markets , Overview of leisure & hobby facilities, rest & recreation options, etc

Business Requirement for your team member(s)- Employment ServicesEmployment Letter,

Payroll Services - salary structuring for your team members , payroll processing, pay slips, statutory reports and submissions, client and employee query management, IT Computation and submissions, and other local compliances, etc .

Registering the Employee, Issuing

Thank You Mr Rohit Chaturvedi XnI Consultancy Services Private Ltd 161, Windsor Greens F-28, sector 50, Noida 201301, INDIA Ph- 91-120-4316510

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